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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1994 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File No. 1-6033
UAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-2675207
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Location: 1200 Algonquin Road, Elk Grove Township, Illinois 60007
Mailing Address: P. O. Box 66919, Chicago, Illinois 60666
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 952-4000
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock ($.01 par value) New York, Chicago and
Pacific Stock Exchanges
Preferred Stock Purchase Rights New York, Chicago and
Pacific Stock Exchanges
Depositary Shares representing
interests in Registrant's Series
B Preferred Stock, without par value New York Stock Exchange
6-3/8% Convertible Subordinated
Debentures due 2025 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K.[ ]
The number of shares of common stock outstanding as of March 1, 1995
was 12,434,865. The aggregate market value of voting stock held by
non-affiliates of the Registrant was $1,178,423,998 as of
March 1, 1995.
Part III information shall be incorporated by reference from the
Registrant's definitive proxy statement for its 1995 Annual Meeting
of Shareholders or shall be added hereto by an amendment to this Form
10-K, in either case within the time required by the instructions to
Form 10-K.
PART I
ITEM 1. BUSINESS.
Introduction
UAL Corporation ("UAL" or the "Company") was incorporated
under the laws of the State of Delaware on December 30, 1968.
The world headquarters of the Company are located at 1200
Algonquin Road, Elk Grove Township, Illinois 60007. The
Company's mailing address is P.O. Box 66919, Chicago, Illinois
60666. The telephone number for the Company is (708) 952-4000.
The Company is a holding company and its principal
subsidiary is United Air Lines, Inc., a Delaware corporation
("United"), which is wholly-owned. United accounted for
virtually all of the Company's revenues and expenses in 1994.
United is a major commercial air transportation company.
Employee Investment Transaction and Recapitalization
On July 12, 1994, the stockholders of the Company approved
and adopted the Amended and Restated Agreement and Plan of
Recapitalization, dated as of March 25, 1994, among UAL, the Air
Line Pilots Association, International and the International
Association of Machinists and Aerospace Workers (the
"Recapitalization"), that provides an approximately 55% equity
and voting interest in the Company to certain employees of United
in exchange for wage concessions and work-rule changes. The
employees' equity interest will be allocated to individual
employee accounts through the year 2000 under Employee Stock
Ownership Plans ("ESOPs") which were created as a part of the
Recapitalization. The entire 55% ESOP voting interest generally
will be voted by the ESOP trustee at the direction of, and on
behalf of, the employees participating in the ESOPs. In
connection with the Recapitalization, holders of the Company's
old common stock received approximately $2.1 billion in cash and
the remaining 45% of the equity in the form of Common Stock.
Each share of old common stock was converted into one-half share
of Common Stock and cash in lieu of fractional shares plus a cash
payment of $84.81. In connection with the Recapitalization,
United issued $370 million of 10.67% debentures due in 2004 and
$371 million of 11.21% debentures due 2014 and the Company issued
Series B 12-1/4% preferred stock with an aggregate liquidation
preference of $410 million. In addition, in connection with the
consummation of the plan of Recapitalization, the Rights
Agreement was amended to provide, among other things, for one
right to purchase shares of the Company's Series C Junior
Participating Preferred Stock to be attached to and issued with
each share of Common Stock, including shares of Common Stock into
which the preferred stock held in the ESOPs is convertible.
Airline Operations
United has been engaged in the air transportation of per-
sons, property and mail since 1934, and certain of its
predecessors began operations as early as 1926. United is the
world's largest employee-owned airline and one of the world's
largest airlines as measured by operating revenues, revenue
passengers and revenue passenger miles flown. At the end of
1994, United served 152 airports in the United States and 29
foreign countries. During 1994, United averaged 2,004 departures
daily, flew a total of 108 billion revenue passenger miles, and
carried an average of 203,400 passengers per day.
United provides its domestic and international service
principally through a system of hub airports at major cities.
Each hub provides United flights to a network of spoke
destinations as well as flights to the other United hubs. This
arrangement permits travelers to fly from point of origin to more
destinations without changing carriers. Currently, United flies
from four U.S. hubs - Chicago-O'Hare International, Denver
International, San Francisco International, and Dulles
International near Washington, D.C. - and is the principal
carrier at each of these hubs. United also has a Pacific hub
operation at Tokyo Narita Airport. During the last several
years, United has strengthened the revenue-generating capability
of the hub airports by: (1) adding new spokes (routes to new
cities and airports); (2) adding frequency on previously operated
route segments; and (3) entering into marketing agreements with
smaller U.S. air carriers which serve less populated destinations
and with foreign carriers which serve destinations that United
could not serve itself for economic or regulatory reasons.
United has developed a route system covering North America,
Asia, the South Pacific, Europe and Latin America.
Within North America, East-West traffic is served by nonstop
transcontinental flights and by the hubs at Chicago O'Hare and
Denver, while North-South traffic on the West Coast is served by
the San Francisco hub.
In October 1994, United launched a new service designed to
be cost competitive on routes under 750 miles. Named "Shuttle by
United", this service achieves lower costs through special work
rules and wage rates for pilots, high station and aircraft
utilization and minimal service amenities. As of February 1995,
Shuttle by United was operating daily 342 flights on 15 routes
between 10 West Coast cities and, as of April 1995, expects to be
operating 378 flights on 16 routes between 11 cities.
United has a marketing program in North America with
selected independent regional air carriers, known as the United
Express program, which allows United to increase the number of
destinations served by its hub-and-spoke network. Six regional
carriers currently participate in the United Express marketing
program providing connecting schedules to ten major cities also
served by United.
United also has marketing agreements that provide for
sharing of the "UA" code on certain routes with three other
independent domestic air carriers. Code-sharing allows an
airline to expand the marketing of its service brand by using its
two-letter designator code in computer reservations systems on a
connecting flight operated by another airline on the itinerary.
Also, North American traffic is served by code-sharing agreements
United has with two independent Caribbean air carriers.
Asian traffic is served from six U.S. cities via the Tokyo
hub and with nonstop flights from San Francisco to Hong Kong,
Osaka, Seoul and Taipei; from Honolulu to Osaka; and from Los
Angeles to Hong Kong and Osaka. South Pacific traffic to Sydney
is served from Los Angeles and San Francisco, while traffic to
Auckland and Melbourne is served from Los Angeles. In December
1994, service began from Guam and Saipan to Osaka and from Guam
to Saipan, further strengthening United's presence at Osaka's new
Kansai International Airport which opened September 4, 1994. In
addition, United plans to initiate service between the U.S. and
Ho Chi Minh City via an intermediate point as soon as government
approvals are received. United also has code-sharing agreements
with two independent South Pacific air carriers. Based on
reports filed with the Department of Transportation, United was
the leading U.S. carrier in the Pacific in 1994 in terms of
revenue passenger miles and available seat miles. During 1994,
United's Pacific Division accounted for 22% of United's revenues.
Service between the U.S. and Europe is provided by: flights
from six U.S. cities (five after Seattle service is discontinued
in April 1995) to London, with connecting service at
London to Amsterdam and Brussels; flights from four U.S. cities
to Paris; nonstop service from Dulles to Amsterdam, Brussels,
Frankfurt, Madrid, Milan/Rome and Zurich; and nonstop service
from Chicago to Frankfurt. European traffic is also served by
United's code-sharing agreements with three independent air
carriers, including Germany's flag carrier, Lufthansa.
United's comprehensive marketing agreement with Lufthansa
began during 1994. This worldwide alliance involves, among other
things, coordination of scheduling, ground handling, frequent
flyer programs and other passenger services, and allows, among
other things, code-sharing between the two airlines on
Transatlantic route segments, and permits United to code-share on
Lufthansa flights in certain markets beyond Lufthansa's European
gateways. Similarly, the agreement permits Lufthansa to code-
share on United flights to certain cities in the U.S. As of
February 1995, the list of markets includes 43 city pairs in
which United places its code on flight segments operated by
Lufthansa and Lufthansa places its code on 30 flight segments
operated by United. Code-share segments include North America,
Europe, Africa and the Middle East.
Service between the U.S. and Latin America is provided by
flights to eleven Latin American cities in nine countries from a
number of cities in the U.S. Eight Latin American cities are
served nonstop from Miami, two nonstop from Los Angeles, and
three from New York-Kennedy. In addition, United expects to
commence daily nonstop service in the summer of 1995 to Belo
Horizonte, Brazil from Miami. United has code-sharing agreements
with two independent air carriers in this region.
Operating revenues attributed to United's foreign operations
were approximately $4.9 billion in 1994, $4.5 billion in 1993 and
$3.9 billion in 1992.
Selected Operating Statistics
The following table sets forth certain selected operating
data for United:
Exhibit 4.1
As Amended
July 12, 1994
_________________________________________________________________
_________________________________________________________________
RIGHTS AGREEMENT
______________________
UAL CORPORATION
And
First Chicago Trust Company of New York
Rights Agent
______________________
Dated as of December 11, 1986
_________________________________________________________________
_________________________________________________________________
TABLE OF CONTENTS
Section Page
1 Certain Definitions........................... 1
2 Appointment of Rights Agent................... 4
3 Issue of Right Certificates................... 5
4 Form of Right Certificates.................... 5
5 Countersignatures and Registration............ 6
6 Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates ........................... 7
7 Exercise of Rights; Purchase Price;
Expiration Date of Rights..................... 8
8 Cancellation and Destruction of
Right Certificates ........................... 10
9 Reservation and Availability of
Shares of Preferred Stock .................... 11
10 Preferred Stock Record Date .................. 12
11 Adjustment of Purchase Price,
Number and Kind of Shares or
Number of Rights ............................. 13
12 Certification of Adjusted Purchase
Price or Number of Shares .................... 24
13 Consolidation, Merger or Sale or
Transfer of Assets or Earning Power........... 25
14 Fractional Rights and Fractional
Shares ....................................... 27
15 Rights of Action ............................. 29
Section Page
16 Agreement of Right Holders ................... 29
17 Right Certificate Holder Not Deemed
a Stockholder ................................ 30
18 Concerning the Rights Agent .................. 30
19 Merger or Consolidation or Change
of Name of Rights Agent ...................... 31
20 Duties of Rights Agent ....................... 32
21 Change of Rights Agent ....................... 34
22 Issuance of New Right Certificates ........... 35
23 Redemption ................................... 36
24 Notice of Proposed Actions ................... 37
25 Notices ...................................... 38
26 Supplements and Amendments ................... 39
27 Successors ................................... 40
28 Benefits of this Agreement ................... 40
29 Delaware Contract ............................ 40
30 Counterparts ................................. 40
31 Descriptive Headings ......................... 40
EXHIBIT A -- Certificate of Designation, Preferences and Rights
EXHIBIT B -- Form of Right Certificate
RIGHTS AGREEMENT
This Agreement, dated as of December 11, 1986, between UAL
Corporation, a Delaware corporation (the "Company"), and First
Chicago Trust Company of New York, a New York corporation (the
"Rights Agent").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company has
authorized and declared a dividend (the "Dividend") of one Right
for each outstanding share of Common Stock, par value $0.01 per
share, of the Company outstanding on the record date for the
Dividend, each Right representing the right to purchase one one-
hundredth of a share of Series C Junior Participating Preferred
Stock of the Company having the rights and preferences set forth
in the form of Certificate of Designation, Rights and Preferences
attached hereto as Exhibit A ("Preferred Stock") upon the terms
and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" means any Person who, together with
all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Common Stock
then outstanding (after giving effect to full conversion into
Common Stock of outstanding shares of ESOP Convertible Preferred
Stock and, upon issuance, of the Available Unissued ESOP Shares),
but shall not include the Company, any of its Subsidiaries, any
employee benefit plan formed by the Company or any of its
Subsidiaries or any Person organized, appointed or established by
the Company or any of its Subsidiaries for or pursuant to the
terms of any such plan; provided that (i) in the event that the
Company repurchases shares of Common Stock pursuant to a tender
offer, and solely as a result thereof, such Person, together with
all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 15% or more of the shares of Common Stock
then outstanding (after giving effect to full conversion into
Common Stock of outstanding shares of ESOP Convertible Preferred
Stock and, upon issuance, of the Available Unissued ESOP Shares),
such Person shall not be an Acquiring Person if immediately after
ten days after the completion of the Company's repurchases of
shares pursuant to the tender offer, such Person is no longer the
Beneficial Owner of 15% or more of the shares of Common Stock
then outstanding (after giving effect to full conversion into
Common Stock of outstanding shares of ESOP Convertible Preferred
Stock and, upon issuance, of the Available Unissued ESOP Shares),
and (ii) any Person that, together with all Affiliates and
Associates of such Person is as of the date of Amendment No. 2 to
this Agreement the Beneficial Owner of 15% or more but less than
20% of the shares of Common Stock outstanding as of such date
shall not be an Acquiring Person until such time, if any, as such
Person acquires one or more additional shares of Common Stock;
and provided further that each of the ESOP Trustee and each of
the Unions (as such terms are defined in the Agreement and Plan
of Recapitalization, dated March 25, 1994 (as amended, the
"Recapitalization Agreement"), among the Company, Air Line Pilots
Association International ("ALPA") and International Association
of Machinists and Aerospace Workers ("IAM")) shall not be deemed
to be an Acquiring Person by reason of either the effectiveness
of the Recapitalization Agreement or the undertaking or
consummation of any transactions contemplated by the
Recapitalization Agreement or the Schedules or other attachments
thereto; and provided further that any Person who becomes a
Beneficial Owner of Common Stock and is eligible to report, and
reports, such Beneficial Ownership on Schedule 13G promulgated
under the Securities Exchange Act of 1934 shall not be deemed an
Acquiring Person so long as such Person continues to be eligible
to report, and reports, such Beneficial Ownership on a Schedule
13G.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of any
securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement
or understanding, or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights), warrants
or options, or otherwise, or (B) the right to vote pursuant
to any agreement, arrangement or understanding; and
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or
any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any securities of
the Company;
provided, however, that no Person shall be deemed the Beneficial
Owner of any securities solely because such Person has been
granted a revocable proxy to vote such shares.
(d) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.
(e) "Close of Business" on any given date shall mean
5:00 p.m., New York time, on such date; provided, however, that
if such date is not a Business Day it shall mean 5:00 p.m., New
York time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the Common Stock, par
value $0.01 per share, of the Company, except that "Common Stock"
when used with reference to any Person other than the Company
shall mean the class of common stock with the greatest aggregate
voting power of the outstanding classes of common stock with
respect to the election of directors of such Person or, if such
Person is a subsidiary of another Person, the Person which
ultimately controls such first-mentioned Person.
(g) "Continuing Director" shall mean (i) any member of
the Board of Directors of the Company, while such Person is a
member of the Board, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or
Associate, and was a member of the Board prior to the date of
this Agreement, or (ii) any Person who subsequently becomes a
member of the Board, while such Person is a member of the Board,
who is not an Acquiring Person, or an Affiliate or Associate of
an Acquiring Person, or a representative of an Acquiring Person
or of any such Affiliate or Associate, if such Person's
nomination for election or election to the Board is recommended
or approved by a majority of the Continuing Directors.
(h) "Person" shall mean any individual, firm, trust,
association, corporation, partnership or other entity.
(i) "Stock Acquisition Date" shall mean the first date
of public announcement by the Company or an Acquiring Person that
an Acquiring Person has become such.
(j) "Subsidiary" of any Person means any other Person
of which securities or other ownership interests having ordinary
voting power, in the absence of contingencies, to elect a
majority of the board of directors or other Persons performing
similar functions are at the time directly or indirectly owned by
such first Person.
(k) "Triggering Event" shall mean any Section
11(a)(ii) event or any Section 13 event.
(l) "Available Unissued ESOP Shares" shall have the
same meaning as the term "Available Unissued ESOP Shares" in
Article FIFTH, Section 1.5 of the Restated Certificate of
Incorporation of the Company (the "Restated Certificate").
(m) "ESOP Convertible Preferred Stock" shall mean,
collectively, the Class 1 ESOP Convertible Preferred Stock, par
value $0.01 per share, of the Company, together with the Class 2
ESOP Convertible Preferred Stock, par value $0.01 per share, of
the Company.
(n) "Voting Preferred Stock" shall have the same
meaning as the term "Voting Preferred Stocks" in Article FOURTH,
Part II Section 2.41 of the Restated Certificate.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company
in accordance with the terms and conditions hereof and the Rights
Agent hereby accepts such appointment. The Company may from time
to time appoint such Co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Right Certificates. Until the
Close of Business on the tenth day following the Stock
Acquisition Date (such date being hereinafter referred to as the
"Distribution Date") (x) the Rights will be evidenced by the
certificates for the Common Stock and the certificates for the
Voting Preferred Stock, as the case may be, registered in the
names of the holders of the Common Stock and the Voting Preferred
Stock, respectively (which certificates shall be deemed also to
be Right Certificates) and not by separate Right Certificates,
and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Stock
and Voting Preferred Stock, as the case may be. As soon as
practicable after the Distribution Date, the Rights Agent will
mail, by registered, insured, postage prepaid mail, to each
record holder of the Common Stock and the Voting Preferred Stock,
as the case may be, as of the Close of Business on the
Distribution Date, as shown by the records of the Company, at the
address of such holder shown on such records, a Right
Certificate, in the form of Exhibit B hereto, evidencing: (a)
with respect to each share of Common Stock - one Right for each
share of Common Stock, and (b) with respect to each share of
Voting Preferred Stock - a number of Rights equal to the result
of dividing (x) the sum of (A) the number of shares of Common
Stock into which the ESOP Convertible Preferred Stock then
outstanding is convertible and (B) the number of Available
Unissued ESOP Shares by (y) the number of shares of Voting
Preferred Stock then outstanding (such result, the "Voting
Preferred Stock Fraction").
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election
to purchase shares and of assignment to be printed on the reverse
thereof) shall be substantially the same as Exhibit B hereto and
may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company
may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto
or with any rule or regulation of any stock exchange on which the
rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 22 hereof, the Right
Certificates, whenever issued, shall be dated as of the date
hereof and on their face shall entitle the holders thereof to
purchase such number of shares of Preferred Stock as shall be set
forth therein at the price per share set forth therein (the
"Purchase Price"), but the number of such shares and the Purchase
Price shall be subject to adjustments as provided herein.
(b) Any Right Certificate representing Rights
beneficially owned by any Person referred to in clauses (i), (ii)
or (iii) of the first sentence of Section 7(e) shall (to the
extent feasible) contain the following legend:
The Rights represented by this Right Certificate are or
were beneficially owned by a Person who was or became
an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the
Rights Agreement). This Right Certificate and the
Rights represented hereby may be or may become null and
void in the circumstances specified in Section 7(e) of
such Agreement.
Section 5. Countersignature and Registration. The
Right Certificates shall be executed on behalf of the Company by
its Chairman, President and Chief Executive Officer, its Vice
Chairman and Chief Financial Officer, or any Vice President,
either manually or by facsimile signature, and have affixed
thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent
and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance
and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, issued
and delivered with the same force and effect as though the person
who signed such Right Certificates had not ceased to be such
officer of the Company; and any Right Certificate may be signed
on behalf of the Company by any person who, at the actual date of
the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although
at the date of the execution of this Rights Agreement any such
person was not such an officer.
Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at one of its offices in New York City,
New York, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each
of the Right Certificates, the Certificate number, and the date
of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. At any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on
the Expiration Date (as such term is hereinafter defined), any
Right Certificate or Certificates, may be transferred, split up,
combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like
number of shares of Preferred Stock as the Right Certificate or
Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate shall make such request
in writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the principal office of the Rights
Agent. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Right Certificate or
Certificates until the registered holder of the Rights has
complied with the requirements of Section 7(f). Upon
satisfaction of the foregoing requirements, the Rights Agent
shall, subject to Sections 4(b), 7(e) and 14, countersign and
deliver to the Person entitled thereto a Right Certificate or
Certificates as so requested. The Company may require payment of
a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination
or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery
to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) Subject to Section 23(a), the registered holder of any
Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein, including Sections 7(e) and
(f), 9(e) and 11(a)(iii)) in whole or in part at any time after
the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the
Rights Agent in Chicago, Illinois, together with payment of the
Purchase Price for each one one-hundredth of a share of Preferred
Stock as to which the Rights are exercised, at or prior to the
Close of Business on the earlier of (i) December 31, 1996 (the
"Final Expiration Date"), or (ii) the date, if any, on which the
Rights are redeemed as provided in Section 23; such earlier date
being herein referred to as the "Expiration Date".
(b) The Purchase Price for each share of Preferred Stock
shall initially be $18,500 (i.e., $185 for each one one-hundredth
of a share of Preferred Stock pursuant to the exercise of a
Right), shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America.
(c) Subject to Section 20(j), upon receipt of a Right
Certificate, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be
purchased and an amount equal to any applicable transfer tax in
cash, or by certified check or money order payable to the order
of the Company, the Rights Agent shall thereupon promptly (i)
requisition from any transfer agent of the Preferred Stock of the
Company certificates for the number of shares of Preferred Stock
to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, (ii) as provided
in Section 14(b), at the election of the Company, cause
depositary receipts in lieu of fractional shares of Preferred
Stock in integral multiples of one-hundredth of a share to be
issued, (iii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14 hereof and (iv) promptly
after receipt of such certificates and/or depositary receipts
cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, and, when
appropriate, after receipt promptly deliver such cash to or upon
the order of the registered holder of such Right Certificate. If
the Company is obligated to deliver Common Stock, other
securities or assets pursuant to this Agreement, the Company will
make all arrangements necessary so that such other securities and
assets are available for delivery by the Rights Agent, if and
when appropriate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to
his duly authorized assigns, subject to the provisions of Section
14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)
(ii) event, any Rights beneficially owned by (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (ii)
a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person
becomes such or (iii) a transferee of an Acquiring Person(or of
any such Associate or Affiliate) who becomes a transferee prior
to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether
or not for consideration) from the Acquiring Person (or any such
Associate of Affiliate) to holders of equity interests in such
Acquiring Person (or in any such Associate or Affiliate) or to
any Person with whom the Acquiring Person (or any such Associate
or Affiliate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is
part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action, and no
holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable
efforts to insure that the provisions of this Section 7(e) and
Section 4(b) are complied with, but shall have no liability to
any holder of Right Certificates or other Person as a result of
its failure to make any determinations with respect to an
Acquiring Person or its Affiliates and Associates or any
transferee of any of them hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder of Rights upon the occurrence of any purported transfer
pursuant to Section 6 or exercise pursuant to this Section 7
unless such registered holder (i) shall have completed and signed
the certificate contained in the form of assignment or election
to purchase, as the case may be, set forth on the reverse side of
the Right Certificate surrendered for such transfer or exercise,
as the case may be, (ii) shall not have indicated an affirmative
response to clause 1 or 2 thereof and (iii) shall have provided
such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof
as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
of exercise, transfer, split up, combination or exchange shall,
if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled
by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Right Certificates to
the Company, or shall, at the written request of the Company,
destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of
Preferred Stock.
(a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and
unissued shares of Preferred Stock or its authorized and issued
shares of Preferred Stock held in its treasury, the number of
shares of Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) So long as the Preferred Stock issuable upon the
exercise of Rights may be listed on any national securities
exchange, the Company shall use its best efforts, from and after
such time as the Rights become exercisable, to cause all shares
reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
(c) The Company covenants and agrees that it will take
all such action as may be necessary to insure that all shares of
Preferred Stock delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to
payment of the Purchase Price), be duly and validly authorized
and issued and fully paid and nonassessable shares.
(d) The Company further covenants and agrees that it
will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any shares
of Preferred Stock upon the exercise of Rights. The Company
shall, not, however, be required to pay any transfer tax which
may be payable in respect of any transfer involved in the
transfer or delivery of Right Certificates or the issuance or
delivery of certificates for Preferred Stock in a name other than
that of the registered holder of the Right Certificate evidencing
Rights surrendered for exercise or to issue or deliver any
certificates for shares of Preferred Stock upon the exercise of
any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
(e) The Company shall use its best efforts (i) to
file, as soon as practicable following the earliest date after
the occurrence of a Section 11(a)(ii) event as of which the
consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with Section 11(a)(iii),
or as soon as is required by law following the Distribution Date,
as the case may be, a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to
the securities issuable upon exercise of the Rights, (ii) to
cause such registration statement to become effective as soon as
practicable after such filing and (iii) to cause such
registration statement to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until
the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date. The
Company will also take such action as may be appropriate under,
or to ensure compliance with, the securities or blue sky laws of
the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of
time not to exceed 90 days after the date set forth in clause (i)
of the first sentence of this Section 9(e), the exercisability of
the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any such
provision of this Agreement to the contrary, the Rights shall not
be exercisable for securities in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been
obtained, such exercise therefor shall not be permitted under
applicable law or a registration statement in respect of such
securities shall not have been declared effective.
Section 10. Preferred Stock Record Date. Each person
in whose name any certificate for shares of Preferred Stock is
issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Stock
represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if
the date of such surrender and payment is a date upon which the
Preferred Stock transfer books of the Company are closed, such
person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next
succeeding business day on which the Preferred Stock transfer
books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate shall
not be entitled to any rights of a stockholder of the Company
with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. The Purchase Price, the
number and kind of shares covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a)(i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on
the Preferred Stock payable in shares of Preferred Stock,
(B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock into a smaller number of
shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation),
except as otherwise provided in this Section 11(a), the
Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right
exercised after such time shall be (except as otherwise
provided herein, including Section 7(e)) entitled to
receive the aggregate number and kind of shares of capital
stock which, if such Right had been exercised immediately
prior to such date and at a time when Preferred Stock
transfer books of the Company were open, he would have
owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or
reclassification.
(ii) If any Person, alone or together with its
Affiliates and Associates, shall, at any time after the date
of this Agreement, become the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding (after
giving effect to full conversion into Common Stock of
outstanding shares of ESOP Convertible Preferred Stock and,
upon issuance, of the Available Unissued ESOP Shares), then
proper provision shall promptly be made so that each holder
of a Right shall (except as otherwise provided herein,
including Section 7(e)) thereafter be entitled to receive,
upon exercise thereof at the Purchase Price in effect
immediately prior to the first occurrence of a Section
11(a)(ii) event, in lieu of Preferred Stock, such number of
duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock of the Company (such
number of shares being referred to herein as the "Adjustment
Shares") as shall be equal to the result obtained by
dividing (x) the product obtained by multiplying the
Purchase Price in effect immediately prior to the first
occurrence of a Section 11(a)(ii) event by the number of one
one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such first
occurrence by (y) 33 1/3% of the current market price
(determined pursuant to Section 11(d)(i)) per share of
Common Stock on the date of such first occurrence; provided
that if the transaction that would otherwise give rise to
the foregoing adjustment is also subject to the provisions
of Section 13, then only the provisions of Section 13 shall
apply and no adjustment shall be made pursuant to this
Section 11(a)(ii). After any Section 11(a)(ii) event the
Purchase Price shall be adjusted to equal the product
obtained under clause (x) above. After any Person has
become an Acquiring Person, the Company shall not enter into
any transaction if at the time of or immediately after such
transaction there are any rights, warrants, instruments or
securities outstanding or any agreements or arrangements
which, as a result of the consummation of such transaction,
would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
(iii) If the number of shares of Common Stock
which are authorized by the Company's certificate of
incorporation but not outstanding or reserved for issuance
other than upon exercise of the Rights is not sufficient to
permit the exercise in full of the Rights in accordance with
Section 11(a)(ii), the Company shall, with respect to each
Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the Purchase Price then
in effect, (A) (to the extent available) Common Stock and
then, (B) (to the extent available) other equity securities
of the Company which the Board of Directors of the Company
(or, if at such time there is an Acquiring Person, a
majority of the Continuing Directors) has determined to be
essentially equivalent to shares of Common Stock in respect
to dividend, liquidation and voting rights (such securities
being referred to herein as "common stock equivalents") and
then, if necessary, (C) other equity or debt securities of
the Company, cash or other assets, a reduction in the
Purchase Price or any combination of the foregoing, having
an aggregate value (as determined by the Board of Directors
of the Company based upon the advice of a nationally
recognized investment banking firm selected by the Board of
Directors of the Company) equal to the value of the
Adjustment Shares; provided that (x) the Company may, and
(y) if the Company shall not have made adequate provision as
required above to deliver value within 30 days following the
later of the first occurrence of a Section 11(a)(ii) event
and the first date that the right to redeem the Rights
pursuant to Section 23 shall expire, then the Company shall
be obligated to, deliver, upon the surrender for exercise of
a Right and without requiring payment of the Purchase Price,
shares of Common Stock, common stock equivalents, other
equity or debt securities of the Company, cash or other
assets or any combination of the foregoing, having an
aggregate value (as determined by the Board of Directors of
the Company based upon the advice of a nationally recognized
investment banking firm selected by the Board of Directors
of the Company) equal to the excess of the value of the
Adjustment Shares over the Purchase Price. If the Board of
Directors of the Company shall determine in good faith that
it is likely that sufficient additional shares of Common
Stock could be authorized for issuance upon exercise in full
of the Rights, the 30 day period set forth above (such
period, as it may be extended, being referred to herein as
the "Substitution Period") may be extended to the extent
necessary, but not more than 90 days following the first
occurrence of a Section 11(a)(ii) event, in order that the
Company may seek stockholder approval for the authorization
of such additional shares. To the extent that the Company
determines that some action is to be taken pursuant to the
first and/or second sentence of this Section 11(a)(iii), the
Company (X) shall provide, subject to Section 7(e), that
such action shall apply uniformly to all outstanding Rights
and (Y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek
any authorization of additional shares and/or to decide the
appropriate form and value of any consideration to be
delivered as referred to in such first and/or second
sentence. If any such suspension occurs, the Company shall
issue a public announcement stating that the exercisability
of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii),
the value of the Common Stock shall be the current market
price per share of Common Stock (as determined pursuant to
Section 11(d)) on the later of the date of the first
occurrence of a Section 11(a)(ii) event and the first date
that the right to redeem the Rights pursuant to Section 23
shall expire; any "common stock equivalent" shall be deemed
to have the same value as the Common Stock on such date; and
the value of other securities or assets shall be determined
pursuant to Section 11(d)(iii).
(b) In case the Company shall fix a record date for
the issuance of rights or warrants to all holders of Preferred
Stock entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase
Preferred Stock (or having the same rights, privileges and
preferences as the Preferred Stock (an "equivalent preferred
stock") or securities convertible into Preferred Stock or
equivalent preferred stock) at a price per share of Preferred
Stock or equivalent preferred stock (or having a conversion price
per share, if a security convertible into Preferred Stock or
equivalent preferred stock) less than the current market price
per share of Preferred Stock (as defined in Section 11(d)) on
such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction, of
which the numerator shall be the number of shares of Preferred
Stock outstanding on such record date plus the number of shares
of Preferred Stock which the aggregate offering price of the
total number of shares of Preferred Stock and/or equivalent
preferred stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered)
would purchase at such current market price and of which the
denominator shall be the number of shares of Preferred Stock
outstanding on such record date plus the number of additional
shares of Preferred Stock or equivalent preferred stock to be
offered for subscription or purchase (or into which the
convertible securities so to be offered are initially
convertible). In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the
event that such rights or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for
the making of a distribution to all holders of Preferred Stock
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness or assets (other than a
regular periodic cash dividend at a rate not in excess of 125% of
the rate of the last cash dividend theretofore paid or a dividend
payable in Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase
Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, of which the numerator shall be
the current market price per share of Preferred Stock (as defined
in Section 11(d)) on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one share of
Preferred Stock and of which the denominator shall be such
current market price per share of Preferred Stock. Such
adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so
made, the Purchase Price shall again be adjusted to be the
Purchase Price which would then be in effect if such record date
had not been fixed.
(d)(i) For the purpose of any computation
hereunder other than computations made pursuant to Section
11(a)(iii) or 14, the "current market price" per share of
Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock
for the 30 consecutive Trading Days immediately prior to
such date; for purposes of computations made pursuant to
Section 11(a)(iii), the "current market price" per share of
Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock
for the 10 consecutive Trading Days immediately following
such date; and for purposes of computations made pursuant to
Section 14, the "current market price" per share of Common
Stock for any Trading Day shall be deemed to be the closing
price per share of Common Stock for such Trading Day;
provided that if the current market price per share of the
Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a
dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities exercisable for or
convertible into shares of such Common Stock (other than the
Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the
expiration of the requisite 30 Trading Day or 10 Trading Day
period, as set forth above, after the ex-dividend date for
such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in
each such case, the "current market price" shall be properly
adjusted to take into account ex-dividend trading. The
closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York
Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to
trading or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter
market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use or, if on any
such date the shares of Common Stock are not quoted by any
such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a
market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market
maker is making a market in the Common Stock, the fair value
of such shares on such date as determined in good faith by
the Board of Directors of the Company shall be used. If the
Common Stock is not publicly held or not so listed or
traded, the "current market price" per share means the fair
value per share as determined in good faith by the Board of
Directors of the Company, or, if at the time of such
determination there is an Acquiring Person, by a majority of
the Continuing Directors or if there are no Continuing
Directors, by a nationally recognized investment banking
firm selected by the Board of Directors, which determination
shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation
hereunder, the "current market price" per share of Preferred
Stock shall be determined in the same manner as set forth
above for the Common Stock in Section 11(d)(i) (other than
the last sentence thereof). If the "current market price"
per share of Preferred Stock cannot be determined in such
manner, the "current market price" per share of Preferred
Stock shall be conclusively deemed to be an amount equal to
100 (as such number may be appropriately adjusted for such
events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring
after the date of this Agreement) multiplied by the current
market price per share of Common Stock (as determined
pursuant to Section 11(d)(i) (other than the last sentence
thereof)). If neither the Common Stock nor the Preferred
Stock is publicly held or so listed or traded, the "current
market price" per share of the Preferred Stock shall be
determined in the same manner as set forth in the last
sentence of Section 11(d)(i). For all purposes of this
Agreement, the "current market price" of one one-hundredth
of a share of Preferred Stock shall be equal to the "current
market price" of one share of Preferred Stock divided by
100.
(iii) For the purpose of any computation hereunder,
the value of any securities or assets other than Common
Stock or Preferred Stock shall be the fair value as
determined in good faith by the Board of Directors of the
Company, or, if at the time of such determination there is
an Acquiring Person, by a majority of the Continuing
Directors then in office, or, if there are no Continuing
Directors, by a nationally recognized investment banking
firm selected by the Board of Directors, which determination
shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in such price; provided, however, that
any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest ten-thousandth of a share as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 but postponed under such
sentence shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such
adjustment or (ii) the date of the expiration of the right to
exercise any Rights.
(f) In the event that at any time, as a result of an
adjustment made pursuant to Section 11(a), the holder of any
Right thereafter exercised shall become entitled to receive any
shares of capital stock of the Company other than shares of
Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the shares
of Preferred Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of shares of Preferred Stock purchasable from
time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of
shares (calculated to the nearest ten-thousandth) obtained by (i)
multiplying (x) the number of shares covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price
and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in substitution for any adjustment in the number of shares of
Preferred Stock purchasable upon the exercise of a Right. Each
of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for one one-hundredth of a share of
Preferred Stock. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company
shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Right Certificates
have been issued, upon each adjustment of the number of Rights
pursuant to this Section ll(i) the Company shall, as promptly as
practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates
evidencing, subject to Section 14, the additional Rights to which
such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed
to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price)
and shall be registered in the names of the holders of record of
Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of shares of Preferred Stock
issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of shares which were
expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value,
if any, of the shares of Preferred Stock issuable upon exercise
of the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that
the Company may validly and legally issue fully paid and
nonassessable shares of such Preferred Stock at such adjusted
Purchase Price.
(1) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuing to the
holder of any Right exercised after such record date the shares
of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the
shares of Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise on the basis
of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder
a due bill or other appropriate instrument evidencing such
holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reduction in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that
it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred
Stock, issuance wholly for cash of any Preferred Stock at less
than the current market price, issuance wholly for cash of
Preferred Stock or securities which by their terms are
convertible into or exchangeable for Preferred Stock, stock
dividends or issuance of rights, options or warrants referred to
hereinabove in this Section 11, hereafter made by the Company to
its common and/or preferred stockholders, shall not be taxable to
such common or preferred stockholders.
(n) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate
with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), (ii)
merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o)
hereof), or (iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(o)
hereof), if (x) at the time of or immediately after such
consolidation, merger or sale there are any rights, warrants or
other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior
to, simultaneously with or immediately after such consolidation,
merger or sale, the shareholders of the Person whose Common
Shares are issuable pursuant to the exercise of the Rights under
Section 13(a) shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and
Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as Permitted by Section 23
or Section 26 hereof, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the
Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time
after the Rights Dividend Declaration Date and prior to the
Distribution Date (i) declare a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii)
combine the outstanding shares of Common Stock into a smaller
number of shares, the number of Rights associated with each share
of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number
of Rights associated with each share of Common Stock immediately
prior to such event by a fraction the numerator of which shall be
the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of
Common Stock outstanding immediately following the occurrence of
such event; provided, however, that an adjustment in accordance
with this subsection 11(p) shall not be made as a result of the
execution of the Recapitalization Agreement or the consummation
of the transactions contemplated thereby. Anything in this
Agreement to the contrary notwithstanding, the number of Rights
associated with each share of Voting Preferred Stock issued or
delivered prior to the Distribution Date shall be proportionately
adjusted if the number of Rights associated with each share of
Common Stock is adjusted as stated in the preceding sentence, as
may be necessary to ensure that the number of Rights associated
with each outstanding share of Voting Preferred Stock shall be at
all times equal to the product of (I) the number of Rights then
associated with each share of Common Stock and (II) the Voting
Preferred Stock Fraction.
Section 12. Certification of Adjusted Purchase Price
or Number of Shares. Whenever an adjustment is made as provided
in Sections 11 and 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment, and a brief statement
of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the
Preferred Stock a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in
accordance with Section 25.
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. In the event following the Stock
Acquisition Date, directly or indirectly, (a) the Company shall
consolidate with, or merge with and into, any other Person (other
than a subsidiary of the Company in a transaction that complies
with Section 11(o)) and the Company shall not be the continuing
or surviving corporation, (b) any Person (other than a subsidiary
of the Company in a transaction that complies with Section 11(o))
shall consolidate, merge with and into the Company, the Company
shall be the continuing or surviving corporation of such merger
and, in connection with such merger, all or part of the Common
Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or
(c) the Company shall sell or otherwise transfer, including by
liquidation, dissolution, sale or lease (or one or more of its
subsidiaries shall sell or otherwise transfer), in one or more
related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its
subsidiaries (taken as a whole) to any Person or Persons, then,
and in each such case, proper provision shall be made so that (i)
each holder of a Right shall thereafter have the right to
receive, upon the exercise thereof at the then-current exercise
price for the number of shares of Preferred Stock for which a
Right is then exercisable in accordance with the terms of this
Agreement, such number of shares of Common Stock of such other
Person (or in the case of any transaction described in clause (c)
above, the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to
such transaction or transactions) as shall be equal to the result
obtained by (x) multiplying the then-current Purchase Price per
full share of Preferred Stock by the number of shares of
Preferred Stock for which a Right is then exercisable and
dividing that product by (y) 33 1/3% of the current market price
per share of the Common Stock of such other Person (determined
pursuant to Section 11(d) on the date of consummation of such
consolidation, merger, sale or transfer), and such Common Stock
shall be validly authorized and issued, fully paid and
nonassessable, and freely tradable and not subject to any liens,
encumbrances, rights of first refusal or adverse claims;
provided, however, that if the holders of shares of Common Stock
of such other Person have received after the Stock Acquisition
Date, or will receive after the Stock Acquisition Date due to a
declaration or distribution that has as its record date for those
entitled to receive such declaration or distribution a date prior
to the tenth Business Day after the date of consummation of such
consolidation, merger, sale or transfer, in their capacity as a
holder of such Common Stock, (i) any rights, warrants or options
to purchase such Common Stock or to purchase any other security,
asset (including cash) or evidence of indebtedness, at less than
its current market value, or (ii) any other security, asset
(including cash) or evidence of indebtedness of such other Person
(in all events other than ordinary regular and periodic cash
dividends) then each holder of a Right shall have the right to
receive, for no additional consideration, and in addition to such
number of shares of Common Stock specified above, such rights,
warrants or options or other security, asset (including cash) or
evidence of indebtedness, that such holder would have been
entitled to receive if it had been the holder of such number of
shares of Common Stock specified above at the time of such
issuance, declaration or distribution of such rights, warrants or
options, or other security, asset (including cash) or evidence of
indebtedness, and provided further that if the Person whose
Common Stock would otherwise be issuable pursuant to the exercise
of the Rights under this Section 13(a) is a direct or indirect
Subsidiary of a Person (the "Parent") that has shares registered
pursuant to Section 12 of the Securities Exchange Act of 1934,
then the shares of Common Stock to be issued, pursuant to such
exercise of the Rights shall be the shares of Common Stock of the
Parent; (ii) the issuer of such Common Stock shall thereafter be
liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company"
shall thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock
in accordance with Section 9) in connection with such
consummation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to the shares of its Common Stock thereafter
deliverable upon the exercise of the Rights.
The Company shall not consummate any such
consolidation, merger, combination, sale or transfer unless the
Person required pursuant to the preceding paragraph to issue
Common Stock shall have a sufficient number of authorized shares
of its Common Stock which are not outstanding or otherwise
reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior
thereto the Company and such Person shall have executed and
delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in the preceding paragraph of this
Section and providing that, as soon as practicable after the date
of any consolidation, merger, combination, sale or transfer
mentioned therein, such Person will
(i) prepare and file a registration statement
under the Securities Act with respect to the securities
issuable upon exercise of the Rights, and will use its best
efforts to cause such registration statement (A) to become
effective as soon as practicable after such filing and (B)
to remain effective (with a prospectus at all times meeting
the requirements of the Securities Act) until the Expiration
Date and
(ii) deliver to holders of the Rights historical
financial statements for such Person and each of its
Affiliates which comply in all respects with the
requirements for registration on Form 10 under the
Securities Exchange Act of 1934, as amended.
The provisions of this Section 13 shall similarly apply
to successive mergers, consolidations, combinations, sales or
other transfers. If any Section 13 event shall occur at any time
after the occurrence of a Section 11(a)(ii) event, the Rights
which have not theretofore been exercised shall thereafter become
exercisable in the manner described in this Section 13.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which
evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted
to trading on any national securities exchange, the average of
the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ. If on any such date the Rights are not
quoted by any such organization, the fair value of the Rights on
such date as determined in good faith by the Board of Directors
of the Company shall be used.
(b) The Company shall not be required to issue
fractions of shares of Preferred Stock (other than fractions
which are integral multiples of one-hundredth of a share) upon
exercise of the Rights or to distribute certificates which
evidence fractional shares of Preferred Stock (other than
fractions which are integral multiples of one-hundredth of a
share). Fractions of shares of Preferred Stock in integral
multiples of one-hundredth of a share may, at the election of the
Company be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary
selected by it provided that such agreement shall provide that
the holders of such depositary receipts shall have all of the
rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Stock. In lieu of fractional
shares of Preferred Stock that are not integral multiples of one-
hundredth of a share, there shall be paid to the registered
holders of Right Certificates at the time such Right Certificates
are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of a share of Preferred
Stock. For purposes of this Section 14(b), the current market
value of a share of Preferred Stock shall be the closing price of
a share of Preferred Stock (as determined pursuant to Section
11(d)) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of any Triggering Event,
the Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights. In lieu of fractional
shares of Common Stock, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market price of a share of Common Stock.
For purposes of this Section 14(c), the current market price of a
share of Common Stock shall be the closing price of a share of
Common Stock (as determined pursuant to Section 11(d)(i)) for the
Trading Day immediately prior to the date of such exercise or
exchange.
(d) The holder of a Right by the acceptance of the
Rights expressly waives his right to receive any fractional
Rights or any fractional shares (other than fractions which are
integral multiples of one-hundredth of a share) upon exercise of
a Right.
Section 15. Rights of Action. All rights of action in
respect of this Agreement are vested in the respective registered
holders of the Right Certificates; and any registered holder of
any Right Certificate, without the consent of the Rights Agent or
of the holder of any other Right Certificate may, in his own
behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for
any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief
against actual or threatened violations of, the obligations of
any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder
of a Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock
or Voting Preferred Stock;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office of the Rights
Agent, duly endorsed or accompanied by a proper instrument of
transfer; and
(c) subject to Sections 6 and 7, the Company and the
Rights Agent may deem and treat the person in whose name the
Right Certificate (or, prior to the Distribution Date, the
associated Common Stock Certificate and Voting Preferred Stock
Certificate, as the case may be) is registered as the absolute
owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Stock Certificate and
Voting Preferred Stock Certificate, as the case may be, made by
anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e), shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of Preferred Stock or any other securities of
the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon
the holder of any Right Certificate, as such, any of the rights
of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in
Section 24), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability in
the premises.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this
Agreement in reliance upon any Right Certificate or certificate
for Preferred Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper person or persons.
Section 19. Merger or Consolidation or Change of Name
of Rights Agent. Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the
Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates
either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall
have been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted
by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such
fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman,
President and Chief Executive Officer, the Vice Chairman and
Chief Financial Officer, or any Vice President and by the
Treasurer or any Assistant Treasurer or the Secretary or any
Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only
for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in
this Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the Rights
becoming void pursuant to Section 7(e)) or any adjustment in the
terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13 or 23, or the
ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such
adjustment); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock to be issued
pursuant to this Agreement or any Right Certificate or as to
whether any shares of Preferred Stock will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its
duties hereunder from the Chairman, President and Chief Executive
Officer, the Vice Chairman and Chief Financial Officer, or any
Vice President or the Secretary or any Assistant Secretary or the
Treasurer or any Assistant Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with
its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or deal in
any of the Rights or other securities of the Company or become
peculiarly interested in any transaction in which the Company may
be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company,
or for any other legal entity.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) If, with respect to any Right Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of
election to purchase, as the cases may be, has either not been
completed or indicates an affirmative response to clause 1 or 2
thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common
Stock, the Voting Preferred Stock and the Preferred Stock by
registered or certified mail, and to the holders of the Right
Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon 30 days' notice
in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common
Stock and the Preferred Stock by registered or certified mail,
and to the holders of the Right Certificates by first-class mail.
If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor
to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice
submit his Right Certificate for inspection by the Company), then
the registered holder of any Right Certificate may apply to any
court of competent Jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by
the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States
or of the State of Delaware, Illinois or New York, in good
standing, having its principal office in the State of Illinois or
New York, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 or (b) an
affiliate of a corporation described in clause (a). After
appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or
deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall
file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Voting
Preferred Stock and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price per share and the number or kind or
class of shares of stock or other securities or property
purchasable under the Right Certificates made in accordance with
the provisions of this Agreement.
Section 23. Redemption.
(a) The Company may, at its option, at any time prior
to the earlier of (i) the Close of Business on the tenth Business
Day following the Stock Acquisition Date or (ii) the Final
Expiration Date, elect to redeem all but not less than all the
then outstanding Rights at a redemption price of $.05 per Right
(such redemption price being hereinafter referred to as the
"Redemption Price"); provided, however, if the Board of Directors
of the Company authorizes redemption of the Rights in either of
the circumstances set forth in clauses (i) and (ii) below, then
there must be Continuing Directors then in office and such
authorization shall require the concurrence of a majority of such
Continuing Directors: (i) such authorization occurs on or after
the time a Person becomes an Acquiring Person, or (ii) such
authorization occurs on or after the date of a change (resulting
from a proxy or consent solicitation) in a majority of the
directors in office at the commencement of such solicitation if
any Person who is a participant in such solicitation has stated
(or, if upon the commencement of such solicitation, a majority of
the Board of Directors of the Company has determined in good
faith) that such Person (or any of its Affiliates or Associates)
intends to take, or may consider taking, any action which would
result in such Person becoming an Acquiring Person or which would
cause the occurrence of a Triggering Event unless, concurrent
with such solicitation, such Person (or one or more of its
Affiliates or Associates) is making a cash tender offer pursuant
to a Schedule 14D-1 (or any successor form) filed with the
Securities and Exchange Commission for all outstanding shares of
Common Stock not beneficially owned by such Person (or by its
Affiliates or Associates); provided further, however, that if,
following the occurrence of a Stock Acquisition Date and
following the expiration of the right of redemption hereunder but
prior to any Triggering Event, (i) a Person who is an Acquiring
Person shall have transferred or otherwise disposed of a number
of shares of Common Stock in one transaction or series of
transactions, not directly or indirectly involving the Company or
any of its Subsidiaries, which did not result in the occurrence
of a Triggering Event or if the Company (with the approval of the
Continuing Directors) shall have issued additional equity, in
either instance such that such Person is thereafter a Beneficial
Owner of 10% or less of the outstanding shares of Common Stock,
and (ii) there are no other Persons, immediately following the
occurrence of the event described in clause (i), who are
Acquiring Persons, then the right of redemption shall be
reinstated and thereafter be subject to the provisions of this
Section 23. Notwithstanding anything contained in this Agreement
to the contrary, the Rights shall not be exercisable after the
first occurrence of a Section 11(a)(ii) event until such time as
the Company's right of redemption hereunder has expired.
(b) Immediately upon the action of the Board of
Directors of the Company electing to redeem the Rights, the
Company shall make a public announcement thereof, and from and
after the tenth day after the date of such announcement, without
any further action and without any further notice, the right to
exercise the Rights will terminate and the only right thereafter
of the holders of Rights shall be to receive the Redemption
Price. As soon as practicable after the action of the Board of
Directors ordering the redemption of the Rights, the Company
shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at
their last addresses as they appear upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Stock and the
Voting Preferred Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be
made.
Section 24. Notice of Proposed Actions. In case the
Company shall propose (a) to pay any dividend payable in stock of
any class to the holders of its Preferred Stock or to make any
other distribution to the holders of its Preferred Stock (other
than a regular periodic cash dividend at a rate not in excess of
125% of the rate of the last cash dividend theretofore paid), or
(b) to offer to the holders of its Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (c) to effect any
reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding
shares of Preferred Stock), or (d) to effect any consolidation or
merger into or with, or to effect any sale or other transfer (as
specified in Section 1.3) (or to permit one or more of its
subsidiaries to effect any sale or other transfer), in one or
more transactions, of more than 50% of the assets or earning
power of the Company and its subsidiaries (taken as a whole) to
any other Person, or (e) to effect the liquidation, dissolution
or winding up of the Company, then, in each such case, the
Company shall give to each holder of a Right, in accordance with
Section 25, a notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend,
distribution of rights or Rights, or the date on which such
reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of Common Stock,
Voting Preferred Stock and/or Preferred Stock, if any such date
is to be fixed, and such notice shall be so given in the case of
any action covered by clause (a) or (b) above at least twenty
days prior to the record date for determining holders of the
Preferred Stock for purposes of such action, and in the case of
any such other action, at least twenty days prior to the date of
the taking of such proposed action or the date of participation
therein by the holders of Common Stock, Voting Preferred Stock
and/or Preferred Stock, whichever shall be the earlier. The
failure to give notice required by this Section 24 or any defect
therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
Section 25. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Vice President and Secretary
UAL Corporation
Post Office Box 66919
Chicago, Illinois 60666
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company
or by the holder of any Right Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first class
mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:
First Chicago Trust Company of New York
30 West Broadway
New York, NY 10007-2192
Attn: Tenders and Exchanges
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the
Company.
Section 26. Supplements and Amendments. Prior to the
Distribution Date and subject to the penultimate sentence of this
Section 26, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of certificates
representing shares of Common Stock and Voting Preferred Stock.
From and after the Distribution Date and subject to the
penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of
Rights Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, (iii)
to shorten or lengthen any time period hereunder (which
lengthening or shortening, following the first occurrence of an
event set forth in clauses (i) and (ii) of the first proviso to
Section 23(a) hereof, shall be effective only if there are
Continuing Directors and shall require the concurrence of a
majority of such Continuing Directors), or (iv) to change or
supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights
Certificates; provided, this Agreement may not be supplemented or
amended to lengthen, pursuant to clause (iii) of this sentence,
(A) a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance
with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the Final
Expiration Date, the Purchase Price or the number of one one-
hundredths of a share of Preferred Stock for which a Right is
exercisable. Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock and Voting Preferred
Stock, as the case may be.
Section 27. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 28. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the
registered holders of the Right Certificates any legal or
equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right
Certificates.
Section 29. Delaware Contract. This Agreement and
each Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for all
purposes shall be governed. by and construed in accordance with
the laws of such state applicable to contracts to be made and
performed entirely within such state.
Section 30. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
Section 31. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this agreement
to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first
above written.
ATTEST: UAL CORPORATION
By: /s/ Marlys N. Clark By: /s/ John L. Cowan
Assistant Secretary Title:
ATTEST: FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By: /s/ John Bagdonas By: /s/ John Bambach
Production Officer Title: Vice President
EXHIBIT A
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES C JUNIOR PARTICIPATING PREFERRED STOCK
Of
UAL CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, _________________, Chairman, President and Chief
Executive Officer, and ______________, Vice President and
Secretary, of UAL Corporation, a corporation organized and
existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103
thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board
of Directors by the Restated Certificate of Incorporation of the
said Corporation, the said Board of Directors on December 11,
1986, adopted the following resolution creating a series of Seven
Hundred Thousand (700,000) shares of Preferred Stock designated
as Series C Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the
Board of Directors of this Corporation in accordance with the
provisions of its Restated Certificate of Incorporation, a series
of Preferred Shares of the Corporation be, and it hereby is,
created and classified, and that the designation and amount
thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions
thereof are as follows:
Section 1. Designation and Amount. The shares of such
series shall be designated, as "Series C Junior Participating
Preferred Stock" (the "Series C Preferred Stock") and the number
of shares constituting such series shall be 1,250,000.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series C Preferred Stock
shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the fifteenth day
of January, April, July and October in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Series C
Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $10 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), declared on
the Common Stock, par value $.01 per share, of the Corporation
("Common Stock") since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series C Preferred Stock. In the event
the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such
case the amount to which holders of shares of Series C Preferred
Stock were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
The Corporation shall declare a dividend or
distribution on the Series C Preferred Stock as provided in this
paragraph (A) immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable
in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $10.00 per share on the Series C Preferred Stock
shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
Dividends shall begin to accrue and be cumulative on
outstanding shares of Series C Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares of Series C Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders
of shares of Series C Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series C Preferred Stock in an
amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on
a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series C Preferred
Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 60 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of
Series C Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment herein-
after set forth, each share of Series C Preferred Stock shall
entitle the holder thereof to 100 votes on all matters submitted
to a vote of the stockholders of the Corporation. In the event
the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such
case the number of votes per share to which holders of shares of
Series C Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series C Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) If the equivalent of six quarterly dividends
payable on the Series C Preferred Stock or any other series of
preferred stock of the Corporation are in default, the number of
directors of the Corporation shall be increased by two and the
holders of all such series in respect of which such a default
exists, voting as a class without regard to series, will be
entitled to elect two additional directors at the next annual
meeting and each subsequent meeting, until all cumulative
dividends have been paid in full or until noncumulative dividends
have been paid regularly for at least one year.
(D) Except as set forth herein, holders of Series C
Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series C Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on
shares of Series C Preferred Stock outstanding shall have been
paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series C Preferred Stock;
(ii) declare or pay dividends on or make any
other distributions on any shares of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series C Preferred
Stock, except dividends paid ratably on the Series C
Preferred Stock and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts
to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series C Preferred Stock, provided that
the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series C Preferred Stock;
or
(iv) purchase or otherwise acquire for
consideration any shares of Series C Preferred Stock, or any
shares of stock ranking on a parity with the Series C
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the
Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series C
Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued
shares of preferred stock and may be reissued as part of a new
series of preferred stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
Subject to (a) the rights of the holders of preferred stock of
the Corporation ranking senior to the Series C Preferred Stock as
to dividends and amounts payable upon any voluntary or
involuntary liquidation, dissolution or winding up and (b) any
other provision of the Certificate of Incorporation of the
Corporation, upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, no distribution
shall be made (1) to the holders of shares of stock ranking
junior (either as to dividends or upon any voluntary or
involuntary liquidation, dissolution or winding up) to the Series
C Preferred Stock unless, prior thereto, the holders of shares of
the Series C Preferred Stock shall have received $100.00 per
share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of
such payment, provided that the holders of shares of Series C
Preferred Stock shall be entitled to receive an aggregate amount
per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (2) to the
holders of stock ranking on a parity (either as to dividends or
upon any voluntary or involuntary liquidation, dissolution or
winding up) with the Series C Preferred Stock, except
distributions made ratably on the Series C Preferred Stock and
all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such
voluntary or involuntary liquidation, dissolution or winding up.
In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the aggregate amount to which holders of
shares of Series C Preferred Stock were entitled immediately
prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case
the shares of Series C Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to
the provision for adjustment hereinafter set forth) equal to 100
times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which
or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of
Series C Preferred Stock shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series C
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series C Preferred Stock shall
rank junior to all other series of the Corporation's preferred
stock, whether now or hereafter outstanding, as to dividends and
amounts payable upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, unless the terms of
any such series shall provide otherwise.
Section 10. Amendment. The Certificate of
Incorporation of the Corporation shall not be amended in any
manner which would materially alter or change the powers,
preferences or special rights of the Series C Preferred Stock so
as to affect them adversely without the affirmative vote of the
holders of two-thirds or more of the outstanding shares of Series
C Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the
Penalties of Perjury this eleventh day of December, 1986.
___________________________
Chairman, President and
Chief Executive Officer
___________________________
Vice President and Secretary
EXHIBIT B
[Form of Right Certificate]
No. R - Rights
NOT EXERCISABLE AFTER THE EARLIER OF DECEMBER 31, 1996
AND THE DATE ON WHICH THE RIGHTS EVIDENCED HEREBY ARE
REDEEMED BY THE COMPANY AS SET FORTH IN THE RIGHTS
AGREEMENT. AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR
BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON
BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY
BE NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS
RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BE OR MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
RIGHT CERTIFICATE
UAL CORPORATION
This Right Certificate certifies that
_____________________, or registered assigns, is the registered
holder of the number of Rights set forth above, each of which
entitles the holder (upon the terms and subject to the conditions
set forth in the Rights Agreement dated as of December 11, 1986
between UAL Corporation, a Delaware corporation (the "Company"),
and First Chicago Trust Company of New York, as amended the
"Rights Agreement")), to purchase from the Company, at any time
* If applicable, insert this portion of the legend and delete
preceding sentence.
after the Distribution Date and prior to the Expiration Date, one
one-hundredth[s] of a fully paid, nonassessable share of Series C
Junior Participating Preferred Stock (the "Preferred Stock") of
the Company at a purchase price of $185 per one one-hundredth of
a share (the "Purchase Price"), payable in lawful money of the
United States of America, upon surrender of this Right
Certificate, with the form of election to purchase and related
certificate duly executed, and payment of the Purchase Price at
an office of the Rights Agent designated for such purpose.
Terms used herein and not otherwise defined herein have
the meanings assigned to them in the Rights Agreement.
The number of Rights evidenced by this Right
Certificate (and the number and kind of shares issuable upon
exercise of each Right) and the Purchase Price set forth above
are as of December 22, 1986, and may have been or in the future
be adjusted as a result of the occurrence of certain events, as
more fully provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) event, if
the Rights evidenced by this Right Certificate are beneficially
owned by (a) an Acquiring Person or an Associate or Affiliate of
an Acquiring Person, (b) a transferee of an Acquiring Person (or
any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (c) under certain
circumstances specified in the Rights Agreement, a transferee of
an Acquiring Person (or any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such, such Rights shall become null and void, and
no holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Section 11(a)(ii) event.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Right Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Agreement.
Upon surrender at the principal office or offices of
the Rights Agent designated for such purpose and subject to the
terms and conditions set forth in the Rights Agreement, any
Rights Certificate or Certificates may be transferred or
exchanged for another Rights Certificate or Certificates
evidencing a like number of Rights as the Rights Certificate or
Certificates surrendered.
Subject to the provisions of the Rights Agreement, the
Board of Directors of the Company may, at its option, at any time
prior to the earlier of (i) the Close of Business on the tenth
business day after the Stock Acquisition Date and (ii) the Final
Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.05 per Right.
No fractional shares of Preferred Stock will be issued
upon the exercise of any Right or Rights evidenced hereby (other
than fractions which are multiples of one one-hundredth of a
share of Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement. If this Right Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof
another Right Certificate or Certificates for the number of whole
Rights not exercised.
No holder of this Right Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the
holder of the shares of capital stock which may at any time be
issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have
been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal by its
authorized officers.
Dated as of ________________, 19__
UAL CORPORATION
By _____________________________
Title:
[SEAL]
Attest:
______________________________
Secretary
Countersigned:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK, as Rights Agent
By____________________________
Authorized Signature
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed if the registered holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________________________________
hereby sells, assigns and transfers unto ________________________
_________________________________________________________________
(Please print name and address of transferee)
_________________________________________________________________
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint __________________________ Attorney, to transfer the
within Right Certificate on the books of the within-named
Company, with full power of substitution.
Date: ________________________, 19__
______________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Right Certificate
____ are ____ are not being assigned by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it ____ did ____ did not acquire the Rights
evidenced by this Right Certificate from any Person who is, was
or became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Date: _______________, 19__ _____________________________
Signature
_________________________
The signatures to the foregoing Assignment and
Certificate must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration
or enlargement or any change whatsoever.
_________________________
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise
Rights represented by the Right Certificate.)
To: UAL Corporation
The undersigned hereby irrevocably elects to exercise
_____________ Rights represented by this Right Certificate to
purchase shares of Preferred Stock issuable upon the exercise of
the Rights (or such other securities of the Company or of any
other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such securities be
issued in the name of and delivered to:
Please insert social security
or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right Certificate for
the balance of such Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
Dated: _________________, 19__
______________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Right Certificate
____ are ____are not being exercised by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it ____did ____did not acquire the Rights evidenced
by this right Certificate from any Person who is, was or became
an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated: ______________, 19__ _____________________________
Signature
_______________________
The signature of the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration
or enlargement or any change whatsoever.
_______________________
Exhibit 10.2
Waiver and Agreement dated as of
December 23, 1994 with respect to the
Amended and Restated Agreement and Plan
of Recapitalization dated as of March
25, 1994 among UAL Corporation and Air
Line Pilots Association, International
and International Association of
Machinists and Aerospace Workers (the
"Agreement").
WHEREAS, Section 5.7 of the Agreement provides for the
implementation of certain rights and restrictions with respect to
the purchase of UAL Corporation stock ("UAL Shares") by employees
of United Air Lines, Inc. including a requirement that no UAL
Shares may be acquired through the directed account plan, the
401(k) plans and the stock purchase plan during the six month
period ending on the last day of the Measuring Period, as defined
in Section 1.10 of the Agreement, and
WHEREAS, the Association of Flight Attendants is not a party to,
and is not bound by the terms of, the Agreement.
NOW, THEREFORE, it is agreed as follows:
1. To the extent Section 5.7 would apply to the rights of
flight attendants to acquire or dispose of UAL Shares including
any requirement for the suspension of the purchase of UAL Shares
by the flight attendant 401(k) plan or by flight attendants
through the stock purchase plan, such requirement is hereby
waived by the parties hereto.
2. Except as specifically modified hereby, the Agreement shall
remain in full force and effect in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this Waiver
and Agreement to be executed by their respective authorized
officers as of the day and year first above written.
AIR LINE PILOTS ASSOCIATION, INTERNATIONAL ASSOCIATION OF
INTERNATIONAL MACHINISTS AND AEROSPACE WORKERS
By: /s/ Harlow B. Osteboe By: /s/ Kenneth W. Thiede
Name: Harlow B. Osteboe Name: Kenneth W. Thiede
Title: UAL-MEC Chairman Title: President and
General Chairman
UAL CORPORATION
By: /s/ Douglas A. Hacker
Name: Douglas A. Hacker
Title: Senior Vice President - Finance
Exhibit 10.3
THIRD AMENDMENT dated as of March 15,
1995 to the Amended and Restated
Agreement and Plan of
Recapitalization dated as of March
25, 1994 among UAL Corporation, the
Air Line Pilots Association,
International and the International
Association of Machinists and
Aerospace Workers (the "Agreement").
W I T N E S S E T H
WHEREAS, Section 5.7 of the Agreement provides for the
implementation of certain rights and restrictions with
respect to the purchase of UAL Corporation common stock,
$0.01 par value ("UAL Shares"), by employees of United Air
Lines, Inc. through certain employee plans, including a
requirement that no UAL Shares may be acquired through the
directed account plan, the 401(k) plans and the stock
purchase plan during the six month period ending on the last
day of the Measuring Period, as defined in Section 1.10 of
the Agreement, and
WHEREAS, the parties to the Agreement believe it is
appropriate to relax that purchase restriction as and to the
extent hereinafter set forth.
NOW, THEREFORE, it is agreed as follows:
1. Effective March 15, 1995, clause (D) appearing at
the end of Section 5.7 of the Agreement is amended to be as
follows:
"(D) if on any day during the period
commencing on March 15, 1995 and ending
on the last day of the Measuring Period,
as defined in Section 1.10, the closing
price of New Shares on one or more of
the New York Stock Exchange, the Chicago
Stock Exchange and the Pacific Stock
Exchange equals or exceeds $150.00 per
New Share, no New Shares may be acquired
through such plans during the remainder
of the Measuring Period."
2. Except as specifically modified hereby, the
Agreement shall remain in full force and effect in
accordance with its terms.
3. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become
effective when each party hereto shall have received
counterparts hereto (which may be by facsimile transmission)
signed by all of the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Third Amendment to be executed by their respective
authorized officers as of the day and year first above
written.
AIR LINE PILOTS ASSOCIATION, INTERNATIONAL ASSOCIATION OF
INTERNATIONAL MACHINISTS AND AEROSPACE WORKERS
By:/s/ Harlow B. Osteboe By:/s/ Kenneth W. Thiede
Name: Harlow B. Osteboe Name: Kenneth W. Thiede
Title: UAL-MEC Chairman Title: President and
General Chairman
UAL CORPORATION
By:/s/ Douglas A. Hacker
Name: Douglas A. Hacker
Title: Senior Vice President - Finance
Exhibit 10.12
As Amended
February 24, 1995
FIRST REFUSAL AGREEMENT
This Agreement (the "Agreement") has been made and entered
into as of this 12th day of July, 1994 by and among UAL
Corporation, a Delaware corporation (the "Company"), The Air Line
Pilots Association, International ("ALPA"), pursuant to its
authority as the collective bargaining representative for the
crafts or class of pilots employed by United Airlines, Inc.
("United"), and The International Association of Machinists and
Aerospace Workers ("IAM"), pursuant to its authority as the
collective bargaining representative for the crafts or classes of
mechanics and related employees, ramp and stores employees, food
service employees, dispatchers and security officers employed by
United, and the Salaried/Management Employee Director (as defined
in Article FIFTH, Section 1.66 of the Restated Certificate (as
defined below)) on behalf of the salaried and management
employees of United who are not represented by any collective
bargaining organization (the "SAM") (ALPA, IAM and the SAM,
together, the "Employee Groups").
WHEREAS, pursuant to the terms of and schedules to the
Agreement and Plan of Recapitalization, dated as of March 25,
1994, by and among the Company, ALPA and the IAM (as amended, the
"Recapitalization Agreement"), including the terms of the
restated certificate of incorporation of the Company to be
effective as of the Effective Time (as defined in the
Recapitalization Agreement) (the "Restated Certificate"), neither
(i) a Non-Dilutive Issuance (as defined in Article FIFTH, Section
3.4(b)(vii) of the Restated Certificate) nor (ii) the issuance of
Permitted Bankruptcy Equity (as defined in Article FIFTH, Section
3.4(b)(vii)(B) of the Restated Certificate) (a "Bankruptcy
Issuance") shall constitute an Other Extraordinary Matter (as
defined in Article FIFTH, Section 3.4(b) of the Restated
Certificate) if, among other things, such issuance is subject to
the right of first refusal provided for hereunder; and
WHEREAS, the parties hereto have entered into this Agreement
in order to effectuate the terms and intent of the
Recapitalization Agreement and the Restated Certificate with
respect to the Company's grant of such right of first refusal to
the Employee Groups in connection with such Non-Dilutive Issuance
and/or such Bankruptcy Issuance;
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual covenants herein contained and other good and valuable
consideration the receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Right of First Refusal.
A. If, during the term of this Agreement, the Company
proposes to issue Equity Securities (as defined in Article FIFTH,
Section 1.37 of the Restated Certificate) pursuant to a
transaction which would constitute an Other Extraordinary Matter
pursuant to Article FIFTH, Section 3.4(b) of the Restated
Certificate or would not constitute an Other Extraordinary Matter
pursuant to Article FIFTH, Section 3.4(b)(vii)(A) or (B) of the
Restated Certificate (a "Proposed Equity Issuance"), the Company,
prior to making such Proposed Equity Issuance, shall provide each
of the Employee Groups with a written statement of the specific
terms of such Proposed Equity Issuance (the "Proposed Sale
Notice"); provided, however, that the issuance of Equity
Securities in exchange for the Series A Convertible Preferred
Stock, without par value (the "Series A Preferred Stock") of the
Company, or any underlying Equity Security upon the conversion of
any Equity Security so issued in exchange, shall not constitute a
Proposed Equity Issuance. Each of the Employee Groups shall then
have 30 days to provide to the Company a binding commitment to
purchase up to its respective Proportionate Percentage (as
defined in subsection D below) of the Equity Securities proposed
to be issued in such Proposed Equity Issuance on terms that are
Equivalent (as defined in subsection E below) to the terms set
forth in the Proposed Sale Notice (the "Purchase Commitment"),
and the Company shall not consummate the Proposed Equity Issuance
during such 30 day period. If the Company consummates a Proposed
Equity Issuance within 180 days of the end of the 30 day notice
period with respect thereto, it shall honor all the timely
Purchase Commitments and shall reduce the amount of securities
offered pursuant to the Proposed Equity Issuance by the amount of
securities covered by such Purchase Commitments.
B. In addition to and not in limitation of the foregoing,
if one or more Employee Groups submit a Purchase Commitment
within the 30 day period provided for in subsection A above and
any other Employee Group either (i) indicates in writing during
such period that it does not intend to submit a Purchase
Commitment for all of its Proportionate Percentage of the
Proposed Equity Issuance or (ii) does not submit a Purchase
Commitment for all of its Proportionate Percentage of the
Proposed Equity Issuance within such 30 day period, then the
Company, prior to consummating a Proposed Equity Issuance, must
provide each of the Employee Groups that submitted a Purchase
Commitment for all of its Proportionate Percentage of the
Proposed Equity Issuance with the opportunity to provide an
additional purchase commitment with respect to the portion of the
Proposed Equity Issuance that is not subject to a Purchase
Commitment (an "Additional Purchase Commitment") within the last
to expire of (a) 15 days after receipt of written notice from the
Company of the opportunity to make an Additional Purchase
Commitment and (b) the unexpired portion of the 30 day period
referred to in subsection A above which remains after receipt of
written notice from the Company that any portion of the Proposed
Equity Issuance is not subject to a Purchase Commitment from any
other Employee Group (such longer period, the "APC Period"). The
Company shall not consummate the Proposed Equity Issuance during
such APC Period and if the Company consummates a Proposed Equity
Issuance within 180 days of the end of the notice period referred
to in the preceding sentence, it shall honor all the timely
Additional Purchase Commitments and shall reduce the amount of
securities offered pursuant to the Proposed Equity Issuance to
any person or entity other than the Employee Groups by the amount
of securities covered by such Additional Purchase Commitments.
C. Notwithstanding anything set forth in subsection B to
the contrary, if more than one Employee Group submit Additional
Purchase Commitments which in the aggregate are in excess of the
securities being offered pursuant to the Proposed Equity
Issuance, the Company shall accept such Additional Purchase
Commitments in proportion to the relative proportion that such
Employee Groups Proportionate Percentages bear to each other;
provided, however, that in no event shall any Employee Group be
obligated to purchase Equity Securities in excess of the amount
set forth in its Additional Purchase Commitment.
D. For the purposes of this Agreement, "Proportionate
Percentage" shall mean, for each of the Employee Groups, the
following:
ALPA: 46.23%
IAM: 37.13%
SAM: 16.64%
E. For the purpose of this Agreement,"Equivalent" shall
mean, in connection with a Proposed Equity Issuance, a Purchase
Commitment on substantially the same terms as that set forth in a
Proposed Sale Notice. If any Proposed Sale Notice provides for
consideration other than cash to be paid to the Company (the "Non-
Cash Consideration"), a Purchase Commitment must provide for
consideration to be paid to the Company, whether in cash or
otherwise, with a fair market value, as determined by the board
of directors of the Company, equal to the Non-Cash Consideration
to be paid to the Company pursuant to the Proposed Sale Notice in
order for such Purchase Commitment to be deemed Equivalent for
the purpose of subsection A above.
F. In the event that no Employee Group submits a Purchase
Commitment within the time period provided for in subsection A
above or the Purchase Commitments and Additional Purchase
Commitments, if any, submitted are for less than all of the
securities being offered in the Proposed Equity Issuance, the
Company may then consummate the Proposed Equity Issuance of such
securities not subject to Purchase Commitments or Additional
Purchase Commitments only upon the terms set forth in the
Proposed Sale Notice. Such Proposed Equity Issuance may not be
consummated unless it is consummated (i) within 180 days after
the later of the 30 day period provided for in subsection A above
or, if applicable, the APC Period provided for in subsection B
above and (ii) on the specific terms set forth in the Proposed
Sale Notice. Any subsequent Proposed Equity Issuance proposed by
the Company shall be subject to each of the provisions and
requirements of this Section 1 as if the prior Proposed Equity
Issuance that was not consummated for any reason never was
proposed by the Company.
G. Notwithstanding anything contained in this Section 1 to
the contrary, the provisions of this Section 1 shall be
inapplicable to issuances of Equity Securities (a) in accordance
with Article FIFTH, Subsection 3.4(b)(vii)(C) of the Restated
Certificate, or (b) in exchange for the Series A Preferred Stock
or upon the conversion of any Equity Security so issued in
exchange.
H. The Salaried/Management Employee Director may consult
with the senior executive of United having responsibility for
human resources concerning the exercise of any rights under this
Agreement. The Company shall assist the Salaried/Management
Director in the exercise of such rights, including providing
administrative and logistical support in disseminating Proposed
Sale Notices to the Salaried/Management Employees and collating
and processing any Purchase Commitments and Additional Purchase
Commitments received from such employees and, if requested, shall
similarly assist ALPA and the IAM.
I. To the extent consistent with its policies and
practices, United may, but shall not be obligated to, assist the
SAM Employee Group (to the same extent that either of the other
Employee Groups assists its members) in the exercise of their
rights under this Agreement in order to enable them to consummate
their Purchase Commitments made hereunder.
2. Term. This Agreement shall terminate and be of no further
force or effect upon the Termination Date (as defined in the
Restated Certificate).
3. Assignments. All right, title and interest in and to, and
all benefits and obligations arising under, this Agreement may be
assigned in whole or in part by any of the Employee Groups to any
of the Existing Plans and/or the ESOPs (as defined in Article
FIFTH, Sections 1.41 and 1.39 of the Restated Certificate,
respectively) without the consent of any other party hereto and
may not otherwise be assigned.
4. Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns. This Agreement is being
entered into for the benefit of the parties hereto (other than
the Salaried/Management Director) and for the Employee Groups
named herein. The Salaried/Management Director is not a party to
this Agreement in a personal capacity but only in the capacity of
the Salaried/Management Director as the nominal representative of
the SAM Employee Group to acknowledge their acceptance of the
benefits of this Agreement. Upon the replacement of the
individual named herein as the Salaried/Management Director, each
such successor to the office of Salaried/Management Director,
rather than the individual named herein, shall be authorized to
act hereunder as the Salaried/Management Director. The parties
hereto, on behalf of themselves and the Employee Groups that they
represent, agree that the Salaried/Management Director, and the
successor Salaried/Management Directors, shall not have any
personal liability under this Agreement.
5. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware
without regard to the conflicts of laws principles thereof.
6. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same
effect as if the signature thereto and hereto were upon the same
instrument.
7. Specific Performance. The parties hereto agree that if any
of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached,
irreparable damage would occur, no adequate remedy of law would
exist and damages would be difficult to determine, and that the
parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
8. Amendments. This Agreement may not be amended or modified
unless such amendment or modification is approved in writing by
each of the parties hereto.
9. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject
matter hereof and, except as otherwise contemplated hereby,
supersedes all other prior agreements and understandings, both
written and oral, between the parties hereto with respect to the
subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
UAL CORPORATION
By: /s/ James M. Guyette
AIR LINE PILOTS ASSOCIATION,
INTERNATIONAL
By: /s/ R. D. Hall
INTERNATIONAL ASSOCIATION OF
MACHINISTS AND AEROSPACE
WORKERS
By: /s/ Ken Thiede
/s/ Joseph V. Vittoria
Joseph V. Vittoria
Salaried/Management Employee
Director (not personally but as
representative of the
Salaried/Management Employees)
Exhibit 10.13
As Amended
September 30, 1994
UAL CORPORATION
1981 INCENTIVE STOCK PLAN
1. Purpose. The purpose of the UAL Corporation 1981
Incentive Stock Plan (the "Plan") is to attract and retain
outstanding individuals as officers and key employees of UAL
Corporation (the "Company") and its subsidiaries, and to furnish
incentives to such persons by providing such persons
opportunities to acquire shares of the Company's Common Stock,
par value $.01 per share ("Common Stock"), or monetary payments
based on the value of such shares or both, on advantageous terms
as herein provided.
2. Administration. The Plan shall be administered by
a stock option committee (the "Committee") of not less than three
Directors of the Company who shall be appointed from time to time
by the Board of Directors of the Company; provided, however, that
no Director, who within one year prior thereto was eligible to
participate in the Plan, shall be appointed as a member of the
Committee. No member of the Committee shall be eligible, while a
member of the Committee, to receive a Benefit under the Plan.
The Committee is authorized to interpret the provisions of the
Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, to determine the terms and conditions of
Benefits to be granted under the Plan and to make all other
determinations necessary or advisable for the administration of
the Plan, but only to the extent not contrary to or inconsistent
with the express provisions of the Plan.
3. Participants. The Plan shall be administered by
the Compensation Administration Committee of the Board of
Directors of the Company for all grants to (I) any "officer" as
such term is defined in Rule 16a-1(f) under the Securities
Exchange Act of 1934, as amended, or (II) any "covered employee"
within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended, and the regulations promulgated thereunder,
and by the Compensation Committee of the Board of Directors of
the Company for all other grants (such committee, as applicable,
herein called the "Committee"). The Committee shall consider
such factors as it deems pertinent in selecting participants and
in determining the type and amount of their respective Benefits,
including without limitation (i) the financial condition of the
Company; (ii) anticipated profits for the current or future
years; (iii) contributions of participants to the profitability
and development of the Company; and (iv) other compensation
provided to participants.
4. Types of Benefits. Benefits under the Plan may be
granted in any one or a combination of (a) Incentive Stock
Options, (b) Non-qualified Stock Options, and (c) Stock
Appreciation Rights, all as described below.
5. Shares Reserved under the Plan. There is hereby
reserved for issuance under the Plan an aggregate of 1,200,000
shares of Common Stock, which may be newly issued or treasury
shares.* All of such shares may, but need not, be issued
pursuant to the exercise of Incentive Stock Options. If there is
a lapse, expiration, termination or cancellation of any Benefit
granted hereunder without the issuance of shares or payment of
cash thereunder, or if shares are issued under any Benefit and
thereafter are reacquired by the Company pursuant to rights
reserved upon the issuance thereof, the shares subject to or
reserved for such Benefit may again be used for new options or
rights under this Plan; provided, however, that in no event may
the number of shares issued under this Plan exceed the total
number of shares reserved for issuance hereunder.
Notwithstanding any other provision of the Plan to the contrary,
in no event may the aggregate number of shares of Common Stock
with respect to which options or Stock Appreciation Rights are
granted to any individual exceed 125,000 in any period of two
calendar years, provided, however, that grants made to any new
employee as a condition of employment may not exceed two times
such biennial limit during the first two years of employment.
If, pursuant to Section 1.9 of the Agreement and Plan of
Recapitalization among the Company, Air Line Pilots Association,
International and International Association of Machinists and
Aerospace Workers (the "Agreement"), the Company becomes
obligated to issue the Additional Shares (as defined in the
Agreement), the number of shares reserved for issuance hereunder
as well as the limitations set forth in the preceding sentence
shall be increased by the percentage determined by dividing the
number of Additional Shares the Company is so required to issue
by the number of Fully Diluted Old Shares (as defined in the
Agreement).
* Represents shares of Common Stock reserved for issuance
under the Plan in connection with grants made on or after
July 12, 1994.
6. Incentive Stock Options. Incentive Stock Options
will consist of options to purchase shares of Common Stock at
purchase prices not less than one hundred percent (100%) of the
fair market value of such shares on the date of grant. Incentive
Stock Options will be exercisable over not more than ten (10)
years after date of grant and shall terminate not later than
three (3) months after termination of employment for any reason
other than death. If the optionee should die while employed or
within three (3) months after termination of employment, the
right of the optionee or his or her successor in interest to
exercise an option shall terminate not later than twelve (12)
months after the date of death. The aggregate fair market value
(determined as of the time the option is granted) of the shares
of Common Stock which any participant may exercise pursuant to
Incentive Stock Options for the first time in any calendar year
(under all option plans of the Company and its parent and
subsidiary corporations) shall not exceed $100,000.
7. Non-qualified Stock Options. Non-qualified Stock
Options will consist of options to purchase shares of Common
Stock at purchase prices not less than one hundred percent (100%)
of the fair market value of shares on the date of grant. Non-
qualified Stock Options will be exercisable over not more than
ten (10) years after date of grant. Non-qualified Stock Options
will terminate no later than six (6) months after termination of
employment for any reason other than retirement or death, unless
immediately after such termination of employment the optionee
shall be a member of the Board of Directors of the Company, in
which case such options will terminate two (2) years after such
termination of employment. In the event termination of
employment occurs by reason of the optionee's retirement, the
option shall terminate not later than the fixed expiration date
set forth therein. In the event termination of employment occurs
by reason of the optionee's death or if the optionee's death
occurs within six months after termination of employment, the
option shall terminate not later than twelve (12) months after
the date of such death.
8. Stock Appreciation Rights. The Committee may, in
its discretion, grant a Stock Appreciation Right to the holder of
any Non-qualified Stock Option granted hereunder. In addition, a
Stock Appreciation Right may be granted independently of and
without relation to any stock option. Stock Appreciation Rights
shall be subject to such terms and conditions consistent with the
Plan as the Committee shall impose from time to time, including
the following:
(a) A Stock Appreciation Right may be granted with
respect to a Non-qualified Stock Option at the
time of its grant or at any time thereafter up to
six (6) months prior to its expiration.
(b) Each Stock Appreciation Right will entitle the
holder to elect to receive up to 100% of the
appreciation in fair market value of the shares
subject thereto up to the date the right is
exercised. In the case of a Stock Appreciation
Right issued in relation to a Non-qualified Stock
Option, such appreciation shall be measured from
the option price. In the case of a Stock
Appreciation Right issued independently of any
stock option, the appreciation shall be measured
from not less than the fair market value of the
Common Stock on the date the right is granted.
(c) The Committee shall have the discretion to satisfy
a participant's right to receive the amount of
cash determined under subparagraph (b) hereof, in
whole or in part, by the delivery of shares of
Common Stock valued as of the date of the
participant's election.
(d) In the event of the exercise of a Stock
Appreciation Right, the number of shares reserved
for issuance hereunder (and the shares subject to
the related option, if any) shall be reduced by
the number of shares with respect to which the
right is exercised.
9. Nontransferability. Each Benefit granted under
this Plan shall not be transferable other than by will or the
laws of descent and distribution, and shall be exercisable,
during the holder's lifetime, only by the holder.
10. Other Provisions. The award of any Benefit under
the Plan may also be subject to other provisions (whether or not
applicable to the Benefit awarded to any other participant) as
the Committee determines appropriate, including, without
limitation, provisions for the purchase of common shares under
stock options in installments, provisions for the payment of the
purchase price of shares under stock options by delivery of other
shares of the Company having a then market value equal to the
purchase price of such shares, restrictions on resale or other
disposition, such provisions as may be appropriate to comply with
federal or state securities laws and stock exchange requirements
and understandings or conditions as to the participant's
employment in addition to those specifically provided for under
the Plan.
11. Term of Plan and Amendment, Modification or
Cancellation of Benefits. No Benefit shall be granted after
December 8, 2001; provided, however, that the terms and
conditions applicable to any Benefits granted prior to such date
may at any time be amended, modified, extended or canceled by
mutual agreement between the Committee and the participant or
such other persons as may then have an interest therein, so long
as any amendment or modification does not increase the number of
shares of Common Stock issuable under this Plan and any extension
does not extend the option term beyond ten (10) years.
12. Taxes. The Company shall be entitled to withhold
the amount of any tax attributable to any amount payable or
shares deliverable under the Plan after giving the person
entitled to receive such amount or shares notice as far in
advance as practicable, and the Company may defer making payment
or delivery if any such tax may be pending unless and until
indemnified to its satisfaction.
13. Fair Market Value. The Fair Market Value of the
Company's shares of Common Stock at any time shall be determined
in such manner as the Committee may deem equitable or required by
applicable laws or regulations.
14. Adjustment Provisions.
(a) If the Company shall at any time change the number
of issued shares of Common Stock without new
consideration to the Company (such as by stock
dividend or stock split), the total number of
shares reserved for issuance under this Plan and
the number of shares covered by each outstanding
Benefit shall be adjusted so that the aggregate
consideration payable to the Company and the value
of each such Benefit shall not be changed. The
Committee shall also have the right to provide for
the continuation of Benefits or for other
equitable adjustments after changes in the shares
of Common Stock resulting from reorganization,
sale, merger, consolidation or similar occurrence.
(b) Notwithstanding any other provision of this Plan,
and without affecting the number of shares
otherwise reserved or available hereunder, the
Committee may authorize the issuance or assumption
of Benefits in connection with any merger,
consolidation, acquisition of property or stock,
or reorganization upon such terms and conditions
as it may deem appropriate.
15. Amendment and Termination of Plan. The Board of
Directors of the Company may amend the Plan from time to time or
terminate the Plan at any time, but no such action shall reduce
the then existing amount of any participant's Benefit or
adversely change the terms and conditions thereof without the
participant's consent. However, except for adjustments expressly
provided for herein, no amendment may, without stockholder
approval, (i) materially increase the Benefits accruing to
participants, (ii) materially increase the number of shares which
may be issued, or (iii) materially modify the requirements as to
eligibility for participation in the Plan.
16. Stockholder Approval. The Plan was adopted by the
Board of Directors of the Company on December 9, 1981, and was
ratified by the stockholders of the Company on April 29, 1982.
The Board of Directors amended the Plan on October 31, 1985, to
permit the exercise of non-qualified stock options after
termination of employment due to retirement up to their fixed
expiration date, and to increase the shares of old common stock,
par value $5 per share ("Old Common Stock"), of the Company
reserved for issuance under the Plan from 1,300,000 shares to
3,300,000 shares. The latter amendment was subject to
shareholder approval, which was obtained on April 24, 1986.
The Board of Directors amended the Plan on February 28, 1991, to
extend the duration of the Plan from December 8, 1991 to December
8, 2001, and to increase the shares of Old Common Stock of the
Company reserved for issuance under the Plan from 3,300,000
shares to 4,300,000 shares. These amendments were approved by
the Company's stockholders on April 25, 1991.
The Board of Directors amended the Plan on July 12, 1994, to
limit the number of shares of Common Stock with respect to which
options may be granted under the Plan to any individual during
any two-year period to 125,000 (250,000 with respect to grants
made to any new employee as a condition of employment), subject
to adjustment if additional shares become issuable to the
employee groups in accordance with the Agreement, and to provide
for 1,200,000 shares of Common Stock of the Company to be
available for issuance under the Plan subsequent to the
Recapitalization of the Company on July 12, 1994. Additional
shares are reserved for issuance on account of the options
granted prior to the Recapitalization for old Common Stock ("Pre-
Closing Options") that became exercisable for new Common Stock
and cash as a result of the Recapitalization; however, these
shares are not available for future awards in the event any Pre-
Closing Option is forfeited or expires unexercised. These
amendments were approved by the Company's stockholders on July
12, 1994.
Exhibit 10.14
As Amended
September 30, 1994
UAL CORPORATION
1988 RESTRICTED STOCK PLAN
1. Purpose.
The purposes of the Plan are to attract and retain key
employees of the Company and its Subsidiaries, to compensate
them for their contributions to the growth and profits of the
Company and its Subsidiaries and to encourage ownership by them
of shares of Common Stock of the Company.
2. Definitions.
(a) "Company" shall mean UAL Corporation.
(b) "Subsidiary" or "Subsidiaries" shall mean a
corporation or corporations of which the Company owns, directly
or indirectly, shares having a majority of the ordinary voting
power for the election of directors.
(c) "Board" shall mean the Board of Directors of the
Company.
(d) "Committee" shall mean, as applicable, the
Compensation Administration Committee of the Board of Directors
of the Company for all grants to (I) any "officer" as such term
is defined in Rule 16a-1(f) under the Securities Exchange Act of
1934, as amended, or (II) any "covered employee" within the
meaning of Section 162(m) of the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder, and the
Compensation Committee of the Board of Directors of the Company
for all other grants.
(e) "Plan" shall mean the UAL Corporation 1988
Restricted Stock Plan.
(f) "Restricted Share" shall mean a share of Common
Stock of the Company, par value $.01 per share ("Common Stock"),
allocated to a Recipient pursuant to the Plan.
(g) "Recipient" shall mean an employee of the Company
or a Subsidiary to whom shares are allocated pursuant to the Plan
and shall be deemed to include such Recipient's estate and the
beneficiaries of such estate as the context may require.
(h) "Change in Control" shall be deemed to have
occurred if (A) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing
25% or more of the combined voting power of the Company's then
outstanding securities (such percentage ownership to be
determined in the manner provided in Rule 13d-3(d)(1)(i) under
the Exchange Act); or (B) during any period of two consecutive
years or portion thereof not including any period prior to July
1, 1993, individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (A) or (C) of
this Subsection) whose election by the Board or nomination for
election by the Company's shareholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; or (C) the
shareholders of the Company approve a merger or consolidation of
the Company with any other corporation (or similar transaction),
other than a merger or consolidation (or similar transaction)
which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 80% of the
combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger,
consolidation or similar transaction (either alone or in
combination with new or additional voting securities held by
management of the Company and its subsidiaries) or the
shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets. For purposes of (I) clause (A) of the
preceding sentence, beneficial ownership of securities of United
Air Lines, Inc. ("United") representing 25% or more of the
combined voting power of United's then outstanding securities
shall be deemed to constitute such beneficial ownership of the
Company and (II) clause (C) of the preceding sentence, the
approval by the shareholders of United of a plan of complete
liquidation of United or an agreement for the sale or disposition
by United of all or substantially all of United's assets shall be
deemed to constitute approval by the shareholders of the Company
of such events in respect of the Company.
3. Restricted Shares Available Under the Plan.
(a) An aggregate of five hundred thousand (500,000)
shares of Common Stock, par value $5 per share, will be available
for allocation under the Plan.1 Such shares, which shall be
treasury shares of such Common Stock, shall be credited to a
Restricted Share reserve.2 Upon the allocation of shares
hereunder, said reserve shall be reduced by the number of shares
so allocated. Upon the failure of a Recipient to complete on a
timely basis all of the requirements of Section 6 in connection
with the allocation of any Restricted Shares or upon the
forfeiture of any Restricted Shares pursuant to Section 7(d) or
Section 9, the Restricted Share reserve shall be increased by
such number of shares, and such Restricted Shares may again be
the subject of allocations hereunder.
(b) In the event of any stock dividend, stock split,
merger, consolidation, reorganization, recapitalization, or other
change in corporate structure of the Company, appropriate
adjustments shall be made in the aggregate number of shares which
may be allocated under the Plan. Such adjustments shall be made
by the Committee, whose determination as to what adjustments
shall be made, and the extent thereof, shall be final. No
fractional shares of stock shall be allocated or authorized by
any such adjustment.
4. Eligibility and Making of Allocations.
(a) Any officer or key employee of the Company or any
Subsidiary shall be eligible to receive an allocation of
Restricted Shares pursuant to the Plan.
(b) The Committee shall from time to time select those
employees who will receive allocations and determine the number
of Restricted Shares subject to each such allocation.
Notwithstanding any other provision of the Plan to the contrary,
in no event may the aggregate number of Restricted Shares
allocated to any individual exceed 30,000 in any period of two
calendar years, provided, however, that allocations made to any
new employee as a condition of employment may not exceed two
times such biennial limit during the first two years of
employment. If, pursuant to Section 1.9 of the Agreement and
Plan of Recapitalization among the Company, Air Line Pilots
Association, International and International Association of
Machinists and Aerospace Workers (the "Agreement"), the Company
becomes obligated to issue the Additional Shares (as defined in
the Agreement), the limitations set forth in the preceding
sentence shall be increased by the percentage determined by
dividing the number of Additional Shares the Company is so
required to issue by the number of Fully Diluted Old Shares (as
defined in the Agreement).
5. Form of Allocations.
(a) Each allocation shall specify the number of
Restricted Shares subject thereto. At the time of making any
allocation, the Committee or its designee shall advise the
Recipient thereof by delivery of written notice in the form
prescribed by the Committee.
(b) The Company shall take such action as shall be
necessary to cause any Restricted Shares not previously so listed
to be listed on the New York Stock Exchange and/or such other
exchange or exchanges on which shares of the same class as the
Restricted Shares are then listed.
6. Actions Required of Recipients.
(a) Within 30 days of an allocation of Restricted
Shares, the Recipient shall deliver to the Company an agreement
in writing, signed by such Recipient, in form and substance as
prescribed by the Committee, together with a stock power, duly
endorsed in blank, relating to such Restricted Shares. The
Company may require that the Recipient represent to the Company
in such agreement that such Recipient is acquiring such
Restricted Shares for the purpose of investment and with no
present intention to transfer, sell or otherwise dispose of such
shares, except such distribution by a legal representative as
shall be required by will or the laws of descent and distribution
of any jurisdiction in administering the estate of any Recipient.
In the event the Company requires such a representation in
connection with an acquisition of Restricted Shares hereunder,
such shares shall be transferable only if (i) the proposed
transfer shall be permissible pursuant to the Plan and (ii) the
Company shall determine at the time of the lapse of the
restrictions thereon pursuant to Section 7(c) or at any time
thereafter (based upon an opinion of counsel satisfactory to the
Company, if the Company shall so require) that such a transfer
would comply with applicable securities laws.
(b) The date on which such agreement and stock power
are received by the Company shall be deemed the "Date of
Transfer" of the Restricted Shares. The failure of a Recipient
to deliver such agreement and stock power within 30 days from the
date of an allocation of shares shall terminate such allocation
to the Recipient.
7. Restrictions.
(a) On or promptly after the Date of Transfer of
Restricted Shares, a certificate or certificates representing
such shares shall be prepared in the Recipient's name. The
Recipient shall thereupon be a stockholder with respect to all
the shares represented by such certificate or certificates and
shall have all the rights of a stockholder with respect to all
such shares, including the right to vote such shares and to
receive all dividends and other distributions (subject to the
provisions of Section 7(b)) paid with respect to such shares,
provided, however, that such shares shall be subject to the
restrictions hereinafter described in Section 7(d). Certificates
of stock representing Restricted Shares shall be imprinted with a
legend to the effect that the shares represented thereby may not
be sold, exchanged, transferred, pledged, hypothecated or
otherwise disposed of except in accordance with the terms of the
Plan, and each transfer agent for the Common Stock shall be
instructed to the same effect in respect of such shares. In aid
of such restrictions, during the Restricted Period with respect
to the Restricted Shares represented by such a certificate, such
certificate, together with the stock power described in Section
6(a), shall remain in the physical custody of the Company.
(b) In the event that, as the result of an event
giving rise to an adjustment described in Section 3(b), the
Recipient shall, as the owner of Restricted Shares, receive new
or additional or different shares of stock or securities, the
certificate or certificates for, or other evidences of, such new
or additional or different shares or securities shall also be
imprinted with a legend as provided in Section 7(a) and, together
with a stock power duly endorsed in blank by the Recipient, shall
remain in the physical custody of the Company, and all provisions
of the Plan relating to restrictions and lapse of restrictions
shall thereupon be applicable to such new or additional or
different shares or securities; provided, however, that if the
Recipient shall receive rights, warrants or fractional interests
in respect of any of such Restricted Shares, such rights or
warrants may be held, exercised, sold or otherwise disposed of,
and such fractional interests may be settled, by the Recipient,
without regard to such restrictions.
(c) The term "Restricted Period" with respect to
Restricted Shares shall mean a period commencing on the Date of
Transfer of such shares and ending ten (10) years after such Date
of Transfer or, if sooner, upon the first to occur of any of the
following:
(i) the dissolution of the Company, or any merger
or consolidation of the Company where the Company is not the
surviving corporation and the surviving corporation does not
agree to exchange the Restricted Shares outstanding
hereunder for shares of stock or securities of which it is
the issuer having an aggregate value equal to the aggregate
value of such Restricted Shares;
(ii) a Change in Control;
(iii) a determination by the Committee at any
time to accelerate or terminate such Restricted Period, but
only to the extent of such determination.
Notwithstanding the foregoing provision of this Section 7(c), the
Committee may provide with respect to any allocation of
Restricted Shares that the "Restricted Period" with respect to
such Restricted Shares shall lapse based upon the attainment by
the Company of one or more target levels of pre-tax income (as
determined under generally accepted accounting principles but
without regard to any items (whether gains or losses) otherwise
included therein relating to (1) the UAL Corporation Employee
Stock Ownership Plan, the UAL Corporation Supplemental ESOP, or
the trusts relating thereto, (2) any event or occurrence that the
Committee determines to be either not directly related to the
operations of the Company or not within the reasonable control of
the Company's management, (3) the Plan and (4) the Company's
Incentive Compensation Plan). Such target level(s) shall be
determined by the Committee on or before the allocation of such
Restricted Shares, shall relate to such period or periods of time
as the Committee shall prescribe and may provide that any period
in which such pre-tax income is less than zero may be
disregarded.
(d) During the Restricted Period applicable to any
Restricted Shares and except as otherwise specifically provided
in the Plan, none of such Restricted Shares may be sold,
assigned, exchanged, transferred, pledged, hypothecated or
otherwise disposed of or encumbered. If a Recipient ceases to be
an employee of the Company or any Subsidiary for any reason, all
of such Recipient's Restricted Shares which at such time remain
subject to the restrictions imposed hereunder shall be forfeited
and returned to the Company, unless and to the extent the
Committee determines to end the Restricted Period with respect to
any such Restricted Shares pursuant to Section 7(c)(iii).
(e) The restrictions set forth in Section 7(d) shall
lapse with respect to Restricted Shares when the Restricted
Period applicable to such shares expires, as described in Section
7(c).
8. Administration.
The Committee shall administer the Plan and construe
its provisions. The Committee is authorized, subject to the
provisions of the Plan, to establish such rules and regulations
as it deems necessary for the proper administration of the Plan
and to determine such other terms and conditions of Restricted
Shares and make such other determinations and interpretations and
to take such action in connection with the Plan as it deems
necessary or advisable. All determinations by the Committee in
carrying out, administering or construing this Plan shall be
final, binding and conclusive for all purposes and upon all
persons interested herein.
9. Limitations.
(a) Except as provided herein, no person shall at any
time have any right to receive an allocation of Restricted Shares
hereunder, and no person shall have authority to enter into an
agreement for the making of an allocation hereunder or to make
any representation or warranty with respect thereto without the
approval of the Committee and the Board.
(b) Recipients of allocations shall have no rights in
respect thereof except as set forth in the Plan. Except as
provided in Section 6(a), in the event that any attempt shall be
made to sell, assign, transfer, pledge, hypothecate or otherwise
dispose of or encumber any Restricted Shares which are then
subject to restrictions hereunder, the shares which are the
subject of such attempted disposition shall be deemed forfeited
and shall be returned to the Company. No Recipient shall have
any rights as a stockholder with respect to any shares reserved
for allocation hereunder nor shall any such shares be earmarked
for any Recipient prior to the Date of Transfer of such shares.
(c) Neither the action of the Company in establishing
the Plan, nor any action taken by it or by the Board or the
Committee under the Plan, nor any provision of the Plan, shall be
construed as giving to any person the right to be retained in
employment with the Company or any Subsidiary.
10. Amendment, Suspension or Termination of the Plan in Whole or
in Part.
The Board may amend, suspend or terminate the Plan in
whole or in part at any time, provided that such amendment,
suspension or termination shall not, without a Recipient's
consent, affect adversely such Recipient's rights with respect to
allocations of Restricted Shares theretofore made; and provided,
further, that no modification of the Plan by the Board without
approval of the stockholders of the Company shall (i) increase
the maximum number of Restricted Shares available for allocation
under the Plan pursuant to Section 3 of the Plan or (ii) render
any member of the Committee eligible to receive an allocation of
Restricted Shares at any time while such member is serving on the
Committee.
11. Withholding.
The Company shall be entitled to withhold the amount of
taxes which the Company deems necessary to satisfy any applicable
federal, state and local tax withholding obligations arising from
allocations of or the lapse of restrictions on Restricted Shares
under the Plan, or to make other appropriate arrangements with
Recipients to satisfy such obligations. At the discretion of the
Committee, the Company may deduct or withhold from any transfer
or payment to a Recipient, or may receive payment from a
Recipient, in the form of cash or other property, including
shares of Common Stock of the Company.
12. Effective Date and Term of Plan.
(a) The Plan was adopted by the Board on March 31,
1988, subject to approval of the Plan by the shareholders of the
Company within twelve (12) months after its adoption by the
Board. If the Plan is not so approved, the Plan shall be
ineffective. No Restricted Shares may be allocated to a
Recipient under the Plan unless and until such shareholders have
so approved the Plan.
(b) The Plan shall terminate ten (10) years after the
date of its adoption by the Board, unless terminated sooner by
the Board. No Restricted Shares may be allocated under the Plan
after its termination date, but the Plan shall continue in effect
with respect to all Restricted Shares which, as of such
termination date, have been allocated under the Plan.
1 Pursuant to the recapitalization of the Company on July 12,
1994, each share of old Common Stock, par value $5 per share, was
reclassified and converted into, among other things, 1/2 of a share
of new Common Stock, par value $.01 per share.
2 The Restricted Share reserve of old Common Stock immediately
prior to the Effective Time (as defined in the Agreement and Plan
of Recapitalization of the Company and which occurred on July 12,
1994) shall continue to constitute such Restricted Share reserve
of new Common Stock as of the Effective Time. Such reserve is
equal to 142,500 shares of new Common Stock as of the Effective
Time.
Exhibit 10.15
As Amended
September 30, 1994
UAL CORPORATION
INCENTIVE COMPENSATION PLAN
I. PURPOSE
In an effort to maintain a position of leadership in the
fast-growing and highly competitive business segments in which
UAL Corporation (the "Company") competes, it is necessary to
promote financial interests of the corporation and its corporate
affiliates (the "subsidiaries"), including its growth, by (A)
attracting and retaining highly qualified executives possessing
outstanding ability, (B) motivating executives by means of
performance related incentives, and (C) providing incentive
compensation opportunities which are competitive with those of
major corporations. The Incentive Compensation Plan (the "Plan")
hereinafter described is designated to assist the Company in
attaining these objectives.
II. ADMINISTRATION OF THE PLAN
1. The Company is responsible for the general
administration of the Plan, except as to matters reserved in this
Plan to the Compensation Administration Committee of the Board of
Directors of the Company for all grants to any "covered employee"
within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended, and the regulations promulgated thereunder,
and by the Compensation Committee of the Board of Directors of
the Company for all other grants (such committee, as applicable,
herein called the "Committee"). Determinations, decisions and
actions of the Company or the Committee in connection with the
construction, interpretation, administration, or application of
the Plan will be final, conclusive, and binding upon any grantee
of awards under the Plan and any person claiming under or through
such grantee. Neither the Company nor any member of the
Committee will be liable for any determination, decision, or
action made with respect to the Plan or any Incentive Award
granted under the Plan.
2. A Participant's rights and interests in any Incentive
Award made under the Plan may not be assigned or transferred and
are not subject to attachment, garnishment, execution, or other
creditor's processes.
3. This Plan may at any time be amended, modified, or
terminated as the Board, in its discretion, determines, and such
amendment, modification, or termination will not require the
consent, ratification, or approval of any party, including any
Participant hereunder.
4. This Plan and all determinations made and actions taken
pursuant hereto will be governed and construed by the law of the
State of Illinois.
III. DEFINITIONS
1. Award Year--The calendar year for which Incentive
Awards, if any, are calculated under the Plan.
2. Financial Objectives--Financial performance goals
established by the Company and approved by the Committee at the
beginning of an Award Year. Financial Objectives may apply to
overall Company and subsidiaries performance in selected areas
and/or to performance of major business segments of the Company
and subsidiaries.
3. Financial Performance Factor--The numerical factor
determined by the Company shortly after the Award Year by
comparing actual performance during such Award Year to the
applicable Financial Performance Objectives previously
established for such Award Year.
4. Individual Performance Objectives--Goals and objectives
established by the Company (or by the Committee in the case of
the Company's Chairman and its Chief Executive Officer) for each
Participant under the Plan.
5. Individual Performance Factor--The numerical factor
determined with respect to the Plan by the Company (or by the
Committee in the case of the Chairman and the Chief Executive
Officer and officers reporting to either of them) shortly after
the Award Year, based upon an evaluation as to the extent to
which a Participant in the Plan achieved the Individual
Performance Objectives established for him/her. Such evaluation
will be wholly discretionary and subjective on the part of the
Company or the Committee.
6. Incentive Awards--The dollar value of awards made to
Participants under the Plan. Notwithstanding any other
provisions of the Plan, in no event may a total Incentive Award
for any Participant exceed 100% of his/her base salary for an
Award Year.
7. Incentive Opportunity--The amount, determined by the
Company and approved by the Committee at the beginning of an
Award Year, that a Participant may receive as an Incentive Award
under the Plan. The Incentive Opportunity will be stated as a
percentage of a Participant's annual base salary as of December
31, of an Award Year. If a Participant held more than one
position in an Award Year, his/her Incentive Opportunity will be
based on the position he/she occupied at the end of the Award
Year.
IV. PARTICIPATION IN THE PLAN
1. Participants will be determined annually by the Company
from among key employees and senior management employees of the
Company and its subsidiaries. This determination will allow
participation only for the Award Year concerned.
2. The Plan does not constitute a contract of employment,
and participation in the Plan will not give any employee the
right to be retained in the service of the Company or its
subsidiaries.
3. If a Participant's employment with the Company or its
subsidiaries is terminated during an Award Year, the appropriate
Incentive Award under the Plan, if any, for such Participant will
be subject to the sole discretion of the Company's Chairman (or
to the sole discretion of the committee in case of the
termination of employment of the Chairman). A transfer of
employment between the Company and any of its subsidiaries will
not be considered a termination of employment.
V. COMPUTATION OF INCENTIVE AWARDS
The Incentive Award for an Award Year for a Participant will
be the product of a Participant's Incentive Opportunity times the
sum of his company's Financial Performance Factor plus his
Individual Performance Factor. No Incentive Award will be made
to a Participant for an Award Year in which his company's
Financial Performance Factor is below threshold level. However,
the Chairman, with Committee approval, may waive the Company's
Financial Performance Factor threshold requirement.
Total payments to all participants of the Incentive
Compensation Plan will be limited to 5% of Pre-Tax Income in any
given year. Should total calculated incentive awards exceed 5%
of Pre-Tax Income, payments will be made on a prorated basis.
VI. PAYMENT OF AWARDS
(A) Standard Procedures--Payment of Incentive Awards will
be made in cash on or about April 1, of the year following the
Award Year; provided, however, that an Incentive Award may be
deferred at the election of a Participant in the manner described
below.
(B) Deferred Awards--Participants may elect, on or before
December 31 of the year preceding an Award Year, to defer receipt
of all or any portion on an Incentive Award to a subsequent
calendar year. A Participant will receive payment of a deferred
Incentive Award in a lump sum in January of the earliest of: (1)
the deferral calendar year selected by the Participant; (2) the
calendar year immediately after the Participant's retirement
under the United Air Lines, Inc. Non-Union Ground Employees'
Retirement Plan; (3) the calendar year after the Participant's
termination of employment with the Company for other reasons,
provided that a transfer of employment from the Company to any of
the Company's affiliates will not be considered a termination of
employment with the Company; (4) the occurrence of an
"Unforeseeable Emergency", provided that a distribution pursuant
to this clause (4) shall not exceed the amount reasonably needed
to satisfy the emergency need, or (5) any other time elected by
the Participant, provided that upon making such an election, the
Participant shall be entitled to receive 90% of the amounts then
credited to him or her under the Plan and shall forfeit the
remaining 10% of such amount. The amounts deferred will be
credited annually with compound interest at the prime rate in
effect during the deferral period at the end of the calendar
quarter, as reported by The Wall Street Journal. All deferred
Incentive Awards will be reflected in the Company's books as
general unsecured and unfunded obligations of the Company. No
trust in favor of any Participant will be implied. Deferral
elections will be irrevocable by a Participant or his or her
beneficiary. For purposes of this Section, "Unforeseeable
Emergency" shall mean a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or
accident of the Participant or of a dependent (as defined in
Section 152(a) of the Code) of the Participant, loss of the
Participant's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant. The
circumstances that will constitute an Unforeseeable Emergency
will depend upon the facts of each case, but, in any case,
payment under clause (4) above may not be made to the extent that
such hardship is or may be relieved (i) through reimbursement or
compensation by insurance or otherwise, (ii) by liquidation of
the Participant's assets, to the extent the liquidation of such
assets would not itself cause severe financial hardship, or (iii)
by cessation of deferrals under the Plan.
VII. SPECIAL RULES
Nothwithstanding any other provision of this Plan to the
contrary: Incentive Awards with respect to an Award Year with
respect to any Participant who is a "covered employee" (as
defined in Section 162(m)(3) of the Code) with respect to such
Award Year (I) may not exceed $900,000 and (ii) shall be
determined by reference to a formula which shall define the
Incentive Award by reference to the attainment by the Company of
one or more target levels of pre-tax income (as determined under
generally accepted accounting principles but without regard to
any items (whether gains or losses) otherwise included therein
relating to (1) the UAL Corporation Employee Stock Ownership
Plan, the UAL Corporation Supplemental ESOP, or the trusts
relating thereto, (2) any event or occurrence that the Committee
determines to be either not directly related to the operations of
the Company or not within the reasonable control of the Company's
management, (3) this Plan and (4) the Company's 1988 Restricted
Stock Plan) for such Award Year. Such target level(s) and the
formula referred to above shall be determined by the Committee
prior to the commencement of such Award Year (or at such later
time as may be permissible under Section 162(m) of the Code); the
Committee shall determine and certify whether such target levels
of pre-tax income have been met. Notwithstanding the foregoing,
the Committee may reduce the Incentive Award otherwise determined
pursuant to such formula in its sole discretion.
Exhibit 10.18
As Amended
December 15, 1994
UAL CORPORATION
1992 STOCK PLAN
FOR OUTSIDE DIRECTORS
1. Purpose.
The purposes of the Plan are to attract and retain
outstanding individuals as outside directors of the Company, to
compensate them for their contributions to the growth and profits
of the Company and its subsidiaries and to encourage ownership by
them of shares of Common Stock of the Company.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the
Company.
(b) "Committee" shall mean the Compensation Committee of
the Board, selected by and serving at the pleasure of the Board.
(c) "Shares" shall mean shares of the common stock of the
Company, par value $0.01 per share.
(d) "Company" shall mean UAL Corporation.
(e) "Outside Director" shall mean a director of the Company
who, on the applicable Date of Award, is not an employee of the
Company or a subsidiary of the Company.
(f) "Date of Award" shall mean the date on which Shares are
granted to Outside Directors pursuant to Section 3(a) hereof.
(g) "Plan" shall mean the UAL Corporation 1992 Stock Plan
for Outside Directors.
(h) "Recipient" shall mean an Outside Director of the
Company to whom Shares are granted pursuant to the Plan.
3. Shares Available Under the Plan.
(a) Each Outside Director shall be granted 100 Shares on
July 1, 1992 and shall be granted 100 Shares on the first
business day of January in each subsequent year commencing with
the year 1993; provided, however, that with respect to the year
1995 only, such grant of 100 Shares shall occur on the first
business day of the month of February.
(b) An aggregate of 20,000 Shares will be available for
grant under the Plan. Such Shares, which shall be treasury
shares, shall be credited to a Share reserve. Upon the grant of
Shares hereunder, said reserve shall be reduced by the number of
Shares so granted.
(c) In the event of any stock dividend, stock split,
recapitalization, or merger, consolidation, or reorganization in
which the Company is the survivor, appropriate adjustments shall
be made in the aggregate number and kind of Shares which may be
granted under the Plan. Such adjustments shall be made by the
Committee. In determining what adjustment, if any, is
appropriate, the Committee may rely on the advice of independent
counsel and the accountants of the Company, and the determination
of the Committee shall be final. No fractional Shares of stock
shall be granted or authorized by any such adjustment.
4. Administration.
To the extent necessary, the Committee shall administer the
Plan and it shall have the power to (1) construe and interpret
the provisions of the Plan, (2) to prescribe, amend and rescind
such rules and regulations as it deems necessary for the proper
administration of the Plan, and (3) to take such action in
connection with administering the Plan as it deems necessary or
advisable. All determinations by the Committee in carrying out,
administering or construing this Plan shall be final, binding and
conclusive for all purposes and upon all persons interested
herein.
5. Limitations.
(a) Except as provided herein, no person shall at any time
have any right to receive a grant of Shares hereunder.
(b) Neither the action of the Company in establishing the
Plan, nor any action taken by it or by the Board or the Committee
under the Plan, nor any provision of the Plan, shall be construed
as giving to any person the right to be retained as a member of
the Board.
(c) Except for Shares actually delivered under the Plan,
the Plan constitutes only an unfunded, unsecured promise of the
Company to make payments or awards to Outside Directors (or other
persons) or deliver Shares in the future in accordance with the
terms of the Plan.
6. Deferral of Share Awards.
Subject to the terms and conditions of the Plan, each
Outside Director, by filing a written "Share Deferral Election"
with the Committee in accordance with uniform and
nondiscriminatory rules adopted by the Committee, may elect to
defer the receipt of all or any portion of the Shares which are
otherwise to be granted to him or her pursuant to Section 3(a)
until the Distribution Date. The "Distribution Date" shall be
the date specified by the Outside Director in his or her Share
Deferral Election or, if no such date is specified, the first
business day in January of the year following the date on which
the Outside Director ceases to be a director of the Company for
any reason. An Outside Director's Share Deferral Election shall
be effective with respect to grants otherwise to be made to him
or her pursuant to Section 3(a) after the last day of the
calendar year in which such election is filed with the Committee
(or for grants to be made in calendar year 1995, after the date
the election is filed with the Committee if it is filed with the
Committee no later than January 5, 1995); provided, however, that
by notice filed with the Committee in accordance with uniform and
nondiscriminatory rules established by it, an Outside Director
may terminate or modify any Share Deferral Election as to grants
to be made after the last day of the calendar year in which such
notice is filed with the Committee. An Outside Director may
modify the Distribution Date only by filing notice with the
Committee at least one year prior thereto; provided, however,
that the Committee may, in its sole discretion, after considering
all pertinent facts and circumstances, approve a change to the
Distribution Date which is requested by an Outside Director less
than one year prior thereto.
7. Crediting and Adjustment of Share Deferrals.
The amount of any Shares deferred by an Outside Director
pursuant to a Share Deferral Election ("Share Deferral") shall be
credited to a bookkeeping account maintained by the Company in
the name of the Outside Director (the "Share Unit Account"). An
Outside Director's Share Unit Account shall be adjusted as
follows:
(a) As of the date on which Shares would be granted to the
Outside Director pursuant to Section 3(a) but for his or her
Share Deferral Election, the Share Unit Account shall be credited
with a number of share units ("Share Units") equal to the number
of Shares that would have been granted to the Outside Director as
of such date but for his or her Share Deferral Election.
(b) As of the date on which Shares are distributed to the
Outside Director in accordance with Section 8 below, the Share
Unit Account shall be charged with an equal number of Share
Units.
(c) As of the record date for any dividend paid on Shares,
the Share Unit Account shall be credited with that number of
additional Share Units or fractions thereof which is equal to the
number obtained by multiplying the number of Share Units then
credited to the Share Unit Account by the amount of the cash
dividend or the fair market value (as determined by the Board) of
any dividend in kind payable on a Share, and dividing that
product by the then Fair Market Value (as defined below) of a
Share.
In the event of any merger, consolidation, reorganization,
recapitalization, spinoff, rights offering, stock split, reverse
stock split, exchange or other exchange or other change in the
corporate structure or capitalization of the Company affecting
the Shares, each Outside Director's Share Unit Account shall be
equitably adjusted in such manner as the Committee shall
determine in its sole judgment.
The "Fair Market Value" of a Share on any date shall be
equal to the average of the high and low prices of a Share
reported for New York Stock Exchange Composite Transactions for
the applicable date or, if there are no such reported trades for
such date, for the last previous date for which trades were
reported.
8. Payment of Share Deferrals.
Except as otherwise provided in this Section 8 or Section 9,
the balance credited to the Share Unit Account of an Outside
Director shall be payable to the Outside Director in 10 annual
installments commencing as of the Distribution Date and
continuing on each annual anniversary thereof. Notwithstanding
the foregoing, an Outside Director may elect, by filing a notice
with the Committee at least one year prior to the Distribution
Date, to change the number of payments to a single payment or to
any number of annual payments not in excess of ten. Each such
payment shall be made in whole Shares, the number of which shall
be determined by rounding to the next lower integer the product
obtained by multiplying the number of Share Units then credited
to the Outside Director's Share Unit Account by a fraction, the
numerator of which is one and the denominator of which is the
number of remaining payments to be made, including such payment.
The Fair Market Value of any fractional Share remaining after all
distributions have been made to the Outside Director pursuant to
this Section 8 shall be paid to the Outside Director in cash.
Notwithstanding the foregoing, the Committee, in its sole
discretion, may distribute all of an Outside Director's Share
Unit Account to such Outside Director (or former Outside
Director) in a lump sum as of any date or, if requested by an
Outside Director who has elected to receive a lump sum, the
Committee in its sole discretion, may distribute all of an
Outside Director's Share Unit Account to such Outside Director
(or former Outside Director) in installments satisfying the
preceding paragraph as requested by the Outside Director (or
former Outside Director).
9. Payment of Share Deferrals in the Event of Death.
If an Outside Director dies before payment of his or her
Share Unit Account commences, all amounts then credited to his or
her Share Unit Account shall be distributed to his or her
Beneficiary (as described below), as soon as practicable after
his or her death in a lump sum. If an Outside Director dies
after payment of his or her Share Unit Account has commenced but
before the entire balance of such account has been distributed,
the remaining balance thereof shall be distributed to his or her
Beneficiary, as soon as practicable after his or her death, in a
lump sum. Any such amounts shall be distributed in whole Shares
determined in accordance with Section 8, and the Fair Market
Value of any fractional Share shall be distributed in cash. For
purposes of the Plan, the Outside Director's "Beneficiary" is the
person or persons the Outside Director designates, which
designation shall be in writing, signed by the Outside Director
and filed with the Committee prior to the Outside Director's
death. A Beneficiary designation shall be effective when filed
with the Committee in accordance with the preceding sentence. If
more than one Beneficiary has been designated, the balance in the
Outside Director's Share Unit Account shall be distributed to
each such Beneficiary per capita (with cash distributed in lieu
of any fractional Share). In the absence of a Beneficiary
designation or if no Beneficiary survives the Outside Director,
the Beneficiary shall be the Outside Director's estate.
10. Amendment, Suspension or Termination of the Plan in Whole or
in Part.
(a) Except as provided in subsections (b) - (c) of this
Section 10, the Compensation Committee of the Board may amend,
suspend or terminate the Plan in whole or in part at any time.
(b) No amendment, suspension or termination shall, without
a Recipient's consent, affect adversely such Recipient's rights
with respect to Shares which have been granted to him.
(c) The provisions in the Plan shall not be amended more
than once every six months, except as permitted by Rule 16b-3 (c)
(2) (ii) (B) promulgated under the Securities Exchange Act of
1934, as amended, or any successor thereto.
11. Continuation of Benefits.
Absent express provision to the contrary, upon the
dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one
or more corporations as a result of which the Company is not the
surviving corporation, the Plan shall terminate.
12. Governing Law.
This Plan, shall be governed by, and construed in accordance
with, the laws of the State of Illinois. If any provision shall
be held by a court of competent jurisdiction to be invalid and
unenforceable, the remaining provisions of this Plan shall
continue to be fully effective.
Exhibit 10.19
UAL CORPORATION 1995 DIRECTORS PLAN
TABLE OF CONTENTS
Page No.
1. General 1
1.1 Purpose, History and Effective Date 1
1.2 Participation 1
1.3 Administration 1
1.4 Shares Subject to the Plan 2
1.5 Compliance with Applicable Laws 3
1.6 Director and Shareholder Status 3
1.7 Definition of Fair Market Value 3
1.8 Source of Payments 3
1.9 Nonassignment 3
1.10 Elections 4
2. Formula Stock Awards 4
3. Elections to Receive Stock in Lieu of
Eligible Cash Fees 4
3.1 Election to Receive Stock 4
3.2 Revocation of Election to Receive Stock 4
3.3 Equivalent Amount of Stock 5
4. Deferral Elections 5
4.1 Deferrals of Fees 5
4.2 Deferral of Stock Awards 6
4.3 Crediting and Adjustment of Deferred Amounts 7
4.4 Payment of Deferred Compensation Account 9
4.5 Payments in the Event of Death 10
5. Amendment and Termination 11
UAL CORPORATION
1995 DIRECTORS PLAN
SECTION 1
General
1.1. Purpose, History and Effective Date. UAL Corporation
(the "Company") maintains the UAL Corporation 1992 Stock Plan for
Outside Directors (the "Prior Plan") which provides certain
benefits to non-employee directors of the Company. In order to
(i) encourage stock ownership by directors to further align their
interests with those of the stockholders of the Company, while at the same
time providing flexibility for directors who, due to their individual
circumstances, may be unable to take stock in lieu of cash compensation,
and (ii) add certain deferral features for fees and stock awards,
the Company has authorized a variety of compensation
alternatives, including those set forth in the Prior Plan, that
will be available to Outside Directors under a new plan to be
known as the UAL Corporation 1995 Directors Plan (the "Plan").
The Plan shall be effective immediately upon approval by the
Board of Directors, except that subsections 1.4, 1.5, 1.7, 1.8
and 4.2 and Sections 2 and 3 and all references to Stock Awards,
Stock Deferrals and the Company Stock Subaccount shall be
effective on July 3, 1995, but only if the Plan is approved by
shareholders of the Company (the "Effective Date") prior thereto.
Upon the Effective Date the Prior Plan shall be terminated (with
prior stock deferrals thereunder being treated as deferrals under
subsection 4.2 of the Plan); provided, however, that if
shareholder approval is not obtained at the next annual meeting
of shareholders of the Company, subsections 1.4, 1.5, 1.7, 1.8
and 4.2 and Sections 2 and 3 and all references to Stock Awards,
Stock Deferrals and the Company Stock Subaccount shall be deleted
and the Plan shall be restated accordingly, and the Prior Plan
will continue in effect in accordance with its terms.
1.2. Participation. Only Outside Directors shall be
eligible to participate in the Plan. As of any applicable date,
an "Outside Director" is a person who is serving as a director of
the Company who is not an employee of the Company or any
subsidiary of the Company as of that date.
1.3. Administration. The authority to manage and control
the operation and administration of the Plan shall be vested in
the Executive Committee of the Board (the "Committee"). Subject
to the limitations of the Plan, the Committee shall have the sole
and complete authority to:
(a) interpret the Plan and to adopt, amend and rescind
administrative guidelines and other rules and
regulations relating to the Plan;
(b) correct any defect or omission and to reconcile any
inconsistency in the Plan or in any payment made
hereunder; and
(c) to make all other determinations and to take all other
actions necessary or advisable for the implementation
and administration of the Plan.
The Committee's determinations on matters within its control
shall be conclusive and binding on the Company and all other
persons. Notwithstanding the foregoing, no member of the
Committee shall act with respect to the administration of the
Plan except to the extent consistent with the exempt status of
the Plan under Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended ("Rule 16b-3").
1.4. Shares Subject to the Plan. Shares of stock which may
be distributed under the plan are shares of common stock of the
Company, par value $.01 per share ("Stock"). The shares of Stock
which shall be available for distribution pursuant to the Plan
shall be treasury shares (including, in the discretion of the
Company, shares purchased in the open market). The number of
shares of Stock to be distributed pursuant to Outside Directors'
elections to receive shares of Stock in lieu of Eligible Cash
Fees (as described in subsection 3.1) shall be determined in
accordance with Section 3. The number of shares of Stock to be
distributed pursuant to Outside Directors' Deferral Elections (as
described in Section 4) shall be determined in accordance with
Section 4. The number of shares of Stock which are available for
awards under Section 2 shall be 20,000; provided, however, that:
(a) in the event of any merger, consolidation,
reorganization, recapitalization, spinoff, stock split,
reverse stock split, rights offering, exchange or other
change in the corporate structure or capitalization of
the Company affecting the Stock, the number and kind of
shares of Stock available for awards under Section 2
and the annual awards provided thereunder shall be
equitably adjusted in such manner as the Committee
shall determine in its sole judgment;
(b) in determining what adjustment, if any, is appropriate
pursuant to paragraph (a), the Committee may rely on
the advice of such experts as they deem appropriate,
including counsel, investment bankers and the
accountants of the Company; and
(c) no fractional shares shall be granted or authorized
pursuant to any adjustment pursuant to paragraph (a),
although cash payments may be authorized in lieu of
fractional shares that may otherwise result from such
an equitable adjustment.
1.5. Compliance with Applicable Laws. Notwithstanding any
other provision of the Plan, the Company shall have no obligation
to deliver any shares of Stock under the Plan unless such
delivery would comply with all applicable laws and the applicable
requirements of any securities exchange or similar entity. Prior
to the delivery of any shares of Stock under the Plan, the
Company may require a written statement that the recipient is
acquiring the shares for investment and not for the purpose or
with the intention of distributing the shares. If the
redistribution of shares is restricted pursuant to this
subsection 1.5, the certificates representing such shares may
bear a legend referring to such restrictions.
1.6. Director and Shareholder Status. The Plan will not
give any person the right to continue as a director of the
Company, or any right or claim to any benefits under the Plan
unless such right or claim has specifically accrued under the
terms of the Plan. Participation in the Plan shall not create
any rights in a director (or any other person) as a shareholder
of the Company until shares of Stock are registered in the name
of the director (or such other person).
1.7. Definition of Fair Market Value. The "Fair Market
Value" of a share of Stock on any date shall be equal to the
average of the high and low prices of a share of Stock reported
for New York Stock Exchange Composite Transactions for the
applicable date or, if there are no such reported trades for such
date, for the last previous date for which trades were reported.
1.8. Source of Payments. Except for Stock actually
delivered pursuant to the Plan, the Plan constitutes only an
unfunded, unsecured promise of the Company to make payments or
awards to directors (or other persons) or deliver Stock in the
future in accordance with the terms of the Plan.
1.9. Nonassignment. Neither a director's nor any other
person's rights to payments or awards under the Plan are subject
in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment or garnishment by
creditors of the director.
1.10. Elections. Any notice or document required to be filed
with the Committee under the Plan will be properly filed if
delivered or mailed by registered mail, postage prepaid, to the
Committee, in care of the Company, at the Company's principal
executive offices. The Committee may, by advance written notice
to affected persons, revise such notice procedure from time to
time. Any notice required under the Plan may be waived by the
person entitled thereto.
SECTION 2
Formula Stock Awards
As of the first business day of January each year after the
Effective Date, each Outside Director shall be awarded 100 shares
of Stock (the "Stock Award").
SECTION 3
Elections to Receive Stock in
Lieu of Eligible Cash Fees
3.1. Election to Receive Stock. Subject to the terms and
conditions of the Plan, each Outside Director may elect to forego
receipt of all or any portion of the Eligible Cash Fees (as
defined below) payable to him or her during 1995 following the
Effective Date (or payable during 1995 prior to the Effective
Date and subject to a Deferral Election made in accordance with
Section 4) and during any calendar year thereafter and instead to
receive whole shares of Stock of equivalent value to the Eligible
Cash Fees so foregone (determined in accordance with subsection
3.3). An election under this subsection 3.1 to have Eligible
Cash Fees paid in shares of Stock shall be valid only if it is in
writing, signed by the Outside Director, and filed with the
Committee in accordance with uniform and nondiscriminatory rules
adopted by the Committee but, in any event:
(a) at least six months prior to any date in 1995
following the Effective Date or subsequent years on
which such Eligible Cash Fees would otherwise be
payable; and
(b) prior to January 1, 1995 with respect to any amounts
payable during 1995 prior to the Effective Date and
deferred pursuant to a Deferral Election made in
accordance with Section 4.
For purposes of the Plan, the term "Eligible Cash Fees" means the
retainer fees, meeting fees, committee fees and committee chair
fees that would otherwise be payable to the Outside Director by
the Company in cash as established, from time to time, by the
Board or any committee thereof.
3.2. Revocation of Election to Receive Stock. Once
effective, an election pursuant to subsection 3.1 to receive
Stock shall remain in effect for successive calendar years until
it is revised or revoked. Any such revision or revocation shall
be in writing, signed by the Outside Director and filed with the
Committee and shall be effective for the calendar year next
following the date on which it is received by the Committee, or
such later date specified in such notice; provided, however, that
no revision or revocation shall be effective prior to six months
from the date it is made.
3.3. Equivalent Amount of Stock. The number of whole shares
of Stock to be distributed to any Outside Director, or credited
to his or her Deferred Compensation Account (as defined in
subsection 4.3) pursuant to a Deferral Election made in
accordance with Section 4, by reason of his or her election
pursuant to subsection 3.1 to receive Stock in lieu of Eligible
Cash Fees shall be equal to:
(a) the amount of the Eligible Cash Fees which the Outside
Director has elected to have paid to him or her in
shares of Stock or credited to his or her Company Stock
Subaccount (as defined in subsection 4.3);
DIVIDED BY
(b) the Fair Market Value of a share of Stock as of the
date on which such Eligible Cash Fees would otherwise
have been payable to the Outside Director.
The Fair Market Value of any fractional share shall be paid to
the Outside Director in cash; provided, however, that fractional
shares subject to a Deferral Election filed in accordance with
subsection 4.1 shall be deferred and credited to the Company
Stock Subaccount.
SECTION 4
Deferral Elections
4.1. Deferrals of Fees. Subject to the terms and conditions
of the Plan, each Outside Director, by filing a written "Deferral
Election" with the Committee in accordance with uniform and
nondiscriminatory rules adopted by the Committee, may elect to
defer the receipt of all or any portion of the Eligible Cash Fees
otherwise payable to him or her for a calendar year commencing on
or after January 1, 1995 (including any Eligible Cash Fees that
he or she has elected to receive in Stock pursuant to Section 3)
until a future date (the "Distribution Date") specified by the
Outside Director in his or her Deferral Election as of which
payment of his or her Deferred Compensation Account attributable
to amounts deferred pursuant to his or her Deferral Election
shall commence in accordance with subsection 4.4; provided,
however, that in no event shall the Distribution Date elected
pursuant to this subsection 4.1 be different from the
Distribution Date, if any, elected by the Outside Director
pursuant to subsection 4.2. If no Distribution Date is specified
in an Outside Director's Deferral Election or has otherwise been
elected by the Outside Director pursuant to subsection 4.2, the
Distribution Date shall be deemed to be the first business day in
January of the year following the date on which the Outside
Director ceases to be a director of the Company for any reason.
An Outside Director's Deferral Election shall be effective with
respect to Eligible Cash Fees (including any Eligible Cash Fees
that he or she has elected to receive in Stock pursuant to
Section 3) otherwise payable to him or her for services rendered
after the last day of the calendar year in which such election is
filed with the Committee; provided, however, that:
(a) a Deferral Election which is filed within 30 days of
the date on which a director first becomes an Outside
Director shall be effective with respect to all
Eligible Cash Fees (including any Eligible Cash Fees
that he or she has elected to receive in Stock pursuant
to Section 3) otherwise payable to him or her after the
date of the Deferral Election; and
(b) by notice filed with the Committee in accordance with
uniform and nondiscriminatory rules established by it,
a director may terminate or modify any Deferral
Election as to Eligible Cash Fees payable for services
rendered after the last day of the calendar year in
which such notice is filed with the Committee;
provided, however, that no modification may be made to
the Distribution Date unless the Outside Director shall
file such notice with the Committee at least one year
prior thereto.
Notwithstanding the provisions of paragraph (b) next above, the
Committee may, in its sole discretion, after considering all of
the pertinent facts and circumstances, approve a change to the
Distribution Date which is requested by an Outside Director less
than one year prior thereto.
4.2. Deferral of Stock Awards. Subject to the terms and
conditions of the Plan, each Outside Director, by filing a
written "Stock Deferral Election" with the Committee in
accordance with uniform and nondiscriminatory rules adopted by
the Committee, may elect to defer the receipt of all or any
portion of the Stock Award which is otherwise to be made to him
or her for 1996 and subsequent years until the Distribution Date;
provided, however, that if no Distribution Date has been elected
(or is deemed to have been elected) pursuant to subsection 4.1,
the "Distribution Date" shall be the date specified by the
Outside Director in his or her Stock Deferral Election or, if no
such date is specified, the first business day in January of the
year following the date on which the Outside Director ceases to
be a director of the Company for any reason. An Outside
Director's Stock Deferral Election shall be effective with
respect to Stock Awards otherwise to be made to him or her
pursuant to Section 2 after the last day of the calendar year in
which such election is filed with the Committee; provided,
however, that by notice filed with the Committee in accordance
with uniform and nondiscriminatory rules established by it, an
Outside Director may terminate or modify any Stock Deferral
Election as to Stock Awards to be made after the last day of the
calendar year in which such notice is filed with the Committee;
further provided that no modification may be made to the Stock
Distribution Date unless the Outside Director shall file such
notice with the Committee at least one year prior thereto.
4.3. Crediting and Adjustment of Deferred Amounts. The
amount of any Eligible Cash Fees (including any Eligible Cash
Fees that he or she has elected to receive in Stock pursuant to
Section 3) deferred pursuant to subsection 4.1 ("Deferred
Compensation") and the amount of any Stock Award deferred by an
Outside Director pursuant to a Stock Deferral Election ("Stock
Deferral") shall be credited to a bookkeeping account maintained
by the Company in the name of the Outside Director (the "Deferred
Compensation Account"), which account shall consist of two
subaccounts, one known as the "Cash Subaccount" and the other as
the "Company Stock Subaccount." Any Stock Deferrals and Eligible
Cash Fees that the Outside Director has elected to receive in
Stock pursuant to Section 3 and which he or she has also elected
to defer pursuant to subsection 4.1 shall be credited to his or
her Company Stock Subaccount. Any other Deferred Compensation
shall be credited to his or her Cash Subaccount. An Outside
Director's Deferred Compensation Account shall be adjusted as
follows:
(a) As of the first day of February, May, August and
November, and as of July 3, 1995 (which dates are
referred to herein as "Accounting Dates"), the Outside
Director's Cash Subaccount shall be adjusted as
follows:
(i) first, the amount of any distributions made since
the last preceding Accounting Date and
attributable to the Cash Subaccount shall be
charged to the Cash Subaccount;
(ii) next, the balance of the Cash Subaccount after
adjustment in accordance with subparagraph (i)
above shall be credited with interest for the
period since the last preceding Accounting Date
computed at the prime rate as reported by The
Wall Street Journal for the current Accounting
Date, or if such date is not a business day, for
the next preceding business day;
(iii) next, on the Accounting Date occurring on July 3,
1995, the balance in the cash Subaccount shall be
charged with a distribution equal to that portion
of the balance in the Cash Subaccount which is
attributable to Eligible Cash Fees payable prior
to the Effective Date which the Outside Director
has elected to receive in Stock pursuant to
Section 3 and which were credited to the Cash
Subaccount pursuant to the Outside Director's
Deferral Election (as adjusted in accordance with
the terms of the Plan through July 3, 1995); and
(iv) finally, after adjustment in accordance with the
foregoing provisions of this paragraph (a), the
Cash Subaccount shall be credited with the
portion of the Deferred Compensation otherwise
payable to the Outside Director since the last
preceding Accounting Date or, in the case of the
Accounting Date occurring on February 1, 1995,
subsequent to January 1, 1995, which is to be
credited to the Cash Subaccount.
(b) The Outside Director's Company Stock Subaccount shall
be adjusted as follows:
(i) as of the Effective Date, the Company Stock
Subaccount shall be credited with that number of
stock units ("Stock Units") which is equal to the
amount charged to the Cash Subaccount as of that
date pursuant to subparagraph (a) (iii) next
above, divided by the Fair Market Value of a
share of Stock as of the Effective Date;
(ii) as of any date on or after the Effective Date on
which Eligible Cash Fees would have been payable
to the Outside Director in Stock but for his or
her Deferral Election, the Company Stock
Subaccount shall be credited with a number of
Stock Units equal to the number of shares of
Stock (including any fractional shares) to which
he or she would have been entitled pursuant to
Section 3;
(iii) as of the date on which a Stock Award would be
made to the Outside Director pursuant to Section
2 but for his or her Stock Deferral Election, the
Company Stock Subaccount shall be credited with a
number of Stock Units equal to the number of
shares of Stock that would have been awarded to
the Outside Director as of such date but for his
or her Stock Deferral Election;
(iv) as of the date on which shares of Stock are
distributed to the Outside Director in accordance
with subsection 4.4 below, the Company Stock
Subaccount shall be charged with an equal number
of Stock Units; and
(v) as of the record date for any dividend paid on
Stock, the Company Stock Subaccount shall be
credited with that number of additional Stock
Units which is equal to the number obtained by
multiplying the number of Stock Units then
credited to the Company Stock Subaccount by the
amount of the cash dividend or the fair market
value (as determined by the Board of Directors)
of any dividend in kind payable on a share of
Stock, and dividing that product by the then Fair
Market Value of a share of Stock.
In the event of any merger, consolidation, reorganization, reca
pitalization, spinoff, stock split, reverse stock split, rights
offering, exchange or other change in the corporate structure or
capitalization of the Company affecting the Stock, each Outside
Director's Company Stock Subaccount shall be equitably adjusted
in such manner as the Committee shall determine in its sole
judgment.
4.4. Payment of Deferred Compensation Account. Except as
otherwise provided in this subsection 4.4 or subsection 4.5, the
balances credited to the Cash Subaccount and Company Stock
Subaccount of an Outside Director's Deferred Compensation Account
shall each be payable to the Outside Director in 10 annual
installments commencing as of the Distribution Date and
continuing on each annual anniversary thereof. Notwithstanding
the foregoing, an Outside Director may elect, by filing a notice
with the Committee at least one year prior to the Distribution
Date, to change the number of payments to a single payment or to
any number of annual payments not in excess of ten. Each such
payment shall include a cash portion, if applicable, and a Stock
portion, if applicable, as follows:
(a) The cash portion to be paid as of the Distribution Date
or any anniversary thereof and charged to the Cash
Subaccount shall be equal to the balance of the Cash
Subaccount multiplied by a fraction, the numerator of
which is one and the denominator of which is the number
of remaining payments to be made, including such
payment.
(b) The Stock portion to be paid as of the Distribution
Date or any anniversary thereof and charged to the
Company Stock Subaccount shall be distributed in whole
shares of Stock, the number of shares of which shall be
determined by rounding to the next lower integer the
product obtained by multiplying the number of Stock
Units then credited to the Outside Director's Company
Stock Subaccount by a fraction, the numerator of which
is one and the denominator of which is the number of
remaining payments to be made, including such payment.
The Fair Market Value of any fractional share of Stock
remaining after all Stock distributions have been made
to the Outside Director pursuant to this paragraph (b)
shall be paid to the Outside Director in cash.
Notwithstanding the foregoing, the Committee, in its sole
discretion, may distribute all balances in any Deferred
Compensation Account to an Outside Director (or former Outside
Director) in a lump sum as of any date. Notwithstanding the
foregoing, the Committee, in its sole discretion, may distribute
all of an Outside Director's Share Unit Account to such Outside
Director (or former Outside Director) in a lump sum as of any
date or, if requested by an Outside Director who has elected to
receive a lump sum, the Committee, in its sole discretion, may
distribute all balances in any Deferred Compensation Account to
an Outside Director (or former Outside Director) in installments
satisfying this Section 4.4 as requested by the Outside Director
(or former Outside Director).
4.5. Payments in the Event of Death. If an Outside Director
dies before payment of his or her Deferred Compensation Account
commences, all amounts then credited to his or her Deferred
Compensation Account shall be distributed to his or her
Beneficiary (as described below), as soon as practicable after
his or her death, in a lump sum. If an Outside Director dies
after payment of his or her Deferred Compensation Account has
commenced but before the entire balance of such account has been
distributed, the remaining balance thereof shall be distributed
to his or her Beneficiary, as soon as practicable after his or
her death, in a lump sum. Any amounts in the Cash Subaccount
shall be distributed in cash and any amounts in the Stock
Subaccount shall be distributed in whole shares of Stock
determined in accordance with paragraph 4.4(b), and the Fair
Market Value of any fractional share of Stock shall be
distributed in cash. For purposes of the Plan, the Outside
Director's "Beneficiary" is the person or persons the Outside
Director designates, which designation shall be in writing,
signed by the Outside Director and filed with the Committee prior
to the Outside Director's death. A Beneficiary designation shall
be effective when filed with the Committee in accordance with the
preceding sentence. If more than one Beneficiary has been
designated, the balance in the Outside Director's Deferred
Compensation Account shall be distributed to each such
Beneficiary per capita (with cash distributed in lieu of any
fractional share of Stock). In the absence of a Beneficiary
designation or if no Beneficiary survives the Outside Director,
the Beneficiary shall be the Outside Director's estate.
SECTION 5
Amendment and Termination
While the Company expects and intends to continue the Plan,
the Board of Directors of the Company reserves the right to, at
any time and in any way, amend, suspend or terminate the Plan;
provided, however, that no amendment, suspension or termination
shall:
(a) be made without shareholder approval to the extent such
approval is required by law, agreement or the rules of
any exchange or automated quotation system upon which
the Stock is listed or quoted;
(b) except as provided in subsection 4.4 (relating to lump
sum payments of amounts held in an Outside Director's
Deferred Compensation Account) or this Section 5,
materially alter or impair the rights of an Outside
Director under the Plan without the consent of the
Outside Director with respect to rights already accrued
hereunder;
(c) amend the provisions of Section 2 or 3 more frequently
than once in any six-month period except to comport
with changes in the Internal Revenue Code of 1986, as
amended, the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder; or
(d) make any change that would disqualify the Plan or any
other plan of the Company intended to be so qualified
from the exemption provided by Rule 16b-3 under the
Securities Exchange Act of 1934, as amended.
EXHIBIT 10.27
6-1162-JCM-500
United Air Lines, Inc.
Executive Offices
P. 0. Box 66100
Chicago, IL 60666-0100
Subject: Letter Agreement No. 6-1162-JCM-500 to
Purchase Agreement No. 1663 -
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
Gentlemen:
Reference is made to Purchase Agreement No. 1663 dated
as of December 18, 1990 (the Purchase Agreement)
between The Boeing Company (Boeing) and United Air
Lines, Inc. (Buyer) relating to the sale by Boeing and
the purchase by Buyer of thirty-four (34) Model 777-222
aircraft (hereinafter referred to generally as the
Aircraft).
Reference is also made to Letter Agreement 6-1162-DLJ-
935 to Purchase Agreement No. 1663 (entitled "Early
Approval of One Hundred Eighty (180) Minutes Extended
Range Operations with Two-Engine Aircraft").
This Letter Agreement will become part of the Purchase
Agreement and will evidence our further agreement with
respect to the matters set forth below.
All terms used herein and in the Purchase Agreement,
and not defined herein, shall have the same meanings as
in the Purchase Agreement.
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 2
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 3
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 4
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, inc.
6-1162-JCM-500
Page 5
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 6
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 7
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 8
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 9
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 10
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 11
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 12
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 13
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 14
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 15
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 16
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 17
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 18
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 19
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 20
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 21
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
8. Confidentiality
8.1 In accordance with Letter Agreement No. 6-1162-DLJ-
832, the terms and conditions of this Letter Agreement
are and will remain strictly confidential between
Boeing and Buyer and will not under any circumstances
be disclosed by either party to any third party
(except, as reasonably necessary, to its respective
employees and professional advisers, and to Boeing's
insurers in connection with the insurance described in
paragraph 7.3 above and to the Federal Aviation
Administration) without the prior written
United Air Lines, Inc.
6-1162-JCM-500
Page 22
consent of the other party, such consent not to be
unreasonably withheld.
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1162-JCM-500
Page 23
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
If the foregoing correctly sets forth your
understanding of our agreement with respect to the
matters treated above, please indicate your acceptance
and approval below.
Very truly yours,
THE BOEING COMPANY
By /s/ Joseph Mc Aleer
Its Attorney-in-Fact
ACCEPTED AND AGREED TO as of
the 9th day of December, 1994.
UNITED AIR LINES, INC.
By /s/ D. Hacker
Its Senior Vice President-Finance
EXHIBIT 10.28
Boeing Commercial Airplane Group
P.O. Box 3707
Seattle, WA 98124-2207
February 22, 1995
6-1171-FT-831
United Air Lines, Inc.
Flight Center
32nd & Quebec Street
Denver, Colorado 80207
Facsimile: 415-634-7388
Attention: Captain Stephen Forte
Flight Manager
B757/B767/B777
Facsimile: 708-952-4683
cc: Mr. Chick McErlean
Senior Attorney
Facsimile: 415-634-7388
cc: Mr. W. C. Ceresa
Manager
Maintenance, Warranty and Contracts San
Francisco International Airport
Subject: * CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT
Dear Captain Forte:
In response to your request, The Boeing Company
(Boeing) is pleased to offer to provide to United Air
Lines, Inc. (Buyer) the following flight training
services:
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1171-FT-831
Page 2
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1171-FT-831
Page 3
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1171-FT-831
Page 4
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
United Air Lines, Inc.
6-1171-FT-831
Page 5
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
Article 7. Right to Stop Work.
Boeing will not be required to begin or continue
providing services if:
7.1 there is a labor dispute or work stoppage in
progress, or
7.2 there exist conditions that are dangerous
to the safety or health of the Boeing employees.
Article 8. Excusable Delays.
Boeing will not be liable for any delay resulting from any
cause beyond Boeing's control.
Article 9. Assignment.
Boeing may assign all or any part of its rights and
obligations under this Agreement to any wholly owned
subsidiary of Booing.
Article 10. Order of Precedence.
The provisions of this Agreement will not be revised in
any manner by any provision of any purchase order which Buyer
may choose to issue in connection with this Agreement
ARTICLE 11. GOVERNING LAW.
THIS AGREEMENT WILL BE GOVERNED BY THE LAWS OF THE STATE
OF WASHINGTON, U.S.A. EXCLUSIVE OF WASHINGTON'S CONFLICT OF
LAWS RULES.
United Air Lines, Inc.
6-1171-FT-831
Page 6
Article 12. Negotiated Agreement.
This Agreement, including the Indemnification and the
Exclusion of Liabilities has been the subject of
discussion, and negotiation and is fully understood by the
parties, and the price of the Services and the other mutual
agreements of the parties set forth in this Agreement were
arrived at in consideration of such provisions.
Please accept this offer by signing one (1) copy and
returning same to the undersigned at facsimile No.
206-237-1706 on or before February 22, 1995, the date on
which this offer will otherwise expire.
Very truly yours,
THE BOEING COMPANY
BY /s/W.R. Lyle
W. R. Lyle
Contracts Manager
Aircraft Support
Mail Stop 76-66
ACCEPTED AND AGREED TO this
date: February 23, 1995.
UNITED AIR LINES, INC.
BY /s/Stuart Oran
ITS Executive Vice President-Corporate
Affairs & General Counsel
EXHIBIT 10.29
UNITED AIRLINES
January 31, 1995
Via facsimile: 206-237-1706
Mr. R. C. Nelson
Regional Director, Aircraft Contracts
Boeing Commercial Airplane Group P.O. Box 3707
Seattle, WA 98124-2207
Re: (1) Letter Agreement 6-1162-TML-1205 to Purchase Agreement
1670 dated December 18, 1990 as amended and supplemented
among The Boeing Company and United Air Lines, Inc.
and United Worldwide Corporation
(2) Boeing Proposal Letters 6-1162-MMF-045 & 6-1162-RCN-
839 dated January 23, 1995
Gentlemen:
Reference is made to Letter Agreement No. 6-1162-TML-1205 (the
"Letter Agreement") to Purchase Agreement No. 1670 dated December
18, 1990 (as previously amended and supplemented, including all
previously executed letter agreements, the "Purchase Agreement")
among The Boeing Company ("Boeing"), United Air Lines, Inc.
("United") and United Worldwide Corporation ("Worldwide")
relating to the sale by Boeing and the purchase by United and
Worldwide (collectively the "Buyer") of Model 747-400 aircraft;
and reference is made to Boeing Proposal Letters 6-1162-MMF-045
and 6-1162-RCN-839 both dated January 23, 1995 (the "Proposal
Letters").
This letter amendment (this "Letter Amendment"), when accepted by
Buyer, will become part of the Letter Agreement and part of the
Purchase Agreement, and will evidence our further agreement with
respect to the matters set forth below. All terms used herein and
in the Letter Agreement, and not defined herein, shall have the
same meaning as in the Letter Agreement. If there is any
inconsistency between the terms of this Letter Amendment and the
Letter Agreement or the Purchase Agreement, the terms of this
Letter Amendment will govern.
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
If the foregoing correctly sets forth your understanding of our
agreement with respect to the matters addressed above, please
indicate your acceptance and approval below.
UNITED AIR LINES, INC.
/s/ Douglas A. Hacker
Douglas A. Hacker
Senior Vice President -
Finance
ACCEPTED AND AGREED TO
AS OF THE DATE SHOWN ABOVE:
THE BOEING COMPANY
By: /s/R.C. Nelson
Its: Attorney-in-Fact
UNITED AIRLINES
January 31, 1995
Via facsimile: 206-237-1706
Mr. R. C. Nelson
Regional Director, Aircraft Contracts
Boeing Commercial Airplane Group P.O. Box 3707
Seattle, WA 98124-2207
Re: (1) Letter Agreement 6-1162-DLJ-89lRl to Purchase Agreement
No. 1670 dated December 18, 1990 as amended and supplemented
among The Boeing Company and United Air Lines, Inc. and
United Worldwide Corporation
(2) Boeing Letter Fix/Pollock dated September 23, 1994
(3) Boeing Proposal Letters 6-1162-MMF-045 & 6-1162-RCN-
839 dated January 23, 1995
Gentlemen:
Reference is made to Letter Agreement No. 6-1162-DLJ-89lRl (the
"Letter Agreement") to Purchase Agreement No. 1670 dated December
18, 1990(as previously amended and supplemented, including all
previously executed letter agreements, the "Purchase Agreement")
among The Boeing Company ("Boeing"), United Air Lines, Inc.
("United") and United Worldwide Corporation ("Worldwide")
relating to the sale by Boeing and the purchase by United and
Worldwide (collectively the "Buyer") of Model 747-400 aircraft;
and reference is made to Boeing Letter Fix/Pollock dated
September 23, 1994 and to Boeing Proposal Letters 6-1162-MMF-045
and 6-1162-RCN-839 both dated January 23, 1995 (the "Proposal
Letters").
This letter amendment (this "Letter Amendment"), when accepted by
Buyer, will become part of the Letter Agreement and part of the
Purchase Agreement, and will evidence our further agreement with
respect to the matters set forth below. All terms used herein and
in the Letter Agreement, and not defined herein, shall have the
same meaning as in the Letter Agreement. If there is any
inconsistency between the terms of this Letter Amendment and the
Letter Agreement or the Purchase Agreement, the terms of this
Letter Amendment will govern.
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
If the foregoing correctly sets forth your understanding of our
agreement with respect to the matters addressed above, please
indicate your acceptance and approval below.
UNITED AIR LINES, INC.
/s/ Douglas A. Hacker
Douglas A. Hacker
Senior Vice President -
Finance
ACCEPTED AND AGREED TO
AS OF THE DATE SHOWN ABOVE:
THE BOEING COMPANY
By: /s/R.C. Nelson
Its: Attorney-in-Fact
EXHIBIT 10.30
UNITED AIRLINES
February 28, 1995
Via facsimile: 206-237-1706
Mr. R. C. Nelson
Regional Director, Aircraft Contracts
Boeing Commercial Airplane Group P.O. Box 3707
Seattle, WA 98124-2207
Re: (1) Letter Agreement 6-1162-DLJ-89lRl to Purchase Agreement
No. 1670 dated December 18, 1990 as amended and supplemented
among The Boeing Company and United Air Lines, Inc. and
United Worldwide Corporation
(2) Boeing Proposal Letters 6-1162-MMF-045 & 6-1162-
RCN-839 dated January 23, 1995
Gentlemen:
Reference is made to Letter Agreement No. 6-1162-DLJ-89lRl (the
"Letter Agreement") to Purchase Agreement No. 1670 dated December
18, 1990(as previously amended and supplemented, including all
previously executed letter agreements, the "Purchase Agreement")
among The Boeing Company ("Boeing") and United Air Lines, Inc.
("United") relating to the sale by Boeing and the purchase by
United (the "Buyer") of Model 747-400 aircraft; and reference is
made to Boeing Proposal Letters 6-1162-MMF-045 and 6-1162-RCN-839
both dated January 23, 1995 (the "Proposal Letters").
This letter amendment (this "Letter Amendment"), when accepted by
Buyer, will become part of the Letter Agreement and part of the
Purchase Agreement, and will evidence our further agreement with
respect to the matters set forth below. All terms used herein and
in the Letter Agreement, and not defined herein, shall have the
same meaning as in the Letter Agreement. If there is any
inconsistency between the terms of this Letter Amendment and the
Letter Agreement or the Purchase Agreement, the terms of this
Letter Amendment will govern.
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
If the foregoing correctly sets forth your understanding of our
agreement with respect to the matters addressed above, please
indicate your acceptance and approval below.
UNITED AIR LINES, INC.
/s/ Douglas A. Hacker
Douglas A. Hacker
Senior Vice President -
Finance
ACCEPTED AND AGREED TO
AS OF THE DATE SHOWN ABOVE:
THE BOEING COMPANY
By: /s/R.C. Nelson
Its: Attorney-in-Fact
EXHIBIT 10.31
2 ROND POINT MAURICE
BELLONTE
31700 BLAGNAC FRANCE
TELEPHONE 33 + 61 30 40 12
TELECOPY: 33 + 61 30 40 11
TELEX: AVSA 5211 55 F
UNITED AIR LINES
San Francisco
Fax 19.1.415.634.7117 Attention: Jerry Pollock
Fax 61.93.43.41 cc: Tom Ellis
Fax 19.1.708.952-5104 Yesso Tekerian
Dick Coykendall
O/REF. AVSA/CA-SL-0182/95 Blagnac, February 10, 1995
SUBJECT: * CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
Dear Mr Pollock,
Further to our discussions with You and Dick Coykendall, please
find hereafter the terms of our offer with respect to the
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
S.A.R.L. AU CAPITAL DE 235 000 000 F - R.C.S. TOULOUSE B 330
926 672 - CODE APE 514S
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
If you agree with the preceding, please sign below and return to
AVSA by February 11, 1995.
Yours Sincerely, Agreed and accepted
United Air Lines
/s/Sylyain Lebeuf /s/J.L. Pollock
Sylyain Lebeuf Senior Staff Specialist
Director of Contracts Administration Aircraft Purchasing
Attachment 1
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
Attachment 2
* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
EXHIBIT 10.35
[PHOTOCOPIES/SIGNATURES)
IMC 757/767 PROJECT
AGREEMENT
Dated as of December 1, 1994
IMC 757-767 PROJECT
AGREEMENT
Table of Contents
ARTICLE I LOCATION AND DESCRIPTION OF THE 757/767
PROJECT.......................................... 8
101 Location......................................... 8
102 Description...................................... 8
ARTICLE II CONSTRUCTION OF THE 757/767 PROJECT.............. 9
201 Construction of the 757/767 Project.............. 9
ARTICLE III FINANCING........................................ 10
301 Financing........................................ 10
302 Repayment........................................ 10
303 Costs of the Project; Indiana Project
Costs....................................... 10
ARTICLE IV FINANCIAL INCENTIVES............................. 11
401 Account.......................................... 11
402 State Incentives and State Bonds................. 12
ARTICLE V ADDITIONAL COVENANTS............................. 14
501 Necessary Actions................................ 14
502 Taxes............................................ 14
503 Supplemental Disclosure.......................... 15
504 Governmental Assistance.......................... 15
505 Airport Rates and Charges........................ 16
ARTICLE VI COVENANTS OF UNITED.............................. 17
601 Construction and Operation of the 757/767
Project as a Part of the IMC
Facility.................................... 17
602 Reimbursement.................................... 18
603 Minority Business Enterprise and Women
Business Enterprise Goals................... 24
ARTICLE VII LEASE ARRANGEMENTS............................... 25
701 Master Lease Agreement........................... 25
702 Lease Terms...................................... 25
ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF THE
STATE....................................... 26
801 Power and Authority.............................. 26
802 Due Authorization................................ 26
803 Due Execution.................................... 26
804 Consents and Approvals; NO Violation:............ 26
805 Operation of the 757/767 Project and
the IMC Facility:........................... 27
806 No Injunctions, Suits or Proceedings............. 27
ARTICLE IX REPRESENTATIONS AND WARRANTIES OF UNITED......... 29
901 organization and Existence....................... 29
902 Power and Authority.............................. 29
903 Due Authorization................................ 29
904 Due Execution.................................... 29
905 Consents and Approvals; No Violation............. 29
ARTICLE X INDEMNIFICATIONS; SURVIVAL OF REPRESENTATIONS
AND WARRANTIES.............................. 31
1001 Indemnification by the State..................... 31
1002 Indemnification by United........................ 32
1003 Survival of Representations, Etc................. 32
ARTICLE XI TERMINATION...................................... 33
1101 Termination...................................... 33
1102 Procedure upon Termination....................... 33
1103 Effect of Termination............................ 34
1104 Breach........................................... 34
1105 Other Rights and Remedies........................ 34
ARTICLE XII MISCELLANEOUS.................................... 35
1201 Expenses......................................... 35
1202 Further Assurances............................... 35
1203 Alternative Dispute Resolution;
Arbitration................................ 35
1204 Parties in Interest............................. 37
1205 Amendments and Waiver............................ 37
1206 Entire Agreement; Non-Merger.................... 37
1207 Headings......................................... 38
1208 Notices.......................................... 38
1209 Third Parties.................................... 39
1210 Independent Parties.............................. 39
1211 Appropriations................................... 39
1212 Non-Discrimination............................... 40
1213 Drug-Free Workplace.............................. 40
1214 Counterparts..................................... 40
1215 Governing Law.................................... 41
1216 Severability..................................... 41
EXHIBITS
IMC 757/767 PROJECT
AGREEMENT
AGREEMENT, dated as of December 1, 1994 (the "Agreement"), by
and between the State of Indiana, acting by and through its
Department of Commerce (the "State"), and United Air Lines, Inc.
("United").
RECITALS
A. In November 1991, United selected Indianapolis
International Airport (the "Airport") as the site of its new, state-
of-the-art, major aircraft maintenance facility (originally
referred to as "MOC-II and currently redesignated and referred to
as the "Indianapolis Maintenance Center" or the "IMC Facility").
B. United has previously entered into the MOC-II Agreement
dated as of November 21, 1991 (together with subsequent letter
agreement amendments dated June 15, 1992, and December 23, 1993,
the "Original Agreement") , by and among the State, the City of
Indianapolis, Indiana (the "City"), the Indianapolis Airport
Authority (the "Authority") (the State, the City and the Authority,
collectively, the "Governments") and United, pursuant to which
United has agreed to locate the IMC Facility on a specified site
(the "Site") at the Airport, subject to the terms and conditions of
the Original Agreement.
C. Subsequent to the date of and pursuant to the original
Agreement, United and the Authority have entered into a Master
Lease Agreement (together with subsequent letter agreement
amendments dated June 15, 1992, and December 23, 1993, and an
Amendment to Lease Agreements dated May 11, 1993, the "Master Lease
Agreement"), with respect to the construction, lease and operation
of the IMC Facility and a Construction Management Agreement dated
as of March 1, 1992 (the "Original Construction Management
Agreement"), as amended by an Amendment to the Construction
management Agreement, dated as of August 1, 1993 (the "Construction
Management Agreement Amendment" and, together with the Original
Construction Management Agreement, the "Construction Management
Agreement"), under which, to expedite the construction process and
to assure that the IMC Facility conforms to and complies with the
needs of United, the Authority has designated United as its
construction manager for the purpose of granting to United, to the
extent permitted by law, the responsibility and authority to act as
the agent for and on behalf of the authority with total
responsibility and authority to manage the design, construction and
equipping of the IMC Facility, including the delegation to United
of any and all approval authority with respect to the IMC Facility
to the extent allowed by Indiana law.
D. Construction of the IMC Facility began in August 1992 and
has been expeditiously pursued to the satisfaction of United and
the State. The IMC Facility was dedicated nearly a year ahead of
schedule and under budget, on March 2, 1994, with the first Boeing
737 arriving for maintenance on March 28, 1994. It is
anticipated by United that Phase I (as defined in the Master Lease
Agreement) of the IMC Facility will be completed in accordance with
the Original Agreement.
E. Each of United and the State has substantially complied
with all of its respective commitments under the Original
Agreement.
F. As originally contemplated by United and the Governments,
the IMC Facility would be dedicated to meeting the heavy
maintenance requirements of United's growing fleet of Boeing 737
aircraft.
G. Because of its strong partnership with the State, the
City and the Authority and the advantages and attractions of the
IMC Facility to and for United, United has already expanded the
types of maintenance operations to be conducted at the IMC Facility
to include certain types of lighter maintenance, and has
consequently commenced certain maintenance operations at the IMC
Facility approximately one year earlier than contemplated by the
Original Agreement.
H. Because of its strong partnership with the State, the
City and the Authority and the advantages and attractions of the
IMC Facility to and for United, United also has now proposed to
expand the number and nature of the aircraft types to be maintained
at the IMC Facility to include United's entire and growing fleet of
Boeing 757 and Boeing 767 aircraft as well as its growing fleet of
Boeing 737 aircraft.
I. United currently operates and maintains 88 Boeing 757
aircraft and 42 Boeing 767 aircraft, representing approximately 25%-
of United's fleet. The Boeing 757 aircraft, carrying 185
passengers, is one of the most efficient aircraft in commercial
aviation on a cost-per-passenger-mile basis. The Boeing 767
aircraft, carrying 210 passengers, represents one of Boeing's
newest generation of aircraft. Heavy maintenance visits for each
of the Boeing 757 and Boeing 767 fleets would be currently
scheduled to occur in the second quarter of 1996 in Indianapolis.
Since many components of the Boeing 757 and Boeing 767 aircraft are
interchangeable, an interlinking of the maintenance of the Boeing
757 and Boeing 767 aircraft fleets makes sound business sense.
J. Airframe maintenance of the Boeing 737, Boeing 757 and
Boeing 767 aircraft at the IMC Facility will bring approximately
65% of United's current total aircraft fleet to Indiana for regular
airframe maintenance operations.
K. The IMC Facility has been contemplated by the parties to
the Original Agreement and designed and constructed by United to be
flexible and expandable with respect to the nature and types of
operations and functions that can be performed. Accordingly, while
the hangars for maintenance of the Boeing 757 and Boeing 767
aircraft are substantially larger than hangars required for Boeing
737 aircraft maintenance and will each be required to be specially
designed, constructed and integrated into the IMC Facility as
contemplated in the Original Agreement, the resulting
reconfiguration of the IMC Facility is both feasible and consistent
with the nature, substance, function and intent of the IMC Facility
as contemplated by the Original Agreement.
L. Construction of the Boeing 757 and Boeing 767 maintenance
hangars will require hundreds of additional Hoosier construction
workers and tens of millions of dollars of expenditures for
additional materials and services to be purchased and procured
within Indiana.
M. The Boeing 757 and Boeing 767 maintenance hangars, when
complete, are expected and anticipated by United to result in
(i) capital additions to the IMC Project with an anticipated cost
of up to $117 million and (ii) at least 1200 new and additional
employees in good paying jobs at the IMC Facility by December 31,
1996.
N. The State believes that the expansion of the IMC Facility
through the construction and operation of the Boeing 757 and Boeing
767 maintenance hangars will allow the IMC Facility to make a
further and faster contribution to the diversification of the
Indiana economy; will provide an enhanced and earlier opportunity
for the State, Central Indiana and the City to attract other
aerospace and aerospace-related business to Indiana; will provide
more Hoosier workers with an earlier and unprecedented opportunity
to improve the quality of their skills and work; and will provide
(through the need for additional numbers of better educated, better
skilled Hoosier workers at the IMC Facility and related businesses)
the State's higher education institutions -- especially Vincennes
University, Purdue University, Indiana University-Purdue University
at Indianapolis and Indiana Vocational Technical College -- with an
even greater and earlier opportunity to help prepare these workers
for their new jobs.
0. United has already established itself as a committed
corporate citizen of Indianapolis and Indiana.
P. The State is entering into this Agreement with United in
reliance upon United's representations, warranties, covenants and
agreements, especially those with respect to the construction and
equipping of two additional hangars for Boeing 757 and Boeing 767
aircraft maintenance at and as a part of the IMC Facility at the
Airport and the employment of at least 1,200 additional highly
skilled workers in good paying jobs relating to such additional
hangars.
Q. United is entering into this Agreement with the State in
continuing reliance upon the respective representations,
warranties, covenants and agreements of the State under the
Original Agreement, and in further reliance upon the State's
additional representations, warranties, covenants and obligations
hereunder, especially those obligations to provide to United the
financial incentives provided for herein and an environment
conducive to efficiency of operation in accordance with the
Original Agreement and this Agreement.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained herein, and subject
to the terms and conditions described below, the parties hereto
agree as follows. Capitalized terms used in this Agreement and not
otherwise defined have the meanings set forth in Appendix I to the
Original Agreement.
ARTICLE I
LOCATION AND DESCRIPTION OF THE 757/767 PROJECT
101. Location. United agrees to construct and equip two
additional hangars for Boeing 757 and Boeing 767 aircraft
maintenance (the "757/767 Project") at and as an integral part of
the IMC Facility on the Site at the Airport as defined and
described in the Original Agreement. As an integral part of the
IMC Facility, the 757/767 Project will be subject to the terms and
conditions of the Master Lease Agreement.
102. Description. The 757/767 Project is generally described
on Exhibit A hereto. The parties acknowledge and agree that
nothing contained herein or in Exhibit A hereto shall prevent
United from making changes to the 757/767 Project description
provided that such description changes do not change United's
commitments as expressed in this Agreement.
ARTICLE II
CONSTRUCTION OF THE 757/767 PROJECT
201. Construction of the 757/767 Project.
(a) The State acknowledges and agrees generally that Article
II of the Original Agreement shall control, to the extent
applicable, the construction and equipping of the 757/767 Project,
and acknowledges and agrees specifically, but without limitation,
that (i) the Authority has committed under the Original Agreement
to confer upon United complete discretion with respect to the
selection of, and contracting for, professional services, including
program management, architectural design, engineering services and,
to the extent permitted by law, all additional non-contractual
issues and matters and (ii) United will, at United's election,
construct and equip the 757/767 Project pursuant to and in
accordance with United's rights, responsibilities and obligations
under the terms and conditions of the Construction Management
Agreement.
(b) In addition to this Section 201, the State shall, to the
extent permitted by law, continue to support and reasonably
cooperate with United in seeking administrative or legislative
relief or advantage with respect to the expedited construction of
the 757/767 Project and continued operation of the IMC Facility.
ARTICLE III
FINANCING
301. Financing. United hereby represents and warrants that
it is proceeding to finance a portion of the Costs of the Project,
as hereinafter defined, including Costs of the Project relating to
the 757/767 Project, through the issuance and sale by or through
the Authority of one or more series of bonds payable from lease
rentals under the Master Lease Agreement and constituting Special
Facility Bonds, as defined and described in and subject to Section
3.01(a) of the Original Agreement.
302. Repayment. United shall be responsible for paying all
debt service on the Special Facility Bonds by making the lease
rental payments specified in the Master Lease Agreement, as
supplemented in connection with the issuance of Special Facility
Bonds. United acknowledges and agrees that the State shall have no
liability with respect to the payment of principal of and premium
(if any) and interest on the Special Facility Bonds or United's
obligations to make rental payments as described in the Master
Lease Agreement, as so supplemented.
303. Costs of the Project; Indiana Project Costs. For
purposes of this Agreement:
a) "Costs of the Project" shall have the meaning set forth
in Section 3.03(a) of the Original Agreement.
b ) "Indiana Project Costs" shall have the meaning set
forth in Section 3.03(b) of the Original Agreement.
ARTICLE IV
FINANCIAL INCENTIVES
401. Account.
(a) In accordance with Section 4.01 of the original
Agreement, the proceeds of bonds as described in Sections 301 and
402 of this Agreement shall be or continue to be deposited in one
or more trust accounts with a trustee bank or banks permitted to
serve as a trustee for the particular bond issue under Indiana law,
acceptable to United, pursuant to a trust indenture, resolution or
ordinance for such bonds (all such trust accounts, collectively,
the "Account"). All deposits in the Account and any investment
income thereon (subject to any required rebate to the federal
government) shall be available at the direction of United solely to
fund the Costs of the Project as provided in Section 303 hereof and
the provisions set forth in the Master Lease Agreement and the
Construction Management Agreement. The funds in the Account shall
be invested by or on behalf of the State or another entity issuing
on behalf of the State (the "Issuer") at the direction of United in
obligations in which the Issuer is legally authorized to invest
such funds. For the purposes, among others, of complying with
State law and maintaining the tax-exemption of the Special Facility
Bonds and the State Bonds (as defined herein), funds deposited into
the Account may be segregated; set aside in separate accounts as
may be required under any trust indenture, resolution or ordinance
providing for the issuance of the Special Facility Bonds or the
State Bonds; or accounted for otherwise.
(b) On or before the 15th day of each month following the
initial deposit into the Account pursuant to this Article IV and
until all funds in the Account have been expended, United shall
cause to be provided to the Issuer, on behalf of the State, records
of all deposits to and payments from the Account, together with
appropriate documentation therefor. United shall also provide a
designee of the State, reasonably acceptable to United, with
reasonable access during normal business hours to United's books
and records relating to all payments made from the Account.
(c) United acknowledges and agrees that, with respect to the
issuance and sale of the State Bonds, (i) certain actions will be
required to be taken by various State governmental entities to
effect the issuance and sale of such State Bonds; (ii) the
conditions customarily included in bond purchase agreements with
respect to such State Bonds will be required to be satisfied; and
(iii) United will cooperate fully with, and provide sufficient
information to, the Issuer to effectuate the Issuer's ability to
issue and sell the State Bonds on a tax-exempt basis. United and
the State acknowledge and agree to cooperate and consult with each
other regarding all such activities.
402. State Incentives and State Bonds.
(a) Subject to the actions and conditions referred to in
Section 401 (c) having been taken or satisfied, as the case may be,
the Issuer shall issue and sell a special series of tax-exempt
revenue bonds (the "State Bonds"), the principal of and premium (if
any) and interest on which, and all other costs and expenses
relating thereto (except as provided in Section 1201 hereof), shall
be payable solely from available funds of the Issuer, including
lease rentals payable from any State appropriations which may be
made by the Indiana General Assembly. As soon as practicable, but
in any event not later than April 15, 1995, unless a longer period
of time is agreed to by United, the State shall cause the Issuer to
deposit $26 million, in cash, from the proceeds of the issuance of
the State Bonds into the Account. United acknowledges and agrees
that the State Bonds will be issued by the Indiana Transportation
Finance Authority or such other Issuer as the State shall cause to
issue such bonds.
(b) The State covenants and agrees that United shall have no
liability with respect to the issuance, sale or repayment of the
State Bonds, or any other obligations with respect thereto, and no
portion of the IMC Facility, including the 757/767 Project, shall
be pledged, directly or indirectly, to secure any obligations
relating to the State Bonds.
ARTICLE V
ADDITIONAL COVENANTS
501. Necessary Actions. The State hereby covenants and
agrees to use its best efforts to cause each of its affected and
applicable agencies, authorities, boards and commissions and other
entities to take all actions necessary or appropriate to effect to
the fullest extent possible all of the covenants of the State
contained in this Agreement as soon as practicable after-the date
hereof.
502. Taxes.
a) The State affirms its acknowledgment and agreement under
Section 5.04 of the Original Agreement to the effect that United
(i) has initially selected the Airport as the site of the IMC
Facility, and has now selected the Airport as the site for the
inclusion within the IMC Facility of the 757/767 Project, in
reliance upon the current State and local governmental tax
structures and with the expectation that the fundamental policies
underlying such tax structures would not change significantly in
the future; and (ii) has entered into this Agreement in continuing
reliance upon the representations and warranties made by the State
under Section 5.04 of the Original Agreement concerning State and
local property, sales and use and corporate income taxes.
b) The State affirms its acknowledgment and agreement under
Section 5.04 of the Original Agreement that changes in current
State and local taxes may result in the creation of fees and taxes
that could produce results that are, in effect, discriminatory
against United in contravention of the understandings of the
parties hereto and the parties to the Original Agreement. In
furtherance thereof, the State covenants and agrees to the extent
permitted by law that it will not seek or support any changes in
such taxes that are, in effect, limited to the airlines or to their
suppliers.
(c) United acknowledges that the State has supported and
cooperated, in accordance with Section 5.04(c) of the Original
Agreement, with United in obtaining legislative relief from those
provisions of Indiana's corporate tax law that could have resulted
in additional corporate tax liability for United.
503. Supplemental Disclosure. The State and United shall
have, and in accordance with Section 5.06 of the Original
Agreement, shall continue to have, the continuing obligation to
notify the other promptly of any event, circumstance or discovery
leading to a reasonable conclusion that any representation,
warranty, covenant or agreement contained in this Agreement is
incomplete, inaccurate or not complied with in any material
respect.
504. Governmental Assistance.
(a) In addition to the obligations contained in Section 2.01
of the Original Agreement and as an affirmation of Section 5.07 of
the Original Agreement, the State shall continue to cooperate in
good faith with United and with the City, the Authority and any
other affected governmental entity or agency to assist United in
obtaining or maintaining in effect all federal, State and local
licenses, permits, approvals and authorizations under any and all
applicable laws, ordinances, regulations, rules, orders or decrees
that are necessary, in the reasonable judgment of United, to
construct, equip, utilize and operate the IMC Facility, including
the 757/767 Project, as expeditiously as possible.
(b) To continue to facilitate the foregoing commitment, the
State shall continue to employ an expedited review process with
respect to all aspects of the IMC Facility, including the 757/767
Project, through which process United will submit all documentation
required for any license, permit, approval or authorization
necessary or appropriate to be obtained from or maintained with the
State or any agency or instrumentality thereof.
505. Airport Rates and Charges. The State affirms its
agreement and understanding under Section 5.08 of the original
Agreement that none of the costs and expenses to or for the account
of the State or any other governmental entity in connection with
the provision of the incentives pursuant to Article IV of the
Original Agreement or Article IV hereof shall or should in any
manner be paid, directly or indirectly, from airport rates, charges
or landing fees paid by United or any other airline under its
respective Agreement and Lease of Premises with the Authority.
ARTICLE VI
COVENANTS OF UNITED
601. Construction and Operation of the 757/767 Project as a
Part of the IMC Facility.
(a) United agrees to locate, construct and equip (or cause to
construct and equip) the 757/767 Project as an integral part of the
IMC Facility at the Airport.
(b) During the term of the Master Lease Agreement, United
will utilize the IMC Facility, including the 757/767 Project, as a
major aircraft maintenance facility.
(c) United agrees that an aggregate of at least 1,200 full
time employees (the "757/767 Employees") will be employed by United
at the 757/767 Project within the IMC Facility on or before
December 31, 1998.
(d) Subject to the provisions. of Section 602 of this
Agreement, the agreements by United set forth in the foregoing
paragraph (c) of this Section 601 are separate from and in addition
to the covenants of United set forth in Section 6.01(c) of the
Original Agreement.
(e) The estimated annual payroll and benefits for the United
employees allocable to the 757/767 Project within the IMC Facility
are expected to aggregate more than $54 million by December 31,
1997.
(f) Subject to the compliance by the State, the City and the
Authority with Section 2.01 and Section 5.07 of the Original
Agreement, United agrees to construct the 757/767 Project as an
integral part of the IMC Facility.
(g) United continues to be committed to assisting the State
in its economic development efforts and, in this regard, will
continue to use its best efforts to cooperate with the State in an
effort to induce other private entities to locate significant new
economic development projects related to the IMC Facility in
Indiana.
602. Reimbursement.
(a) United acknowledges and agrees that the State has entered
into this Agreement and has agreed to provide the incentives set
forth herein, in part, in reliance upon the covenants of United set
forth in Section 601 hereof. In furtherance thereof, the parties
hereto agree that if any of such covenants are not fulfilled, the
following provisions shall serve as the sole and exclusive remedy
of the State, subject to Article XI of this Agreement:
(i) In the event that on or before December 31,
2001, the aggregate Indiana Project Costs, including the
Indiana Project Costs expended or allocated for the
construction and equipping of the 757/767 Project, do not
equal or exceed $800 million (in actual dollars
expended), United (A) affirms its obligations under
Section 6.02 (a) (i) of the Original Agreement to pay to
the State and the other Governments, as defined in the
Original Agreement, the amount determined in the manner
and paid in accordance with Section 6.02 (a) (i) of the
Original Agreement; and (B) shall make an additional
payment to the State of an aggregate amount equal to the
product of (1) a fraction, the numerator of which shall
be $800 million minus the actual Indiana Project Costs
accrued or expended through December 31, 2001, and the
denominator of which shall be $800 million; times (2) a
fraction, the numerator of which shall be $26 million and
the denominator of which shall be three.
(ii) In the event that during the calendar year
ending December 31, 2004 (or any earlier calendar year
selected by United in its sole discretion), there are not
at least 7,500 Facility Employees, including the 757/767
Employees, United shall pay to the State an aggregate
amount equal to the product of (X) a fraction, the
numerator of which shall be 7,500 minus the actual number
of Facility Employees for the year ending December 31,
2004 (or such earlier year selected by United), and the
denominator of which shall be 1,200; times (Y) $26
million; times (Z) a fraction, the numerator of which
shall be two and the denominator of which shall be three.
In the event that a calculation is required to be made
under this clause (ii) and the actual number of Facility
Employees for the year ending December 31, 2004 (or such
earlier year selected by United) is less than 6,300, then
the first sentence of this clause (ii) shall not apply
and United shall pay to the State the sum of
$17,333,333.33. United further acknowledges that it may
also be liable to make payments to the State and the
other Governments as set forth in Section 6.02(a) (ii) of
the Original Agreement.
(iii) Notwithstanding clause (ii) above, in the
event that for the calendar year referred to in clause
(ii) above, the number of Facility Employees is less than
7,500, for purposes of determining whether United shall
be required to make any payment to the State pursuant to
such clause (ii), the number of Facility Employees shall
be recalculated so that such number will equal the sum of
(A) the number of Facility Employees (including 757/767
Employees) for such calendar year, plus (B) the number of
Net New United Employees for such calendar year, plus (C)
the number of Ancillary Employees for such calendar year.
(iv) For purposes of this Section 602:
(W) "Facility Employees" means the
average number of all Full-Time United
Employees and Full-Time Equivalents employed at
the Facility during any year.
(X) "Full-Time United Employees and
FullTime Equivalents" shall mean all Full-Time
United Employees and Full-Time United
Equivalents; "Full Time United Employees"
means any United employee who works (including
all vacation time, sick time and compensatory
time) an average of 35 hours or more per week
of employment; provided, however, that any
employees covered by a collective bargaining
agreement shall be deemed to satisfy this
requirement if they work (including all
vacation time, sick time and compensatory
time) at least the minimum number of hours
required of full-time employees under the
applicable terms of their respective
collective bargaining agreements; and "FullTime
United Equivalents" means (i) with respect to
United employees covered by a collective
bargaining agreement who are not Full Time
United Employees, the aggregate number of hours
per week during any relevant period worked
(including all vacation time, sick time and
compensatory time) by all such employees
divided by the number obtained by multiplying
the minimum number of hours per week required
of full-time employees under the applicable
collective bargaining agreement by the number
of weeks in such period; or (ii) with
respect to all other employees that are not
Full-Time United Employees, the aggregate
number of hours worked per week (including all
vacation time, sick time and compensatory time)
during any relevant period by all such
employees, divided by the number obtained by
multiplying 35 times the number of weeks in
such period.
(Y) "Net New United Employees" shall mean
the average number of all Full-Time United
Employees and Full-Time Equivalents (other
than Facility Employees) employed in the
State in any year in excess of the average
number of Full-Time United Employees and Full
Time Equivalents employed in the State during
the year ending December 31, 1991; provided,
however, that Net New United Employees shall
not include any employee of a business
acquired by United (by merger or otherwise),
after the date hereof who prior to such
acquisition worked in the State . for such
business.
(Z) "Ancillary Employees" shall mean the
average number of full-time employees employed
in the State during any year of all
corporations or other entities which conduct
business falling within Standard Industry
Group No. 372 and all corporations engaged in
the aircraft or aeronautical industries which
conduct businesses falling within Standard
Industry Classification Nos. 3592, 3694, 3714,
3812, 4581, or 8731 and such other Standard
Industry Classification Numbers as the State
and United agree to, and which directly serve
the IMC Facility, but only to the extent that
such employee's job has been created by such
business since November 15, 1991. Without
limiting the foregoing, United and the State
agree that the term "Ancillary Employees"
hereunder shall include employees of non United
owned or controlled entities working on a full-
time basis at the IMC Facility and performing
functions or services which were or would
reasonably have been contemplated to be
performed or carried out by United employees
as of the time of execution of the Original
Agreement.
(b) For purposes of Paragraph (a) of this Section 602, (i) no
later than March 31, 2002, United shall deliver to the State a
certificate (a "Determination Certificate") of an appropriate
officer of United, certifying as to the aggregate Indiana Project
Costs on December 31, 2001 or such earlier time selected by United
(in actual dollars expended) ; and (ii) no later than March 31,
2005, United shall deliver to the State a Determination Certificate
of an appropriate officer of United, certifying as to the actual
number of Facility Employees during the year ending December 31,
2004, or such earlier year selected by United. All amounts used
for such computation shall be determined according to United's
internal books and records, except that the number of Ancillary
Employees shall be determined pursuant to good faith negotiations
between United and the State consistent with Section 6.02 of the
Original Agreement or certificates of United and employers of such
Ancillary Employees. For purposes of reviewing any Determination
Certificate, a designee of the State acceptable to United will
have the right, during normal business hours, to review the books
and records of United related solely to the matters set forth
therein. Any Determination Certificate shall be deemed conclusive
of the facts set forth therein and shall be final and binding on
the parties hereto, unless challenged by the State within 45 days
following delivery.
(c) In the event that United is required to reimburse the
State pursuant to Paragraph (a) of this Section 602, United shall
make such payment within 45 days following the date that the
applicable Determination Certificate provided pursuant to
Paragraph (b) of this Section 602 becomes final and binding on the
State, in cash, by wire transfer to a trust account designated by
the State in writing at least three business days prior to any
required payment date. Any such payment shall be separate from and
in addition to any payment that may be required to be made by
United to the State and the other Governments pursuant to
Section 6.02 of the Original Agreement. Any such payment made to
the State pursuant to the Determination Certificate described
under Section 602(b)(i) shall be held by the State in escrow under
mutually agreeable terms until December 31, 2004, and shall be
paid to the State at such time only in the event that Section 602
(e) does not apply.
(d) The parties hereto acknowledge and agree that any amount
required to be paid by United to the State pursuant to this
Section 602 represents a good faith estimate of damages to the
State as a result of United's failure to fulfill the covenants
contained herein, and is not intended to be a penalty imposed upon
United.
(e) Notwithstanding any other provision of this Section 602,
in the event that for any calendar year ending on or before
December 31, 2004, the number of Facility Employees, including the
757/767 Employees, equals or exceeds 7900, the provisions of this
Section 602 shall terminate and United shall have no liability
hereunder or under Section 6.02 of the Original Agreement pursuant
to Section 6.02(e) thereof. Any amounts which have previously been
paid to the State by United and held in escrow pursuant to
Section 602(c) shall be thereupon returned to United, together with
any interest earned on such amounts during the period of escrow
investment.
(f) Nothing in this Agreement generally, or in Section 601
or this Section 602 of this Agreement in particular, shall be
deemed in any way to modify, amend, alter or affect any obligation,
liability or covenant of United set forth in the Original Agreement
with respect to the City or the Authority, or any obligation,
liability or covenant of the City or the Authority set forth in the
Original Agreement with respect to United. Neither the City nor the
Authority shall be, or deemed to be, a third-party beneficiary for
any purposes under this Agreement.
603. Minority Business Enterprise and Women Business
Enterprise Goals. United and the State affirm the Minority
Business Enterprise and Women Business Enterprise goals and
provisions of Section 6.03 of the Original Agreement.
ARTICLE VII
LEASE ARRANGEMENTS
701. Master Lease Agreement. The 757/767 Project shall be
an integral part of and shall be included for all purposes with the
IMC Facility leased to United pursuant to the Master Lease
Agreement.
702. Lease Terms. Interests in the IMC Facility, including
the 757/767 Project, financed with the proceeds of the State Bonds
shall be leased or subleased by the Authority to United pursuant
to the Master Lease Agreement. United shall have no liability for
any additional amounts required with respect to the lease of the
portions of the IMC Facility, including the 757/767 Project,
financed with the State Bonds except for its obligations to
maintain and operate the IMC Facility.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF THE STATE
The State represents and warrants to United as follows:
801. Power and Authority. The State has all requisite power
and authority to enter into this Agreement and to perform its
obligations under this Agreement.
802. Due Authorization. Except as otherwise set forth
herein, all acts and other proceedings required to be taken by
the State to authorize the execution, delivery and performance of
this Agreement have been duly and properly taken.
803. Due Execution. This Agreement has been duly executed
and properly delivered by the State and constitutes a valid and
binding obligation of the State, enforceable against the State in
accordance with this Agreement's terms, subject to (i) bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting
creditors, rights generally heretofore or hereafter enacted; and
(ii) the exercise of judicial discretion in accordance with the
general principles of equity; and (iii) the valid exercise of the
constitutional powers of the State and the United States of
America.
804. Consents and Approvals; No Violation. The execution and
delivery of this Agreement by the State does not, and the
consummation by the State of the transactions contemplated hereby
and compliance by the State with the terms hereof will not:
(a) conflict with or result in a violation of (i) any
provision of any instrument governing the State (including, without
limitation, the State Constitution and any State enabling
legislation) or (ii) any judgment, order, writ, injunction, decree,
statute, law, ordinance, rule or regulation applicable to the
State; or
(b) conflict with or result in or cause any material breach,
violation of or default under any material contract, agreement,
other instrument, commitment, arrangement, or understanding or
grant to which the State is a party or which is otherwise
applicable to the State.
805. Operation of the 757/767 Project and the IMC Facility.
There is no law, ordinance, regulation or rule of the State enacted
or, to the best knowledge of the State, proposed that would
prohibit United from fully utilizing the IMC Facility, including
the 757/767 Project, on a 24-hour-a-day, seven-day-a-week basis in
the manner currently contemplated.
806. No Injunctions, Suits or Proceedinqs.
(a) None of the commitments of the State to provide benefits
to United hereunder is the subject of any injunction, suit,
proceeding or other challenge.
(b) Except as disclosed to United as of the date hereof, the
State has not received any communication, whether from any member
of the Indiana General Assembly, a citizens' group, taxpayer or
otherwise, with respect to any proposed or current suit,
proceeding, legislation with respect to or challenge to this
Agreement or any of the transactions contemplated hereby. The State
agrees to inform United of any such communications and, subject to
the attorney-client privilege, to provide United with copies of all
such communications whenever received.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF UNITED
United hereby represents and warrants to the State as follows:
901. Organization and Existence. United is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware. United has all requisite corporate
power and authority to own, lease and operate its properties and
to carry on its business as now being conducted.
902. Power and Authority. United has all requisite corporate
power and authority to enter into this Agreement and to perform its
obligations under this Agreement.
903. Due Authorization. All corporate acts and other
proceedings required to be taken by United to authorize the
execution, delivery and performance of this Agreement have been
duly and properly taken.
904. Due Execution. This Agreement has been duly executed
and properly delivered by United and constitutes the valid and
binding obligation of United, enforceable against United in
accordance with its terms, subject to (i) bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors',
rights generally heretofore or hereafter enacted and (ii) the
exercise of judicial discretion in accordance with the general
principles of equity.
905. Consents and Approvals; No Violation. The execution and
delivery of this Agreement by United does not, and the consummation
of the transactions contemplated hereby and compliance with the
terms hereof will not, (a) conflict with or result in a violation
of (i) its Certificate of Incorporation or By-laws; or (ii) any
judgment, order, writ, injunction, decree, statute, law, ordinance,
rule or regulation applicable to United; or (b) conflict with, or
result in or cause any material breach, violation of or default
under, any material contract, agreement, other instrument,
commitment, arrangement or understanding to which United is a party
or which otherwise applies to United.
ARTICLE X
INDEMNIFICATIONS; SURVIVAL OF
REPRESENTATIONS AND WARRANTIES
1001. Indemnification by the State. To the fullest extent
permitted by law and subject to Section 1211 hereof, the State
agrees to indemnify, defend and hold harmless the United Parties
from and against any and all losses, liabilities, expenses
(including attorneys and other professionals' fees and expenses),
claims and damages asserted against, resulting to, imposed upon or
suffered by the United Parties or any of them to the extent arising
from or attributable to (i) any breach of any representation or
warranty by the State contained in this Agreement, (ii) any breach
or nonperformance of any covenant or agreement of the State
contained in this Agreement, (iii) any action, suit or proceeding
relating to or challenging any of the obligations of the State set
forth in this Agreement, or (iv) the issuance, sale or repayment
of the State Bonds. Although the State's obligations under this
Section 1001 are subject to Section 1211 hereof, the State
covenants that it will do all things lawfully within its power to
obtain and maintain funds from which to meet its obligations under
this Section 1001, including, without limitation, making separate
provision for any such obligations under this Section 1001 in each
budget, or adjustments thereto, submitted to the General Assembly
of the State for the purpose of obtaining appropriations; using
its bona fide best efforts to have such portion of the State's
budget approved; and exhausting all available reviews and appeals
in the event such portion of the State's budget is not approved.
1002. Indemnification by United. To the fullest extent
permitted by law, United agrees to indemnify, defend and hold
harmless the State from and against any and all losses,
liabilities, expenses (including attorneys' and other
professionals' fees and expenses), claims and damages asserted
against, resulting to, imposed upon or suffered by the State to the
extent arising from or attributable to (i) any breach of any
representation or warranty of United contained in this Agreement,
(ii) any breach or nonperformance of any covenant or agreement of
United contained in this Agreement, or (iii) any action, suit or
proceeding relating to or challenging any of the obligations of
United set forth in this Agreement.
1003. Survival of Representations, Etc. The parties agree
that each of the representations, warranties, covenants and
agreements contained herein shall survive the consummation of the
transactions contemplated hereby.
ARTICLE XI
TERMINATION
1101. Termination. Notwithstanding any other provision
of this Agreement, this Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) by mutual written agreement of the parties hereto;
(b) by the State, in the event of a material breach by United
of its obligations set forth in Section 601 (a), (b), (c), (f) or
(g) hereof which is not cured within forty-five (45) days of
written notice thereof;
(c) by United, in the event of (i) a material breach by the
State of its obligations set forth in Sections 501 or 1211 hereof,
which is not cured within forty-five (45) days of written notice
thereof or (ii) in the event that the financial incentives set
forth in Section 402 hereof of this Agreement have not been
provided within the time period set forth in Section 402 hereof;
and
(d) unless earlier terminated, this Agreement shall
automatically terminate and be of no further force or effect on
November 22, 2050.
1102. Procedure upon Termination. In the event of the
termination of this Agreement and the abandonment of the
transactions contemplated hereby pursuant to Section 1101 hereof,
written notice thereof shall forthwith be given by the party so
terminating to the other party, and this Agreement shall terminate,
and the transactions contemplated hereby shall be abandoned,
without further action by the State or United hereunder.
1103. Effect of Termination. If this Agreement is
terminated pursuant to Section 1101 hereof:
(a) Except as provided in Section 1104 hereof, neither the
State nor United shall have any liability hereunder to the other
party hereto;
(b) United shall have no obligation to reimburse the State
for amounts expended from the Account pursuant to Section 401 of
this Agreement; and
(c) The provisions of Sections 1001, 1002, 1003, 1104 and
1201 hereof and this Section 1103 shall survive any termination of
this Agreement.
1104. Breach. In no event shall termination of this
Agreement limit or restrict the rights and remedies of either party
hereto against the other party to the extent that such other party
has willfully breached the terms of this Agreement prior to
termination hereof.
1105. Other Rights and Remedies. The right of any party
hereto to terminate this Agreement shall not in any manner affect
or limit such party's right to exercise any other right or remedy
it may have in addition to its right of termination hereunder, or
any right or remedy it may have under the Original Agreement.
ARTICLE XII
MISCELLANEOUS
1201. Expenses. Except as otherwise provided herein, each
party shall pay all fees and expenses incurred by it in connection
with the transactions contemplated by this Agreement. United
acknowledges that the costs incurred in connection with the
issuance of the State Bonds may be disbursed from the proceeds
thereof, so long as the amount required to be deposited into the
Account pursuant to Section 402 of this Agreement is so deposited.
1202. Further Assurances. From time to time, either party
may request the other party to execute and deliver to the
requesting party such documents and to take such other action as
the party may reasonably request in order to consummate more
effectively the transactions contemplated herein.
1203. Alternative Dispute Resolution; Arbitration.
(a) If a dispute arises between the parties relating to this
Agreement, the parties agree, to the fullest extent permitted by
law, to use the following procedure to resolve the dispute:
(i) A meeting shall be held promptly between the
parties, attended by individuals with decision-making
authority regarding the dispute, to attempt in good faith
to negotiate a resolution of the dispute;
(ii) If, within 15 days after that meeting, the
parties have not succeeded in negotiating a resolution
of the dispute, they hereby agree to submit the dispute
to mediation in accordance with the Commercial Mediation
Rules of the American Arbitration Association and to bear
equally the costs of the mediation;
(iii) The parties will jointly appoint a mutually
acceptable mediator, seeking assistance in this regard
from the American Arbitration Association if they are
unable to agree upon this appointment within 15 days from
the conclusion of the negotiation period; and
(iv) The parties agree to participate in good faith
in the mediation and negotiations related thereto for a
period of 30 days. If the parties are not successful in
resolving the dispute through the mediation, then the
parties agree that, to the fullest extent permitted by
law, the dispute shall be settled by binding arbitration
in accordance with the procedures set forth below.
(b) If any dispute cannot be settled in accordance with the
procedures set forth above, to the fullest extent permitted by law,
then:
(i) Either the State or United may request
arbitration of the dispute by giving the other party
written notice that specifies the matter sought to be
arbitrated and designates a person to act as arbitrator;
(ii) within 10 business days after receipt of that
notice, the State or United, as the case may be, shall
send written notice to the party requesting arbitration
and designating a second person to act as arbitrator;
(iii) Within 10 business days after receipt of the
written notice of the second arbitrator, the two
arbitrators, by mutual agreement, shall designate a third
arbitrator. If the time provided in subparagraph (ii)
above expires before the written notice of the second
arbitrator is sent to the party requesting arbitration,
the first arbitrator shall designate the two additional
arbitrators.
(iv) Promptly after the third arbitrator's
designation, but in no event later than 30 days
thereafter, at a date to be set by the arbitrators, an
arbitration hearing shall be held in Indianapolis,
Indiana. The Commercial Arbitration Rules of the
American Arbitration Association shall apply at the
arbitration hearing, and the three arbitrators shall
allow the State and United to each present, in the
presence of the other party, its case, including opening
statement, evidence, witnesses, if any, and summation.
The arbitrators shall render their decision within 30
days of the hearing; and
(v) The decision and award, if any, of the majority
of the arbitrators shall be final, binding and
nonappealable as to the parties hereto. Any award shall
provide for the entire costs and expenses of the
arbitration, including reasonable attorney's fees, by the
losing party where it is determined that the arbitration
has been made necessary by the refusal or failure of that
party to negotiate in good faith the matter that is the
subject matter of the arbitration. If no such
determination is made, each party shall bear its own
costs and expenses. Judgment may be entered on any award
so rendered in any court of competent jurisdiction.
1204. Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of and be enforceable by the respective
successors and permitted assigns of the parties hereto. The rights
and obligations of the State and United hereunder may not be
assigned without the consent of the other party.
1205. Amendments and Waiver. This Agreement may be amended
only by a written instrument executed by both of the parties. Any
condition precedent to a party's obligations hereunder may be
waived in writing by that party to the extent permitted by law.
1206. Entire Agreement; Non-Merger. This Agreement and the
schedules and exhibits hereto, together with the other agreements
referred to herein, contain the entire understanding of the parties
hereto with respect to their subject matter. This Agreement
supersedes all prior agreements and understandings, oral and
written, with respect to the subject matter set forth herein,
provided that (a) the Original Agreement shall not be deemed to be
merged into or modified or amended or superseded by this Agreement,
and (b) this Agreement is and shall be deemed to be supplemental
only to the Original Agreement with respect to the additional
rights and obligations of United and the State set forth herein.
Except as so supplemented by the provisions set forth herein, the
Original Agreement shall continue in full force and effect with
respect to the rights, title, interests and obligations of the
State and United.
1207. Headings. The article and section headings contained
in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
1208. Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally or
mailed (registered or certified mail, postage prepaid, return
receipt requested) as follows:
If to the State:
Indiana Department of Commerce
Office of the Lieutenant Governor
Indianapolis, Indiana 46204
Attention: Frank O'Bannon, Director
If to United:
United Air Lines, Inc.
1200 Algonquin Road
Elk Grove Township, Illinois 60007
Attention: Stuart Oran, Esq.
Executive Vice President
and General Counsel
With a copy to:
Larry Clark, Vice President - Properties
and Facilities
or to such other address as the person to whom notice is to be
given may have previously furnished to the other party in writing
in the manner set forth above; provided, that notice of a change
of address shall be deemed given only upon receipt.
1209. Third Parties. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any entity
or person other than the parties hereto and their successors or
permitted assigns any rights or remedies under or by reason of this
Agreement.
210. Independent Parties. With respect to the State and
United, each party, in the performance of this Agreement, will be
acting in an individual capacity and not as an agent, employee,
partner, joint venturer or associate of one another. The employees
or agents of the State shall not be deemed or construed to be the
employees or agents of United, and the employees or agents of
United shall not be deemed or construed to be the employees or
agents of the State for any purposes whatsoever. Neither United
nor the State will assume any liability for any injury (including
death) to any persons, or any damage to any property, arising out
of the acts or omissions of the agents, employees or subcontractors
of the other party.
1211. Appropriations. The payment and performance
obligations of the State under Section 1001 of this Agreement are
subject to the appropriation and the availability of funds and, in
this regard, this Agreement may be terminated by United, in whole
or in part, if the State Budget Director makes an official written
determination that funds are not appropriated or otherwise
available to support continuation of performance of the State under
this Agreement. An official determination by the State Budget
Director that funds are not appropriated or otherwise available to
support continuation of performance shall be final and conclusive.
1212. Non-Discrimination. United and its subcontractors, if
any, shall not discriminate against any employee or applicant for
employment in the performance of this Agreement, with respect to
the hire, tenure, terms, conditions or privileges of employment or
any matter directly or indirectly related to employment because of
such person's race, color, religion, sex, handicap, national origin
or ancestry.
1213. Drug-Free Workplace. United hereby covenants and
agrees (a) to continue to make a good faith effort to provide and
maintain during the term of this Agreement a drug-free workplace
at the IMC Facility; and (b) that it will give written notice to
the State within 10 days after receiving actual notice that any
Facility Employee has been convicted of a criminal drug violation
occurring at the Site. In addition, United hereby acknowledges that
the entry of the State into this Agreement is expressly subject to
the Drug-Free Workplace Certificate, attached as Exhibit B hereto.
United covenants to undertake its best efforts to comply with this
Section 1213 and the representations of United set forth in the
Drug-Free Workplace Certificate.
1214. Counterparts. This Agreement may be executed
simultaneously in several counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument.
1215. Governing Law. This Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the
State of Indiana, without regard to the conflicts of law principles
thereof.
1216. Severability. In the event that any clause, portion
or section of this Agreement is unenforceable or invalid for any
reason, as long as the economic benefits expected to be derived by
each of the parties are not materially affected, such
unenforceability or invalidity shall not affect the enforceability
or validity of the remainder of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
STATE OF INDIANA, ACTING BY AND
THROUGH ITS DEPARTMENT OF
COMMERCE
By: /s/ Frank O'Bannon
Frank O'Bannon, Director
APPROVED:
DEPARTMENT OF ADMINISTRATION:
By: /s/ William Shenberg
Date: 28 December 1994
STATE BUDGET AGENCY:
By: /s/ Jean S. Blackwell
Jean S. Blackwell,
State Budget Director
Date: 28 December 1994
APPROVED ONLY AS TO FORM AND
LEGALITY WITH RESPECT TO THE STATE:
By: /s/ Pamela Carter
Pamela Carter,
Attorney General
Date: 28 December 1994
APPROVED AND RATIFIED
By: /s/ Evan Bayh
Evan Bayh, Governor
Date: 4 January 1995
****
UNITED AIR LINES, INC.
By: /s/ Stuart I. Oran
Name: Stuart I. Oran
Title: Executive Vice President
Corporate Affairs and
General Counsel
ATTEST:
BY: /s/ Mary Jo Georgen
Name: Mary Jo C. Georgen
Title: Assistant Secretary
EXHIBIT LIST
A. Description of the 757/767 Project (Section 101)
B. Drug-Free Workforce Certificate (Section 1213)
EXHIBIT A
Description of the 757/767 Project
[To be supplied]
EXHIBIT B
STATE OF INDIANA
DRUG-FREE WORKPLACE CERTIFICATION
Pursuant to Executive Order No. 95-0, April 12, 1990, Issued
by Governor Evan Bayh, the Indiana Department of Administration
requires the Inclusion of this certification In all contracts with
and grants from the State of Indiana in excess of $25,000. No
award of a contract or grant shall be made, and no contract,
purchase order or agreement, the total amount of which exceeds
$25,000, shall be valid unless and until this certification has
been fully executed by the Contractor or Grantee and attached to
the contract or agreement as part of the contract documents. False
certification or violation of the certification may result in
sanctions including, but not limited to, suspension of contract
payments, termination of the contract or agreement and/or debarment
of contracting opportunities with the State for up to three (3)
years.
The Contractor/Grantee certifies and agrees that it will
provide a drug-free workplace by:
(a) Publishing and providing to all of its employees a
statement notifying employees that the unlawful manufacture,
distribution, dispensing, possession or use of a controlled
substance is prohibited in the Contractor's workplace and
specifying the actions that will be taken against employees for
violations of such prohibition; and
(b) Establishing a drug-free awareness program to Inform
employees about (1) the dangers of drug abuse in the workplace; (2)
the Contractor's policy of maintaining a drug-free workplace; (3)
any available drug counseling, rehabilitation, and employee
assistance programs; (4) the penalties that may be imposed upon an
employee for drug abuse violations occurring in the workplace;
(c) Notifying all employees in the statement required by
subparagraph (a) above that as a condition of continued employment
the employee will (1) abide by the terms of the statement; and (2)
notify the employer of nay criminal drug statute conviction for a
violation occurring In the workplace no later than five (5) days
after such conviction;
(d) Notifying in writing the contracting State Agency and the
Indiana Department of Administration within ten (10) days after
receiving notice from an employee under subdivision (c)(2) above,
or otherwise receiving actual notice of such conviction;
(e) Within thirty (30) days after receiving notice under
subdivision (c)(2) above of a conviction, Imposing the following
sanctions or remedial measures on any employee who is convicted of
drug abuse violations occurring in the workplace: (1) take
appropriate personnel action against the employee, up to and
Including termination; or (2) require such employee to
satisfactorily participate in a drug abuse assistance or
rehabilitation program approved for such purposes by a Federal,
State or local health, law enforcement, or other appropriate
agency; and
(f) Making a good faith effort to maintain a drugfree
workplace through the implementation of subparagraphs (2) through
(3) above.
THE UNDERSIGNED AFFIRMS, UNDER PENALTIES OF PERJURY, THAT HE OR
SHE IS AUTHORIZED TO EXECUTE THIS CERTIFICATION ON BEHALF OF THE
DESIGNATED ORGANIZATION.
Printed Name of Organization Contract/Grantee
ID Number
Signature of Authorized Representative Date
Printed Name and Title
State Form DAPW 150
44260 Rev. 8/90
Exhibit 10.37
OFFICER BENEFITS
UAL CORPORATION AND UNITED AIR LINES, INC.
Welfare Benefits
Each officer of United and UAL is eligible to receive "split-
dollar" life insurance and 24-hour all-risk accidental death and
dismemberment ("AD&D") insurance. Under the split-dollar
program, officers receive whole life coverage equal to
approximately three times base salary less $50,000. UAL and
United pay the entire premium for the first seven years, partly
with cash and partly with loans against the policy's cash value.
UAL and United recover their payments from the cash value of the
policy in the eighth policy year, or when the policy is paid up.
The AD&D insurance pays a $250,000 benefit upon the accidental
death or dismemberment of the insured.
Officers are covered by a self-insured supplemental long term
disability plan which provides a supplement to the Company's
disability benefit for certain management employees equal to 50%
of monthly pay in excess of $20,000.
Company Cars
Designated senior officers are entitled to the personal use of
cars owned or leased by United.
Club Memberships
United pays the cost of social club memberships of designated
senior officers only upon approval by the Chairman and Chief
Executive Officer.
Travel Benefits
Free travel is provided on United for active and retired officers
of UAL and United and their spouses and dependent children, and
payments are made to federal and state tax authorities with
respect to the imputed tax liability on up to $12,000 in value of
travel benefits for active officers, and up to $6,000 for retired
officers. This benefit also includes admission to United's Red
Carpet Club. Active officers who are also directors of UAL
received the benefits provided to active directors.
Financial Advisory Services
Each officer of UAL and United at the Senior Vice President level
and above are entitled to receive reimbursement for costs
incurred for professional financial counseling in the areas of
cash management, taxes, investments,, insurance and estate
planning. Reimbursement is limited to $7,000 in the first year
the officer is admitted to the program, and to $4,000 per year
thereafter. Unused reimbursements may be carried over and used
in succeeding years.
Exhibit 21
UAL CORPORATION SUBSIDIARIES
Subsidiary Place of Incorporation Business Name
Air Wis Services, Inc. Wisconsin Air Wis Services, Inc.
Four Star Insurance Bermuda Four Star Insurance
Company, Ltd. Company, Ltd.
Mileage Plus, Inc. Delaware Mileage Plus, Inc.
UAL Leasing Corporation Delaware UAL Leasing Corporation
U-C Corp. Delaware U-C Corp.
United Air Lines, Inc. Delaware United Air Lines, Inc.
Exhibit 23.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the
incorporation of our report included in the UAL Corporation
Form 10-K for the year ended December 31, 1994, into the
Company's previously filed Post-Effective Amendment No. 1 to
Form S-8 Registration Statement (File No. 2-67368) and Post-
Effective Amendment No. 2 to Form S-8 Registration Statement
(File No. 33-37613) for the Employees' Stock Purchase Plan
of UAL Corporation; Post-Effective Amendment No. 1 to Form S-
8 Registration Statement (File No. 33-38613) for the United
Air Lines, Inc. Management and Salaried Employees' 401(k)
Retirement Savings Plan; Form S-8 Registration Statement
(File No. 33-57331) and Post-Effective Amendment No. 1 to
Form S-8 Registration Statement (File No. 33-44552) for the
United Air Lines, Inc. Ground Employees' 401(k) Retirement
Savings Plan; Post-Effective Amendment No. 1 to Form S-8
Registration Statement (File No. 33-44553) for the United
Air Lines, Inc. Flight Attendant Employees' 401(k)
Retirement Savings Plan; Post-Effective Amendment No. 2 to
Form S-8 Registration Statement (File No. 33-41968) and Form
S-8 Registration Statement (File No. 33-10206) for the UAL
Corporation 1981 Incentive Stock Plan; Form S-3 Registration
Statement (File No. 33-57192), as amended; Post-Effective
Amendment No. 1 to Form S-8 Registration Statement (File No.
33-59950) for the United Air Lines, Inc. Pilots' Directed
Account Retirement Income Plan; and Form S-4 Registration
Statement (File No. 33-57579), as amended.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Chicago, Illinois
March 8, 1995
EXHIBIT 99.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1994
Employees' Stock Purchase Plan of UAL Corporation
(Full title of the Plan)
UAL Corporation
(Employer sponsoring the Plan, issuer of the
participations in the Plan and issuer of
the shares held pursuant to the Plan)
1200 Algonquin Road, Elk Grove Township, Illinois
Mailing Address:
UAL Corporation, P.O. Box 66919, Chicago, Illinois 60666
(Address of principal executive offices)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To UAL Corporation:
We have audited the accompanying statement of financial position
of the Employees' Stock Purchase Plan of UAL Corporation (the "Plan") as of
December 31, 1994 and 1993 and the related statement of changes in
participants' equity for each of the three years in the period ended
December 31, 1994. These financial statements are the responsibility of the
Plan's administrator. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by the Plan's administrator, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Plan as of
December 31, 1994 and 1993 and the changes in its participants' equity for
each of the three years in the period ended December 31, 1994, in conformity
with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 23, 1995
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the sponsor and issuer of the participants of the Plan, UAL
Corporation, has duly caused this Annual Report to be signed on its
behalf by the undersigned thereunto duly authorized.
UAL Corporation
Administrator
Dated February 23, 1995 By /s/ Douglas A. Hacker
Douglas A. Hacker
Senior Vice President - Finance
EMPLOYEES' STOCK PURCHASE PLAN
OF UAL CORPORATION
STATEMENT OF FINANCIAL POSITION
(In Thousands, Except Number of Shares)