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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-6033
UAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 36-2675207
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1200 East Algonquin Road, Elk Grove Township, Illinois 60007
Mailing Address: P. O. Box 66919, Chicago, Illinois 60666
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 700-4000
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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
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at
Class July 31, 2000
- ----- -------------
Common Stock ($0.01 par value) 51,338,457
UAL Corporation and Subsidiary Companies Report on Form 10-Q
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For the Quarter Ended June 30, 2000
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Index
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PART I. FINANCIAL INFORMATION Page No.
- ------ --------------------- -------
Item 1. Financial Statements
Condensed Statements of Consolidated 3
Financial Position - as of June 30, 2000
(Unaudited) and December 31, 1999
Statements of Consolidated Operations 5
(Unaudited) - for the three months and
six months ended June 30, 2000 and 1999
Condensed Statements of Consolidated 7
Cash Flows (Unaudited) - for the six
months ended June 30, 2000 and 1999
Notes to Consolidated Financial 8
Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial 12
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About 19
Market Risk
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings 20
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 6. Exhibits and Reports on Form 8-K 22
Signatures 23
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Exhibit Index 24
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EXHIBIT 3.1
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INDEX TO RESTATED CERTIFICATE OF INCORPORATION
OF UAL CORPORATION (As Amended May 18, 2000)
Page
FIRST - NAME OF CORPORATION 1
SECOND - REGISTERED OFFICE 1
THIRD - PURPOSE OF CORPORATION 1
FOURTH - TOTAL NUMBER OF SHARES 1
PART I - SERIAL PREFERRED STOCK 2
A. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES A
CONVERTIBLE PREFERRED STOCK 2
SECTION 1. NUMBER OF SHARES AND DESIGNATIONS 2
SECTION 2. DEFINITIONS 2
SECTION 3. DIVIDENDS 5
SECTION 4. PAYMENTS UPON LIQUIDATION 6
SECTION 5. REDEMPTION AT THE OPTION OF THE
CORPORATION 7
SECTION 6. SHARES TO BE RETIRED 8
SECTION 7. CONVERSION 8
SECTION 8. RANKING 13
SECTION 9. VOTING 13
SECTION 10. RECORD HOLDERS 14
B. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES B
PREFERRED STOCK 15
SECTION 1. NUMBER OF SHARES AND DESIGNATIONS 15
SECTION 2. DEFINITIONS 15
SECTION 3. DIVIDENDS 16
SECTION 4. PAYMENTS UPON LIQUIDATION 17
SECTION 5. REDEMPTION AT THE OPTION OF THE
CORPORATION 17
SECTION 6. SHARES TO BE RETIRED 18
SECTION 7. RANKING 18
SECTION 8. VOTING 19
SECTION 9. RECORD HOLDERS 20
C. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES C
JUNIOR PARTICIPATING PREFERRED STOCK 20
SECTION 1. DESIGNATION AND AMOUNT 20
SECTION 2. DIVIDENDS AND DISTRIBUTIONS 20
SECTION 3. VOTING RIGHTS 21
SECTION 4. CERTAIN RESTRICTIONS 21
SECTION 5. REACQUIRED SHARES 22
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP 22
SECTION 7. CONSOLIDATION, MERGER, ETC. 22
SECTION 8. NO REDEMPTION 23
SECTION 9. RANKING 23
SECTION 10. AMENDMENT 23
Page
D. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES D
REDEEMABLE PREFERRED STOCK 23
SECTION 1. NUMBER OF SHARES AND DESIGNATIONS 23
SECTION 2. DEFINITIONS 23
SECTION 3. DIVIDENDS 23
SECTION 4. PAYMENTS UPON LIQUIDATION 23
SECTION 5. SHARES TO BE RETIRED 24
SECTION 6. REDEMPTION 24
SECTION 7. RANKING 24
SECTION 8. VOTING 25
SECTION 9. RECORD HOLDERS 25
PART II - CLASS 1 ESOP CONVERTIBLE PREFERRED STOCK 25
SECTION 1. NUMBER OF SHARES; DESIGNATION; ISSUANCE
AND AUTOMATIC CONVERSION 25
SECTION 2. DEFINITIONS 26
SECTION 3. DIVIDENDS 29
SECTION 4. PAYMENTS UPON LIQUIDATION 30
SECTION 5. SHARES TO BE RETIRED 31
SECTION 6. CONVERSION 31
SECTION 7. CONSOLIDATION, MERGER, ETC. 37
SECTION 8. RANKING 38
SECTION 9. VOTING 38
SECTION 10. NO REDEMPTION 39
SECTION 11. RECORD HOLDERS 39
PART III - CLASS 2 ESOP CONVERTIBLE PREFERRED STOCK 39
SECTION 1. NUMBER OF SHARES; DESIGNATION; ISSUANCE
AND AUTOMATIC CONVERSION. 39
SECTION 2. DEFINITIONS 40
SECTION 3. DIVIDENDS 43
SECTION 4. PAYMENTS UPON LIQUIDATION 45
SECTION 5. SHARES TO BE RETIRED 45
SECTION 6. CONVERSION 45
SECTION 7. CONSOLIDATION, MERGER, ETC. 51
SECTION 8. RANKING 52
SECTION 9. VOTING 53
SECTION 10. NO REDEMPTION 53
SECTION 11. RECORD HOLDERS 53
PART IV - CLASS P ESOP VOTING JUNIOR PREFERRED STOCK 54
SECTION 1. NUMBER OF SHARES; DESIGNATION; ISSUANCES;
AUTOMATIC CONVERSION 54
SECTION 2. DEFINITIONS 54
SECTION 3. DIVIDENDS 56
SECTION 4. PAYMENTS UPON LIQUIDATION 56
SECTION 5. SHARES TO BE RETIRED 57
SECTION 6. RANKING 57
SECTION 7. CONSOLIDATION, MERGER, ETC. 57
SECTION 8. VOTING 59
SECTION 9. AUTOMATIC CONVERSION 61
SECTION 10. RECORD HOLDERS 62
Page
PART V - CLASS M ESOP VOTING JUNIOR PREFERRED STOCK 62
SECTION 1. NUMBER OF SHARES; DESIGNATION; ISSUANCES;
AUTOMATIC CONVERSION 62
SECTION 2. DEFINITIONS 62
SECTION 3. DIVIDENDS 65
SECTION 4. PAYMENTS UPON LIQUIDATION 65
SECTION 5. SHARES TO BE RETIRED 65
SECTION 6. RANKING 65
SECTION 7. CONSOLIDATION, MERGER, ETC. 66
SECTION 8. VOTING 67
SECTION 9. AUTOMATIC CONVERSION 69
SECTION 10. RECORD HOLDERS 70
PART VI - CLASS S ESOP VOTING JUNIOR PREFERRED STOCK 70
SECTION 1. NUMBER OF SHARES; DESIGNATION; ISSUANCES;
AUTOMATIC CONVERSION 70
SECTION 2. DEFINITIONS 71
SECTION 3. DIVIDENDS 73
SECTION 4. PAYMENTS UPON LIQUIDATION 73
SECTION 5. SHARES TO BE RETIRED 73
SECTION 6. RANKING 73
SECTION 7. CONSOLIDATION, MERGER, ETC. 74
SECTION 8. VOTING 75
SECTION 9. AUTOMATIC CONVERSION. 77
SECTION 10. RECORD HOLDERS 78
PART VII - CLASS PILOT MEC JUNIOR PREFERRED STOCK 79
SECTION 1. NUMBER OF SHARES; DESIGNATION; ISSUANCE;
RESTRICTIONS ON TRANSFER 79
SECTION 2. DEFINITIONS 79
SECTION 3. DIVIDENDS 81
SECTION 4. PAYMENTS UPON LIQUIDATION 81
SECTION 5. SHARES TO BE RETIRED 82
SECTION 6. RANKING 82
SECTION 7. CONSOLIDATION, MERGER, ETC. 82
SECTION 8. VOTING 83
SECTION 9. REDEMPTION. 85
SECTION 10. RECORD HOLDERS 86
PART VIII - CLASS IAM JUNIOR PREFERRED STOCK 86
SECTION 1. NUMBER OF SHARES; DESIGNATION; ISSUANCE;
RESTRICTIONS ON TRANSFER 86
SECTION 2. DEFINITIONS 86
SECTION 3. DIVIDENDS 88
SECTION 4. PAYMENTS UPON LIQUIDATION 88
SECTION 5. SHARES TO BE RETIRED 89
SECTION 6. RANKING 89
SECTION 7. CONSOLIDATION, MERGER, ETC. 89
SECTION 8. VOTING 90
SECTION 9. REDEMPTION 92
SECTION 10. RECORD HOLDERS 93
Page
PART IX - CLASS SAM JUNIOR PREFERRED STOCK 93
SECTION 1. NUMBER OF SHARES; DESIGNATION; ISSUANCE;
RESTRICTIONS ON TRANSFER 93
SECTION 2. DEFINITIONS 94
SECTION 3. DIVIDENDS 96
SECTION 4. PAYMENTS UPON LIQUIDATION 96
SECTION 5. SHARES TO BE RETIRED 96
SECTION 6. RANKING 96
SECTION 7. CONSOLIDATION, MERGER, ETC. 97
SECTION 8. VOTING 97
SECTION 9. REDEMPTION 100
SECTION 10. RECORD HOLDERS 100
PART X - CLASS I JUNIOR PREFERRED STOCK 101
SECTION 1. NUMBER OF SHARES; DESIGNATIONS; ISSUANCE;
RESTRICTIONS ON TRANSFER 101
SECTION 2. DEFINITIONS 101
SECTION 3. DIVIDENDS 103
SECTION 4. PAYMENTS UPON LIQUIDATION 103
SECTION 5. SHARES TO BE RETIRED 103
SECTION 6. RANKING 103
SECTION 7. VOTING 104
SECTION 8. REDEMPTION 104
SECTION 9. RECORD HOLDERS 105
PART XI - COMMON STOCK 105
SECTION 1. DIVIDENDS 105
SECTION 2. LIQUIDATION 105
SECTION 3. VOTING 105
PART XII - GENERAL PROVISIONS 106
FIFTH - GOVERNANCE 106
SECTION 1. DEFINITIONS 106
SECTION 2. DIRECTORS 113
2.1 GENERAL POWERS 113
2.2 NUMBER AND COMPOSITION 113
2.3 QUALIFICATIONS OF PUBLIC DIRECTORS 113
2.4 QUALIFICATIONS OF INDEPENDENT DIRECTORS 114
2.5 NOMINATION OF BOARD'S NOMINEES FOR PUBLIC
DIRECTORS 114
2.6 TERM OF OFFICE 114
2.7 RESIGNATION OF DIRECTORS 114
2.8 REMOVAL OF DIRECTORS 114
2.9 VACANCIES ON THE BOARD 114
2.9.1 VACANCIES OF PUBLIC DIRECTORS 114
2.9.2 VACANCIES OF INDEPENDENT DIRECTORS 115
2.9.3 VACANCIES OF EMPLOYEE DIRECTORS 115
2.9.4 BOARD ACTION DURING VACANCIES 115
Page
2.10 QUORUM REQUIREMENTS OF BOARD MEETINGS 115
2.11 VOTING BY DIRECTORS 115
2.12 QUORUM REQUIREMENTS OF STOCKHOLDER MEETINGS 115
2.13 EVENTS UPON THE OCCURRENCE OF THE TERMINATION
DATE 115
SECTION 3. SPECIAL VOTING PROVISIONS 116
3.1 MATTERS REQUIRING STOCKHOLDER VOTE UNDER THE GCL 116
3.1.1 AMENDMENT TO THE RESTATED CERTIFICATE 116
3.1.2 MERGER OR CONSOLIDATION 117
3.1.3 SALE, LEASE OR EXCHANGE OF ALL OR
SUBSTANTIALLY ALL ASSETS 117
3.1.4 DISSOLUTION 118
3.2 SUBSTANTIVE AMENDMENT TO THE RESTATED BYLAWS 119
3.3 SIGNIFICANT LABOR-RELATED BUSINESS TRANSACTION
WITH A LABOR AFFILIATE 119
3.4 OTHER EXTRAORDINARY MATTERS REQUIRING SPECIAL
VOTING 119
3.5 SPECIAL VOTING PROVISIONS WITH RESPECT TO THE
PURCHASE AND SALE OF COMMON STOCK 125
3.6 SPECIAL PROVISIONS WITH RESPECT TO THE
APPOINTMENT AND REMOVAL OF OFFICERS 125
3.6.1 APPOINTMENT OF SUCCESSOR CHIEF EXECUTIVE
OFFICER 125
3.6.2 APPOINTMENT OF OTHER OFFICERS 125
3.6.3 TERM OF OFFICE 125
3.6.4 REMOVAL 125
3.6.5 VACANCY 125
3.7 CERTAIN PROVISIONS WITH RESPECT TO (A) THE
CLASS I PREFERRED STOCK AND THE INDEPENDENT
DIRECTORS AND (B) THE CLASS SAM PREFERRED STOCK
AND THE SALARIED/MANAGEMENT EMPLOYEE DIRECTOR 126
3.8 SECTION 203 OF THE GCL 126
3.9 EMPLOYEES' PURCHASE OF EQUITY SECURITIES 126
3.10 CONSTRUCTION OF SPECIAL VOTING PROVISIONS 126
3.11 PARTICIPATION OF FLIGHT ATTENDANTS 127
SECTION 4. BOARD COMMITTEES 127
4.1 COMMITTEES OF THE BOARD 127
4.1.1 AUDIT COMMITTEE 127
4.1.2 CAP COMMITTEE 127
4.1.3 COMPENSATION COMMITTEE 128
4.1.4 COMPENSATION ADMINISTRATION COMMITTEE 128
4.1.5 EXECUTIVE COMMITTEE 128
4.1.6 INDEPENDENT DIRECTOR NOMINATION COMMITTEE 129
4.1.7 LABOR COMMITTEE 129
4.1.8 OUTSIDE PUBLIC DIRECTOR NOMINATION COMMITTEE 129
4.1.9 TRANSACTION COMMITTEE 130
4.1.10 OTHER BOARD COMMITTEES 130
4.1.11 UNION DIRECTOR MEMBERSHIP ON BOARD
COMMITTEES 130
4.1.12 QUORUM AND VOTING REQUIREMENTS OF BOARD
COMMITTEES 130
4.1.13 EFFECT OF BOARD COMMITTEE ACTION 131
4.1.14 RETAINER OF COUNSEL AND ADVISORS 131
4.2 BOARD COMMITTEES FOLLOWING THE TERMINATION DATE 131
SIXTH - DIRECTOR LIABILITY 131
SEVENTH - AMENDMENTS TO SAID RESTATED CERTIFICATE 132
As Amended
May 18, 2000
RESTATED CERTIFICATE OF INCORPORATION
OF
UAL CORPORATION
The present name of the corporation is UAL Corporation
(the "Corporation"). The Corporation was incorporated under
the name of UAL, Inc., the original Certificate of
Incorporation having been filed with the Secretary of State
of the State of Delaware on December 30, 1968. This
Restated Certificate of Incorporation of the Corporation,
which both restates and further amends the provisions of the
Corporation's Certificate of Incorporation as heretofore
amended, restated or supplemented, was duly adopted in
accordance with the provisions of Sections 242 and 245 of
the General Corporation Law of the State of Delaware.
FIRST. The name of the Corporation is UAL CORPORATION
SECOND. The registered office of the Corporation in
the State of Delaware is located at 1013 Centre Road, in the
City of Wilmington, County of Newcastle. The name and
address of its registered agent is Corporation Service
Company, 1013 Centre Road, in the City of Wilmington, County
of Newcastle, Delaware 19805-1297.
THIRD. The purpose of the Corporation is to engage
in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of capital stock
of all classes of which the Corporation shall have authority
to issue is 291,100,022, divided into eleven (11) classes,
as follows: 16,000,000 shares of Preferred Stock, without
par value (hereinafter referred to as "Serial Preferred
Stock"), 25,000,000 shares of Class 1 ESOP Convertible
Preferred Stock, of the par value of $0.01 per share
(hereinafter referred to as "Class 1 ESOP Convertible
Preferred Stock"), 25,000,000 shares of Class 2 ESOP
Convertible Preferred Stock, of the par value of $0.01 per
share (hereinafter referred to as "Class 2 ESOP Convertible
Preferred Stock"), 11,600,000 shares of Class P ESOP Voting
Junior Preferred Stock, of the par value of $0.01 per share
(hereinafter referred to as "Class P Voting Preferred
Stock"), 9,300,000 shares of Class M ESOP Voting Junior
Preferred Stock, of the par value of $0.01 per share
(hereinafter referred to as "Class M Voting Preferred
Stock"), 4,200,000 shares of Class S ESOP Voting Junior
Preferred Stock, of the par value of $0.01 per share
(hereinafter referred to as "Class S Voting Preferred
Stock"), one (1) share of Class Pilot MEC Junior Preferred
Stock, of the par value of $0.01 per share (hereinafter
referred to as "Class Pilot MEC Preferred Stock"), one (1)
share of Class IAM Junior Preferred Stock, of the par value
of $0.01 per share (hereinafter referred to as "Class IAM
Preferred Stock"), ten (10) shares of Class SAM Junior
Preferred Stock, of the par value of $0.01 per share
(hereinafter referred to as "Class SAM Preferred Stock"),
ten (10) shares of Class I Junior Preferred Stock, of the
par value of $0.01 per share (hereinafter referred to as
"Class I Preferred Stock" and, together with the Serial
Preferred Stock, the Class 1 ESOP Convertible Preferred
Stock, the Class 2 ESOP Convertible Preferred Stock, the
Class P Voting Preferred Stock, the Class M Voting Preferred
Stock, the Class S Voting Preferred Stock, the Class Pilot
MEC Preferred Stock, the Class IAM Preferred Stock, and the
Class SAM Preferred Stock, collectively, as "Preferred
Stock") and 200,000,000 shares of Common Stock, of the par
value of $0.01 per share (hereinafter referred to as "Common
Stock").
PART I
Serial Preferred Stock
The Board of Directors is expressly authorized to
adopt, from time to time, a resolution or resolutions
providing for the issue of Serial Preferred Stock in one or
more series, to fix the number of shares in each such series
and to fix the designations and the powers, preferences and
relative, participating, optional or other special rights,
and the qualifications, limitations and restrictions
thereof, of each such series. The authority of the Board of
Directors with respect to each such series shall include a
determination of the following (which may vary as between
the different series of Serial Preferred Stock):
(a) The number of shares constituting the series
and the distinctive designation of the series;
(b) The dividend rate on the shares of the series,
the conditions and dates upon which dividends thereon
shall be payable, the extent, if any, to which dividends
thereon shall be cumulative, and the relative rights of
preference, if any, of payment of dividends thereon;
(c) Whether or not the shares of the series are
redeemable and, if redeemable, the time or times during
which they shall be redeemable and the amount per share
payable on redemption thereof, which amount may, but need
not, vary according to the time and circumstances of such
redemption;
(d) The amount payable in respect of the shares of
the series, in the event of any liquidation, dissolution
or winding up of the Corporation, which amount may, but
need not, vary according to the time or circumstances of
such action, and the relative rights of preference, if
any, of payment of such amount;
(e) Any requirement as to a sinking fund for the
shares of the series, or any requirement as to the
redemption, purchase or other retirement by the
Corporation of the shares of the series;
(f) The right, if any, to exchange or convert
shares of the series into other securities or property,
and the rate or basis, time, manner and condition of
exchange or conversion;
(g) The voting rights, if any, to which the holders
of shares of the series shall be entitled in addition to
the voting rights provided by law; and
(h) Any other term, condition or provision with
respect to the series not inconsistent with the
provisions of this Article Fourth or any resolution
adopted by the Board of Directors pursuant thereto.
A. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES A
CONVERTIBLE PREFERRED STOCK
Unless otherwise indicated, any reference in this
Article FOURTH, Part I.A to "Section", "Subsection",
"paragraph", "subparagraph" or "clause" shall refer to a
Section, Subsection, paragraph, subparagraph or clause of
this Article FOURTH, Part I.A.
Section 1. Number of Shares and Designations. Six
million (6,000,000) shares of the Serial Preferred Stock,
without par value, of the Corporation are constituted as a
series thereof designated as Series A Convertible Preferred
Stock (the "Series A Preferred Stock").
Section 2. Definitions. For purposes of the
Series A Preferred Stock, the following terms shall have the
meanings indicated:
2.1 "Accrued Dividends" shall have the meaning set
forth in Section 4.1 hereof.
2.2 "Aggregate Involuntary Liquidation Amount" shall
mean the limitation on the aggregate amount payable upon an
involuntary liquidation, dissolution or winding up in
respect of all shares of Serial Preferred Stock outstanding
at any one time contained in Article FOURTH, Part I,
paragraph (h) of the Corporation's Restated Certificate of
Incorporation, as the same may be increased or eliminated
from time to time.(1)
(1) Article FOURTH, Part I, paragraph (h) was amended, and the
limitation on amounts payable upon an involuntary
liquidation was repealed, pursuant to a Certificate of
Amendment dated May 6, 1993.
2.3 "Board of Directors" shall mean the board of
directors of the Corporation or any committee authorized by
such board of directors to perform any of its
responsibilities with respect to the Series A Preferred
Stock.
2.4 "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which state or federally
chartered banking institutions in New York, New York are not
required to be open.
2.5 "Common Stock" shall mean the common stock of the
Corporation, par value $5.00 per share.(2)
(2) The Common Stock, par value $5.00 per share, was
reclassified pursuant to the Agreement and Plan of
Recapitalization dated as of March 25, 1994, among the
Corporation, the Air Line Pilots Association, International
and the International Association of Machinists and
Aerospace Workers, as amended from time to time, a copy of
which is on file in the office of the Secretary of the
Corporation, and this Restated Certificate.
2.6 "Constituent Person" shall have the meaning set
forth in Section 7.5 hereof.
2.7 "Conversion Price" shall mean the conversion price
per share of Common Stock for which the Series A Preferred
Stock is convertible, as such Conversion Price may be
adjusted pursuant to Section 7. The initial conversion
price will be $156.50.
2.8 "Current Market Price" of publicly traded shares
of Common Stock or any other class of capital stock or other
security of the Corporation or any other issuer for any day
shall mean the last reported sales price, regular way on
such day, or, if no sale takes place on such day, the
average of the reported closing bid and asked prices on such
day, regular way, in either case as reported on the New York
Stock Exchange Composite Tape or, if such security is not
listed or admitted for trading on the New York Stock
Exchange ("NYSE"), on the principal national securities
exchange on which such security is listed or admitted for
trading or, if not listed or admitted for trading on any
national securities exchange, on the National Market System
of the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or, if such security
is not quoted on such National Market System, the average of
the closing bid and asked prices on such day in the over-the-
counter market as reported by NASDAQ or, if bid and asked
prices for such security on such day shall not have been
reported through NASDAQ, the average of the bid and asked
prices on such day as furnished by any NYSE member firm
regularly making a market in such security selected for such
purpose by the Board of Directors.
2.9 "Dividend Payment Date" shall mean May 1, August
1, November 1 and February 1 in each year, commencing on May
1, 1993; provided, however, that if any Dividend Payment
Date falls on any day other than a Business Day, the
dividend payment due on such Dividend Payment Date shall be
paid on the Business Day immediately following such Dividend
Payment Date.
2.10 "Dividend Periods" shall mean quarterly dividend
periods commencing on May 1, August 1, November 1 and
February 1 of each year and ending on and including the day
preceding the first day of the next succeeding Dividend
Period (other than the initial Dividend Period, which shall
commence on the Issue Date and end on and include April 30,
1993).
2.11 "Fair Market Value" shall mean the average of the
daily Current Market Prices of a share of Common Stock
during the five (5) consecutive Trading Days selected by the
Corporation commencing not more than 20 Trading Days before,
and ending not later than, the earlier of the day in
question and the day before the "ex" date with respect to
the issuance or distribution requiring such computation.
The term " 'ex' date," when used with respect to any
issuance or distribution, means the first day on which the
Common Stock trades regular way, without the right to
receive such issuance or distribution, on the exchange or in
the market, as the case may be, used to determine that day's
Current Market Price.
2.12 "Involuntary Liquidation Preference" shall have
the meaning set forth in Section 4.1 hereof.
2.13 "Issue Date" shall mean the first date on which
shares of Series A Preferred Stock are issued and sold.
2.14 "Junior Stock" shall mean the Common Stock, the
Series C Preferred Stock and any other class or series of
shares of the Corporation over which the Series A Preferred
Stock has preference or priority in the payment of dividends
or in the distribution of assets on any liquidation,
dissolution or winding up of the Corporation. The Common
Stock shall be deemed Junior Stock notwithstanding that it
may participate in distributions upon an involuntary
liquidation, dissolution or winding up without the Series A
Preferred Stock receiving the Voluntary Liquidation
Preference.
2.15 "non-electing share" shall have the meaning set
forth in Section 7.5 hereof.
2.16 "Person" shall mean any individual, firm,
partnership, corporation or other entity, and shall include
any successor (by merger or otherwise) of such entity.
2.17 "Redemption Date" shall have the meaning set forth
in Section 5.3 hereof.
2.18 "Restated Certificate" or "Certificate of
Incorporation" shall mean the Restated Certificate of
Incorporation of the Corporation, as amended from time to
time.
2.19 "Rights" shall mean the rights of the Corporation
which are issuable under the Corporation's Rights Agreement
dated as of December 11, 1986, and as amended from time to
time, or rights to purchase any capital stock of the
Corporation under any successor shareholder rights plan or
plans adopted in replacement of the Corporation's Rights
Agreement.
2.20 "Securities" shall have the meaning set forth in
Section 7.4(c) hereof.
2.21 "Series A Preferred Stock" shall have the meaning
set forth in Section 1 hereof.
2.22 "Series C Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series C Junior Participating Preferred
Stock in Article FOURTH, Part I.B of this Certificate.
2.23 "set apart for payment" shall be deemed to
include, without any action other than the following, the
recording by the Corporation in its accounting ledgers of
any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so
paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any
class or series of Junior Stock or any class or series of
stock ranking on a parity with the Series A Preferred Stock
as to the payment of dividends are placed in a separate
account of the Corporation or delivered to a disbursing,
paying or other similar agent, then "set apart for payment"
with respect to the Series A Preferred Stock shall mean
placing such funds in a separate account or delivering such
funds to a disbursing, paying or other similar agent.
2.24 "Stated Value" shall have the meaning set forth in
Section 4.1 hereof.
2.25 "Trading Day" shall mean any day on which the
securities in question are traded on the NYSE, or if such
securities are not listed or admitted for trading on the
NYSE, on the principal national securities exchange on which
such securities are listed or admitted, or if not listed or
admitted for trading on any national securities exchange, on
the National Market System of the NASDAQ, or if such
securities are not quoted on such National Market System, in
the applicable securities market in which the securities are
traded.
2.26 "Transaction" shall have the meaning set forth in
Section 7.5 hereof.
2.27 "Transfer Agent" means First Chicago Trust Company
of New York or such other agent or agents of the Corporation
as may be designated by the Board of Directors as the
transfer agent for the Series A Preferred Stock.
2.28 "Voluntary Liquidation Preference" shall have the
meaning set forth in Section 4.1 hereof.
Section 3. Dividends.
3.1 The holders of shares of the Series A Preferred
Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of assets legally available
for that purpose, dividends payable in cash at the rate per
annum of $6.25 per share of Series A Preferred Stock. Such
dividends shall be cumulative from the Issue Date, whether
or not in any Dividend Period or Periods there shall be
assets of the Corporation legally available for the payment
of such dividends, and shall be payable quarterly, when, as
and if declared by the Board of Directors, in arrears on
Dividend Payment Dates, commencing on May 1, 1993. Each
such dividend shall be payable in arrears to the holders of
record of shares of the Series A Preferred Stock, as they
appear on the stock records of the Corporation at the close
of business on such record dates, which shall not be more
than 60 days nor less than 10 days preceding the payment
dates thereof, as shall be fixed by the Board of Directors
or a duly authorized committee thereof. Accrued and unpaid
dividends for any past Dividend Periods may be declared and
paid at any time, without reference to any Dividend Payment
Date, to holders of record on such date, not exceeding 45
days preceding the payment date thereof, as may be fixed by
the Board of Directors.
3.2 The amount of dividends payable for each full
Dividend Period for the Series A Preferred Stock shall be
computed by dividing the annual dividend rate by four. The
amount of dividends payable for the initial Dividend Period,
or any other period shorter or longer than a full Dividend
Period, on the Series A Preferred Stock shall be computed on
the basis of twelve 30-day months and a 360-day year.
Holders of shares of Series A Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property
or stock, in excess of cumulative dividends, as herein
provided, on the Series A Preferred Stock. No interest, or
sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series A
Preferred Stock that may be in arrears.
3.3 So long as any shares of the Series A Preferred
Stock are outstanding, no dividends, except as described in
the next succeeding sentence, shall be declared or paid or
set apart for payment on any class or series of stock of the
Corporation ranking, as to dividends and amounts
distributable upon liquidation, dissolution or winding up,
on a parity with the Series A Preferred Stock, for any
period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such
payment on the Series A Preferred Stock for all Dividend
Periods terminating on or prior to the date of payment of
the dividend on such class or series of parity stock. When
dividends are not paid in full or a sum sufficient for such
payment is not set apart, as aforesaid, all dividends
declared upon shares of the Series A Preferred Stock and all
dividends declared upon any other class or series of stock
ranking on a parity as to dividends and amounts
distributable upon liquidation, dissolution or winding up
shall be declared ratably in proportion to the respective
amounts of dividends accumulated and unpaid on the Series A
Preferred Stock and accumulated and unpaid on such parity
stock.
3.4 So long as any shares of the Series A Preferred
Stock are outstanding, no dividends (other than (i) the
Rights and (ii) dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or
purchase shares of, Junior Stock) shall be declared or paid
or set apart for payment or other distribution declared or
made upon Junior Stock, nor shall any Junior Stock or any
series of stock of the Corporation ranking, as to dividends
and amounts distributable upon liquidation, dissolution or
winding up, on a parity with Series A Preferred Stock be
redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of shares of
Common Stock made for purposes of an employee incentive or
benefit plan of the Corporation or any subsidiary) for any
consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any shares of any
such stock) by the Corporation, directly or indirectly
(except by conversion into or exchange for Junior Stock),
unless in each case the full cumulative dividends on all
outstanding shares of the Series A Preferred Stock and any
other stock of the Corporation ranking on a parity with the
Series A Preferred Stock, as to dividends and amounts
distributable upon liquidation, dissolution or winding up
shall have been paid or set apart for payment for all past
Dividend Periods with respect to the Series A Preferred
Stock and all past dividend periods with respect to such
parity stock.
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary liquidation,
dissolution or winding up of the Corporation before any
payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart
for the holders of Junior Stock, the holders of the shares
of Series A Preferred Stock shall be entitled to receive One
Hundred Dollars ($100) per share of Series A Preferred Stock
(the "Stated Value") plus an amount equal to all dividends
(whether or not earned or declared) accrued and unpaid
thereon to the date of final distribution to such holders
(the "Voluntary Liquidation Preference"); but such holders
shall not be entitled to any further payment. In the event
of any involuntary liquidation, dissolution or winding up of
the Corporation, before any payment or distribution of the
assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of Junior Stock, the
holders of the shares of Series A Preferred Stock shall be
entitled to receive an amount per share of Series A
Preferred Stock (the "Involuntary Liquidation Preference")
equal to the Voluntary Liquidation Preference or, in the
event the Corporation's Restated Certificate of
Incorporation contains an Aggregate Involuntary Liquidation
Amount, the lesser of (i) the Voluntary Liquidation
Preference or (ii) an amount equal to the product of (a) the
Voluntary Liquidation Preference and (b) a fraction, the
numerator of which is the Aggregate Involuntary Liquidation
Amount less the aggregate maximum amounts distributable upon
liquidation of all classes or series of stock of the
Corporation ranking, as to dividends and amounts
distributable upon liquidation, dissolution or winding up,
prior to the Series A Preferred Stock and the denominator of
which is the aggregate amount of the voluntary liquidation
preference (including accrued dividends) of all shares of
the Series A Preferred Stock and any other stock of the
Corporation ranking, as to dividends and amounts
distributable upon liquidation, dissolution or winding up,
on a parity with the Series A Preferred Stock; but such
holders shall not be entitled to any further payment. If,
upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of the shares of
Series A Preferred Stock shall be insufficient to pay in
full the Voluntary Liquidation Preference or the Involuntary
Liquidation Preference, as the case may be, and the
liquidation preference on all other shares of any class or
series of stock ranking, as to dividends and amounts
distributable upon liquidation, dissolution or winding up,
on a parity with the Series A Preferred Stock, then such
assets, or the proceeds thereof, shall be distributed among
the holders of shares of Series A Preferred Stock and any
such other parity stock ratably in accordance with the
respective amounts that would be payable on such shares of
Series A Preferred Stock and any such other stock if all
amounts payable thereon were paid in full. For the purposes
of this Section 4, (i) a consolidation or merger of the
Corporation with one or more corporations, or (ii) a sale or
transfer of all or substantially all of the Corporation's
assets, shall not be deemed to be a liquidation, dissolution
or winding up, voluntary or involuntary, of the Corporation.
4.2 Subject to the rights of the holders of shares of
any series or class or classes of stock ranking on a parity
with or prior to the Series A Preferred Stock as to
dividends and amounts distributable upon liquidation,
dissolution or winding up of the Corporation, after payment
shall have been made to the holders of the Series A
Preferred Stock, as and to the fullest extent provided in
this Section 4, any other series or class or classes of
Junior Stock shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive
any and all assets remaining to be paid or distributed, and
the holders of the Series A Preferred Stock shall not be
entitled to share therein.
Section 5. Redemption at the Option of the Corporation.
5.1 The shares of Series A Preferred Stock will be
redeemable at the option of the Corporation by resolution of
its Board of Directors, in whole, or, from time to time, in
part, at any time on or after May 1, 1996, at the following
redemption prices per share, if redeemed during the twelve-
month period beginning May 1 of the year indicated below,
plus, in each case, all dividends accrued and unpaid on the
shares of Series A Preferred Stock up to the date fixed for
the redemption, upon giving notice as provided hereinbelow:
Price
-----
1996 $104.375
1997 103.750
1998 103.125
1999 102.500
2000 101.875
2001 101.250
2002 100.625
2003 and thereafter 100.000
5.2 If fewer than all of the outstanding shares of
Series A Preferred Stock are to be redeemed, the number of
shares to be redeemed shall be determined by the Board of
Directors and the shares to be redeemed shall be determined
pro rata or by lot or in such other manner and subject to
such regulations as the Board of Directors in its sole
discretion shall prescribe.
5.3 At least 30 days, but not more than 60 days, prior
to the date fixed for the redemption of shares of Series A
Preferred Stock, a written notice shall be mailed in a
postage prepaid envelope to each holder of record of the
shares of Series A Preferred Stock to be redeemed, addressed
to such holder at his post office address as shown on the
records of the Corporation, notifying such holder of the
election of the Corporation to redeem such shares, stating
the date fixed for redemption thereof (the "Redemption
Date"), and calling upon such holder to surrender to the
Corporation, on the Redemption Date at the place designated
in such notice, his certificate or certificates representing
the number of shares specified in such notice of redemption.
On or after the Redemption Date, each holder of shares
of Series A Preferred Stock to be redeemed shall present and
surrender his certificate or certificates for such shares to
the Corporation at the place designated in such notice and
thereupon the redemption price of such shares shall be paid
to or on the order of the person whose name appears on such
certificate or certificates as the owner thereof and each
surrendered certificate shall be cancelled. In case less
than all the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the
unredeemed shares.
From and after the Redemption Date (unless default
shall be made by the Corporation in payment of the
redemption price), all dividends on the shares of Series A
Preferred Stock designated for redemption in such notice
shall cease to accrue, and all rights of the holders thereof
as stockholders of the Corporation, except the right to
receive the redemption price of such shares (including all
accrued and unpaid dividends up to the Redemption Date) upon
the surrender of certificates representing the same, shall
cease and terminate and such shares shall not thereafter be
transferred (except with the consent of the Corporation) on
the books of the Corporation, and such shares shall not be
deemed to be outstanding for any purpose whatsoever. At its
election, the Corporation, prior to the Redemption Date, may
deposit the redemption price (including all accrued and
unpaid dividends up to the Redemption Date) of shares of
Series A Preferred Stock so called for redemption in trust
for the holders thereof with a bank or trust company (having
a capital surplus and undivided profits aggregating not less
than $50,000,000) in the Borough of Manhattan, City and
State of New York, or in any other city in which the
Corporation at the time shall maintain a transfer agency
with respect to such shares, in which case the aforesaid
notice to holders of shares of Series A Preferred Stock to
be redeemed shall state the date of such deposit, shall
specify the office of such bank or trust company as the
place of payment of the redemption price, and shall call
upon such holders to surrender the certificates representing
such shares at such place on or after the date fixed in such
redemption notice (which shall not be later than the
Redemption Date) against payment of the redemption price
(including all accrued and unpaid dividends up to the
Redemption Date). Any interest accrued on such funds shall
be paid to the Corporation from time to time. Any moneys so
deposited which shall remain unclaimed by the holders of
such shares of Series A Preferred Stock at the end of two
years after the Redemption Date shall be returned by such
bank or trust company to the Corporation.
If a notice of redemption has been given pursuant to
this Section 5 and any holder of shares of Series A
Preferred Stock shall, prior to the close of business on the
day preceding the Redemption Date, give written notice to
the Corporation pursuant to Section 7 below of the
conversion of any or all of the shares to be redeemed held
by such holder (accompanied by a certificate or certificates
for such shares, duly endorsed or assigned to the
Corporation, and any necessary transfer tax payment, as
required by Section 7 below), then such redemption shall not
become effective as to such shares to be converted, such
conversion shall become effective as provided in Section 7
below, and any moneys set aside by the Corporation for the
redemption of such shares of converted Series A Preferred
Stock shall revert to the general funds of the Corporation.
Section 6. Shares to be Retired. All shares of
Series A Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation (excluding,
until the Corporation elects to retire them, shares which
are held as treasury shares) shall be restored to the status
of authorized but unissued shares of Serial Preferred Stock,
without designation as to series.
Section 7. Conversion. Holders of shares of
Series A Preferred Stock shall have the right to convert all
or a portion of such shares into shares of Common Stock, as
follows:
7.1 Subject to and upon compliance with the provisions
of this Section 7, a holder of shares of Series A Preferred
Stock shall have the right, at his or her option, at any
time after 40 days after the Issue Date, to convert such
shares into the number of fully paid and nonassessable
shares of Common Stock obtained by dividing the aggregate
Stated Value of such shares by the Conversion Price (as in
effect on the date provided for in the last paragraph of
Section 7.2) by surrendering such shares to be converted,
such surrender to be made in the manner provided in Section
7.2; provided, however, that the right to convert shares
called for redemption pursuant to Section 5 shall terminate
at the close of business on the day preceding the Redemption
Date, unless the Corporation shall default in making payment
of the cash payable upon such redemption under Section 5
hereof. Certificates will be issued for the remaining
shares of Series A Preferred Stock in any case in which
fewer than all of the shares of Series A Preferred Stock
represented by a certificate are converted.
7.2 In order to exercise the conversion right, the
holder of shares of Series A Preferred Stock to be converted
shall surrender the certificate or certificates representing
such shares, duly endorsed or assigned to the Corporation or
in blank, at the office of the Transfer Agent in the Borough
of Manhattan, City of New York, accompanied by written
notice to the Corporation that the holder thereof elects to
convert Series A Preferred Stock. Unless the shares
issuable on conversion are to be issued in the same name as
the name in which such share of Series A Preferred Stock is
registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax (or evidence reasonably
satisfactory to the Corporation demonstrating that such
taxes have been paid).
Holders of shares of Series A Preferred Stock at the
close of business on a dividend payment record date shall be
entitled to receive the dividend payable on such shares on
the corresponding Dividend Payment Date notwithstanding the
conversion thereof following such dividend payment record
date and prior to such Dividend Payment Date. However,
shares of Series A Preferred Stock surrendered for
conversion during the period between the close of business
on any dividend payment record date and the opening of
business on the corresponding Dividend Payment Date (except
shares converted after the issuance of a notice of
redemption with respect to a Redemption Date during such
period, which shall be entitled to such dividend on the
Dividend Payment Date) must be accompanied by payment of an
amount equal to the dividend payable on such shares on such
Dividend Payment Date. A holder of shares of Series A
Preferred Stock on a dividend payment record date who (or
whose transferee) tenders any such shares for conversion
into shares of Common Stock on such Dividend Payment Date
will receive the dividend payable by the Corporation on such
shares of Series A Preferred Stock on such date, and the
converting holder need not include payment of the amount of
such dividend upon surrender of shares of Series A Preferred
Stock for conversion. Except as provided above, the
Corporation shall make no payment or allowance for unpaid
dividends, whether or not in arrears, on converted shares or
for dividends on the shares of Common Stock issued upon such
conversion.
As promptly as practicable after the surrender of
certificates for shares of Series A Preferred Stock as
aforesaid, the Corporation shall issue and shall deliver at
such office to such holder, or on his or her written order,
a certificate or certificates for the number of full shares
of Common Stock issuable upon the conversion of such shares
in accordance with provisions of this Section 7, and any
fractional interest in respect of a share of Common Stock
arising upon such conversion shall be settled as provided in
Section 7.3.
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on
which the certificates for shares of Series A Preferred
Stock shall have been surrendered and such notice (and if
applicable, payment of an amount equal to the dividend
payable on such shares) received by the Corporation as
aforesaid, and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares
represented thereby at such time on such date and such
conversion shall be at the Conversion Price in effect at
such time on such date, unless the stock transfer books of
the Corporation shall be closed on that date, in which event
such person or persons shall be deemed to have become such
holder or holders of record at the close of business on the
next succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Price
in effect on the date upon which such shares shall have been
surrendered and such notice received by the Corporation.
7.3 No fractional shares or scrip representing
fractions of shares of Common Stock shall be issued upon
conversion of the Series A Preferred Stock. Instead of any
fractional interest in a share of Common Stock that would
otherwise be deliverable upon the conversion of a share of
Series A Preferred Stock, the Corporation shall pay to the
holder of such share an amount in cash based upon the
Current Market Price of Common Stock on the Trading Day
immediately preceding the date of conversion. If more than
one share shall be surrendered for conversion at one time by
the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares of Series A
Preferred Stock so surrendered.
7.4 The Conversion Price shall be adjusted from time
to time as follows:
(a) If the Corporation shall after the Issue Date
(A) pay a dividend or make a distribution on its
capital stock in shares of its Common Stock, (B)
subdivide its outstanding Common Stock into a greater
number of shares, (C) combine its outstanding Common
Stock into a smaller number of shares or (D) issue any
shares of capital stock by reclassification of its
Common Stock, the Conversion Price in effect at the
opening of business on the day next following the date
fixed for the determination of stockholders entitled to
receive such dividend or distribution or at the opening
of business on the day next following the day on which
such subdivision, combination or reclassification
becomes effective, as the case may be, shall be
adjusted so that the holder of any share of Series A
Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number of shares of
Common Stock that such holder would have owned or have
been entitled to receive after the happening of any of
the events described above had such share been
converted immediately prior to the record date in the
case of a dividend or distribution or the effective
date in the case of a subdivision, combination or
reclassification. An adjustment made pursuant to this
subparagraph (a) shall become effective immediately
after the opening of business on the day next following
the record date (except as provided in Section 7.8
below) in the case of a dividend or distribution and
shall become effective immediately after the opening of
business on the day next following the effective date
in the case of a subdivision, combination or
reclassification.
(b) If the Corporation shall issue after the
Issue Date rights or warrants (in each case, other than
the Rights) to all holders of Common Stock entitling
them (for a period expiring within 45 days after the
record date mentioned below) to subscribe for or
purchase Common Stock at a price per share less than
the Fair Market Value per share of Common Stock on the
record date for the determination of stockholders
entitled to receive such rights or warrants, then the
Conversion Price in effect at the opening of business
on the day next following such record date shall be
adjusted to equal the price determined by multiplying
(I) the Conversion Price in effect immediately prior to
the opening of business on the day next following the
date fixed for such determination by (II) a fraction,
the numerator of which shall be the sum of (A) the
number of shares of Common Stock outstanding on the
close of business on the date fixed for such
determination and (B) the number of shares that the
aggregate proceeds to the Corporation from the exercise
of such rights or warrants for Common Stock would
purchase at such Fair Market Value, and the denominator
of which shall be the sum of (A) the number of shares
of Common Stock outstanding on the close of business on
the date fixed for such determination and (B) the
number of additional shares of Common Stock offered for
subscription or purchase pursuant to such rights or
warrants. Such adjustment shall become effective
immediately after the opening of business on the day
next following such record date (except as provided in
Section 7.8 below). In determining whether any rights
or warrants entitle the holders of Common Stock to
subscribe for or purchase shares of Common Stock at
less than such Fair Market Value, there shall be taken
into account any consideration received by the
Corporation upon issuance and upon exercise of such
rights or warrants, the value of such consideration, if
other than cash, to be determined by the Board of
Directors.
(c) If the Corporation shall distribute to all
holders of its Common Stock any shares of capital stock
of the Corporation (other than Common Stock) or
evidence of its indebtedness or assets (excluding cash
dividends or distributions paid from profits or surplus
of the Corporation) or rights or warrants (in each
case, other than the Rights) to subscribe for or
purchase any of its securities (excluding those rights
and warrants issued to all holders of Common Stock
entitling them for a period expiring within 45 days
after the record date referred to in subparagraph (b)
above to subscribe for or purchase Common Stock, which
rights and warrants are referred to in and treated
under subparagraph (b) above (any of the foregoing
being hereinafter in this subparagraph (c) called the
"Securities"), then in each such case the Conversion
Price shall be adjusted so that it shall equal the
price determined by multiplying (I) the Conversion
Price in effect immediately prior to the close of
business on the date fixed for the determination of
stockholders entitled to receive such distribution by
(II) a fraction, the numerator of which shall be the
Fair Market Value per share of the Common Stock on the
record date mentioned below less the then fair market
value (as determined by the Board of Directors, whose
determination shall be conclusive) of the portion of
the capital stock or assets or evidences of
indebtedness so distributed or of such rights or
warrants applicable to one share of Common Stock, and
the denominator of which shall be the Fair Market Value
per share of the Common Stock on the record date
mentioned below. Such adjustment shall become
effective immediately at the opening of business on the
Business Day next following (except as provided in
Section 7.8 below) the record date for the
determination of shareholders entitled to receive such
distribution. For the purposes of this clause (c), the
distribution of a Security, which is distributed not
only to the holders of the Common Stock on the date
fixed for the determination of stockholders entitled to
such distribution of such security, but also is
distributed with each share of Common Stock delivered
to a person converting a share of Series A Preferred
Stock after such determination date, shall not require
an adjustment of the Conversion Price pursuant to this
clause (c); provided that on the date, if any, on which
a Person converting a share of Series A Preferred Stock
would no longer be entitled to receive such Security
with a share of Common Stock (other than as a result of
the termination of all such Securities), a distribution
of such Securities shall be deemed to have occurred and
the Conversion Price shall be adjusted as provided in
this clause (c) (and such day shall be deemed to be
"the date fixed for the determination of the
stockholders entitled to receive such distribution" and
"the record date" within the meaning of the two
preceding sentences).
(d) No adjustment in the Conversion Price shall
be required unless such adjustment would require a
cumulative increase or decrease of at least 1% in such
price; provided, however, that any adjustments that by
reason of this subparagraph (d) are not required to be
made shall be carried forward and taken into account in
any subsequent adjustment until made; and provided,
further, that any adjustment shall be required and made
in accordance with the provisions of this Section 7
(other than this subparagraph (d)) not later than such
time as may be required in order to preserve the tax-
free nature of a distribution to the holders of shares
of Common Stock. Notwithstanding any other provisions
of this Section 7, the Corporation shall not be
required to make any adjustment of the Conversion Price
for the issuance of any shares of Common Stock pursuant
to any plan providing for the reinvestment of dividends
on securities of the Corporation. All calculations
under this Section 7 shall be made to the nearest cent
(with $.005 being rounded upward) or to the nearest
1/10 of a share (with .05 of a share being rounded
upward), as the case may be. Anything in this Section
7.4 to the contrary notwithstanding, the Corporation
shall be entitled, to the extent permitted by law, to
make such reductions in the Conversion Price, in
addition to those required by this Section 7.4, as it
in its discretion shall determine to be advisable in
order that any stock dividends, subdivision of shares,
reclassification or combination of shares, distribution
of rights or warrants to purchase stock or securities,
or a distribution of other assets (other than cash
dividends) hereafter made by the Corporation to its
stockholders shall not be taxable.
7.5 If the Corporation shall be a party to any
transaction (including without limitation a merger,
consolidation, sale of all or substantially all of the
Corporation's assets or recapitalization of the Common Stock
and excluding any transaction as to which Section 7.4(a)
applies) (each of the foregoing being referred to herein as
a "Transaction"), in each case as a result of which shares
of Common Stock shall be converted into the right to receive
stock, securities or other property (including cash or any
combination thereof), each share of Series A Preferred Stock
which is not converted into the right to receive stock,
securities or other property in connection with such
Transaction shall thereafter be convertible into the kind
and amount of shares of stock, securities and other property
(including cash or any combination thereof) receivable upon
the consummation of such Transaction by a holder of that
number of shares or fraction thereof of Common Stock into
which one share of Series A Preferred Stock was convertible
immediately prior to such Transaction, assuming such holder
of Common Stock (i) is not a Person with which the
Corporation consolidated or into which the Corporation
merged or which merged into the Corporation or to which such
sale or transfer was made, as the case may be ("Constituent
Person"), or an affiliate of a Constituent Person and (ii)
failed to exercise his rights of election, if any, as to the
kind or amount of stock, securities and other property
(including cash) receivable upon such Transaction (provided
that if the kind or amount of stock, securities and other
property (including cash) receivable upon such Transaction
is not the same for each share of Common Stock of the
Corporation held immediately prior to such Transaction by
other than a Constituent Person or an affiliate thereof and
in respect of which such rights of election shall not have
been exercised ("non-electing share"), then for the purpose
of this Section 7.5 the kind and amount of stock, securities
and other property (including cash) receivable upon such
Transaction by each non-electing share shall be deemed to be
the kind and amount so receivable per share by the plurality
of the non-electing shares). The Corporation shall not be a
party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this
Section 7.5 and it shall not consent or agree to the
occurrence of any Transaction until the Corporation has
entered into an agreement with the successor or purchasing
entity, as the case may be, for the benefit of the holders
of the Series A Preferred Stock that will contain provisions
enabling the holders of the Series A Preferred Stock that
remains outstanding after such Transaction to convert into
the consideration received by holders of Common Stock at the
Conversion Price in effect immediately prior to such
Transaction. The provisions of this Section 7.5 shall
similarly apply to successive Transactions.
7.6 If:
(a) the Corporation shall declare a dividend (or
any other distribution) on the Common Stock (other than
in cash out of profits or surplus and other than the
Rights); or
(b) the Corporation shall authorize the granting
to the holders of the Common Stock of rights or
warrants (other than the Rights) to subscribe for or
purchase any shares of any class or any other rights or
warrants (other than the Rights); or
(c) there shall be any reclassification of the
Common Stock (other than an event to which Section
7.4(a) applies) or any consolidation or merger to which
the Corporation is a party and for which approval of
any stockholders of the Corporation is required, or the
sale or transfer of all or substantially all of the
assets of the Corporation as an entirety; or
(d) there shall occur the voluntary or
involuntary liquidation, dissolution or winding up of
the Corporation,
then the Corporation shall cause to be filed with the
Transfer Agent and shall cause to be mailed to the holders
of shares of the Series A Preferred Stock at their addresses
as shown on the stock records of the Corporation, as
promptly as possible, but at least 15 days prior to the
applicable date hereinafter specified, a notice stating (A)
the date on which a record is to be taken for the purpose of
such dividend, distribution or rights or warrants, or, if a
record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend,
distribution or rights or warrants are to be determined or
(B) the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution or winding
up is expected to become effective, and the date as of which
it is expected that holders of Common Stock of record shall
be entitled to exchange their shares of Common Stock for
securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up. Failure to give or
receive such notice or any defect therein shall not affect
the legality or validity of the proceedings described in
this Section 7.
7.7 Whenever the Conversion Price is adjusted as
herein provided, the Corporation shall promptly file with
the Transfer Agent an officer's certificate setting forth
the Conversion Price after such adjustment and setting forth
a brief statement of the facts requiring such adjustment
which certificate shall be prima facie evidence of the
correctness of such adjustment. Promptly after delivery of
such certificate, the Corporation shall prepare a notice of
such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the effective date of such
adjustment and shall mail such notice of such adjustment of
the Conversion Price to the holder of each share of Series A
Preferred Stock at such holder's last address as shown on
the stock records of the Corporation.
7.8 In any case in which Section 7.4 provides that an
adjustment shall become effective on the day next following
a record date for an event, the Corporation may defer until
the occurrence of such event
(A) issuing to the holder of any share of Series A
Preferred Stock converted after such record date and before
the occurrence of such event the additional shares of Common
Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the Common
Stock issuable upon such conversion before giving effect to
such adjustment and (B) paying to such holder any amount in
cash in lieu of any fraction pursuant to Section 7.3.
7.9 For purposes of this Section 7, the number of
shares of Common Stock at any time outstanding shall not
include any shares of Common Stock then owned or held by or
for the account of the Corporation. The Corporation shall
not pay a dividend or make any distribution on shares of
Common Stock held in the treasury of the Corporation.
7.10 There shall be no adjustment of the Conversion
Price in case of the issuance of any stock of the
Corporation in a reorganization, acquisition or other
similar transaction except as specifically set forth in this
Section 7. If any action or transaction would require
adjustment of the Conversion Price pursuant to more than one
paragraph of this Section 7, only one adjustment shall be
made and such adjustment shall be the amount of adjustment
that has the highest absolute value.
7.11 If the Corporation shall take any action affecting
the Common Stock, other than action described in this
Section 7, that in the opinion of the Board of Directors
would materially adversely affect the conversion rights of
the holders of the shares of Series A Preferred Stock, the
Conversion Price for the Series A Preferred Stock may be
adjusted, to the extent permitted by law, in such manner, if
any, and at such time, as the Board of Directors may
determine to be equitable in the circumstances.
7.12 The Corporation covenants that it will at all
times reserve and keep available, free from preemptive
rights, out of the aggregate of its authorized but unissued
shares of Common Stock or its issued shares of Common Stock
held in its treasury, or both, for the purpose of effecting
conversion of the Series A Preferred Stock, the full number
of shares of Common Stock deliverable upon the conversion of
all outstanding shares of Series A Preferred Stock not
theretofore converted. For purposes of this Section 7.12,
the number of shares of Common Stock that shall be
deliverable upon the conversion of all outstanding shares of
Series A Preferred Stock shall be computed as if at the time
of computation all such outstanding shares were held by a
single holder.
The Corporation covenants that any shares of Common
Stock issued upon conversion of the Series A Preferred Stock
shall be validly issued, fully paid and non-assessable.
Before taking any action that would cause an adjustment
reducing the Conversion Price below the then-par value of
the shares of Common Stock deliverable upon conversion of
the Series A Preferred Stock, the Corporation will take any
corporate action that, in the opinion of its counsel, may be
necessary in order that the Corporation may validly and
legally issue fully-paid and nonassessable shares of Common
Stock at such adjusted Conversion Price.
The Corporation shall endeavor to list the shares of
Common Stock required to be delivered upon conversion of the
Series A Preferred Stock, prior to such delivery, upon each
national securities exchange, if any, upon which the
outstanding Common Stock is listed at the time of such
delivery.
Prior to the delivery of any securities that the
Corporation shall be obligated to deliver upon conversion of
the Series A Preferred Stock, the Corporation shall endeavor
to comply with all federal and state laws and regulations
thereunder requiring the registration of such securities
with, or any approval of or consent to the delivery thereof
by, any governmental authority.
7.13 The Corporation will pay any and all documentary
stamp or similar issue or transfer taxes payable in respect
of the issue or delivery of shares of Common Stock or other
securities or property on conversion of the Series A
Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issue or
delivery of shares of Common Stock or other securities or
property in a name other than that of the holder of the
Series A Preferred Stock to be converted and no such issue
or delivery shall be made unless and until the person
requesting any issue or delivery has paid to the Corporation
the amount of any such tax or established, to the reasonable
satisfaction of the Corporation, that such tax has been
paid.
Section 8. Ranking. Any class or series of stock
of the Corporation shall be deemed to rank:
(A) prior to the Series A Preferred Stock, as to
the payment of dividends and as to distributions of
assets upon liquidation, dissolution or winding up, if
the holders of such class or series shall be entitled
to the receipt of dividends and of amounts
distributable upon liquidation, dissolution or winding
up in preference or priority to the holders of Series A
Preferred Stock;
(B) on a parity with the Series A Preferred
Stock, as to the payment of dividends and as to
distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per
share thereof be different from those of the Series A
Preferred Stock if the holders of such class of stock
or series and the Series A Preferred Stock shall be
entitled to the receipt of dividends and of amounts
distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of accrued
and unpaid dividends per share or liquidation
preferences, without preference or priority one over
the other; and
(C) junior to the Series A Preferred Stock, as to
the payment of dividends or as to the distribution of
assets upon liquidation, dissolution or winding up, if
such stock or series shall be Common Stock or Series C
Preferred Stock or if the holders of Series A Preferred
Stock shall be entitled to receipt of dividends or of
amounts distributable upon liquidation, dissolution or
winding up in preference or priority to the holders of
shares of such stock or series. Common Stock shall be
deemed junior to the Series A Preferred Stock
notwithstanding that it may participate in
distributions upon an involuntary liquidation,
dissolution or winding up without the Series A
Preferred Stock receiving the Voluntary Liquidation
Preference.
Section 9. Voting.
9.1 Unless the affirmative vote or consent of the
holders of a greater number of shares shall then be required
by law, the consent of the holders of at least 66 2/3 % of
all of the outstanding shares of Series A Preferred Stock
and all other affected series of Serial Preferred Stock
ranking on a parity with the Series A Preferred Stock as to
dividends and amounts distributable upon liquidation,
dissolution and winding up, given in person or by proxy,
either in writing or by a vote at a meeting called for the
purpose, at which the holders of shares of Series A
Preferred Stock and such other series of Serial Preferred
Stock shall vote together as a single class without regard
to series, shall be necessary for authorizing, effecting or
validating the amendment, alteration or repeal of any of the
provisions of this Restated Certificate or of any
certificate amendatory thereof or supplemental thereto
(including any Certificate of Designations, Preferences and
Rights or any similar document relating to any series of
Serial Preferred Stock) which would materially adversely
affect the preferences, rights, powers or privileges of the
Series A Preferred Stock; provided, however, that the
amendment of the provisions of this Restated Certificate so
as to authorize or create, or to increase the authorized
amount of, any Junior Stock or any shares of any class
ranking on a parity with the Series A Preferred Stock shall
not be deemed to materially adversely affect the
preferences, rights, powers or privileges of Series A
Preferred Stock; and provided, further, that the amendment
of the provisions of the Restated Certificate of
Incorporation so as to increase or eliminate the Aggregate
Involuntary Liquidation Amount shall not be deemed to
materially adversely affect the preferences, rights, powers
or privileges of Series A Preferred Stock.
9.2 Unless the affirmative vote or consent of the
holders of a greater number of shares shall then be required
by law, the consent of the holders of at least 66 2/3 % of
all of the outstanding shares of Series A Preferred Stock
and all other series of Serial Preferred Stock ranking on a
parity with the Series A Preferred Stock as to dividends and
amounts distributable upon liquidation, dissolution or
winding up, given in person or by proxy, either in writing
or by a vote at a meeting called for the purpose at which
the holders of shares of Series A Preferred Stock and such
other series of Serial Preferred Stock shall vote together
as a single class without regard to series, shall be
necessary for authorizing, effecting or validating the
creation, authorization or issue of any shares of any class
of stock of the Corporation ranking prior to the Series A
Preferred Stock as to dividends or upon liquidation,
dissolution or winding up, or the reclassification of any
authorized stock of the Corporation into any such prior
shares, or the creation, authorization or issuance of any
obligation or security convertible into or evidencing the
right to purchase any such prior shares.
9.3 If at the time of any annual meeting of
stockholders for the election of directors a default in
preference dividends (as defined below) on the Series A
Preferred Stock and any other series of Serial Preferred
Stock with respect to which such a default exists shall
exist, the number of directors constituting the Board of
Directors of the Corporation shall be increased by two, and
the holders of the Series A Preferred Stock and such other
series shall have the right at such meeting, voting together
as a single class without regard to series, to the exclusion
of the holders of common stock, to elect two directors of
the Corporation to fill such newly created directorships.
Such right shall continue until there are no dividends in
arrears upon the Serial Preferred Stock. Any Preferred
Director may be removed by, and shall not be removed except
by, the vote of the holders of record of the outstanding
shares of Serial Preferred Stock, voting together as a
single class without regard to series, at a meeting of the
stockholders, or of the holders of shares of Serial
Preferred Stock as to which a default exists, called for the
purpose. So long as a default in any preference dividends
on the Serial Preferred Stock shall exist, (a) any vacancy
in the office of a Preferred Director may be filled (except
as provided in the following clause (b)) by an instrument in
writing signed by the remaining Preferred Director and filed
with the Corporation and (b) in the case of the removal of
any Preferred Director, the vacancy may be filled by the
vote of the holders of the outstanding shares of Serial
Preferred Stock as to which a default exists, voting
together as a single class without regard to series, at the
same meeting at which such removal shall be voted. Each
director appointed as aforesaid by the remaining Preferred
Director shall be deemed, for all purposes hereof, to be a
Preferred Director. Whenever a default in preference
dividends shall no longer exist, the term of office of each
Preferred Director shall terminate and the number of
directors constituting the Board of Directors of the
Corporation shall be reduced by two. For the purposes
hereof, a "default in preference dividends" on any series of
Serial Preferred Stock shall be deemed to exist whenever the
equivalent of six quarterly dividends have not been declared
and paid or set apart for payment, whether or not
consecutive, and, having so occurred, such default shall be
deemed to exist thereafter until, but only until, all
accrued dividends on all shares of Serial Preferred Stock of
each and every series then outstanding shall have been
declared and paid or set apart for payment to the end of the
last preceding dividend period.
For purposes of the foregoing provisions of this
Section 9, each share of Series A Preferred Stock shall have
one (1) vote per share. Except as otherwise required by
applicable law or as set forth herein, the shares of Series
A Preferred Stock shall not have any relative,
participating, optional or other special voting rights and
powers and the consent of the holders thereof shall not be
required for the taking of any corporate action.
Section 10. Record Holders. The Corporation and
the Transfer Agent may deem and treat the record holder of
any shares of Series A Preferred Stock as the true and
lawful owner thereof for all purposes, and neither the
Corporation nor the Transfer Agent shall be affected by any
notice to the contrary.
B. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES B
PREFERRED STOCK
Unless otherwise indicated, any reference in this
Article FOURTH, Part I.B to "Section", "Subsection",
"paragraph", "subparagraph" or "clause" shall refer to a
Section, Subsection, paragraph, subparagraph or clause of
this Article FOURTH, Part I.B.
Section 1. Number of Shares and Designations.
Fifty thousand (50,000) shares of the Serial Preferred
Stock, without par value, of the Corporation are hereby
constituted as a series designated as Series B Preferred
Stock (the "Series B Preferred Stock").
Section 2. Definitions. For purposes of the
Series B Preferred Stock, the following terms shall have the
meanings indicated:
2.1 "Board of Directors" shall mean the board of
directors of the Corporation or any committee of such board
of directors authorized to perform any of its
responsibilities with respect to the Series B Preferred
Stock.
2.2 "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which state or federally
chartered banking institutions in New York, New York are not
required to be open.
2.3 "Common Stock" shall mean the common stock of the
Corporation, par value $0.01 per share.
2.4 "default in preference dividends" shall have the
meaning set forth in Section 8.3 hereof.
2.5 "Dividend Payment Date" shall mean February 1, May
1, August 1 and November 1 in each year, commencing on
August 1, 1994; provided that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend
payment due on such Dividend Payment Date shall be paid on
the Business Day immediately following such Dividend Payment
Date.
2.6 "Dividend Periods" shall mean quarterly dividend
periods commencing on February 1, May 1, August 1 and
November 1 of each year and ending on and including the day
preceding the first day of the next succeeding Dividend
Period (other than the initial Dividend Period, which shall
commence on the Issue Date and end on and include July 31,
1994.)
2.7 "Issue Date" shall mean the first date on which
shares of Series B Preferred Stock are issued.
2.8 "Liquidation Preference" shall have the meaning
set forth in Section 4.1 hereof.
2.9 "Preferred Director" shall mean any director of
the Corporation elected or appointed pursuant to Section 8.3
hereof.
2.10 "Redemption Date" shall have the meaning set forth
in Section 5.3 hereof.
2.11 "Restated Certificate" shall mean this Restated
Certificate of Incorporation of the Corporation, as amended
from time to time.
2.12 "Rights" shall mean the rights of the Corporation
that are issuable under the Corporation's Rights Agreement
dated as of December 11, 1986, and as amended from time to
time, or rights to purchase any capital stock of the
Corporation under any successor shareholder rights plan or
plans adopted in replacement of the Corporation's Rights
Agreement.
2.13 "set apart for payment" shall be deemed to
include, without any action other than the following, the
recording by the Corporation in its accounting ledgers of
any accounting or bookkeeping entry that indicates, pursuant
to a declaration of dividends or other distribution by the
Board of Directors, the allocation of funds to be so paid on
any series or class of capital stock of the Corporation;
provided that if any funds for any class or series of stock
ranking on a parity with or junior to the Series B Preferred
Stock as to the payment of dividends are placed in a
separate account of the Corporation or delivered to a
disbursing, paying or other similar agent, then "set apart
for payment" with respect to the Series B Preferred Stock
shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other
similar agent.
2.14 "Transfer Agent" means the Corporation or such
agent or agents of the Corporation as may be designated by
the Board of Directors as the transfer agent for the Series
B Preferred Stock.
Section 3. Dividends.
3.1 The holders of shares of the Series B Preferred
Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of assets legally available
for that purpose, dividends payable in cash at the rate per
annum of $3,062.50 per share of Series B Preferred Stock.
Such dividends shall be cumulative from the Issue Date,
whether or not in any Dividend Period or Periods there shall
be assets of the Corporation legally available for the
payment of such dividends, and shall be payable quarterly,
when, as and if declared by the Board of Directors, in
arrears on Dividend Payment Dates, commencing on August 1,
1994. Each such dividend shall be payable in arrears to the
holders of record of shares of the Series B Preferred Stock,
as they appear on the stock records of the Corporation at
the close of business on such record dates, which shall not
be more than 60 days nor less than 10 days preceding the
payment dates thereof, as shall be fixed by the Board of
Directors or a duly authorized committee thereof. Accrued
and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any
Dividend Payment Date, to holders of record on such date,
not exceeding 45 days preceding the payment date thereof, as
may be fixed by the Board of Directors.
3.2 The amount of dividends payable for each full
Dividend Period for the Series B Preferred Stock shall be
computed by dividing the annual dividend rate by four. The
amount of dividends payable for the initial Dividend Period,
or any other period shorter or longer than a full Dividend
Period, on the Series B Preferred Stock shall be computed on
the basis of twelve-30-day months and a 360-day year.
Holders of shares of Series B Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property
or stock, in excess of cumulative dividends, as herein
provided, on the Series B Preferred Stock. No interest, or
sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series B
Preferred Stock that may be in arrears.
3.3 So long as any shares of the Series B Preferred
Stock are outstanding, no dividends, except as described in
the next succeeding sentence, shall be declared or paid or
set apart for payment on any class or series of stock of the
Corporation ranking, as to dividends and amounts
distributable upon liquidation, dissolution or winding up,
on a parity with the Series B Preferred Stock, for any
period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such
payment on the Series B Preferred Stock for all Dividend
Periods terminating on or prior to the date of payment of
the dividend on such class or series of parity stock. When
dividends are not paid in full or a sum sufficient for such
payment is not set apart, as aforesaid, all dividends
declared upon shares of the Series B Preferred Stock and all
dividends declared upon any other class or series of stock
ranking on a parity as to dividends and amounts
distributable upon liquidation, dissolution or winding up
shall be declared ratably in proportion to the respective
amounts of dividends accumulated and unpaid on the Series B
Preferred Stock and accumulated and unpaid on such parity
stock.
3.4 So long as any shares of the Series B Preferred
Stock are outstanding, no dividends (other than (i) the
Rights and (ii) dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or
purchase shares of, any class or series of stock of the
Corporation that is junior to the Series B Preferred Stock
as to the payment of dividends and as to distributions upon
liquidation, dissolution or winding up of the Corporation)
shall be declared or paid or set apart for payment or other
distribution declared or made upon any class or series of
stock of the Corporation that is junior to the Series B
Preferred Stock as to the payment of dividends, nor shall
any class or series of stock of the Corporation ranking, as
to dividends and amounts distributable upon liquidation,
disolution or winding up, on a parity with or junior to the
Series B Preferred Stock be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other
acquisition of shares of Common Stock made for purposes of
an employee incentive or benefit plan of the Corporation or
any subsidiary) for any consideration (or any moneys be paid
to or made available for a sinking fund for the redemption
of any shares of any such stock) by the Corporation,
directly or indirectly (except by conversion into or
exchange for any class or series of stock of the Corporation
that is junior to the Series B Preferred Stock as to payment
of dividends and as to distributions upon liquidation,
dissolution or winding up of the Corporation), unless in
each case the full cumulative dividends on all outstanding
shares of the Series B Preferred Stock and any other stock
of the Corporation ranking on a parity with the Series B
Preferred Stock, as to dividends and amounts distributable
upon liquidation, dissolution or winding up shall have been
paid or set apart for payment for all past Dividend Periods
with respect to the Series B Preferred Stock and all past
dividend periods with respect to such parity stock.
Section 4. Payments upon Liquidation.
4.1 In the event of any liquidation, dissolution or
winding up of the Corporation before any payment or
distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the
holders of any class or series of stock of the Corporation
that ranks junior to the Series B Preferred Stock as to the
receipt of amounts distributable upon liquidation,
dissolution or winding up of the Corporation, the holders of
the shares of Series B Preferred Stock shall be entitled to
receive Twenty-Five Thousand Dollars ($25,000) per share of
Series B Preferred Stock plus an amount equal to all
dividends (whether or not earned or declared) accrued and
unpaid thereon to the date of final distribution to such
holders (the "Liquidation Preference"); but such holders
shall not be entitled to any further payment. If, upon any
liquidation, dissolution or winding up of the Corporation,
the assets of the Corporation, or proceeds thereof,
distributable among the holders of the shares of Series B
Preferred Stock shall be insufficient to pay in full the
Liquidation Preference and the liquidation preference on all
other shares of any class or series of stock ranking, as to
dividends and amounts distributable upon liquidation,
dissolution or winding up, on a parity with the Series B
Preferred Stock, then such assets, or the proceeds thereof,
shall be distributed among the holders of shares of Series B
Preferred Stock and any such other parity stock ratably in
accordance with the respective amounts that would be payable
on such shares of Series B Preferred Stock and any such
other parity stock if all amounts payable thereon were paid
in full. For the purposes of this Section 4, neither (i) a
consolidation or merger of the Corporation with or into one
or more corporations nor (ii) a sale, lease, exchange or
transfer of all or substantially all of the Corporation's
assets shall be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, of the Corporation.
4.2 Subject to the rights of the holders of shares of
any series or class or classes of stock ranking on a parity
with or prior to the Series B Preferred Stock as to
dividends and amounts distributable upon liquidation,
dissolution or winding up of the Corporation, after payment
shall have been made to the holders of the Series B
Preferred Stock, as and to the fullest extent provided in
this Section 4, any other class or series of stock of the
Corporation that ranks junior to the Series B Preferred
Stock as to amounts distributable upon dissolution,
liquidation or winding up of the Corporation shall, subject
to the respective terms and provisions (if any) applying
thereto, be entitled to receive any and all assets remaining
to be paid or distributed, and the holders of the Series B
Preferred Stock shall not be entitled to share therein.
Section 5. Redemption at the Option of the
Corporation.
5.1 The shares of Series B Preferred Stock shall be
redeemable at the option of the Corporation by resolution of
its Board of Directors, in whole, or, from time to time, in
part, at any time on or after July 12, 2004, at the
redemption price of $25,000.00 per share plus all dividends
accrued and unpaid on the shares of Series B Preferred Stock
up to the date fixed for the redemption, upon giving notice
as provided herein below.
5.2 If fewer than all of the outstanding shares of
Series B Preferred Stock are to be redeemed, the number of
shares to be redeemed shall be determined by the Board of
Directors and the shares to be redeemed shall be determined
pro rata or by lot or in such other manner and subject to
such regulations as the Board of Directors in its sole
discretion shall prescribe.
5.3 At least 30 days, but not more than 60 days, prior
to the date fixed for the redemption of shares of Series B
Preferred Stock, a written notice shall be mailed in a
postage prepaid envelope to each holder of record of the
shares of Series B Preferred Stock to be redeemed, addressed
to such holder at his post office address as shown on the
records of the Corporation, notifying such holder of the
election of the Corporation to redeem such shares, stating
the date fixed for redemption thereof (the "Redemption
Date") and calling upon such holder to surrender to the
Corporation, on the Redemption Date at the place designated
in such notice, the certificate or certificates representing
the number of shares specified in such notice of redemption.
On or after the Redemption Date, each holder of shares of
Series B Preferred Stock to be redeemed shall present and
surrender such certificate or certificates for such shares
to the Corporation at the place designated in such notice
and thereupon the redemption price of such shares shall be
paid to or on the order of the person whose name appears on
such certificate or certificates as the owner thereof and
each surrendered certificate shall be cancelled. In case
less than all the shares represented by any such certificate
are redeemed, a new certificate shall be issued representing
the shares not redeemed.
From and after the Redemption Date (unless default
shall be made by the Corporation in payment of the
redemption price), all dividends on the shares of Series B
Preferred Stock designated for redemption in such notice
shall cease to accrue, and all rights of the holders thereof
as stockholders of the Corporation, except the right to
receive the redemption price of such shares (including all
accrued and unpaid dividends up to the Redemption Date) upon
the surrender of certificates representing the same, shall
cease and terminate and such shares shall not thereafter be
transferred (except with the consent of the Corporation) on
the books of the Corporation, and such shares shall not be
deemed to be outstanding for any purpose whatsoever. At its
election, the Corporation, prior to the Redemption Date, may
deposit the redemption price (including all accrued and
unpaid dividends up to the Redemption Date) of shares of
Series B Preferred Stock called for redemption in trust for
the holders thereof with a bank or trust company (having a
capital surplus and undivided profits aggregating not less
than $50,000,000) in the Borough of Manhattan, City and
State of New York, or in any other city in which the
Corporation at the time shall maintain a transfer agency
with respect to such shares, in which case the aforesaid
notice to holders of shares of Series B Preferred Stock to
be redeemed shall state the date of such deposit, shall
specify the office of such bank or trust company as the
place of payment of the redemption price, and shall call
upon such holders to surrender the certificates representing
such shares at such place on or after the date fixed in such
redemption notice (which shall not be later than the
Redemption Date). Any interest accrued on such funds shall
be paid to the Corporation from time to time. Any moneys so
deposited that shall remain unclaimed by the holders of such
shares of Series B Preferred Stock at the end of two years
after the Redemption Date shall be returned by such bank or
trust company to the Corporation.
Section 6. Shares to be Retired.
All shares of Series B Preferred Stock that have been
issued and reacquired in any manner by the Corporation
(excluding, until the Corporation elects to retire them,
shares that are held as treasury shares) shall be restored
to the status of authorized but unissued shares of Serial
Preferred Stock, without designation as to series.
Section 7. Ranking.
7.1 Any class or series of stock of the Corporation
shall be deemed to rank:
(a) prior to the Series B Preferred Stock, as to
the payment of dividends and as to distributions of
assets upon liquidation, dissolution or winding up, if
the holders of such class or series shall be entitled
to the receipt of dividends and of amounts
distributable upon liquidation, dissolution or winding
up in preference or priority to the holders of Series B
Preferred Stock;
(b) on a parity with the Series B Preferred
Stock, as to the payment of dividends and as to
distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per
share thereof be different from those of the Series B
Preferred Stock, if the holders of such class of stock
or series and the Series B Preferred Stock shall be
entitled to the receipt of dividends and of amounts
distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of accrued
and unpaid dividends per share or liquidation
preferences, without preference or priority one over
the other; and
(c) junior to the Series B Preferred Stock, as to
the payment of dividends or as to the distribution of
assets upon liquidation, dissolution or winding up, if
the holders of Series B Preferred Stock shall be
entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding
up in preference or priority to the holders of shares
of such class or series.
7.2 The Series A Convertible Preferred Stock and the
Series D Redeemable Preferred Stock shall each be deemed to
rank on a parity with the Series B Preferred Stock. The
Class 1 ESOP Convertible Preferred Stock, the Class 2 ESOP
Convertible Preferred Stock, the Class M ESOP Voting Junior
Preferred Stock, the Class P ESOP Voting Junior Preferred
Stock, the Class S ESOP Voting Junior Preferred Stock, the
Class I Junior Preferred Stock, the Class IAM Junior
Preferred Stock, the Class Pilot MEC Junior Preferred Stock,
the Class SAM Junior Preferred Stock, the Series C Junior
Participating Preferred Stock and the Common Stock shall
each be deemed to rank junior to the Series B Preferred
Stock as to receipt of dividends and as to amounts
distributable upon liquidation, dissolution or winding up.
Section 8. Voting.
8.1 Unless the affirmative vote or consent of the
holders of a greater number of shares shall then be required
by law, the consent of the holders of at least 66 2/3 % of
all of the outstanding shares of Series B Preferred Stock,
given in person or by proxy, either in writing or by a vote
at a meeting called for the purpose shall be necessary for
authorizing, effecting or validating the amendment,
alteration or repeal of any of the provisions of this
Restated Certificate or of any certificate amendatory
thereof or supplemental thereto (including any Certificate
of Designations, Preferences and Rights or any similar
document relating to any series of Serial Preferred Stock)
that would materially adversely affect the preferences,
rights, powers or privileges of the Series B Preferred
Stock; provided that the amendment of the provisions of this
Restated Certificate so as to authorize or create, or to
increase the authorized amount of, any shares of any class
or series ranking on a parity with or junior to the Series B
Preferred Stock shall not be deemed to materially adversely
affect the preferences, rights, powers or privileges of
Series B Preferred Stock.
8.2 Unless the affirmative vote or consent of the
holders of a greater number of shares shall then be required
by law, the consent of the holders of at least 66 2/3 % of
all of the outstanding shares of Series B Preferred Stock,
given in person or by proxy, either in writing or by a vote
at a meeting called for the purpose shall be necessary for
authorizing, effecting or validating the creation,
authorization or issue of any shares of any class or series
of stock of the Corporation ranking prior to the Series B
Preferred Stock as to dividends or upon liquidation,
dissolution or winding up, or the reclassification of any
authorized stock of the Corporation into any such prior
shares, or the creation, authorization or issuance of any
obligation or security convertible into or evidencing the
right to purchase any such prior shares.
8.3 If at the time of any annual meeting of
stockholders for the election of directors a default in
preference dividends (as defined below) on the Series B
Preferred Stock and any other series of Serial Preferred
Stock with respect to which such a default exists shall
exist, then (without duplication of the provisions of
Article FOURTH, Part 1.A, Section 9.3 of this Restated
Certificate) the number of directors constituting the Board
of Directors of the Corporation shall be increased by two,
and the holders of the Series B Preferred Stock and such
other series shall have the right at such meeting, voting
together as a single class without regard to series, to the
exclusion of the holders of common stock, to elect two
directors of the Corporation to fill such newly created
directorships. Such right shall continue until there are no
dividends in arrears upon the Serial Preferred Stock. Any
Preferred Director may be removed by, and shall not be
removed except by, the vote of the holders of record of the
outstanding shares of Serial Preferred Stock, voting
together as a single class without regard to series, at a
meeting of the stockholders, or of the holders of shares of
Serial Preferred Stock as to which a default exists, called
for the purpose. So long as a default in any preference
dividends on the Serial Preferred Stock shall exist, (a) any
vacancy in the office of a Preferred Director may be filled
(except as provided in the following clause (b)) by an
instrument in writing signed by the remaining Preferred
Director and filed with the Corporation and (b) in the case
of the removal of any Preferred Director, the vacancy may be
filled by the vote of the holders of the outstanding shares
of Serial Preferred Stock as to which a default exist,
voting together as a single class without regard to series,
at the same meeting at which such removal shall be voted.
Each director appointed as aforesaid by the remaining
Preferred Director shall be deemed, for all purposes hereof,
to be a Preferred Director. Whenever a default in
preference dividends shall no longer exist, the term of
office of each Preferred Director shall terminate and the
number of directors constituting the Board of Directors of
the Corporation shall be reduced by two. For the purposes
hereof, a "default in preference dividends" on any series of
Serial Preferred Stock shall be deemed to exist whenever the
equivalent of six quarterly dividends have not been declared
and paid or set apart for payment, whether or not
consecutive, and, having so occurred, such default shall be
deemed to exist thereafter until, but only until, all
accrued dividends on all shares of Serial Preferred Stock of
each and every series then outstanding shall have been
declared and paid or set apart for payment to the end of the
last preceding dividend period.
8.4 For purposes of the foregoing provisions of this
Section 8, each share of Series B Preferred Stock shall have
one thousand (1,000) votes per share. Except as otherwise
required by applicable law or as set forth herein, the
shares of Series B Preferred Stock shall not have any
relative, participating, optional or other special voting
rights and powers and the consent of the holders thereof
shall not be required for the taking of any corporate
action.
Section 9. Record Holders. The Corporation and
the Transfer Agent may deem and treat the record holder of
any shares of Series B Preferred Stock as the true and
lawful owner thereof for all purposes, and neither the
Corporation nor the Transfer Agent shall be affected by any
notice to the contrary.
C. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES C JUNIOR
PARTICIPATING PREFERRED STOCK
Unless otherwise indicated, any reference in this
Article FOURTH, Part I.C to "Section", "Subsection",
"paragraph", "subparagraph" or "clause" shall refer to a
Section, Subsection, paragraph, subparagraph or clause of
this Article FOURTH, Part I.C.
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. 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 $0.01 per share, of
the Corporation (the "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 then outstanding 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 Section 2 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:
3.1 Subject to the provision for adjustment
hereinafter 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 then
outstanding 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.
3.2 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.
3.3 If the equivalent of six quarterly dividends
payable on the Series C Preferred Stock or any other series
of Serial 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.
3.4 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.
4.1 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
(a) 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;
(b) 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;
(c) 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 as to dividends and
as to distributions upon dissolution, liquidation or
winding up to the Series C Preferred Stock; or
(d) 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.
4.2 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 Section 4.1, 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 cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized
but unissued shares of Serial Preferred Stock and may be
reissued as part of a new series of the Serial 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 Restated Certificate of
Incorporation of the Corporation (as amended from time to
time, the "Restated Certificate"), 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 then outstanding 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 then
outstanding 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 Restated Certificate
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.
D. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES D
REDEEMABLE PREFERRED STOCK
Unless otherwise indicated, any reference in this
Article FOURTH, Part I.D to "Section", "Subsection",
"paragraph", "subparagraph" or "clause" shall refer to a
Section, Subsection, paragraph, subparagraph or clause of
this Article FOURTH, Part I.D.
Section 1. Number of Shares and Designations.
Fifty thousand (50,000) shares of the Serial Preferred
Stock, without par value, of the Corporation are hereby
constituted as a series designated as Series D Redeemable
Preferred Stock (the "Series D Preferred Stock").
Section 2. Definitions. For purposes of the
Series D Preferred Stock, the following terms shall have the
meanings indicated:
2.1 "Common Stock" shall mean the common stock of the
Corporation, par value $0.01 per share.
2.2 "Redemption Consideration" shall mean (subject to
Section 6 hereof) $84.81 in cash, such Redemption
Consideration to be distributed by the Corporation in
respect of each 1/1,000th of a share of Series D Preferred
Stock to the holder thereof upon the redemption of such
fraction of a share as provided in Section 6 hereof and as
adjusted as provided in Section 6 hereof.
2.3 "Series D Preferred Stock" shall have the meaning
set forth in Section 1 hereof.
2.4 "Transfer Agent" means the Corporation or such
agent or agents of the Corporation as may be designated by
the Board of Directors of the Corporation (or any committee
of such board of directors authorized to perform any of its
responsibilities with respect to the Series D Preferred
Stock) as the transfer agent for the Series D Preferred
Stock.
Section 3. Dividends. The holders of shares of
the Series D Preferred Stock or fractions thereof shall not
be entitled to receive any dividends.
Section 4. Payments upon Liquidation.
4.1 In the event of any liquidation, dissolution or
winding up of the Corporation before any payment or
distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the
holders of any class or series of stock of the Corporation
that ranks junior to the Series D Preferred Stock as to
amounts distributable upon liquidation, dissolution or
winding up of the Corporation, the holders of the shares of
Series D Preferred Stock or fractions thereof shall be
entitled to receive the Redemption Consideration per
1/1,000th of a share of Series D Preferred Stock (the
"Liquidation Preference"); but such holders shall not be
entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of
the Corporation, or proceeds thereof, distributable among
the holders of the shares of Series D Preferred Stock and
fractions thereof shall be insufficient to pay in full the
Liquidation Preference, and the liquidation preference on
all other shares of any class or series of stock ranking, as
to dividends and amounts distributable upon liquidation,
dissolution or winding up, on a parity with the Series D
Preferred Stock, then such assets, or the proceeds thereof,
shall be distributed among the holders of shares of Series D
Preferred Stock or fractions thereof and any such other
parity stock ratably in accordance with the respective
amounts that would be payable on such shares of Series D
Preferred Stock or fractions thereof and any such other
parity stock if all amounts payable thereon were paid in
full. For the purposes of this Section 4, neither (i) a
consolidation or merger of the Corporation with or into one
or more corporations nor (ii) a sale, lease, exchange or
transfer of all or substantially all of the Corporation's
assets shall be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, of the Corporation.
4.2 Subject to the rights of the holders of shares of
any series or class or classes of stock ranking on a parity
with or prior to the Series D Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of
the Corporation, after payment shall have been made to the
holders of the Series D Preferred Stock, as and to the
fullest extent provided in this Section 4, any other series
or class or classes of stock of the Corporation that ranks
junior to the Series D Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of
the Corporation, shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive
any and all assets remaining to be paid or distributed, and
the holders of the Series D Preferred Stock shall not be
entitled to share therein.
Section 5. Shares to be Retired. All shares of
Series D Preferred Stock and fractions thereof that shall
have been issued and reacquired in any manner by the
Corporation (excluding, until the Corporation elects to
retire them, shares that are held as treasury shares) shall
be restored to the status of authorized but unissued shares
of Serial Preferred Stock, without designation as to series.
Section 6. Redemption. Each 1/1,000th of a share
of Series D Preferred Stock is redeemable, and immediately
following the issuance thereof, the Corporation, to the
extent that it may legally do so and subject to the other
provisions of this Restated Certificate, shall redeem each
1/1,000th of a share of Series D Preferred Stock, for the
Redemption Consideration. If for any reason the Corporation
is not able to redeem any portion of the Series D Preferred
Stock so issued, such shares and fractions thereof that
remain outstanding shall continue to exist and remain
outstanding and shall thereafter represent the right to
receive the Redemption Consideration as soon as the
Corporation is legally and hereunder permitted to redeem
such shares and fractions thereof.
At the time of the redemption pursuant to this Section
6, the rights of holders of Series D Preferred Stock so
redeemed shall cease with respect to such shares or
fractions thereof (except the right to receive cash as
provided above), and the person entitled to receive the cash
upon redemption shall be treated for all purposes as the
owner of such cash as of the date of such redemption.
With respect to any shares of the Series D Preferred
Stock or fractions thereof that are redeemed by the
Corporation immediately following the issuance thereof, the
Corporation need not distribute a certificate to the person
otherwise entitled to receive such shares or fractions
thereof but may instead distribute the Redemption
Consideration to such person or persons directly. If
certificates representing shares of the Series D Preferred
Stock or fractions thereof are issued, the Corporation may
require the surrender of such certificates as a condition
precedent to the issuance of the Redemption Consideration.
Section 7. Ranking.
7.1 Any class or series of stock of the Corporation
shall be deemed to rank:
(a) prior to the Series D Preferred Stock, as to
distributions of assets upon liquidation, dissolution
or winding up, if the holders of such class or series
shall be entitled to the receipt of amounts
distributable upon liquidation, dissolution or winding
up in preference or priority to the holders of Series D
Preferred Stock;
(b) on a parity with the Series D Preferred
Stock, as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the
redemption or liquidation prices per share thereof be
different from those of the Series D Preferred Stock,
if the holders of such class of stock or series and the
Series D Preferred Stock shall be entitled to the
receipt of amounts distributable upon liquidation,
dissolution or winding up in proportion to their
respective liquidation preferences, without preference
or priority one over the other; and
(c) junior to the Series D Preferred Stock, as to
the distribution of assets upon liquidation,
dissolution or winding up, if the holders of Series D
Preferred Stock shall be entitled to the receipt of
amounts distributable upon liquidation, dissolution or
winding up in preference or priority to the holders of
shares of such class or series.
7.2 The Series A Convertible Preferred Stock and the
Series B Preferred Stock shall each be deemed to rank on a
parity with the Series D Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up.
The Class 1 ESOP Convertible Preferred Stock, the Class 2
ESOP Convertible Preferred Stock, the Class M ESOP Voting
Junior Preferred Stock, the Class P ESOP Voting Junior
Preferred Stock, the Class S ESOP Voting Junior Preferred
Stock, the Class I Junior Preferred Stock, the Class IAM
Junior Preferred Stock, the Class Pilot MEC Junior Preferred
Stock, the Class SAM Junior Preferred Stock, the Series C
Junior Participating Preferred Stock and the Common Stock
shall each be deemed to rank junior to the Series D
Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up.
Section 8. Voting. Except as otherwise required
by applicable law, the shares of Series D Preferred Stock
shall not have any voting rights and the consent of the
holders thereof shall not be required for the taking of any
corporate action. For each matter as to which shares of the
Series D Preferred Stock shall have voting rights, each
share of Series D Preferred Stock shall have one (1) vote
per share.
Section 9. Record Holders. The Corporation and
the Transfer Agent may deem and treat the record holder of
any shares of Series D Preferred Stock as the true and
lawful owner thereof for all purposes, and except as
otherwise provided by law, neither the Corporation nor the
Transfer Agent shall be affected by any notice to the
contrary.
PART II
Class 1 ESOP Convertible Preferred Stock
Unless otherwise indicated, any reference in this
Article FOURTH, Part II to "Section", "Subsection",
"paragraph", "subparagraph" or "clause" shall refer to a
Section, Subsection, paragraph, subparagraph or clause of
this Article FOURTH, Part II.
Section 1. Number of Shares; Designation; Issuance
and Automatic Conversion.
1.1 The Class 1 ESOP Convertible Preferred Stock of
the Corporation (the "Class 1 ESOP Preferred Stock") shall
consist of 25,000,000 shares, par value $0.01 per share.
1.2 Shares of Class 1 ESOP Preferred Stock shall be
issued only to a trustee or trustees acting on behalf of the
UAL Corporation Employee Stock Ownership Plan (the "ESOP").
In the event of any sale, transfer or other disposition
(including, without limitation, upon a foreclosure or other
realization upon shares of Class 1 ESOP Preferred Stock
pledged as security for any loan or loans made to the ESOP
or to the trustee or the trustees acting on behalf of the
ESOP) (hereinafter a "transfer") of shares of Class 1 ESOP
Preferred Stock to any person (including, without
limitation, any participant in the ESOP) other than (x) any
trustee or trustees of the ESOP or (y) any pledgee of such
shares acquiring such shares as security for any loan or
loans made to the ESOP or to any trustee or trustees acting
on behalf of the ESOP, the shares of Class 1 ESOP Preferred
Stock so transferred, upon such transfer and without any
further action by the Corporation or the transferee, shall
be automatically converted into shares of Common Stock at
the applicable Conversion Rate in accordance with Section 6
hereof and thereafter such transferee shall not have any of
the voting powers, preferences or relative, participating,
optional or special rights ascribed to shares of Class 1
ESOP Preferred Stock hereunder, but, rather, shall have only
the powers and rights pertaining to the Common Stock into
which such shares of Class 1 ESOP Preferred Stock shall have
been so converted. In the event of any such automatic
conversion provided for in this Section 1.2, such transferee
shall be treated for all purposes as the record holder of
the shares of Common Stock into which the Class 1 ESOP
Preferred Stock shall have been converted as of the date of
such conversion. Certificates representing shares of Class
1 ESOP Preferred Stock shall be legended to reflect such
consequences of a transfer. Notwithstanding the foregoing
provisions of this Section 1, shares of Class 1 ESOP
Preferred Stock may be converted into shares of Common Stock
as provided by Section 6 hereof and the shares of Common
Stock issued upon any conversion in accordance with Section
6 hereof or this Section 1.2 may be transferred by the
holder thereof as permitted by law.
Section 2. Definitions. For purposes of the Class
1 ESOP Preferred Stock, the following terms shall have the
meanings indicated:
2.1 "Affiliate" shall have the meaning defined in Rule
12b-2 promulgated under the Securities Exchange Act of 1934,
as amended, or any successor thereto.
2.2 "Board of Directors" shall mean the board of
directors of the Corporation or any committee authorized by
such board of directors to perform any of its
responsibilities with respect to the Class 1 ESOP Preferred
Stock.
2.3 "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which state or federally
chartered banking institutions in New York, New York are not
required to be open.
2.4 "Class 1 ESOP Preferred Stock" shall have the
meaning set forth in Section 1 hereof.
2.5 "Class 2 ESOP Preferred Stock" shall mean the
Class 2 ESOP Convertible Preferred Stock, par value $0.01
per share, of the Corporation.
2.6 "Class I Preferred Stock" shall mean the Class I
Junior Preferred Stock, par value $0.01 per share, of the
Corporation.
2.7 "Class IAM Preferred Stock" shall mean the Class
IAM Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
2.8 "Class M Voting Preferred Stock" shall mean the
Class M ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.9 "Class P Voting Preferred Stock" shall mean the
Class P ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.10 "Class Pilot MEC Preferred Stock" shall mean the
Class Pilot MEC Junior Preferred Stock, par value $0.01 per
share, of the Corporation.
2.11 "Class S Voting Preferred Stock" shall mean the
Class S ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.12 "Class SAM Preferred Stock" shall mean the Class
SAM Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
2.13 "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
2.14 "Common Stock" shall mean the common stock of the
Corporation, par value $0.01 per share.
2.15 "Conversion Rate" shall have the meaning set forth
in Section 6.1 hereof.
2.16 "Current Market Price" of publicly traded shares
of Common Stock or any other class or series of capital
stock or other security of the Corporation or any other
issuer for any day shall mean the last reported sales price,
regular way, on such day, or, if no sale takes place on such
day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported
on the New York Stock Exchange Composite Tape or, if such
security is not listed or admitted for trading on the New
York Stock Exchange, Inc. ("NYSE"), on the principal
national securities exchange on which such security is
listed or admitted for trading or quoted or, if not listed
or admitted for trading or quoted on any national securities
exchange, on the Nasdaq National Market, or, if such
security is not quoted on such National Market, the average
of the closing bid and asked prices on such day in the over-
the-counter market as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or, if bid and asked prices for such security on
such day shall not have been reported through NASDAQ, the
average of the bid and asked prices on such day as furnished
by any NYSE member firm regularly making a market in such
security selected for such purpose by the Board of
Directors.
2.17 "Director Preferred Stocks" shall mean
collectively, the Class I Preferred Stock, the Class IAM
Preferred Stock, the Class Pilot MEC Preferred Stock and the
Class SAM Preferred Stock.
2.18 "Dividend Payment Date" means a date on which
Participating Dividends are paid on the Class 1 ESOP
Preferred Stock or on the Common Stock.
2.19 "Dividend Period" shall mean the period commencing
March 31, 2000 or, if later, the most recent Dividend
Payment Date of the Class 1 ESOP Preferred Stock.
2.20 "Equity Securities" shall mean the Common Stock or
any debt, equity or other security or contractual right
convertible into or exercisable or exchangeable for, or
based on the value of, the Common Stock or any warrants,
options or other rights to purchase the Common Stock or
other Equity Securities (other than the Rights).
2.21 "ESOP Preferred Stocks" shall mean, collectively,
the Class 1 ESOP Preferred Stock and the Class 2 ESOP
Preferred Stock.
2.22 "Extraordinary Distribution" shall mean any
single dividend or other distribution (including by
reclassification of shares or recapitalization of the
Corporation, as well as any such dividend or distribution
made in connection with a merger or consolidation in which
the Corporation is the continuing corporation and the Common
Stock is not changed or exchanged) to holders of Common
Stock (effected while any of the shares of Class 1 ESOP
Preferred Stock are outstanding) (i) of cash, where the
aggregate amount of such single cash dividend or
distribution together with the amount of all cash dividends
and distributions made to holders of Common Stock during the
period from the most recent Extraordinary Distribution
Measuring Date until the payment date for such cash dividend
or distribution to holders of Common Stock, when combined
with the aggregate amount of all previous Pro Rata
Repurchases during such period (for this purpose, including
only that portion of the aggregate purchase price of each
such Pro Rata Repurchase which is in excess of the Fair
Market Value of the Common Stock repurchased as determined
on the Business Day prior to the public announcement of such
Pro Rata Repurchase made during such period), exceeds twelve
and one-half percent (12 1/2%) of the aggregate Fair Market
Value of all shares of Common Stock outstanding on the
record date for determining the shareholders entitled to
receive such Extraordinary Distribution and (ii) of any
shares of capital stock of the Corporation (other than
shares of Common Stock), other securities of the Corporation
(other than securities of the type referred to in Sections
6.4(b) and 6.4(c) hereof), evidences of indebtedness of the
Corporation or any other person or any other property
(including, without limitation, shares of capital stock of
any subsidiary of the Corporation), or any combination
thereof. The Fair Market Value of any such single dividend
or other distribution that, pursuant to clause (i),
constitutes an Extraordinary Distribution shall for purposes
of the first paragraph of Section 6.4(d) hereof be the sum
of the Fair Market Value of such Extraordinary Distribution
plus the amount of any other cash dividends and
distributions made within the relevant period referred to
above to holders of Common Stock to the extent such other
dividends and distributions were not previously included in
the calculation of an adjustment pursuant to the first
paragraph of Section 6.4(d) hereof within such period.
2.22.1 "Extraordinary Distribution Measuring Date"
shall mean the penultimate Business Day in each year,
commencing on such penultimate Business Day in 1999.
2.23 "Fair Market Value" shall mean the average of the
daily Current Market Prices of the security in question
during the five (5) consecutive Trading Days before the
earlier of the day in question and the "ex" date with
respect to the issuance or distribution requiring such
computation. The term "'ex' date," when used with respect
to any issuance or distribution, means the first day on
which the Common Stock trades regular way, without the right
to receive such issuance or distribution, on the exchange or
in the market, as the case may be, used to determine that
day's Current Market Price. With respect to any asset or
security for which there is no Current Market Price, the
Fair Market Value of such asset or security shall be
determined in good faith by the Board of Directors.
2.24 "Issue Date" shall mean the first date on which
shares of Class 1 ESOP Preferred Stock are issued.
2.25 "Liquidation Preference" shall have the meaning
set forth in Section 4.1 hereof.
2.26 "Measuring Date" shall mean that date which is the
365th day following the Issue Date.
2.27 "Non-Dilutive Amount" in respect of an issuance,
sale or exchange by the Corporation of any Equity Securities
(other than Common Stock) shall mean the excess of (i) the
product of the Fair Market Value of a share of Common Stock
on the day preceding the first public announcement of such
issuance, sale or exchange multiplied by the maximum number
of shares of Common Stock which could be acquired on such
date upon the exercise, conversion or exchange in full of
such Equity Securities (and any Equity Securities receivable
upon exercise, conversion or exchange thereof), whether or
not then exercisable, convertible or exchangeable at such
date, over (ii) the aggregate amount payable pursuant to the
exercise, conversion or exchange of such Equity Securities,
whether or not then exercisable, convertible or
exchangeable, to purchase or acquire such maximum number of
shares of Common Stock (and any Equity Securities receivable
upon exercise, conversion or exchange thereof); provided,
however, that in no event shall the Non-Dilutive Amount be
less than zero. For purposes of the foregoing sentence, the
amount payable pursuant to the exercise, conversion or
exchange of such Equity Securities to purchase or acquire
shares of Common Stock shall be deemed to be the Fair Market
Value of the consideration payable pursuant to the exercise,
conversion or exchange of such Equity Securities on the date
of the issuance, sale or exchange of such Equity Securities
by the Corporation (excluding for that purpose the Fair
Market Value of the Equity Security to be so exercised,
converted or exchanged).
2.28 "Pro Rata Repurchase" shall mean any purchase of
shares of Common Stock by the Corporation or any Affiliate
thereof, whether for cash, shares of capital stock of the
Corporation, other securities of the Corporation, evidences
of indebtedness of the Corporation or any other person or
any other property (including, without limitation, shares of
capital stock, other securities or evidences of indebtedness
of a subsidiary of the Corporation), or any combination
thereof, effected while any of the shares of Class 1 ESOP
Preferred Stock are outstanding, pursuant to any tender
offer or exchange offer subject to Section 13(e) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any successor provision of law, or pursuant to any
other offer available to substantially all holders of Common
Stock; provided, however, that "Pro Rata Repurchase" shall
not include any purchase of shares by the Corporation or any
subsidiary thereof made in open market transactions
substantially in accordance with the requirements of Rule
10b-18 as in effect under the Exchange Act or on such other
terms and conditions as the Board of Directors shall have
determined are reasonably designed to prevent such purchases
from having a material effect on the trading market for the
Common Stock. The "Effective Date" of a Pro Rata Repurchase
shall mean the date of acceptance of shares for purchase or
exchange under any tender or exchange offer which is a Pro
Rata Repurchase or the date of purchase with respect to any
Pro Rata Repurchase that is not a tender or exchange offer.
2.29 "Restated Certificate" shall mean the Restated
Certificate of Incorporation of the Corporation, as amended
from time to time.
2.30 "Rights" shall mean the rights of the Corporation
issued or issuable under the Corporation's Rights Agreement
dated as of December 11, 1986, and as amended from time to
time (the "Rights Agreement"), or rights to purchase any
capital stock of the Corporation issued or issuable under
any successor shareholder rights plan or plans adopted in
replacement of the Rights Agreement.
2.31 "Series A Debentures" shall mean the Series A
Debentures due 2004 of United Air Lines, Inc.
2.32 "Series A Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series A Convertible Preferred Stock in
Article FOURTH, Part I.A of this Restated Certificate.
2.33 "Series B Debentures" shall mean the Series B
Debentures due 2014 of United Air Lines, Inc.
2.34 "Series B Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series B Preferred Stock in Article
FOURTH, Part I.B of this Restated Certificate.
2.35 "Series C Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series C Junior Participating Preferred
Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.36 "Series D Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series D Redeemable Preferred Stock in
Article FOURTH, Part I.D of this Restated Certificate.
2.37 [Reserved]
2.38 "set apart for payment" shall be deemed to
include, without any action other than the following, the
recording by the Corporation in its accounting ledgers of
any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so
paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any
class or series of stock of the Corporation ranking on a
parity with or junior to the Class 1 ESOP Preferred Stock as
to the payment of dividends or distributions are placed in a
separate account of the Corporation or delivered to a
disbursing, paying or other similar agent, then "set apart
for payment" with respect to the Class 1 ESOP Preferred
Stock shall mean, with respect to such dividends or
distributions, placing such funds in a separate account or
delivering such funds to a disbursing, paying or other
similar agent.
2.39 "Trading Day" shall mean any day on which the
securities in question are traded on the NYSE, or if such
securities are not listed or admitted for trading or quoted
on the NYSE, on the principal national securities exchange
on which such securities are listed or admitted, or if not
listed or admitted for trading or quoted on any national
securities exchange, on the Nasdaq National Market, or if
such securities are not quoted on such National Market, in
the applicable securities market in which the securities are
traded.
2.40 "Transfer Agent" means the Corporation or such
agent or agents of the Corporation as may be designated from
time to time by the Board of Directors as the transfer agent
for the Class 1 ESOP Preferred Stock.
2.41 "Voting Preferred Stocks" shall mean collectively,
the Class M Voting Preferred Stock, the Class P Voting
Preferred Stock and the Class S Voting Preferred Stock.
Section 3. Dividends.
3.1 The holders of shares of the Class 1 ESOP
Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors out of assets legally
available for that purpose, dividends payable in cash at the
rate (per outstanding share of Common Stock) equal to the
dividends which would have been received during the
applicable Dividend Period with respect to the shares of
Common Stock which would have been issued upon conversion of
the Class 1 ESOP Preferred Stock had the Class 1 ESOP
Preferred Stock been outstanding as Common Stock at each
relevant time in order to receive such dividends (but only
to the extent such dividends do not constitute an
Extraordinary Distribution under clause (i) of the
definition thereof), which dividends (hereinafter referred
to as "Participating Dividends") shall be paid in cash, pro-
rata to each holder of Class 1 ESOP Preferred Stock. Such
Participating Dividends shall be cumulative from March 31,
2000, whether or not in any Dividend Period or Periods there
shall be assets of the Corporation legally available for the
payment of such Participating Dividends and whether or not
the Board of Directors shall have declared such
Participating Dividends, and shall be payable when, as and
if declared by the Board of Directors, in arrears on
Dividend Payment Dates. Each such Participating Dividend
shall be payable in arrears to the holders of record of
shares of the Class 1 ESOP Preferred Stock, as they appear
on the stock records of the Corporation at the close of
business on such record dates, which shall not be more than
60 days nor less than 10 days preceding the Dividend Payment
Dates thereof, as shall be fixed by the Board of Directors.
Accrued and unpaid Participating Dividends for any past
Dividend Periods may be declared and paid at any time,
without reference to any Dividend Payment Date, to holders
of record on such date, not exceeding 45 days preceding the
payment date thereof, as may be fixed by the Board of
Directors. Holders of the Class 1 ESOP Preferred Stock
shall be entitled to the cumulative Participating Dividend
provided in the Section 3.1 and shall not be entitled to any
other dividends in excess thereof. In the event that an
adjustment is made pursuant to the second paragraph of
Section 6.4(d) with respect to shares of Class 1 ESOP
Preferred Stock converted during the applicable Dividend
Period, the amount of Participating Dividend to be paid in
accordance with the preceding sentence shall be reduced by
an amount equal to the product of the (x) the number of
shares of Common Stock into which such converted shares of
Class 1 ESOP Preferred Stock would have been converted in
the absence of such adjustment and (y) the amount of the
cash dividend or distributions per share of Common Stock in
respect of which such adjustment was made.
3.2 Except as provided in Section 3.1, holders of
shares of Class 1 ESOP Preferred Stock shall not be entitled
to any dividends, whether payable in cash, property or
stock, in excess of cumulative Participating Dividends, as
herein provided, on the Class 1 ESOP Preferred Stock. No
interest, or sum of money in lieu of interest, shall be
payable in respect of any Participating Dividend payment or
payments on the Class 1 ESOP Preferred Stock that may be in
arrears.
3.3 So long as any shares of the Class 1 ESOP
Preferred Stock are outstanding, no dividends, except as
described in the next succeeding sentence, shall be declared
or paid or set apart for payment on any other class or
series of stock of the Corporation ranking on a parity with
the Class 1 ESOP Preferred Stock as to the payment of
dividends for any period unless full cumulative
Participating Dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Class 1
ESOP Preferred Stock for all Dividend Periods terminating on
or prior to the date of payment of the dividends on such
class or series of parity stock. When Participating
Dividends are not paid in full or a sum sufficient for such
payment is not set apart, as aforesaid, all dividends
declared upon the Class 1 ESOP Preferred Stock and such
parity stock shall be declared ratably in proportion to the
respective amounts of Participating Dividends accumulated
and unpaid on the Class 1 ESOP Preferred Stock and dividends
accumulated and unpaid on such parity stock.
3.4 So long as any shares of the Class 1 ESOP
Preferred Stock are outstanding, no dividends (other than
(i) the Rights and (ii) dividends or distributions paid in
shares of, or options, warrants, or rights to subscribe for
or purchase shares of, any class or series of stock of the
Corporation that is junior to the Class 1 ESOP Preferred
Stock as to the payment of dividends) shall be declared or
paid or set apart for payment or other distribution declared
or made upon any class or series of stock of the Corporation
that is junior to the Class 1 ESOP Preferred Stock as to the
payment of dividends, nor shall any other class or series of
stock of the Corporation ranking on a parity with or junior
to the Class 1 ESOP Preferred Stock as to the payment of
dividends or as to distributions upon liquidation,
dissolution or winding up of the Corporation, be redeemed,
purchased or otherwise acquired (other than a redemption,
purchase or other acquisition of shares of Common Stock made
for purposes of an employee incentive or benefit plan of the
Corporation or any subsidiary) for any consideration (or any
moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the
Corporation, directly to the Class 1 ESOP Preferred Stock as
to the payment of dividends and as to distributions upon
liquidation, dissolution or winding up of the Corporation),
unless in each case the full cumulative Participating
Dividends on all outstanding shares of the Class 1 ESOP
Preferred Stock shall have been paid or set apart for
payment for all past Dividend Periods with respect to the
Class 1 ESOP Preferred Stock and such parity stock.
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or
set apart for payment to the holders of any class or series
of stock of the Corporation that ranks junior to the Class 1
ESOP Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation,
the holders of the shares of Class 1 ESOP Preferred Stock
shall be entitled to receive an amount per share of Class 1
ESOP Preferred Stock equal to the sum of (a) the result of
dividing (i) the Purchase Price (as defined in and
determined pursuant to Section 1 of the Preferred Stock
Purchase Agreement, dated as of March 25, 1994, as amended,
between the Corporation and State Street Bank and Trust
Company as trustee for the UAL Corporation Employee Stock
Ownership Plan Trust (the "Agreement"), a copy of which is
on file in the office of the Secretary of the Corporation)
of the shares of Class 1 ESOP Preferred Stock purchased
pursuant to Section 1 of the Agreement by (ii) the number of
shares of Class 1 ESOP Preferred Stock purchased pursuant to
Section 1 of the Agreement and (b) an amount equal to all
dividends (whether or not earned or declared) accrued and
unpaid thereon to the date of final distribution to such
holders (collectively, the "Liquidation Preference"), but
such holders shall not be entitled to any further payment.
If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of the shares of
Class 1 ESOP Preferred Stock shall be insufficient to pay in
full the Liquidation Preference and the liquidation
preference on all other shares of any class or series of
stock of the Corporation that ranks on a parity with the
Class 1 ESOP Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up of the
Corporation, then such assets, or the proceeds thereof,
shall be distributed among the holders of shares of Class 1
ESOP Preferred Stock and any such other parity stock ratably
in accordance with the respective amounts that would be
payable on such shares of Class 1 ESOP Preferred Stock and
any such other parity stock if all amounts payable thereon
were paid in full. For the purposes of this Section 4, (i)
a consolidation or merger of the Corporation with or into
one or more corporations, or (ii) a sale, lease, exchange or
transfer of all or substantially all of the Corporation's
assets, shall not be deemed to be a liquidation, dissolution
or winding up, voluntary or involuntary, of the Corporation.
4.2 Subject to the rights of the holders of shares of
any class or series of stock ranking prior to or on a parity
with the Class 1 ESOP Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of
the Corporation, after payment shall have been made to the
holders of the Class 1 ESOP Preferred Stock, as and to the
fullest extent provided in this Section 4, any other class
or series of stock of the Corporation that ranks junior to
the Class 1 ESOP Preferred Stock as to amounts distributable
upon dissolution, liquidation or winding up of the
Corporation shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive
any and all assets remaining to be paid or distributed, and
the holders of the Class 1 ESOP Preferred Stock shall not be
entitled to share therein.
Section 5. Shares to be Retired. All shares of
Class 1 ESOP Preferred Stock which shall have been issued
and reacquired in any manner by the Corporation shall be
retired and shall not be reissued.
Section 6. Conversion. Holders of shares of Class
1 ESOP Preferred Stock shall have the right to convert all
or a portion of such shares into shares of Common Stock as
follows:
6.1 Subject to and upon compliance with the provisions
of this Section 6, a holder of shares of Class 1 ESOP
Preferred Stock shall have the right, at such holder's
option, at any time and from time to time, to convert all or
any of such shares into fully paid and nonassessable shares
of Common Stock at a rate of one share of Common Stock for
one share of Class 1 ESOP Preferred Stock subject to
adjustment as provided in this Section 6 (as so adjusted,
the "Conversion Rate") by surrendering such shares to be
converted, such surrender to be made in the manner provided
in Section 6.2. Certificates shall be issued for the
remaining shares of Class 1 ESOP Preferred Stock if fewer
than all of the shares of Class 1 ESOP Preferred Stock
represented by a certificate are converted.
6.2 In order to exercise the conversion right, the
holder of shares of Class 1 ESOP Preferred Stock to be
converted shall surrender the certificate or certificates
representing such shares, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent
in the Borough of Manhattan, City of New York, accompanied
by written notice to the Corporation that the holder thereof
elects to convert Class 1 ESOP Preferred Stock. Unless the
shares issuable on conversion are to be issued in the same
name as the name in which such share of Class 1 ESOP
Preferred Stock is registered, each share surrendered for
conversion shall be accompanied by instruments of transfer,
in form satisfactory to the Corporation, duly executed by
the holder or such holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid or that no such
taxes are payable).
Holders of shares of Class 1 ESOP Preferred Stock at
the close of business on a dividend payment record date
shall be entitled to receive the dividend payable on such
shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof following such
dividend payment record date. The Corporation shall make no
payment or allowance for unpaid dividends on the shares of
Common Stock issued upon such conversion.
As promptly as practicable after the surrender of
certificates for shares of Class 1 ESOP Preferred Stock as
aforesaid, the Corporation shall issue and shall deliver at
such office to such holder, or on such holder's written
order, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such
shares in accordance with provisions of this Section 6, and
any fractional interest in respect of a share of Common
Stock arising upon such conversion shall be settled as
provided in Section 6.3.
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on
which the certificates for shares of Class 1 ESOP Preferred
Stock shall have been surrendered and such notice (and if
applicable, payment of an amount equal to the dividend
payable on such shares) received by the Corporation as
aforesaid, and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares
represented thereby at such time on such date and such
conversion shall be at the Conversion Rate in effect at such
time on such date, unless the stock transfer books of the
Corporation shall be closed on that date, in which event
such person or persons shall be deemed to have become such
holder or holders of record at the close of business on the
next succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Rate in
effect on the date upon which such shares shall have been
surrendered and such notice received by the Corporation.
6.3 No fractional shares or scrip representing
fractions of shares of Common Stock shall be issued upon
conversion of the Class 1 ESOP Preferred Stock. Instead of
any fractional interest in a share of Common Stock that
would otherwise be deliverable upon the conversion of a
share of Class 1 ESOP Preferred Stock, the Corporation shall
pay to the holder of such share an amount in cash based upon
the Current Market Price of Common Stock on the Trading Day
immediately preceding the date of conversion. If more than
one certificate shall be surrendered for conversion at one
time by the same holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on
the basis of the aggregate number of shares of Class 1 ESOP
Preferred Stock so surrendered.
6.4 The Conversion Rate shall be adjusted from time to
time as follows:
(a) In case the Corporation shall, at any time or
from time to time while any of the shares of Class 1
ESOP Preferred Stock are outstanding, (i) pay a
dividend or make a distribution on its capital stock in
shares of its Common Stock, (ii) subdivide its
outstanding Common Stock into a greater number of
shares, (iii) combine its outstanding Common Stock into
a smaller number of shares or (iv) issue any shares of
capital stock by reclassification of its Common Stock,
the Conversion Rate in effect at the opening of
business on the day next following the date fixed for
the determination of stockholders entitled to receive
such dividend or distribution or at the opening of
business on the day next following the day on which
such subdivision, combination or reclassification
becomes effective, as the case may be, shall be
adjusted so that the holder of any share of Class 1
ESOP Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of
shares of Common Stock or other capital stock that such
holder would have owned or have been entitled to
receive after the happening of any of the events
described above had such share been converted
immediately prior to the record date in the case of a
dividend or distribution or the effective date in the
case of a subdivision, combination or reclassification.
An adjustment made pursuant to this subparagraph (a)
shall become effective immediately after the opening of
business on the day next following the record date
(except as provided in Section 6.7 below) in the case
of a dividend or distribution and shall become
effective immediately after the opening of business on
the day next following the effective date in the case
of a subdivision, combination or reclassification.
(b) In case the Corporation shall, at any time or
from time to time while any of the shares of Class 1
ESOP Preferred Stock are outstanding, issue Equity
Securities (other than Common Stock and the Rights)
(the "Issued Equity Securities") to all holders of
shares of its Common Stock entitling them (for a period
expiring within 45 days after the record date for such
issuance) to subscribe for or purchase (whether by
exercise, conversion, exchange or otherwise) shares of
Common Stock (or other Equity Securities) at a price
per share less than the Fair Market Value of the Common
Stock (or the other Equity Security to be acquired) at
such record date (treating the price per share of the
Equity Securities to be acquired as equal to (x) the
sum of (i) the Fair Market Value of the consideration
payable for a unit of the Equity Security plus (ii) the
Fair Market Value of any additional consideration
initially payable upon the exercise, conversion or
exchange of such security into Common Stock divided by
(y) the number of shares of Common Stock initially
underlying or that may be acquired upon the exercise,
conversion or exchange of such Equity Security), the
Conversion Rate shall be adjusted so that it shall
equal the rate determined by multiplying the Conversion
Rate in effect immediately prior to the date of
issuance of such Issued Equity Securities by a
fraction, the numerator of which shall be the sum of
(A) the number of shares of Common Stock outstanding on
the date of issuance of such Issued Equity Securities
plus (B) the number of additional shares of Common
Stock offered for subscription or purchase (including,
without limitation, the security underlying or that may
be acquired upon the exercise, conversion or exchange
of the Equity Securities so offered) and the
denominator of which shall be the sum of (A) the number
of shares of Common Stock outstanding on the date of
issuance of such Issued Equity Securities plus (B) the
number of shares of Common Stock that the aggregate
offering price of the total number of shares so offered
for subscription or purchase (including, without
limitation, the Fair Market Value of the consideration
payable for a unit of the Equity Securities so offered
plus the Fair Market Value of any additional
consideration payable upon exercise, conversion or
exchange of such Equity Securities) would purchase at
such Fair Market Value of the Common Stock as of the
record date for such issuance. Such adjustment shall
become effective as of the record date for the
determination of stockholders entitled to receive such
Issued Equity Securities (except as provided in Section
6.6 below).
(c) In case the Corporation shall, at any time or
from time to time while any of the shares of Class 1
ESOP Preferred Stock are outstanding, issue, sell or
exchange shares of Common Stock (other than pursuant to
any Rights, Equity Securities issued in connection with
any employee or director incentive or benefit plan or
arrangement of the Corporation or any subsidiary or any
Equity Security theretofore outstanding entitling the
holder to purchase or acquire shares of Common Stock)
for a consideration having a Fair Market Value on the
date of such issuance, sale or exchange less than the
Fair Market Value of such shares of Common Stock on the
date of such issuance, sale or exchange, then the
Conversion Rate in effect immediately prior to such
issuance, sale or exchange shall be adjusted by
multiplying such Conversion Rate by a fraction, the
numerator of which shall be the product of (i) the Fair
Market Value of a share of Common Stock on the Trading
Day immediately preceding the first public announcement
of such issuance, sale or exchange multiplied by (ii)
the sum of the number of shares of Common Stock
outstanding on such day plus the number of shares of
Common Stock so issued, sold or exchanged by the
Corporation, and the denominator of which shall be the
sum of (i) the Fair Market Value of all the shares of
Common Stock outstanding on the Trading Day immediately
preceding the first public announcement of such
issuance, sale or exchange plus (ii) the Fair Market
Value of the consideration received by the Corporation
in respect of such issuance, sale or exchange of shares
of Common Stock. In case the Corporation shall, at any
time or from time to time while any of the shares of
Class 1 ESOP Preferred Stock are outstanding, issue,
sell or exchange any Equity Security (other than any
Rights, Equity Securities issued in connection with any
employee or director incentive or benefit plan or
arrangement of the Corporation or any subsidiary or
Common Stock) other than any such issuance to all
holders of shares of Common Stock as a dividend or
distribution (including by way of a reclassification of
shares or a recapitalization of the Corporation) for a
consideration having a Fair Market Value on the date of
such issuance, sale or exchange less than the Non-
Dilutive Amount, then the Conversion Rate shall be
adjusted by multiplying such Conversion Rate by a
fraction, the numerator of which shall be the product
of (i) the Fair Market Value of a share of Common Stock
on the Trading Day immediately preceding the first
public announcement of such issuance, sale or exchange
multiplied by (ii) the sum of the number of shares of
Common Stock outstanding on such day plus the maximum
number of shares of Common Stock underlying or which
could be acquired pursuant to such Equity Security at
the time of the issuance, sale or exchange of such
Equity Security (assuming shares of Common Stock could
be acquired pursuant to such Equity Security at such
time), and the denominator of which shall be the sum of
(i) the Fair Market Value of all the shares of Common
Stock outstanding on the Trading Day immediately
preceding the first public announcement of such
issuance, sale or exchange plus (ii) the Fair Market
Value of the consideration received by the Corporation
in respect of such issuance, sale or exchange of such
Equity Security plus (iii) the Fair Market Value as of
the time of such issuance of the consideration which
the Corporation would receive upon exercise, conversion
or exchange in full of all such Equity Securities.
(d) In case the Corporation shall, at any time or
from time to time while any of the shares of Class 1
ESOP Preferred Stock are outstanding, make an
Extraordinary Distribution in respect of the Common
Stock or effect a Pro Rata Repurchase of Common Stock,
the Conversion Rate in effect immediately prior to such
Extraordinary Distribution or Pro Rata Repurchase shall
be adjusted by multiplying such Conversion Rate by a
fraction, the numerator of which shall be the product
of (i) the number of shares of Common Stock outstanding
immediately before such Extraordinary Dividend or Pro
Rata Repurchase (minus, in the case of a Pro Rata
Repurchase, the number of shares of Common Stock
repurchased by the Corporation) multiplied by (ii) the
Fair Market Value of a share of Common Stock on the
record date with respect to such Extraordinary
Distribution or on the Trading Day immediately
preceding the first public announcement by the
Corporation or any of its Affiliates of the intent to
effect a Pro Rata Repurchase, as the case may be, and
the denominator of which shall be (i) the product of
(x) the number of shares of Common Stock outstanding
immediately before such Extraordinary Distribution or
Pro Rata Repurchase multiplied by (y) the Fair Market
Value of a share of Common Stock on the record date
with respect to such Extraordinary Distribution, or on
the Trading Day immediately preceding the first public
announcement by the Corporation or any of its
Affiliates of the intent to effect a Pro Rata
Repurchase, as the case may be, minus (ii) the Fair
Market Value of the Extraordinary Distribution or the
aggregate purchase price of the Pro Rata Repurchase, as
the case may be (provided that such denominator shall
never be less than 1.0); provided, however, that no Pro
Rata Repurchase shall cause an adjustment to the
Conversion Rate unless the amount of all case dividends
and distributions made to holders of Common Stock
during the period from the most recent Extraordinary
Distribution Measuring Date preceding the Effective
Date of such Pro Rata Repurchase, when combined with
the aggregate amount of all Pro Rata Repurchases,
including such Pro Rata Repurchase (for all purposes of
this Section 7.4(d), including only that portion of the
Fair Market Value of the aggregate purchase price of
each Pro Rata Repurchase which is in excess of the Fair
Market Value of the Common Stock repurchased as
determined on the Trading Day immediately preceding the
first public announcement by the Corporation or any of
its Affiliates of the intent to effect each such Pro
Rata Repurchase), the Effective Dates of which fall
within such period, exceeds twelve and one-half percent
(12 1/2%) of the aggregate Fair Market Value of all
shares of Common Stock outstanding on the Trading Day
immediately preceding the first public announcement by
the Corporation or any of its Affiliates of the intent
to effect such Pro Rata Repurchase. Such adjustment
shall become effective immediately after the record
date for the determination of stockholders entitled to
receive such Extraordinary Distribution or immediately
after the Effective Date of such Pro Rata Repurchase.
Solely as an adjustment applicable to shares of Class 1
ESOP Preferred Stock that are being converted into Common
Stock as of a given date, and not as a permanent adjustment
to the Conversion Rate, the Conversion Rate in effect
immediately prior to such conversion shall be adjusted by
multiplying such Conversion Rate by a fraction, the
numerator of which shall be the product of (i) the number of
shares of Common Stock outstanding immediately before such
conversion multiplied by (ii) the Fair Market Value of a
share of Common Stock on the date of such conversion, and
the denominator of which shall be (i) the product of (x) the
number of shares of Common Stock outstanding immediately
before such conversion multiplied by (y) the Fair Market
Value of a share of Common Stock on the date of such
conversion minus (ii) the Fair Market Value of the cash
dividends and distributions made on or before the date of
such conversion with a record date after the most recent
Extraordinary Distribution Measuring Date
upon which Participating Dividends were paid in
full, but only to the extent that such cash dividends
and distributions (a) would entitle the holders of the
shares of Class 1 ESOP Preferred Stock outstanding on
such conversion date to a dividend under Section 3.1
that has not been paid and (b) would not constitute an
Extraordinary Distribution (provided that such
denominator shall never be less than 1.0).
(e) No adjustment in the Conversion Rate shall be
required unless such adjustment would require a
cumulative increase or decrease of at least 0.01% in
such rate; provided that any adjustments that by reason
of this subparagraph (e) are not required to be made
shall be carried forward and taken into account in any
subsequent adjustment until made; and provided further
that any adjustment shall be required and made in
accordance with the provisions of this Section 6.4
(other than this subparagraph (e)) not later than such
time as may be required in order to preserve the tax-
free nature of a distribution to the holders of shares
of Common Stock. Notwithstanding any other provisions
of this Section 6, the Corporation shall not be
required to make any adjustments of the Conversion Rate
for the issuance of any shares of Common Stock pursuant
to any plan providing for the reinvestment of dividends
on securities of the Corporation so long as the holders
of the Class 1 ESOP Preferred Stock shall be entitled
to participate therein on substantially the same terms
as holders of Common Stock. All calculations under
this Section 6 shall be made to the nearest cent (with
$.005 being rounded upward), one-tenth of a share (with
.05 of a share being rounded upward) or, in the case of
the Conversion Rate, one hundred millionth of a share
(with .000000005 being rounded upward), as the case may
be. Anything in this Section 6.4 to the contrary
notwithstanding, the Corporation shall be entitled, to
the extent permitted by law, to make such reductions in
the Conversion Rate, in addition to those required by
this Section 6.4, as it in its discretion shall
determine to be advisable in order that any stock
dividends, subdivision of shares, reclassification or
combination of shares, distribution of rights or
warrants to purchase stock or securities, or a
distribution of other assets (other than cash
dividends) hereafter made by the Corporation to its
stockholders shall not be taxable.
6.5 If:
(a) the Corporation shall declare a dividend or
any other distribution on the Common Stock (other than
the Rights); or
(b) the Corporation shall authorize the granting
to the holders of the Common Stock of Equity Securities
(other than Common Stock) to subscribe for or purchase
any Equity Security; or
(c) there shall be any reclassification of the
Common Stock (other than an event to which Section
6.4(a) applies) or any consolidation or merger to which
the Corporation is a party and for which approval of
any stockholders of the Corporation is required, or the
sale or transfer of all or substantially all of the
assets of the Corporation as an entirety; or
(d) there shall occur the voluntary or
involuntary liquidation, dissolution or winding up of
the Corporation; or
(e) there shall occur any Pro Rata Repurchase,
then the Corporation shall cause to be filed with the
Transfer Agent and shall cause to be mailed to the holders
of shares of the Class 1 ESOP Preferred Stock at their
addresses as shown on the stock records of the Corporation,
as promptly as possible, but at least 10 days prior to the
applicable date hereinafter specified, a notice stating (A)
the date on which a record is to be taken for the purpose of
such dividend, distribution or granting of Equity
Securities, or, if a record is not to be taken, the date as
of which the holders of Common Stock of record to be
entitled to such dividend, distribution or granting of
Equity Securities are to be determined, (B) the date on
which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution or winding up is expected
to become effective, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or
other property, if any, deliverable upon such
reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up or (C) the number of
shares subject to such offer for a Pro Rata Repurchase and
the purchase price payable by the Corporation pursuant to
such offer. Failure to give or receive such notice or any
defect therein shall not affect the legality or validity of
the proceedings described in this Section 6.
6.6 Whenever the Conversion Rate is adjusted as herein
provided, the Corporation shall promptly file with the
Transfer Agent an officer's certificate setting forth the
Conversion Rate after such adjustment and setting forth a
brief statement of the facts requiring and the manner of
effecting such adjustment which certificate shall be prima
facie evidence of the correctness of such adjustment.
Promptly after delivery of such certificate, the Corporation
shall prepare a notice of such adjustment of the Conversion
Rate setting forth the adjusted Conversion Rate and the
effective date of such adjustment or adjustments and shall
mail such notice of such adjustment or adjustments to the
holder of each share of Class 1 ESOP Preferred Stock at such
holder's last address as shown on the stock records of the
Corporation.
6.7 In any case in which Section 6.4 provides that an
adjustment shall become effective on the day next following
a record date for an event, the Corporation may defer until
the occurrence of such event (A) issuing to the holder of
any share of Class 1 ESOP Preferred Stock converted after
such record date and before the occurrence of such event the
additional shares of Common Stock or other securities
issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock or
other securities issuable upon such conversion before giving
effect to such adjustment and (B) paying to such holder any
amount in cash in lieu of any fraction pursuant to Section
6.3.
6.8 For purposes of this Section 6, the number of
shares of Common Stock at any time outstanding shall not
include any shares of Common Stock then owned or held by or
for the account of the Corporation or any subsidiary. The
Corporation shall not pay a dividend or make any
distribution on shares of Common Stock held in the treasury
of the Corporation.
6.9 There shall be no adjustment of the Conversion
Rate in case of the issuance of any stock of the Corporation
in a reorganization, acquisition or other similar
transaction except as specifically set forth in Section 6 or
Section 7. If any action or transaction would require
adjustment of the Conversion Rate pursuant to more than one
paragraph of this Section 6, only one adjustment shall be
made and such adjustment shall be the amount of adjustment
that has the highest absolute value.
6.10 If the Corporation shall take any action affecting
the Common Stock, other than action described in this
Section 6, that in the opinion of the Board of Directors
would materially adversely affect the conversion rights of
the holders of the shares of Class 1 ESOP Preferred Stock,
the Conversion Rate for the Class 1 ESOP Preferred Stock may
be adjusted, to the extent permitted by law, in such manner,
if any, and at such time, as the Board of Directors may
determine to be equitable in the circumstances.
6.11 The Corporation covenants that it will at all
times reserve and keep available, free from preemptive
rights, out of the aggregate of its authorized but unissued
shares of Common Stock or its issued shares of Common Stock
held in its treasury, or both, for the purpose of effecting
conversion of the Class 1 ESOP Preferred Stock, the full
number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Class 1 ESOP
Preferred Stock not theretofore converted. For purposes of
this Section 6.11, the number of shares of Common Stock that
shall be deliverable upon the conversion of all outstanding
shares of Class 1 ESOP Preferred Stock shall be computed as
if at the time of computation all such outstanding shares
were held by a single holder.
The Corporation covenants that any shares of Common
Stock issued upon conversion of the Class 1 ESOP Preferred
Stock shall be validly issued, fully paid and non-
assessable.
The Corporation shall endeavor to list the shares of
Common Stock (or other securities) required to be delivered
upon conversion of the Class 1 ESOP Preferred Stock, prior
to such delivery, upon each national securities exchange, if
any, upon which the outstanding Common Stock (or other
securities) is listed at the time of such delivery.
Prior to the delivery of any securities that the
Corporation shall be obligated to deliver upon conversion of
the Class 1 ESOP Preferred Stock, the Corporation shall
endeavor to comply with all federal and state laws and
regulations thereunder requiring the registration of such
securities with, or any approval of or consent to the
delivery thereof by, any governmental authority.
6.12 The Corporation shall pay any and all documentary
stamp or similar issue or transfer taxes payable in respect
of the issue or delivery of shares of Common Stock or other
securities or property on conversion of the Class 1 ESOP
Preferred Stock pursuant hereto; provided that the
Corporation shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issue or
delivery of shares of Common Stock or other securities or
property in a name other than that of the holder of the
Class 1 ESOP Preferred Stock to be converted and no such
issue or delivery shall be made unless and until the person
requesting any such issue or delivery has paid to the
Corporation the amount of any such tax or established, to
the reasonable satisfaction of the Corporation, that such
tax has been paid.
6.13 If, prior to the Distribution Date (as defined for
purposes of the Rights), the Corporation shall issue shares
of Common Stock upon conversion of shares of Class 1 ESOP
Preferred Stock as contemplated by this Section 6, the
Corporation shall issue together with each such share of
Common Stock that number of Rights as are then issuable,
pursuant to the Rights Agreement (or any successor rights
plan or plans adopted in replacement of the Rights
Agreement), per share of such Common Stock so issued, but
only if at such time such Rights or rights are, pursuant to
the relevant Rights Agreement, to be represented by
certificates representing shares of Common Stock and have
not expired.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation shall enter into any
consolidation, merger, share exchange or similar
transaction, however named, pursuant to which the
outstanding shares of Common Stock are to be exchanged
solely for or changed, reclassified or converted solely into
stock of any successor or resulting or other company
(including the Corporation) that constitutes "qualifying
employer securities" with respect to holders of Class 1 ESOP
Preferred Stock within the meaning of Section 409(l) of the
Code and Section 407(d)(5) of the Employee Retirement Income
Security Act of 1974, as amended, or any successor
provisions of law, and, if applicable, for a cash payment in
lieu of fractional shares, if any, proper provisions shall
be made so that upon consummation of such transaction, the
shares of Class 1 ESOP Preferred Stock shall be converted
into or exchanged for preferred stock of such successor or
resulting or other company, having in respect of such
company, the same powers, preferences and relative,
participating, optional or other special rights (including
the rights provided by this Section 7), and the
qualifications, limitations or restrictions thereof, that
the Class 1 ESOP Preferred Stock had, in respect of the
Corporation, immediately prior to such transaction, except
that after such transaction each share of preferred stock of
the surviving or resulting or other company so received in
such transaction upon conversion or exchange of the Class 1
ESOP Preferred Stock shall be convertible, otherwise on the
terms and conditions provided by Section 6 hereof, into the
number and kind of "qualifying employer securities"
receivable in such transaction by a holder of the number of
shares of Common Stock into which a share of Class 1 ESOP
Preferred Stock could have been converted immediately prior
to such transaction; provided, however, that if by virtue of
the structure of such transaction, a holder of Common Stock
is required to make an election with respect to the nature
and kind of consideration to be received in such
transaction, which election cannot practicably be made by
the holders of the Class 1 ESOP Preferred Stock, then the
shares of preferred stock of the surviving or resulting or
other company received in such transaction upon conversion
or exchange of Class 1 ESOP Preferred Stock shall, by virtue
of such transaction and on the same terms as apply to the
holders of Common Stock, be convertible into or exchangeable
solely for "qualifying employer securities" (together, if
applicable, with a cash payment in lieu of fractional
shares) with the effect provided above on the basis of the
number and kind of qualifying employer securities receivable
in such transaction by a holder of the number of shares of
Common Stock into which such shares of Class 1 ESOP
Preferred Stock could have been converted immediately prior
to such transaction (provided that if the kind or amount of
qualifying employer securities receivable in such
transaction is not the same for each such share of Common
Stock, then the kind and amount so receivable in such
transaction for each share of Common Stock for this purpose
shall be deemed to be the kind and amount so receivable per
share by the plurality of such shares of Common Stock). The
rights of the preferred stock of such successor or resulting
or other company so received in such transaction upon
conversion or exchange of the Class 1 ESOP Preferred Stock
shall successively be subject to adjustments pursuant to
Section 6 hereof following such transaction as nearly
equivalent to the adjustments provided for by such Sections
prior to such transaction.
7.2 In case the Corporation shall enter into any
consolidation, merger, share exchange or similar
transaction, however named, pursuant to which the
outstanding shares of Common Stock are to be exchanged for
or changed, reclassified or converted into other stock or
securities or cash or any other property, or any combination
thereof, other than any such consideration which is
constituted solely of "qualifying employer securities" (as
referred to in Section 7.1) and cash payments, if
applicable, in lieu of fractional shares, proper provisions
shall be made so that upon consummation of such transaction
the outstanding shares of Class 1 ESOP Preferred Stock
shall, by virtue of such transaction and on the same terms
as are applicable to the holders of Common Stock, be
converted into or exchanged for the aggregate amount of
stock, securities, cash or other property (payable in like
kind) receivable by holders of the number of shares of
Common Stock into which such shares of Class 1 ESOP
Preferred Stock could have been converted immediately prior
to such transaction; provided, however, that if by virtue of
the structure of such transaction, a holder of Common Stock
is required to make an election with respect to the nature
and kind of consideration to be received in such
transaction, which election cannot practicably be made by
holders of the Class 1 ESOP Preferred Stock, then the shares
of Class 1 ESOP Preferred Stock shall, by virtue of such
transaction and on the same terms as apply to the holders of
Common Stock, be converted into or exchanged for the
aggregate amount of stock, securities, cash or other
property (payable in kind) receivable by a holder of the
number of shares of Common Stock into which such shares of
Class 1 ESOP Preferred Stock could have been converted
immediately prior to such transaction if such holder of
Common Stock failed to exercise any rights of election to
receive any kind or amount of stock, securities, cash or
other property receivable in such transaction (provided that
if the kind or amount of stock, securities, cash or other
property receivable in such transaction are not the same for
each non-electing share, then the kind and amount of stock,
securities, cash or other property so receivable upon such
transaction for each non-electing share shall be the kind
and amount so receivable per share by the plurality of the
non-electing shares).
7.3 In case the Corporation shall enter into any
agreement providing for any consolidation, merger, share
exchange or similar transaction described in this Section 7,
then the Corporation shall as soon as practicable thereafter
(and in any event at least fifteen (15) Business Days before
consummation of such transaction) give notice of such
agreement and the material terms thereof to each holder of
Class 1 ESOP Preferred Stock. The Corporation shall not
consummate any consolidation, merger, share exchange or
similar transaction unless all of the terms of this Section
7 have been complied with.
Section 8. Ranking.
8.1 Any class or series of stock of the Corporation
shall be deemed to rank:
(a) prior to the Class 1 ESOP Preferred Stock, as
to the payment of dividends or as to distributions of
assets upon liquidation, dissolution or winding up, as
the case may be, if the holders of such class or series
shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or
priority to the holders of Class 1 ESOP Preferred
Stock;
(b) on a parity with the Class 1 ESOP Preferred
Stock as to the payment of dividends, whether or not
the dividend rates or dividend payment dates thereof be
different from those of the Class 1 ESOP Preferred
Stock, if the holders of such class or series of stock
and the Class 1 ESOP Preferred Stock shall be entitled
to the receipt of dividends in proportion to their
respective amounts of accrued and unpaid dividends per
share, without preference or priority one over the
other, and on a parity with the Class 1 ESOP Preferred
Stock as to the distribution of assets upon
liquidation, dissolution or winding up, whether or not
the liquidation prices per share thereof be different
from those of the Class 1 ESOP Preferred Stock, if the
holder of such class or series of stock and the Class 1
ESOP Preferred Stock shall be entitled to the receipt
of amounts distributable upon liquidation, dissolution
or winding up in proportion to their respective
liquidation preferences, without preference or priority
one over the other; and
(c) junior to the Class 1 ESOP Preferred Stock,
as to the payment of dividends or as to the
distribution of assets upon liquidation, dissolution or
winding up, as the case may be, if the holders of Class
1 ESOP Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in
preference or priority to the holders of shares of such
class or series.
8.2 The Series A Preferred Stock and the Series B
Preferred Stock shall each be deemed to rank prior to the
Class 1 ESOP Preferred Stock both as to the payment of
dividends and as to the distribution of assets upon
liquidation, dissolution or winding up. The Series D
Preferred Stock shall be deemed to rank prior to the Class 1
ESOP Preferred Stock as to the distribution of assets upon
liquidation, dissolution, or winding up. The Class 2 ESOP
Preferred Stock shall be deemed to rank on a parity with the
Class 1 ESOP Preferred Stock as to the payment of dividends
and as to amounts distributable upon liquidation,
dissolution or winding up. The Common Stock, the Director
Preferred Stocks, the Voting Preferred Stocks and the Series
C Preferred Stock shall each be deemed to rank junior to the
Class 1 ESOP Preferred Stock both as to the payment of
dividends and as to the distribution of assets upon
liquidation, dissolution or winding up.
Section 9. Voting. The holders of shares of
Class 1 ESOP Preferred Stock shall have the following voting
rights:
9.1 Unless the affirmative vote or consent of the
holders of a greater number of shares of Class 1 ESOP
Preferred Stock shall then be required by law or this
Restated Certificate, and in addition to any other vote
required by law or this Restated Certificate, the
affirmative vote or written consent of the holders of at
least a majority of all of the outstanding shares of Class 1
ESOP Preferred Stock, voting separately as a class, shall be
necessary for authorizing, effecting or validating the
amendment, alteration or repeal (including any amendment,
alteration or repeal by operation of merger or
consolidation) of any of the provisions of this Restated
Certificate or of any certificate amendatory thereof or
supplemental thereto (including any Certificate of
Designation, Preferences and Rights or any similar document
relating to any series of Serial Preferred Stock) that would
adversely affect the preferences, rights, powers or
privileges of the Class 1 ESOP Preferred Stock; provided,
however, that the amendment of the provisions of this
Restated Certificate so as to authorize or create, or to
increase the authorized amount of, any class or series of
stock of the Corporation ranking on a parity with or junior
to the Class 1 ESOP Preferred Stock both as to the payment
of dividends and as to the distribution of assets upon
liquidation, dissolution or winding up of the Corporation
shall not be deemed to adversely affect the preferences,
rights, powers or privileges of Class 1 ESOP Preferred
Stock.
9.2 Unless the affirmative vote or consent of the
holders of a greater number of shares of Class 1 ESOP Voting
Preferred Stock shall then be required by law or this
Restated Certificate, and in addition to any other vote
required by law or this Restated Certificate, the
affirmative vote or written consent of the holders of at
least a majority of all of the outstanding shares of Class 1
ESOP Preferred Stock, voting separately as a class, shall be
necessary for authorizing, effecting or validating the
creation, authorization or issuance of any shares of any
class or series of stock of the Corporation ranking prior to
the Class 1 ESOP Preferred Stock either as to payment of
dividends or as to distributions upon liquidation,
dissolution or winding up, or the reclassification of any
authorized stock of the Corporation into any such prior
shares, or the creation, authorization or issuance of any
obligation or security convertible into or evidencing the
right to purchase any such prior shares.
9.3 For purposes of the foregoing provisions of
Sections 9.1 and 9.2, each share of Class 1 ESOP Preferred
Stock shall have one (1) vote per share. Except as
otherwise required by applicable law or as set forth herein,
the shares of Class 1 ESOP Preferred Stock shall not have
any relative, participating, optional or other special
voting rights and powers and the consent of the holders
thereof shall not be required for the taking of any
corporate action.
Section 10. No Redemption. The Class 1 ESOP
Preferred Stock shall not be redeemable in whole or in part.
Section 11. Record Holders. The Corporation and
the Transfer Agent (if other than the Corporation) may deem
and treat the record holder of any shares of Class 1 ESOP
Preferred Stock as the true and lawful owner thereof for all
purposes, and, except as otherwise provided by law, neither
the Corporation nor the Transfer Agent shall be affected by
any notice to the contrary.
PART III
Class 2 ESOP Convertible Preferred Stock
Unless otherwise indicated, any reference in this
Article FOURTH, Part III to "Section", "Subsection",
"paragraph", "subparagraph" or "clause" shall refer to a
Section, Subsection, paragraph, subparagraph or clause of
this Article FOURTH, Part III.
Section 1. Number of Shares; Designation; Issuance
and Automatic Conversion.
1.1 The Class 2 ESOP Convertible Preferred Stock of
the Corporation (the "Class 2 ESOP Preferred Stock") shall
consist of 25,000,000 shares, par value $0.01 per share.
1.2 Shares of Class 2 ESOP Preferred Stock shall be
issued only to a trustee or trustees acting on behalf of (i)
the UAL Corporation Employee Stock Ownership Plan, or (ii)
the UAL Corporation Supplemental ESOP (either of (i) or
(ii), a "Plan"). In the event of any sale, transfer or
other disposition (including, without limitation, upon a
foreclosure or other realization upon shares of Class 2 ESOP
Preferred Stock pledged as security for any loan or loans
made to a Plan or to the trustee or the trustees acting on
behalf of a Plan) (hereinafter a "transfer") of shares of
Class 2 ESOP Preferred Stock to any person (including,
without limitation, any participant in a Plan) other than
(x) any trustee or trustees of a Plan or (y) any pledgee of
such shares acquiring such shares as security for any loan
or loans made to a Plan or to any trustee or trustees acting
on behalf of a Plan, the shares of Class 2 ESOP Preferred
Stock so transferred, upon such transfer and without any
further action by the Corporation or the transferee, shall
be automatically converted into shares of Common Stock at
the applicable Conversion Rate in accordance with Section 6
hereof and thereafter such transferee shall not have any of
the voting powers, preferences or relative, participating,
optional or special rights ascribed to shares of Class 2
ESOP Preferred Stock hereunder, but, rather, shall have only
the powers and rights pertaining to the Common Stock into
which such shares of Class 2 ESOP Preferred Stock shall have
been so converted. In the event of any such automatic
conversion provided for in this Section 1.2, such transferee
shall be treated for all purposes as the record holder of
the shares of Common Stock into which the Class 2 ESOP
Preferred Stock shall have been converted as of the date of
such conversion. Certificates representing shares of Class
2 ESOP Preferred Stock shall be legended to reflect such
consequences of a transfer. Notwithstanding the foregoing
provisions of this Section 1, shares of Class 2 ESOP
Preferred Stock may be converted into shares of Common Stock
as provided by Section 6 hereof and the shares of Common
Stock issued upon any conversion in accordance with Section
6 hereof or this Section 1.2 may be transferred by the
holder thereof as permitted by law.
Section 2. Definitions. For purposes of the Class
2 ESOP Preferred Stock, the following terms shall have the
meanings indicated:
2.1 "Affiliate" shall have the meaning defined in Rule
12b-2 promulgated under the Securities Exchange Act of 1934,
as amended, or any successor thereto.
2.2 "Board of Directors" shall mean the board of
directors of the Corporation or any committee authorized by
such board of directors to perform any of its
responsibilities with respect to the Class 2 ESOP Preferred
Stock.
2.3 "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which state or federally
chartered banking institutions in New York, New York are not
required to be open.
2.4 "Class 1 ESOP Preferred Stock" shall mean the
Class 1 ESOP Convertible Preferred Stock, par value $0.01
per share, of the Corporation.
2.5 "Class 2 ESOP Preferred Stock" shall have the
meaning set forth in Section 1 hereof.
2.6 "Class I Preferred Stock" shall mean the Class I
Junior Preferred Stock, par value $0.01 per share, of the
Corporation.
2.7 "Class IAM Preferred Stock" shall mean the Class
IAM Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
2.8 "Class M Voting Preferred Stock" shall mean the
Class M ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.9 "Class P Voting Preferred Stock" shall mean the
Class P ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.10 "Class Pilot MEC Preferred Stock" shall mean the
Class Pilot MEC Junior Preferred Stock, par value $0.01 per
share, of the Corporation.
2.11 "Class S Voting Preferred Stock" shall mean the
Class S ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.12 "Class SAM Preferred Stock" shall mean the Class
SAM Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
2.13 "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
2.14 "Common Stock" shall mean the common stock of the
Corporation, par value $0.01 per share.
2.15 "Conversion Rate" shall have the meaning set forth
in Section 6.1 hereof.
2.16 "Current Market Price" of publicly traded shares
of Common Stock or any other class or series of capital
stock or other security of the Corporation or any other
issuer for any day shall mean the last reported sales price,
regular way, on such day, or, if no sale takes place on such
day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported
on the New York Stock Exchange Composite Tape or, if such
security is not listed or admitted for trading on the New
York Stock Exchange, Inc. ("NYSE"), on the principal
national securities exchange on which such security is
listed or admitted for trading or quoted or, if not listed
or admitted for trading or quoted on any national securities
exchange, on the Nasdaq National Market, or, if such
security is not quoted on such National Market, the average
of the closing bid and asked prices on such day in the over-
the-counter market as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or, if bid and asked prices for such security on
such day shall not have been reported through NASDAQ, the
average of the bid and asked prices on such day as furnished
by any NYSE member firm regularly making a market in such
security selected for such purpose by the Board of
Directors.
2.17 "Director Preferred Stocks" shall mean
collectively, the Class I Preferred Stock, the Class IAM
Preferred Stock, the Class Pilot MEC Preferred Stock and the
Class SAM Preferred Stock.
2.18 "Dividend Payment Date" means a date on which
Participating Dividends are paid on the Class 2 ESOP
Preferred Stock or on the Common Stock.
2.19 "Dividend Period" shall mean the period commencing
March 31, 2000 or, if later, the most recent Dividend
Payment Date of the Class 2 ESOP Preferred Stock.
2.20 "Equity Securities" shall mean the Common Stock or
any debt, equity or other security or contractual right
convertible into or exercisable or exchangeable for, or
based on the value of, the Common Stock or any warrants,
options or other rights to purchase the Common Stock or
other Equity Securities (other than the Rights).
2.21 "ESOP Preferred Stocks" shall mean, collectively,
the Class 2 ESOP Preferred Stock and the Class 1 ESOP
Preferred Stock.
2.22 "Extraordinary Distribution" shall mean any single
dividend or other distribution (including by
reclassification of shares or recapitalization of the
Corporation, as well as any such dividend or distribution
made in connection with a merger or consolidation in which
the Corporation is the continuing corporation and the Common
Stock is not changed or exchanged) to holders of Common
Stock (effected while any of the shares of Class 2 ESOP
Preferred Stock are outstanding) (i) of cash, where the
aggregate shares of Class 2 ESOP Preferred Stock are
outstanding) (i) of cash where the aggregate amount of such
single cash dividend or distribution together with the
amount of all cash dividends and distributions made to
holders of Common Stock during the period from the most
recent Extraordinary Distribution Measuring Date until the
payment date for such cash dividend or distribution to
holders of Common Stock, when combined with the aggregate
amount of all previous Pro Rata Repurchases during such
period (for this purpose, including only that portion of the
aggregate purchase price of each such Pro Rata Repurchase
which is in excess of the Fair Market Value of the Common
Stock repurchased as determined on the Business Day prior to
the public announcement of such Pro Rata Repurchase made
during such period), exceeds twelve and one-half percent
(12 1/2%) of the aggregate Fair Market Value of all shares of
Common Stock outstanding on the record date for determining
the shareholders entitled to receive such Extraordinary
Distribution and (ii) of any shares of capital stock of the
Corporation (other than shares of Common Stock), other
securities of the Corporation (other than securities of the
type referred to in Sections 6.4(b) and 6.4(c) hereof),
evidences of indebtedness of the Corporation or any other
person or any other property (including, without limitation,
shares of capital stock of any subsidiary of the
Corporation), or any combination thereof. The Fair Market
Value of any such single dividend or other distribution
that, pursuant to clause (i), constitutes an Extraordinary
Distribution shall for purposes of the first paragraph of
Section 6.4(d) hereof be the sum of the Fair Market Value of
such Extraordinary Distribution plus the amount of any other
cash dividends and distributions made within the relevant
period referred to above to holders of Common Stock to the
extent such other dividends and distributions were not
previously included in the calculation of an adjustment
pursuant to the first paragraph of Section 6.4(d) hereof
within such period.
2.22.1 "Extraordinary Distribution Measuring Date"
shall mean the penultimate Business Day in each year,
commencing on such penultimate Business Day in 1999.
2.23 "Fair Market Value" shall mean the average of the
daily Current Market Prices of the security in question
during the five (5) consecutive Trading Days before the
earlier of the day in question and the "ex" date with
respect to the issuance or distribution requiring such
computation. The term " 'ex' date," when used with respect
to any issuance or distribution, means the first day on
which the Common Stock trades regular way, without the right
to receive such issuance or distribution, on the exchange or
in the market, as the case may be, used to determine that
day's Current Market Price. With respect to any asset or
security for which there is no Current Market Price, the
Fair Market Value of such asset or security shall be
determined in good faith by the Board of Directors.
2.24 "Issue Date" shall mean the first date on which
shares of Class 2 ESOP Preferred Stock are issued.
2.25 "Liquidation Preference" shall have the meaning
set forth in Section 4.1 hereof.
2.26 "Measuring Date" shall mean that date which is the
365th day following the Issue Date.
2.27 "Non-Dilutive Amount" in respect of an issuance,
sale or exchange by the Corporation of any Equity Securities
(other than Common Stock) shall mean the excess of (i) the
product of the Fair Market Value of a share of Common Stock
on the day preceding the first public announcement of such
issuance, sale or exchange multiplied by the maximum number
of shares of Common Stock which could be acquired on such
date upon the exercise, conversion or exchange in full of
such Equity Securities (and any Equity Securities receivable
upon exercise, conversion or exchange thereof), whether or
not then exercisable, convertible or exchangeable at such
date, over (ii) the aggregate amount payable pursuant to the
exercise, conversion or exchange of such Equity Securities,
whether or not then exercisable, convertible or
exchangeable, to purchase or acquire such maximum number of
shares of Common Stock (and any Equity Securities receivable
upon exercise, conversion or exchange thereof); provided,
however, that in no event shall the Non-Dilutive Amount be
less than zero. For purposes of the foregoing sentence, the
amount payable pursuant to the exercise, conversion or
exchange of such Equity Securities to purchase or acquire
shares of Common Stock shall be deemed to be the Fair Market
Value of the consideration payable pursuant to the exercise,
conversion or exchange of such Equity Securities on the date
of the issuance, sale or exchange of such Equity Securities
by the Corporation (excluding for that purpose the Fair
Market Value of the Equity Security to be so exercised,
converted or exchanged).
2.28 "Pro Rata Repurchase" shall mean any purchase of
shares of Common Stock by the Corporation or any Affiliate
thereof, whether for cash, shares of capital stock of the
Corporation, other securities of the Corporation, evidences
of indebtedness of the Corporation or any other person or
any other property (including, without limitation, shares of
capital stock, other securities or evidences of indebtedness
of a subsidiary of the Corporation), or any combination
thereof, effected while any of the shares of Class 2 ESOP
Preferred Stock are outstanding, pursuant to any tender
offer or exchange offer subject to Section 13(e) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any successor provision of law, or pursuant to any
other offer available to substantially all holders of Common
Stock; provided, however, that "Pro Rata Repurchase" shall
not include any purchase of shares by the Corporation or any
subsidiary thereof made in open market transactions
substantially in accordance with the requirements of Rule
10b-18 as in effect under the Exchange Act or on such other
terms and conditions as the Board of Directors shall have
determined are reasonably designed to prevent such purchases
from having a material effect on the trading market for the
Common Stock. The "Effective Date" of a Pro Rata Repurchase
shall mean the date of acceptance of shares for purchase or
exchange under any tender or exchange offer which is a Pro
Rata Repurchase or the date of purchase with respect to any
Pro Rata Repurchase that is not a tender or exchange offer.
2.29 "Restated Certificate" shall mean the Restated
Certificate of Incorporation of the Corporation, as amended
from time to time.
2.30 "Rights" shall mean the rights of the Corporation
issued or issuable under the Corporation's Rights Agreement
dated as of December 11, 1986, and as amended from time to
time (the "Rights Agreement"), or rights to purchase any
capital stock of the Corporation issued or issuable under
any successor shareholder rights plan or plans adopted in
replacement of the Rights Agreement.
2.31 "Series A Debentures" shall mean the Series A
Debentures due 2004 of United Air Lines, Inc.
2.32 "Series A Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series A Convertible Preferred Stock in
Article FOURTH, Part I.A of this Restated Certificate.
2.33 "Series B Debentures" shall mean the Series B
Debentures due 2014 of United Air Lines, Inc.
2.34 "Series B Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series B Preferred Stock in Article
FOURTH, Part I.B of this Restated Certificate.
2.35 "Series C Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series C Junior Participating Preferred
Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.36 "Series D Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series D Redeemable Preferred Stock in
Article FOURTH, Part I.D of this Restated Certificate.
2.37 [Reserved]
2.38 "set apart for payment" shall be deemed to
include, without any action other than the following, the
recording by the Corporation in its accounting ledgers of
any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so
paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any
class or series of stock of the Corporation ranking on a
parity with or junior to the Class 2 ESOP Preferred Stock as
to the payment of dividends or distributions are placed in a
separate account of the Corporation or delivered to a
disbursing, paying or other similar agent, then "set apart
for payment" with respect to the Class 2 ESOP Preferred
Stock shall mean, with respect to such dividends or
distributions, placing such funds in a separate account or
delivering such funds to a disbursing, paying or other
similar agent.
2.39 "Trading Day" shall mean any day on which the
securities in question are traded on the NYSE, or if such
securities are not listed or admitted for trading or quoted
on the NYSE, on the principal national securities exchange
on which such securities are listed or admitted, or if not
listed or admitted for trading or quoted on any national
securities exchange, on the Nasdaq National Market, or if
such securities are not quoted on such National Market, in
the applicable securities market in which the securities are
traded.
2.40 "Transfer Agent" means the Corporation or such
agent or agents of the Corporation as may be designated from
time to time by the Board of Directors as the transfer agent
for the Class 2 ESOP Preferred Stock.
2.41 "Voting Preferred Stocks" shall mean collectively,
the Class M Voting Preferred Stock, the Class P Voting
Preferred Stock and the Class S Voting Preferred Stock.
Section 3. Dividends.
3.1 The holders of shares of the Class 2 ESOP
Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors out of assets legally
available for that purpose, dividends payable in cash at the
rate (per outstanding share of Common Stock) equal to the
dividends which would have been received during the
applicable Dividend Period with respect to the shares of
Common Stock which would have been issued upon conversion of
the Class 2 ESOP Preferred Stock had the Class 2 ESOP
Preferred Stock been outstanding as Common Stock at each
relevant time in order to receive such dividends (but only
to the extent such dividends do not constitute an
Extraordinary Distribution under clause (i) of the
definition thereof), which dividends (hereinafter referred
to as "Participating Dividends") shall be paid in cash, pro-
rata to each holder of Class 2 ESOP Preferred Stock. Such
Participating Dividends shall be cumulative from March 31,
2000, whether or not in any Dividend Period or Periods there
shall be assets of the Corporation legally available for the
payment of such Participating Dividends and whether or not
the Board of Directors shall have declared such
Participating Dividends, and shall be payable when, as and
if declared by the Board of Directors, in arrears on
Dividend Payment Dates. Each such Participating Dividend
shall be payable in arrears to the holders of record of
shares of the Class 2 ESOP Preferred Stock, as they appear
on the stock records of the Corporation at the close of
business on such record dates, which shall not be more than
60 days nor less than 10 days preceding the Dividend Payment
Dates thereof, as shall be fixed by the Board of Directors.
Accrued and unpaid Participating Dividends for any past
Dividend Periods may be declared and paid at any time,
without reference to any Dividend Payment Date, to holders
of record on such date, not exceeding 45 days preceding the
payment date thereof, as may be fixed by the Board of
Directors. Holders of the Class 2 ESOP Preferred Stock
shall be entitled to the cumulative Participating Dividend
provided in this Section 3.1 and shall not be entitled to
any other dividends in excess thereof. In the event that an
adjustment is made pursuant to the second paragraph of
Section 6.4(d) with respect to shares of Class 2 ESOP
Preferred Stock converted during the applicable Dividend
Period, the amount of Participating Dividend to be paid in
accordance with the preceding sentence shall be reduced by
an amount equal to the product of (x) the number of shares
of Common Stock into which such converted shares of Class 2
ESOP Preferred Stock would have been converted in the
absence of such adjustment and (y) the amount of the cash
dividend or distributions per share of Common Stock in
respect of which such adjustment was made.
3.2 Except as provided in Section 3.1, holders of
shares of Class 2 ESOP Preferred Stock shall not be entitled
to any dividends, whether payable in cash, property or
stock, in excess of cumulative Participating Dividends, as
herein provided, on the Class 2 ESOP Preferred Stock. No
interest, or sum of money in lieu of interest, shall be
payable in respect of any Participating Dividend payment or
payments on the Class 2 ESOP Preferred Stock that may be in
arrears.
3.3 So long as any shares of the Class 2 ESOP
Preferred Stock are outstanding, no dividends, except as
described in the next succeeding sentence, shall be declared
or paid or set apart for payment on any other class or
series of stock of the Corporation ranking on a parity with
the Class 2 ESOP Preferred Stock as to the payment of
dividends for any period unless full cumulative
Participating Dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Class 2
ESOP Preferred Stock for all Dividend Periods terminating on
or prior to the date of payment of the dividends on such
class or series or parity stock. When Participating
Dividends are not paid in full or a sum sufficient for such
payment is not set apart, as aforesaid, all dividends
declared upon the Class 2 ESOP Preferred Stock and such
parity stock shall be declared ratably in proportion to the
respective amounts of Participating Dividends accumulated
and unpaid on the Class 2 ESOP Preferred Stock and dividends
accumulated and unpaid on such parity stock.
3.4 So long as any shares of the Class 2 ESOP
Preferred Stock are outstanding, no dividends (other than
(i) the Rights and (ii) dividends or distributions paid in
shares of, or options, warrants, or rights to subscribe for
or purchase shares of, any class or series of stock of the
Corporation that is junior to the Class 2 ESOP Preferred
Stock as to the payment of dividends) shall be declared or
paid or set apart for payment or other distribution declared
or made upon any class or series of stock of the Corporation
that is junior to the Class 2 ESOP Preferred Stock as to the
payment of dividends, nor shall any other class or series of
stock of the Corporation ranking on a parity with or junior
to the Class 2 ESOP Preferred Stock as to the payment of
dividends or as to distributions upon liquidation,
dissolution or winding up of the Corporation, be redeemed,
purchased or otherwise acquired (other than a redemption,
purchase or other acquisition of shares of Common Stock made
for purposes of an employee incentive or benefit plan of the
Corporation or any subsidiary) for any consideration (or any
moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the
Corporation, directly to the Class 2 ESOP Preferred Stock as
to the payment of dividends and as to distributions upon
liquidation, dissolution or winding up of the Corporation),
unless in each case the full cumulative Participating
Dividends on all outstanding shares of the Class 2 ESOP
Preferred Stock shall have been paid or set apart for
payment for all past Dividend Periods with respect to the
Class 2 ESOP Preferred Stock and such parity stock.
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or
set apart for payment to the holders of any class or series
of stock of the Corporation that ranks junior to the Class 2
ESOP Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation,
the holders of the shares of Class 2 ESOP Preferred Stock
shall be entitled to receive an amount per share of Class 2
ESOP Preferred Stock equal to the sum of (a) the result of
dividing (i) the Purchase Price (as defined in and
determined pursuant to Section 1 of the Preferred Stock
Purchase Agreement, dated as of March 25, 1994, as amended,
between the Corporation and State Street Bank and Trust
Company as trustee for the UAL Corporation Employee Stock
Ownership Plan Trust (the "Agreement"), a copy of which is
on file in the office of the Secretary of the Corporation)
of the shares of Class 1 ESOP Preferred Stock purchased
pursuant to Section 1 of the Agreement by (ii) the number of
shares of Class 1 ESOP Preferred Stock purchased pursuant to
Section 1 of the Agreement and (b) an amount equal to all
dividends (whether or not earned or declared) accrued and
unpaid thereon to the date of final distribution to such
holders (collectively, the "Liquidation Preference"), but
such holders shall not be entitled to any further payment.
If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of the shares of
Class 2 ESOP Preferred Stock shall be insufficient to pay in
full the Liquidation Preference and the liquidation
preference on all other shares of any class or series of
stock of the Corporation that ranks on a parity with the
Class 2 ESOP Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up of the
Corporation, then such assets, or the proceeds thereof,
shall be distributed among the holders of shares of Class 2
ESOP Preferred Stock and any such other parity stock ratably
in accordance with the respective amounts that would be
payable on such shares of Class 2 ESOP Preferred Stock and
any such other parity stock if all amounts payable thereon
were paid in full. For the purposes of this Section 4, (i)
a consolidation or merger of the Corporation with or into
one or more corporations, or (ii) a sale, lease, exchange or
transfer of all or substantially all of the Corporation's
assets, shall not be deemed to be a liquidation, dissolution
or winding up, voluntary or involuntary, of the Corporation.
4.2 Subject to the rights of the holders of shares of
any class or series of stock ranking prior to or on a parity
with the Class 2 ESOP Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of
the Corporation, after payment shall have been made to the
holders of the Class 2 ESOP Preferred Stock, as and to the
fullest extent provided in this Section 4, any other class
or series of stock of the Corporation that ranks junior to
the Class 2 ESOP Preferred Stock as to amounts distributable
upon dissolution, liquidation or winding up of the
Corporation shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive
any and all assets remaining to be paid or distributed, and
the holders of the Class 2 ESOP Preferred Stock shall not be
entitled to share therein.
Section 5. Shares to be Retired. All shares of
Class 2 ESOP Preferred Stock which shall have been issued
and reacquired in any manner by the Corporation shall be
retired and shall not be reissued.
Section 6. Conversion. Holders of shares of Class
2 ESOP Preferred Stock shall have the right to convert all
or a portion of such shares into shares of Common Stock as
follows:
6.1 Subject to and upon compliance with the provisions
of this Section 6, a holder of shares of Class 2 ESOP
Preferred Stock shall have the right, at such holder's
option, at any time and from time to time, to convert all or
any of such shares into fully paid and nonassessable shares
of Common Stock at a rate of one share of Common Stock for
one share of Class 2 ESOP Preferred Stock, subject to
adjustment as provided in this Section 6 (as so adjusted,
the "Conversion Rate") by surrendering such shares to be
converted, such surrender to be made in the manner provided
in Section 6.2. Certificates shall be issued for the
remaining shares of Class 2 ESOP Preferred Stock if fewer
than all of the shares of Class 2 ESOP Preferred Stock
represented by a certificate are converted.
6.2 In order to exercise the conversion right, the
holder of shares of Class 2 ESOP Preferred Stock to be
converted shall surrender the certificate or certificates
representing such shares, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent
in the Borough of Manhattan, City of New York, accompanied
by written notice to the Corporation that the holder thereof
elects to convert Class 2 ESOP Preferred Stock. Unless the
shares issuable on conversion are to be issued in the same
name as the name in which such share of Class 2 ESOP
Preferred Stock is registered, each share surrendered for
conversion shall be accompanied by instruments of transfer,
in form satisfactory to the Corporation, duly executed by
the holder or such holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid or that no such
taxes are payable).
Holders of shares of Class 2 ESOP Preferred Stock at
the close of business on a dividend payment record date
shall be entitled to receive the dividend payable on such
shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof following such
dividend payment record date. The Corporation shall make no
payment or allowance for unpaid dividends on the shares of
Common Stock issued upon such conversion.
As promptly as practicable after the surrender of
certificates for shares of Class 2 ESOP Preferred Stock as
aforesaid, the Corporation shall issue and shall deliver at
such office to such holder, or on such holder's written
order, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such
shares in accordance with provisions of this Section 6, and
any fractional interest in respect of a share of Common
Stock arising upon such conversion shall be settled as
provided in Section 6.3.
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on
which the certificates for shares of Class 2 ESOP Preferred
Stock shall have been surrendered and such notice (and if
applicable, payment of an amount equal to the dividend
payable on such shares) received by the Corporation as
aforesaid, and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares
represented thereby at such time on such date and such
conversion shall be at the Conversion Rate in effect at such
time on such date, unless the stock transfer books of the
Corporation shall be closed on that date, in which event
such person or persons shall be deemed to have become such
holder or holders of record at the close of business on the
next succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Rate in
effect on the date upon which such shares shall have been
surrendered and such notice received by the Corporation.
6.3 No fractional shares or scrip representing
fractions of shares of Common Stock shall be issued upon
conversion of the Class 2 ESOP Preferred Stock. Instead of
any fractional interest in a share of Common Stock that
would otherwise be deliverable upon the conversion of a
share of Class 2 ESOP Preferred Stock, the Corporation shall
pay to the holder of such share an amount in cash based upon
the Current Market Price of Common Stock on the Trading Day
immediately preceding the date of conversion. If more than
one certificate shall be surrendered for conversion at one
time by the same holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on
the basis of the aggregate number of shares of Class 2 ESOP
Preferred Stock so surrendered.
6.4 The Conversion Rate shall be adjusted from time to
time as follows:
(a) In case the Corporation shall, at any time or
from time to time while any of the shares of Class 2
ESOP Preferred Stock are outstanding, (i) pay a
dividend or make a distribution on its capital stock in
shares of its Common Stock, (ii) subdivide its
outstanding Common Stock into a greater number of
shares, (iii) combine its outstanding Common Stock into
a smaller number of shares or (iv) issue any shares of
capital stock by reclassification of its Common Stock,
the Conversion Rate in effect at the opening of
business on the day next following the date fixed for
the determination of stockholders entitled to receive
such dividend or distribution or at the opening of
business on the day next following the day on which
such subdivision, combination or reclassification
becomes effective, as the case may be, shall be
adjusted so that the holder of any share of Class 2
ESOP Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of
shares of Common Stock or other capital stock that such
holder would have owned or have been entitled to
receive after the happening of any of the events
described above had such share been converted
immediately prior to the record date in the case of a
dividend or distribution or the effective date in the
case of a subdivision, combination or reclassification.
An adjustment made pursuant to this subparagraph (a)
shall become effective immediately after the opening of
business on the day next following the record date
(except as provided in Section 6.7 below) in the case
of a dividend or distribution and shall become
effective immediately after the opening of business on
the day next following the effective date in the case
of a subdivision, combination or reclassification.
(b) In case the Corporation shall, at any time or
from time to time while any of the shares of Class 2
ESOP Preferred Stock are outstanding, issue Equity
Securities (other than Common Stock and the Rights)
(the "Issued Equity Securities") to all holders of
shares of its Common Stock entitling them (for a period
expiring within 45 days after the record date for such
issuance) to subscribe for or purchase (whether by
exercise, conversion, exchange or otherwise) shares of
Common Stock (or other Equity Securities) at a price
per share less than the Fair Market Value of the Common
Stock (or the other Equity Security to be acquired) at
such record date (treating the price per share of the
Equity Securities to be acquired as equal to (x) the
sum of (i) the Fair Market Value of the consideration
payable for a unit of the Equity Security plus (ii) the
Fair Market Value of any additional consideration
initially payable upon the exercise, conversion or
exchange of such security into Common Stock divided by
(y) the number of shares of Common Stock initially
underlying or that may be acquired upon the exercise,
conversion or exchange of such Equity Security), the
Conversion Rate shall be adjusted so that it shall
equal the rate determined by multiplying the Conversion
Rate in effect immediately prior to the date of
issuance of such Issued Equity Securities by a
fraction, the numerator of which shall be the sum of
(A) the number of shares of Common Stock outstanding on
the date of issuance of such Issued Equity Securities
plus (B) the number of additional shares of Common
Stock offered for subscription or purchase (including,
without limitation, the security underlying or that may
be acquired upon the exercise, conversion or exchange
of the Equity Securities so offered) and the
denominator of which shall be the sum of (A) the number
of shares of Common Stock outstanding on the date of
issuance of such Issued Equity Securities plus (B) the
number of shares of Common Stock that the aggregate
offering price of the total number of shares so offered
for subscription or purchase (including, without
limitation, the Fair Market Value of the consideration
payable for a unit of the Equity Securities so offered
plus the Fair Market Value of any additional
consideration payable upon exercise, conversion or
exchange of such Equity Securities) would purchase at
such Fair Market Value of the Common Stock as of the
record date for such issuance. Such adjustment shall
become effective as of the record date for the
determination of stockholders entitled to receive such
Issued Equity Securities (except as provided in Section
6.6 below).
(c) In case the Corporation shall, at any time or
from time to time while any of the shares of Class 2
ESOP Preferred Stock are outstanding, issue, sell or
exchange shares of Common Stock (other than pursuant to
any Rights, Equity Securities issued in connection with
any employee or director incentive or benefit plan or
arrangement of the Corporation or any subsidiary or any
Equity Security theretofore outstanding entitling the
holder to purchase or acquire shares of Common Stock)
for a consideration having a Fair Market Value on the
date of such issuance, sale or exchange less than the
Fair Market Value of such shares of Common Stock on the
date of such issuance, sale or exchange, then the
Conversion Rate in effect immediately prior to such
issuance, sale or exchange shall be adjusted by
multiplying such Conversion Rate by a fraction, the
numerator of which shall be the product of (i) the Fair
Market Value of a share of Common Stock on the Trading
Day immediately preceding the first public announcement
of such issuance, sale or exchange multiplied by (ii)
the sum of the number of shares of Common Stock
outstanding on such day plus the number of shares of
Common Stock so issued, sold or exchanged by the
Corporation, and the denominator of which shall be the
sum of (i) the Fair Market Value of all the shares of
Common Stock outstanding on the Trading Day immediately
preceding the first public announcement of such
issuance, sale or exchange plus (ii) the Fair Market
Value of the consideration received by the Corporation
in respect of such issuance, sale or exchange of shares
of Common Stock. In case the Corporation shall, at any
time or from time to time while any of the shares of
Class 2 ESOP Preferred Stock are outstanding, issue,
sell or exchange any Equity Security (other than any
Rights, Equity Securities issued in connection with any
employee or director incentive or benefit plan or
arrangement of the Corporation or any subsidiary or
Common Stock) other than any such issuance to all
holders of shares of Common Stock as a dividend or
distribution (including by way of a reclassification of
shares or a recapitalization of the Corporation) for a
consideration having a Fair Market Value on the date of
such issuance, sale or exchange less than the Non-
Dilutive Amount, then the Conversion Rate shall be
adjusted by multiplying such Conversion Rate by a
fraction, the numerator of which shall be the product
of (i) the Fair Market Value of a share of Common Stock
on the Trading Day immediately preceding the first
public announcement of such issuance, sale or exchange
multiplied by (ii) the sum of the number of shares of
Common Stock outstanding on such day plus the maximum
number of shares of Common Stock underlying or which
could be acquired pursuant to such Equity Security at
the time of the issuance, sale or exchange of such
Equity Security (assuming shares of Common Stock could
be acquired pursuant to such Equity Security at such
time), and the denominator of which shall be the sum of
(i) the Fair Market Value of all the shares of Common
Stock outstanding on the Trading Day immediately
preceding the first public announcement of such
issuance, sale or exchange plus (ii) the Fair Market
Value of the consideration received by the Corporation
in respect of such issuance, sale or exchange of such
Equity Security plus (iii) the Fair Market Value as of
the time of such issuance of the consideration which
the Corporation would receive upon exercise, conversion
or exchange in full of all such Equity Securities.
(d) In case the Corporation shall, at any time or from time
to time while any of the shares of Class 2 ESOP Preferred
Stock are outstanding, make an Extraordinary Distribution in
respect of the Common Stock or effect a Pro Rata Repurchase
of Common Stock, the Conversion Rate in effect immediately
prior to such Extraordinary Distribution or Pro Rata
Repurchase shall be adjusted by multiplying such Conversion
Rate by a fraction, the numerator of which shall be the
product of (i) the number of shares of Common Stock
outstanding immediately before such Extraordinary Dividend
or Pro Rata Repurchase (minus, in the case of a Pro Rata
Repurchase, the number of shares of Common Stock repurchased
by the Corporation) multiplied by (ii) the Fair Market Value
of a share of Common Stock on the record date with respect
to such Extraordinary Distribution or on the Trading Day
immediately preceding the first public announcement by the
Corporation or any of its Affiliates of the intent to effect
a Pro Rata Repurchase, as the case may be, and the
denominator of which shall be (i) the product of (x) the
number of shares of Common Stock outstanding immediately
before such Extraordinary Distribution or Pro Rata
Repurchase multiplied by (y) the Fair Market Value of a
share of Common Stock on the record date with respect to
such Extraordinary Distribution, or on the Trading Day
immediately preceding the first public announcement by the
Corporation or any of its Affiliates of the intent to effect
a Pro Rata Repurchase, as the case may be, minus (ii) the
Fair Market Value of the Extraordinary Distribution or the
aggregate purchase price of the Pro Rata Repurchase, as the
case may be (provided that such denominator shall never be
less than 1.0); provided, however, that no Pro Rata
Repurchase shall cause an adjustment to the Conversion Rate
unless the amount of all cash dividends and distributions
made to holders of Common Stock during the period from the
most recent Extraordinary Distribution Measuring Date
preceding the Effective Date of such Pro Rata Repurchase,
when combined with the aggregate amount of all Pro Rata
Repurchases, including such Pro Rata Repurchase (for all
purposes of this Section 7.4(d), including only that portion
of the Fair Market Value of the aggregate purchase price of
each Pro Rata Repurchase which is in excess of the Fair
Market Value of the Common Stock repurchased as determined
on the Trading Day immediately preceding the first public
announcement by the Corporation or any of its Affiliates of
the intent to effect each such Pro Rata Repurchase), the
Effective Dates of which fall within such period, exceeds
twelve and one-half percent (12 1/2%) of the aggregate Fair
Market Value of all shares of Common Stock outstanding on
the Trading Day immediately preceding the first public
announcement by the Corporation or any of its Affiliates of
the intent to effect such Pro Rata Repurchase. Such
adjustment shall become effective immediately after the
record date for the determination of stockholders entitled
to receive such Extraordinary Distribution or immediately
after the Effective Date of such Pro Rata Repurchase.
Solely as an adjustment applicable to shares of
Class 2 ESOP Preferred Stock that are being converted
into Common Stock as of a given date, and not as a
permanent adjustment to the Conversion Rate, the
Conversion Rate in effect immediately prior to such
conversion shall be adjusted by multiplying such
Conversion Rate by a fraction, the numerator of which
shall be the product of (i) the number of shares of
Common Stock outstanding immediately before such
conversion multiplied by (ii) the Fair Market Value of
a share of Common Stock on the date of such conversion,
and the denominator of which shall be (i) the product
of (x) the number of shares of Common Stock outstanding
immediately before such conversion multiplied by (y)
the Fair Market Value of a share of Common Stock on the
date of such conversion minus (ii) the Fair Market
Value of the cash dividend and distributions made on or
before the date of such conversion with a record date
after the most recent Extraordinary Distribution
Measuring Date upon which Participating Dividends were
paid in full, but only to the extent that such cash
dividends and distributions (a) would entitle the
holders of the shares of Class 2 ESOP Preferred Stock
outstanding on such conversion date to a dividend under
Section 3.1 that has not been paid and (b) would not
constitute an Extraordinary Distribution (provided that
such denominator shall never be less than 1.0).
(e) No adjustment in the Conversion Rate shall be
required unless such adjustment would require a
cumulative increase or decrease of at least 0.01% in
such rate; provided that any adjustments that by reason
of this subparagraph (e) are not required to be made
shall be carried forward and taken into account in any
subsequent adjustment until made; and provided further
that any adjustment shall be required and made in
accordance with the provisions of this Section 6.4
(other than this subparagraph (e)) not later than such
time as may be required in order to preserve the tax-
free nature of a distribution to the holders of shares
of Common Stock. Notwithstanding any other provisions
of this Section 6, the Corporation shall not be
required to make any adjustments of the Conversion Rate
for the issuance of any shares of Common Stock pursuant
to any plan providing for the reinvestment of dividends
on securities of the Corporation so long as the holders
of the Class 2 ESOP Preferred Stock shall be entitled
to participate therein on substantially the same terms
as holders of Common Stock. All calculations under
this Section 6 shall be made to the nearest cent (with
$.005 being rounded upward), one-tenth of a share (with
.05 of a share being rounded upward) or, in the case of
the Conversion Rate, one hundred millionth of a share
(with .000000005 being rounded upward), as the case may
be. Anything in this Section 6.4 to the contrary
notwithstanding, the Corporation shall be entitled, to
the extent permitted by law, to make such reductions in
the Conversion Rate, in addition to those required by
this Section 6.4, as it in its discretion shall
determine to be advisable in order that any stock
dividends, subdivision of shares, reclassification or
combination of shares, distribution of rights or
warrants to purchase stock or securities, or a
distribution of other assets (other than cash
dividends) hereafter made by the Corporation to its
stockholders shall not be taxable.
6.5 If:
(a) the Corporation shall declare a dividend or
any other distribution on the Common Stock (other than
the Rights); or
(b) the Corporation shall authorize the granting
to the holders of the Common Stock of Equity Securities
(other than Common Stock) to subscribe for or purchase
any Equity Security; or
(c) there shall be any reclassification of the
Common Stock (other than an event to which Section
6.4(a) applies) or any consolidation or merger to which
the Corporation is a party and for which approval of
any stockholders of the Corporation is required, or the
sale or transfer of all or substantially all of the
assets of the Corporation as an entirety; or
(d) there shall occur the voluntary or
involuntary liquidation, dissolution or winding up of
the Corporation; or
(e) there shall occur any Pro Rata Repurchase,
then the Corporation shall cause to be filed with the
Transfer Agent and shall cause to be mailed to the
holders of shares of the Class 2 ESOP Preferred Stock
at their addresses as shown on the stock records of the
Corporation, as promptly as possible, but at least 10
days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a
record is to be taken for the purpose of such dividend,
distribution or granting of Equity Securities, or, if a
record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to
such dividend, distribution or granting of Equity
Securities are to be determined, (B) the date on which
such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution or winding up is
expected to become effective, and the date as of which
it is expected that holders of Common Stock of record
shall be entitled to exchange their shares of Common
Stock for securities or other property, if any,
deliverable upon such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution or
winding up or (C) the number of shares subject to such
offer for a Pro Rata Repurchase and the purchase price
payable by the Corporation pursuant to such offer.
Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of
the proceedings described in this Section 6.
6.6 Whenever the Conversion Rate is adjusted as herein
provided, the Corporation shall promptly file with the
Transfer Agent an officer's certificate setting forth the
Conversion Rate after such adjustment and setting forth a
brief statement of the facts requiring and the manner of
effecting such adjustment which certificate shall be prima
facie evidence of the correctness of such adjustment.
Promptly after delivery of such certificate, the Corporation
shall prepare a notice of such adjustment of the Conversion
Rate setting forth the adjusted Conversion Rate and the
effective date of such adjustment or adjustments and shall
mail such notice of such adjustment or adjustments to the
holder of each share of Class 2 ESOP Preferred Stock at such
holder's last address as shown on the stock records of the
Corporation.
6.7 In any case in which Section 6.4 provides that an
adjustment shall become effective on the day next following
a record date for an event, the Corporation may defer until
the occurrence of such event (A) issuing to the holder of
any share of Class 2 ESOP Preferred Stock converted after
such record date and before the occurrence of such event the
additional shares of Common Stock or other securities
issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock or
other securities issuable upon such conversion before giving
effect to such adjustment and (B) paying to such holder any
amount in cash in lieu of any fraction pursuant to Section
6.3.
6.8 For purposes of this Section 6, the number of
shares of Common Stock at any time outstanding shall not
include any shares of Common Stock then owned or held by or
for the account of the Corporation or any subsidiary. The
Corporation shall not pay a dividend or make any
distribution on shares of Common Stock held in the treasury
of the Corporation.
6.9 There shall be no adjustment of the Conversion
Rate in case of the issuance of any stock of the Corporation
in a reorganization, acquisition or other similar
transaction except as specifically set forth in Section 6 or
Section 7. If any action or transaction would require
adjustment of the Conversion Rate pursuant to more than one
paragraph of this Section 6, only one adjustment shall be
made and such adjustment shall be the amount of adjustment
that has the highest absolute value.
6.10 If the Corporation shall take any action affecting
the Common Stock, other than action described in this
Section 6, that in the opinion of the Board of Directors
would materially adversely affect the conversion rights of
the holders of the shares of Class 2 ESOP Preferred Stock,
the Conversion Rate for the Class 2 ESOP Preferred Stock may
be adjusted, to the extent permitted by law, in such manner,
if any, and at such time, as the Board of Directors may
determine to be equitable in the circumstances.
6.11 The Corporation covenants that it will at all
times reserve and keep available, free from preemptive
rights, out of the aggregate of its authorized but unissued
shares of Common Stock or its issued shares of Common Stock
held in its treasury, or both, for the purpose of effecting
conversion of the Class 2 ESOP Preferred Stock, the full
number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Class 2 ESOP
Preferred Stock not theretofore converted. For purposes of
this Section 6.11, the number of shares of Common Stock that
shall be deliverable upon the conversion of all outstanding
shares of Class 2 ESOP Preferred Stock shall be computed as
if at the time of computation all such outstanding shares
were held by a single holder.
The Corporation covenants that any shares of Common
Stock issued upon conversion of the Class 2 ESOP Preferred
Stock shall be validly issued, fully paid and non-
assessable.
The Corporation shall endeavor to list the shares of
Common Stock (or other securities) required to be delivered
upon conversion of the Class 2 ESOP Preferred Stock, prior
to such delivery, upon each national securities exchange, if
any, upon which the outstanding Common Stock (or other
securities) is listed at the time of such delivery.
Prior to the delivery of any securities that the
Corporation shall be obligated to deliver upon conversion of
the Class 2 ESOP Preferred Stock, the Corporation shall
endeavor to comply with all federal and state laws and
regulations thereunder requiring the registration of such
securities with, or any approval of or consent to the
delivery thereof by, any governmental authority.
6.12 The Corporation shall pay any and all documentary
stamp or similar issue or transfer taxes payable in respect
of the issue or delivery of shares of Common Stock or other
securities or property on conversion of the Class 2 ESOP
Preferred Stock pursuant hereto; provided that the
Corporation shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issue or
delivery of shares of Common Stock or other securities or
property in a name other than that of the holder of the
Class 2 ESOP Preferred Stock to be converted and no such
issue or delivery shall be made unless and until the person
requesting any such issue or delivery has paid to the
Corporation the amount of any such tax or established, to
the reasonable satisfaction of the Corporation, that such
tax has been paid.
6.13 If, prior to the Distribution Date (as defined for
purposes of the Rights), the Corporation shall issue shares
of Common Stock upon conversion of shares of Class 2 ESOP
Preferred Stock as contemplated by this Section 6, the
Corporation shall issue together with each such share of
Common Stock that number of Rights as are then issuable,
pursuant to the Rights Agreement (or any successor rights
plan or plans adopted in replacement of the Rights
Agreement), per share of such Common Stock so issued, but
only if at such time such Rights or rights are, pursuant to
the relevant rights agreement, to be represented by
certificates representing shares of Common Stock and have
not expired.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation shall enter into any
consolidation, merger, share exchange or similar
transaction, however named, pursuant to which the
outstanding shares of Common Stock are to be exchanged
solely for or changed, reclassified or converted solely into
stock of any successor or resulting or other company
(including the Corporation) that constitutes "qualifying
employer securities" with respect to holders of Class 2 ESOP
Preferred Stock within the meaning of Section 409(l) of the
Code and Section 407(d)(5) of the Employee Retirement Income
Security Act of 1974, as amended, or any successor
provisions of law, and, if applicable, for a cash payment in
lieu of fractional shares, if any, proper provisions shall
be made so that upon consummation of such transaction, the
shares of Class 2 ESOP Preferred Stock shall be converted
into or exchanged for preferred stock of such successor or
resulting or other company, having in respect of such
company, the same powers, preferences and relative,
participating, optional or other special rights (including
the rights provided by this Section 7), and the
qualifications, limitations or restrictions thereof, that
the Class 2 ESOP Preferred Stock had, in respect of the
Corporation, immediately prior to such transaction, except
that after such transaction each share of preferred stock of
the surviving or resulting or other company so received in
such transaction upon conversion or exchange of the Class 2
ESOP Preferred Stock shall be convertible, otherwise on the
terms and conditions provided by Section 6 hereof, into the
number and kind of "qualifying employer securities"
receivable in such transaction by a holder of the number of
shares of Common Stock into which a share of Class 2 ESOP
Preferred Stock could have been converted immediately prior
to such transaction; provided, however, that if by virtue of
the structure of such transaction, a holder of Common Stock
is required to make an election with respect to the nature
and kind of consideration to be received in such
transaction, which election cannot practicably be made by
the holders of the Class 2 ESOP Preferred Stock, then the
shares of preferred stock of the surviving or resulting or
other company received in such transaction upon conversion
or exchange of Class 2 ESOP Preferred Stock shall, by virtue
of such transaction and on the same terms as apply to the
holders of Common Stock, be convertible into or exchangeable
solely for "qualifying employer securities" (together, if
applicable, with a cash payment in lieu of fractional
shares) with the effect provided above on the basis of the
number and kind of qualifying employer securities receivable
in such transaction by a holder of the number of shares of
Common Stock into which such shares of Class 2 ESOP
Preferred Stock could have been converted immediately prior
to such transaction (provided that if the kind or amount of
qualifying employer securities receivable in such
transaction is not the same for each such share of Common
Stock, then the kind and amount so receivable in such
transaction for each share of Common Stock for this purpose
shall be deemed to be the kind and amount so receivable per
share by the plurality of such shares of Common Stock). The
rights of the preferred stock of such successor or resulting
or other company so received in such transaction upon
conversion or exchange of the Class 2 ESOP Preferred Stock
shall successively be subject to adjustments pursuant to
Section 6 hereof following such transaction as nearly
equivalent to the adjustments provided for by such Sections
prior to such transaction.
7.2 In case the Corporation shall enter into any
consolidation, merger, share exchange or similar
transaction, however named, pursuant to which the
outstanding shares of Common Stock are to be exchanged for
or changed, reclassified or converted into other stock or
securities or cash or any other property, or any combination
thereof, other than any such consideration which is
constituted solely of "qualifying employer securities" (as
referred to in Section 7.1) and cash payments, if
applicable, in lieu of fractional shares, proper provisions
shall be made so that upon consummation of such transaction
the outstanding shares of Class 2 ESOP Preferred Stock
shall, by virtue of such transaction and on the same terms
as are applicable to the holders of Common Stock, be
converted into or exchanged for the aggregate amount of
stock, securities, cash or other property (payable in like
kind) receivable by holders of the number of shares of
Common Stock into which such shares of Class 2 ESOP Common
Stock Preferred Stock could have been converted immediately
prior to such transaction; provided, however, that if by
virtue of the structure of such transaction, a holder of
Common Stock is required to make an election with respect to
the nature and kind of consideration to be received in such
transaction, which election cannot practicably be made by
holders of the Class 2 ESOP Preferred Stock, then the shares
of Class 2 ESOP Preferred Stock shall, by virtue of such
transaction and on the same terms as apply to the holders of
Common Stock, be converted into or exchanged for the
aggregate amount of stock, securities, cash or other
property (payable in kind) receivable by a holder of the
number of shares of Common Stock into which such shares of
Class 2 ESOP Preferred Stock could have been converted
immediately prior to such transaction if such holder of
Common Stock failed to exercise any rights of election to
receive any kind or amount of stock, securities, cash or
other property receivable in such transaction (provided that
if the kind or amount of stock, securities, cash or other
property receivable in such transaction are not the same for
each non-electing share, then the kind and amount of stock,
securities, cash or other property so receivable upon such
transaction for each non-electing share shall be the kind
and amount so receivable per share by the plurality of the
non-electing shares).
7.3 In case the Corporation shall enter into any
agreement providing for any consolidation, merger, share
exchange or similar transaction described in this Section 7,
then the Corporation shall as soon as practicable thereafter
(and in any event at least fifteen (15) Business Days before
consummation of such transaction) give notice of such
agreement and the material terms thereof to each holder of
Class 2 ESOP Preferred Stock. The Corporation shall not
consummate any consolidation, merger, share exchange or
similar transaction unless all of the terms of this Section
7 have been complied with.
Section 8. Ranking.
8.1 Any class or series of stock of the Corporation
shall be deemed to rank:
(a) prior to the Class 2 ESOP Preferred Stock, as
to the payment of dividends or as to distributions of
assets upon liquidation, dissolution or winding up, as
the case may be, if the holders of such class or series
shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or
priority to the holders of Class 2 ESOP Preferred
Stock;
(b) on a parity with the Class 2 ESOP Preferred
Stock as to the payment of dividends, whether or not
the dividend rates or dividend payment dates thereof be
different from those of the Class 2 ESOP Preferred
Stock, if the holders of such class or series of stock
and the Class 2 ESOP Preferred Stock shall be entitled
to the receipt of dividends in proportion to their
respective amounts of accrued and unpaid dividends per
share, without preference or priority one over the
other, and on a parity with the Class 2 ESOP Preferred
Stock as to the distribution of assets upon
liquidation, dissolution or winding up, whether or not
the liquidation prices per share thereof be different
from those of the Class 2 ESOP Preferred Stock, if the
holder of such class or series of stock and the Class 2
ESOP Preferred Stock shall be entitled to the receipt
of amounts distributable upon liquidation, dissolution
or winding up in proportion to their respective
liquidation preferences, without preference or priority
one over the other; and
(c) junior to the Class 2 ESOP Preferred Stock,
as to the payment of dividends or as to the
distribution of assets upon liquidation, dissolution or
winding up, as the case may be, if the holders of Class
2 ESOP Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in
preference or priority to the holders of shares of such
class or series.
8.2 The Series A Preferred Stock and the Series B
Preferred Stock, shall each be deemed to rank prior to
the Class 2 ESOP Preferred Stock both as to the payment
of dividends and as to the distribution of assets upon
liquidation, dissolution or winding up. The Series D
Preferred Stock shall be deemed to rank prior to the
Class 2 ESOP Preferred Stock as to the distribution of
assets upon liquidation, dissolution or winding up.
The Class 1 ESOP Preferred Stock shall be deemed to
rank on a parity with the Class 2 ESOP Preferred Stock
as to the payment of dividends and as to amounts
distributable upon liquidation, dissolution or winding
up. The Common Stock, the Director Preferred Stocks,
the Voting Preferred Stocks and the Series C Preferred
Stock shall each be deemed to rank junior to the Class
2 ESOP Preferred Stock both as to the payment of
dividends and as to the distribution of assets upon
liquidation, dissolution or winding up.
Section 9. Voting. The holders of shares of Class
2 ESOP Preferred Stock shall have the following voting
rights:
9.1 Unless the affirmative vote or consent of the
holders of a greater number of shares of Class 2 ESOP
Preferred Stock shall then be required by law or this
Restated Certificate, and in addition to any other vote
required by law or this Restated Certificate, the
affirmative vote or written consent of the holders of at
least a majority of all of the outstanding shares of Class 2
ESOP Preferred Stock, voting separately as a class, shall be
necessary for authorizing, effecting or validating the
amendment, alteration or repeal (including any amendment,
alteration or repeal by operation of merger or
consolidation) of any of the provisions of this Restated
Certificate or of any certificate amendatory thereof or
supplemental thereto (including any Certificate of
Designation, Preferences and Rights or any similar document
relating to any series of Serial Preferred Stock) that would
adversely affect the preferences, rights, powers or
privileges of the Class 2 ESOP Preferred Stock; provided,
however, that the amendment of the provisions of this
Restated Certificate so as to authorize or create, or to
increase the authorized amount of, any class or series of
stock of the Corporation ranking on a parity with or junior
to the Class 2 ESOP Preferred Stock both as to the payment
of dividends and as to the distribution of assets upon
liquidation, dissolution or winding up of the Corporation
shall not be deemed to adversely affect the preferences,
rights, powers or privileges of Class 2 ESOP Preferred
Stock.
9.2 Unless the affirmative vote or consent of the
holders of a greater number of shares of Class 2 ESOP Voting
Preferred Stock shall then be required by law or this
Restated Certificate, and in addition to any other vote
required by law or this Restated Certificate, the
affirmative vote or written consent of the holders of at
least a majority of all of the outstanding shares of Class 2
ESOP Preferred Stock, voting separately as a class, shall be
necessary for authorizing, effecting or validating the
creation, authorization or issuance of any shares of any
class or series of stock of the Corporation ranking prior to
the Class 2 ESOP Preferred Stock either as to payment of
dividends or as to distributions upon liquidation,
dissolution or winding up, or the reclassification of any
authorized stock of the Corporation into any such prior
shares, or the creation, authorization or issuance of any
obligation or security convertible into or evidencing the
right to purchase any such prior shares.
9.3 For purposes of the foregoing provisions of
Sections 9.1 and 9.2, each share of Class 2 ESOP Preferred
Stock shall have one (1) vote per share. Except as
otherwise required by applicable law or as set forth herein,
the shares of Class 2 ESOP Preferred Stock shall not have
any relative, participating, optional or other special
voting rights and powers and the consent of the holders
thereof shall not be required for the taking of any
corporate action.
Section 10. No Redemption. The Class 2 ESOP
Preferred Stock shall not be redeemable in whole or in part.
Section 11. Record Holders. The Corporation and
the Transfer Agent (if other than the Corporation) may deem
and treat the record holder of any shares of Class 2 ESOP
Preferred Stock as the true and lawful owner thereof for all
purposes, and, except as otherwise provided by law, neither
the Corporation nor the Transfer Agent shall be affected by
any notice to the contrary.
PART IV
Class P ESOP Voting Junior Preferred Stock
Unless otherwise indicated, any reference in this
Article FOURTH, Part IV to "Section", "Subsection",
"paragraph", "subparagraph" or "clause" shall refer to a
Section, Subsection, paragraph, subparagraph or clause of
this Article FOURTH, Part IV.
Section 1. Number of Shares; Designation;
Issuances; Automatic Conversion.
1.1 The Class P ESOP Voting Junior Preferred Stock of
the Corporation (the "Class P Voting Preferred Stock") shall
consist of 11,600,000 shares, par value $0.01 per share.
1.2 Shares of Class P Voting Preferred Stock shall be
issued only to a trustee or trustees acting on behalf of (i)
the UAL Corporation Employee Stock Ownership Plan (the
"ESOP"), (ii) the UAL Corporation Supplemental ESOP (the
"Supplemental ESOP") or (iii) any other employee stock
ownership trust or plan or other employee benefit plan of
the Corporation or any of its subsidiaries (each, a "Plan").
In the event of any sale, transfer or other disposition
(including, without limitation, upon a foreclosure or other
realization upon shares of Class P Voting Preferred Stock
pledged as security for any loan or loans made to a Plan or
to the trustee or the trustees acting on behalf of a Plan)
(hereinafter a "transfer") of shares of Class P Voting
Preferred Stock to any person (including, without
limitation, any participant in a Plan) other than (x) any
Plan or trustee or trustees of a Plan or (y) any pledgee of
such shares acquiring such shares as security for any loan
or loans made to the Plan or to any trustee or trustees
acting on behalf of the Plan, the shares of Class P Voting
Preferred Stock so transferred, upon such transfer and
without any further action by the Corporation or the holder,
shall be automatically converted into shares of Common Stock
at the applicable Conversion Rate in accordance with Section
9 hereof and thereafter such transferee shall not have any
of the voting powers, preferences or relative,
participating, optional or special rights ascribed to shares
of Class P Voting Preferred Stock hereunder, but, rather,
shall have only the powers and rights pertaining to the
Common Stock into which such shares of Class P Voting
Preferred Stock shall be so converted. In the event of any
such automatic conversion provided for in this Section 1.2,
such transferee shall be treated for all purposes as the
record holder of the shares of Common Stock into which the
Class P Voting Preferred Stock shall have been converted as
of the date of such conversion. Certificates representing
shares of Class P Voting Preferred Stock shall be legended
to reflect such consequences of a transfer. The shares of
Common Stock issued upon any conversion in accordance with
Section 9 hereof or this Section 1.2 may be transferred by
the holder thereof as permitted by law.
Section 2. Definitions. For purposes of the Class
P Voting Preferred Stock, the following terms shall have the
meanings indicated:
2.1 "Available Unissued ESOP Shares" shall have the
meaning set forth in Article FIFTH, Section 1.5 of this
Restated Certificate.
2.2 "Board of Directors" shall mean the board of
directors of the Corporation or any committee of such board
of directors authorized by such board of directors to
perform any of its responsibilities with respect to the
Class P Voting Preferred Stock.
2.3 "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which state or federally
chartered banking institutions in New York, New York are not
required to be open.
2.4 "Class 1 ESOP Convertible Preferred Stock" shall
mean the Class 1 ESOP Convertible Preferred Stock, par value
$0.01 per share, of the Corporation.
2.5 "Class 2 ESOP Convertible Preferred Stock" shall
mean the Class 2 ESOP Convertible Preferred Stock, par value
$0.01 per share, of the Corporation.
2.6 "Class I Preferred Stock" shall mean the Class I
Junior Preferred Stock, par value $0.01 per share, of the
Corporation.
2.7 "Class IAM Preferred Stock" shall mean the Class
IAM Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
2.8 "Class M Voting Preferred Stock" shall mean the
Class M ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.9 "Class P Voting Preferred Stock" shall have the
meaning set forth in Section 1 hereof.
2.10 "Class Pilot MEC Preferred Stock" shall mean the
Class Pilot MEC Junior Preferred Stock, par value $0.01 per
share, of the Corporation.
2.11 "Class S Voting Preferred Stock" shall mean the
Class S ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.12 "Class SAM Preferred Stock" shall mean the Class
SAM Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
2.13 "Common Stock" shall mean the common stock, par
value $0.01 per share, of the Corporation.
2.14 "Conversion Rate" shall have the meaning set forth
in Section 9.1 hereof.
2.15 "Current Market Price" of publicly traded shares
of Common Stock or any other class or series of capital
stock or other security of the Corporation or any other
issuer for any day shall mean the last reported sales price,
regular way, on such day, or, if no sale takes place on such
day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported
on the New York Stock Exchange Composite Tape or, if such
security is not listed or admitted for trading on the New
York Stock Exchange, Inc. ("NYSE"), on the principal
national securities exchange on which such security is
listed or admitted for trading or quoted or, if not listed
or admitted for trading or quoted on any national securities
exchange, on the Nasdaq National Market or, if such security
is not quoted on such National Market, the average of the
closing bid and asked prices on such day in the over-the-
counter market as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or, if bid and asked prices for such security on
such day shall not have been reported through NASDAQ, the
average of the bid and asked prices on such day as furnished
by any NYSE member firm regularly making a market in such
security selected for such purpose by the Board of
Directors.
2.16 "Director Preferred Stocks" shall mean,
collectively, the Class I Preferred Stock, the Class Pilot
MEC Preferred Stock, the Class IAM Preferred Stock and the
Class SAM Preferred Stock.
2.17 "ESOP Convertible Preferred Stocks" shall mean,
collectively, the Class 1 ESOP Convertible Preferred Stock
and the Class 2 ESOP Convertible Preferred Stock.
2.18 "Issue Date" shall mean the first date on which
shares of Class P Voting Preferred Stock are issued.
2.19 "Liquidation Preference" shall have the meaning
set forth in Section 4.1 hereof.
2.20 "Measuring Date" shall mean that date which is the
365th day following the Issue Date.
2.21 "Pilot Fraction" shall mean 0.4623.
2.22 "Restated Certificate" shall mean the Restated
Certificate of Incorporation of the Corporation, as amended
from time to time.
2.23 "Series A Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series A Convertible Preferred Stock in
Article FOURTH, Part I.A of this Restated Certificate.
2.24 "Series B Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series B Preferred Stock in Article
FOURTH, Part I.B of this Restated Certificate.
2.25 "Series C Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series C Junior Participating Preferred
Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.26 "Series D Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series D Redeemable Preferred Stock in
Article FOURTH, Part I.D of this Restated Certificate.
2.27 [Reserved]
2.28 "set apart for payment" shall be deemed to
include, without any action other than the following, the
recording by the Corporation in its accounting ledgers of
any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so
paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any
class or series of stock of the Corporation ranking on a
parity with or junior to the Class P Voting Preferred Stock
as to distributions upon liquidation, dissolution or winding
up of the Corporation are placed in a separate account of
the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with
respect to the Class P Voting Preferred Stock shall mean,
with respect to such distributions, placing such funds in a
separate account or delivering such funds to a disbursing,
paying or other similar agent.
2.29 "Termination Date" shall have the meaning set
forth in Article FIFTH, Section 1.72 of this Restated
Certificate.
2.30 "Trading Day" shall mean any day on which the
securities in question are traded on the NYSE, or if such
securities are not listed or admitted for trading or quoted
on the NYSE, on the principal national securities exchange
on which such securities are listed or admitted, or if not
listed or admitted for trading or quoted on any national
securities exchange, on the Nasdaq National Market, or if
such securities are not quoted on such National Market, in
the applicable securities market in which the securities are
traded.
2.31 "Transfer Agent" means the Corporation or such
agent or agents of the Corporation as may be designated from
time to time by the Board of Directors as the transfer agent
for the Class P Voting Preferred Stock.
2.32 "Voting Fraction" shall mean 0.55 with respect to
votes and consents that have a record date on or prior to
the Measuring Date and a fraction that is equivalent to the
Adjusted Percentage (as defined in Section 1.10 of the
Agreement and Plan of Recapitalization, dated as of March
25, 1994, among the Corporation, the Air Line Pilots
Association, International and International Association of
Machinists and Aerospace Workers, as amended from time to
time) as in effect at the close of business on the Measuring
Date with respect to votes and consents that have a record
date after the Measuring Date.
2.33 "Voting Preferred Stocks" shall mean,
collectively, the Class P Voting Preferred Stock, the Class
M Voting Preferred Stock and the Class S Voting Preferred
Stock.
Section 3. Dividends. The holders of shares of
the Class P Voting Preferred Stock as such shall not be
entitled to receive any dividends or other distributions
(except as provided in Section 4 below).
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or
set apart for payment to the holders of any class or series
of stock of the Corporation that ranks junior to the Class P
Voting Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation,
the holders of the shares of Class P Voting Preferred Stock
shall be entitled to receive $0.01 per share of Class P
Voting Preferred Stock (the "Liquidation Preference"), but
such holders shall not be entitled to any further payment.
If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of the shares of
Class P Voting Preferred Stock shall be insufficient to pay
in full the Liquidation Preference and the liquidation
preference on all other shares of any class or series of
stock of the Corporation that ranks on a parity with the
Class P Voting Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up of the
Corporation, then such assets, or the proceeds thereof,
shall be distributed among the holders of shares of Class P
Voting Preferred Stock and any such other parity stock
ratably in accordance with the respective amounts that would
be payable on such shares of Class P Voting Preferred Stock
and any such other parity stock if all amounts payable
thereon were paid in full. For the purposes of this Section
4, (i) a consolidation or merger of the Corporation with or
into one or more corporations, or (ii) a sale, lease,
exchange or transfer of all or substantially all of the
Corporation's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or
involuntary, of the Corporation.
4.2 Subject to the rights of the holders of shares of
any series or class of stock ranking prior to or on a parity
with the Class P Voting Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of
the Corporation, after payment shall have been made to the
holders of the Class P Voting Preferred Stock, as and to the
fullest extent provided in this Section 4, any other series
or class of stock of the Corporation that ranks junior to
the Class P Voting Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of
the Corporation, shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive
any and all assets remaining to be paid or distributed, and
the holders of the Class P Voting Preferred Stock shall not
be entitled to share therein.
Section 5. Shares to be Retired. All shares of
Class P Voting Preferred Stock which shall have been issued
and reacquired in any manner by the Corporation shall be
retired and shall not be reissued.
Section 6. Ranking.
6.1 Any class or series of stock of the Corporation
shall be deemed to rank:
(a) prior to the Class P Voting Preferred Stock
as to the distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class
or series shall be entitled to the receipt of amounts
distributable upon liquidation, dissolution or winding
up in preference or priority to the holders of Class P
Voting Preferred Stock;
(b) on a parity with the Class P Voting Preferred
Stock as to the distribution of assets upon
liquidation, dissolution or winding up, whether or not
the liquidation prices per share thereof be different
from those of the Class P Voting Preferred Stock, if
the holders of such class or series and the Class P
Voting Preferred Stock shall be entitled to the receipt
of amounts distributable upon liquidation, dissolution
or winding up in proportion to their respective
liquidation preferences, without preference or priority
one over the other; and
(c) junior to the Class P Voting Preferred Stock,
as to the distribution of assets upon liquidation,
dissolution or winding up, if the holders of Class P
Voting Preferred Stock shall be entitled to the receipt
of amounts distributable upon liquidation, dissolution
or winding up in preference or priority to the holders
of shares of such class or series.
6.2 The Series A Preferred Stock, the Series B
Preferred Stock, the Series D Preferred Stock and the ESOP
Convertible Preferred Stocks shall be deemed to rank prior
to the Class P Voting Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up.
The other Voting Preferred Stocks and the Director Preferred
Stocks shall each be deemed to rank on a parity with the
Class P Voting Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up. The Common
Stock and the Series C Preferred Stock shall each be deemed
to rank junior to the Class P Voting Preferred Stock as to
amounts distributable upon liquidation, dissolution or
winding up.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation shall enter into any
consolidation, merger, share exchange or similar
transaction, however named, pursuant to which the
outstanding shares of Common Stock are to be exchanged
solely for or changed, reclassified or converted solely into
stock of any successor, resulting or other company
(including the Corporation) (each of the foregoing is
referred to herein as "Merger Transaction") that constitutes
"qualifying employer securities" with respect to holders of
Class P Voting Preferred Stock within the meaning of Section
409(l) of the Code and Section 407(d)(5) of the Employee
Retirement Income Security Act of 1974, as amended, or any
successor provisions of law, and, if applicable, for a cash
payment in lieu of fractional shares, if any, proper
provisions shall be made so that upon consummation of such
transaction, the shares of Class P Voting Preferred Stock
shall be converted into or exchanged for preferred stock of
such successor, resulting or other company (the "New Pilot
Voting Preferred Stock"), having in respect of such company,
except as provided below, the same powers, preferences and
relative, participating, optional or other special rights
(including the rights provided by this Section 7), and the
qualifications, limitations or restrictions thereof, that
the Class P Voting Preferred Stock had, in respect of the
Corporation, immediately prior to such transaction, except
that after such transaction each share of such New Pilot
Voting Preferred Stock so received in such transaction upon
conversion or exchange of the Class P Voting Preferred Stock
shall be convertible, otherwise on the terms and conditions
provided by Section 9 hereof, into the number and kind of
"qualifying employer securities" receivable in such
transaction by a holder of the number of shares of Common
Stock into which a share of Class P Voting Preferred Stock
could have been converted immediately prior to such
transaction; provided, however, that the holder of each
share of New Pilot Voting Preferred Stock shall be entitled
to a number of votes per share equal to a fraction, the
numerator of which is the product of (x) the Pilot Fraction
and (y) the aggregate number of votes that would be entitled
to be cast by the holders of the securities of the
surviving, resulting or other corporation into which the
ESOP Convertible Preferred Stocks are changed, reclassified
or converted (collectively, the "New ESOP Convertible
Preferred Stocks") upon consummation of such transaction
(assuming for such purpose the conversion of the New ESOP
Convertible Preferred Stocks), and the denominator of which
is the aggregate number of shares of New Pilot Voting
Preferred Stock then outstanding; provided, further that if
by virtue of the structure of such transaction, a holder of
Common Stock is required to make an election with respect to
the nature and kind of consideration to be received in such
transaction, which election cannot practicably be made by
the holders of the Class P Voting Preferred Stock, then the
shares of New Pilot Voting Preferred Stock received in such
transaction upon conversion or exchange of Class P Voting
Preferred Stock shall, by virtue of such transaction and on
the same terms as apply to the holders of Common Stock, be
convertible into or exchangeable solely for "qualifying
employer securities" (together, if applicable, with a cash
payment in lieu of fractional shares) with the effect
provided above on the basis of the number and kind of
qualifying employer securities receivable in such
transaction by a holder of the number of shares of Common
Stock into which such shares of Class P Voting Preferred
Stock could have been converted immediately prior to such
transaction (provided that if the kind or amount of
qualifying employer securities receivable in such
transaction is not the same for each such share of Common
Stock, then the kind and amount so receivable in such
transaction for each share of Common Stock for this purpose
shall be deemed to be the kind and amount so receivable per
share by the plurality of such shares of Common Stock). The
rights of the New Pilot Voting Preferred Stock so received
in such transaction upon conversion or exchange of the Class
P Voting Preferred Stock shall successively be subject to
adjustment pursuant to Section 9 hereof following such
transaction as nearly equivalent to the adjustments provided
for by such Section prior to such transaction.
7.2 In case the Corporation shall enter into any
Merger Transaction, however named, pursuant to which the
outstanding shares of Common Stock are exchanged for or
changed, reclassified or converted into other stock or
securities or cash or any other property, or any combination
thereof, other than any such consideration which is
constituted solely of "qualifying employer securities" (as
referred to in Section 7.1) and cash payments, if
applicable, in lieu of fractional shares, proper provisions
shall be made so that each outstanding share of Class P
Voting Preferred Stock shall, by virtue of and upon
consummation of such transaction, on the same terms as are
applicable to the holders of Common Stock, be converted into
or exchanged for the aggregate amount of stock, securities,
cash or other property (payable in like kind) receivable by
holders of the number of shares of Common Stock into which
such shares of Class P Voting Preferred Stock could have
been converted immediately prior to such transaction;
provided, however, that if by virtue of the structure of
such transaction, a holder of Common Stock is required to
make an election with respect to the nature and kind of
consideration to be received in such transaction, which
election cannot practicably be made by holders of the Class
P Voting Preferred Stock, then the shares of Class P Voting
Preferred Stock shall, by virtue of such transaction and on
the same terms as apply to the holders of Common Stock, be
converted into or exchanged for the aggregate amount of
stock, securities, cash or other property (payable in kind)
receivable by a holder of the number of shares of Common
Stock into which such shares of Class P Voting
Preferred Stock could have been converted immediately prior
to such transaction if such holder of Common Stock failed to
exercise any rights of election to receive any kind or
amount of stock, securities, cash or other property
receivable in such transaction (provided that if the kind or
amount of stock, securities, cash or other property
receivable in such transaction are not the same for each non-
electing share, then the kind and amount of stock,
securities, cash or other property so receivable upon such
transaction for each non-electing share shall be the kind
and amount so receivable per share by the plurality of the
non-electing shares).
7.3 In case the Corporation shall enter into any
agreement providing for any Merger Transaction described in
Section 7.1 or 7.2, then the Corporation shall as soon as
practicable thereafter (and in any event at least fifteen
(15) Business Days before consummation of such transaction)
give notice of such agreement and the material terms thereof
to each holder of Class P Voting Preferred Stock. The
Corporation shall not consummate any such Merger Transaction
unless all of the terms of this Section 7 have been complied
with.
Section 8. Voting. The holders of shares of Class
P Voting Preferred Stock shall have the following voting
rights:
8.1 Except as otherwise required by law or provided in
this Restated Certificate, the holders of Class P Voting
Preferred Stock shall be entitled to vote on all matters
submitted to a vote of the holders of Common Stock of the
Corporation, voting together as a single class with the
holders of Common Stock and the holders of such other
classes and series of stock that vote together with the
Common Stock as a single class; provided, however, that
prior to the Termination Date, the holders of Class P Voting
Preferred Stock shall not be entitled to vote with respect
to the election of the members of the Board of Directors.
For purposes of this Section 8.1, with respect to any vote
or consent with a record date occurring prior to the
Termination Date, (a) the holders of the shares of Class P
Voting Preferred Stock from time to time outstanding shall,
collectively, be entitled to a number of votes (rounded to
the nearest whole vote) equal to the excess of (i) the
product of (I) the Pilot Fraction, (II) the Voting Fraction
and (III) a fraction, the numerator of which shall be the
number of votes entitled to be cast on the matter by the
holders of all outstanding securities of the Corporation
(excluding the Voting Preferred Stocks and the shares of
Common Stock issued upon conversion of the ESOP Convertible
Preferred Stocks and held on the applicable record date in
the ESOP or the Supplemental ESOP), and the denominator of
which shall be the excess of one (1.0) over the Voting
Fraction, over (ii) the sum of (A) the aggregate number of
shares of Common Stock held under the ESOP or the
Supplemental ESOP which have been issued upon conversion of
the ESOP Convertible Preferred Stocks and have been, on the
applicable record date, allocated under the ESOP or the
Supplemental ESOP to the accounts of individuals who are
members of the ALPA Employee Group (as defined in the ESOP),
(B) the product of (x) the number of shares of Common Stock
held under the ESOP which have been issued upon conversion
of the Class 1 ESOP Convertible Preferred Stock and are held
on the applicable record date in the Loan Suspense Account
(as defined in the ESOP) under the ESOP multiplied by (y)
the Pilot Fraction, and (C) the product of (aa) the number
of shares of Common Stock held by the Supplemental ESOP
which have been issued upon conversion of the Class 2 ESOP
Convertible Preferred Stock and are held on the applicable
record date in the Phantom Suspense Account (as defined in
the Supplemental ESOP) under the Supplemental ESOP
multiplied by (bb) the Pilot Fraction (the excess of clause
(i) over clause (ii) being referred to herein as the
"Attributed Votes"); and (b) the holder of each share of the
Class P Voting Preferred Stock shall be entitled to a number
of votes per share (rounded to the nearest one hundred
millionth of a vote) equal to the result of dividing (x) the
number of Attributed Votes by (y) the number of shares of
Class P Voting Preferred Stock outstanding on the applicable
record date. With respect to each vote or consent with a
record date occurring on or after the Termination Date, each
share of Class P Voting Preferred Stock then outstanding
shall be entitled to the number of votes per share (rounded
to the nearest one hundred millionth of a vote) equal to a
fraction, the numerator of which is the product of (i) the
sum of (x) the number of shares of Common Stock into which
the ESOP Convertible Preferred Stocks then outstanding can
be converted as of the record date with respect to such vote
or consent and (y) the number of Available Unissued ESOP
Shares as of such record date and (ii) the Pilot Fraction,
and the denominator of which is the number of shares of
Class P Voting Preferred Stock outstanding as of such record
date. For purposes of this Section 8.1, the Corporation
shall certify to the holders of Class P Voting Preferred
Stock and to the judges or similar officials appointed for
the purpose of tabulating votes at any meeting of
stockholders as soon as practicable following the record
date for the determination of stockholders entitled to
notice of or to vote at any meeting of stockholders, but in
no event less than five Trading Days before such meeting,
with respect to record dates prior to the Termination Date,
the number of shares of Common Stock then outstanding and
the number of votes entitled to be cast on the matter or
matters in question by the holders of all outstanding
securities of the Corporation (excluding the Voting
Preferred Stocks and the shares of Common Stock issued upon
conversion of the ESOP Convertible Preferred Stocks and held
on the applicable record date in the ESOP or the
Supplemental ESOP) and, with respect to record dates from
and after the Termination Date, the number of shares of
Common Stock into which a share of ESOP Convertible
Preferred Stock was convertible as of the record date for
such vote or votes. The Corporation shall be deemed to
satisfy the requirements of the preceding sentence if such
matters are specified in any proxy statement mailed to all
stockholders entitled to vote on such matter or matters.
Prior to the Termination Date, the outstanding shares
of the Voting Preferred Stocks, the Class Pilot MEC
Preferred Stock, the Class IAM Preferred Stock and the Class
SAM Preferred Stock, together with the shares of Common
Stock held by the ESOP and the Supplemental ESOP that were
received upon conversion of the ESOP Preferred Stocks, will
represent the Voting Fraction (expressed as a percentage) of
the votes to be cast in connection with matters (other than
the election of directors) submitted to the vote of the
holders of the Common Stock and the holders of all other
outstanding securities that vote as a single class together
with the Common Stock. Subject to any amendment of this
Restated Certificate after the date hereof, it is the intent
of this Restated Certificate that this Section 8.1 (with
respect to the Class P Voting Preferred Stock), Article
FOURTH, Part V, Section 8.1 of the Restated Certificate
(with respect to the Class M Voting Preferred Stock) and
Article FOURTH, Part VI, Section 8.1 of the Restated
Certificate (with respect to the Class S Voting Preferred
Stock) be interpreted together to achieve the foregoing
result.
8.2 Unless the affirmative vote or consent of the
holders of a greater number of shares of Class P Voting
Preferred Stock shall then be required by law or this
Restated Certificate, and in addition to any other vote
required by law or this Restated Certificate, the
affirmative vote or written consent of the holders of at
least a majority of all of the outstanding shares of Class P
Voting Preferred Stock, voting separately as a class, shall
be necessary for authorizing, effecting or validating the
amendment, alteration or repeal (including any amendment,
alteration or repeal by operation of merger or
consolidation) of any of the provisions of this Restated
Certificate or of any certificate amendatory thereof or
supplemental thereto (including any Certificate of
Designation, Preferences and Rights or any similar document
relating to any series of Serial Preferred Stock) which
would adversely affect the preferences, rights, powers or
privileges of the Class P Voting Preferred Stock or of
either of the ESOP Convertible Preferred Stocks.
8.3 For purposes of the foregoing provisions of
Section 8.2, each share of Class P Voting Preferred Stock
shall have one (1) vote per share.
8.4 Notwithstanding anything to the contrary in
Sections 7 or 8.1, if at any time prior to the Termination
Date, (x) the trustee under either (i) the ESOP or (ii) the
Supplemental ESOP (together with the ESOP, the "Employee
Plan") either (a) fails to solicit, in accordance with the
Employee Plan, timely instructions from Employee Plan
participants, the Committee of the ESOP (as defined in the
ESOP and hereinafter referred to as the "ESOP Committee") or
the Committee of the Supplemental ESOP (as defined in the
Supplemental ESOP and, together with the ESOP Committee, the
"Committees"), as applicable ("Instructions"), with respect
to any matter referred to in clause (y) below, or (b) fails
to act in accordance with such Instructions with respect to
any matter referred to in clause (y) below (but only if such
failure to follow such Instructions is attributable to (i)
the trustee having concluded that, based upon the terms of
such transaction, the trustee's fiduciary duties require the
trustee to fail to follow such instructions or (ii) the
unenforceability of the provisions of the ESOP and/or the
Supplemental ESOP relating to the solicitation and/or
following of such Instructions); (y) either (i) but for the
provisions of Article FOURTH, Part VII, Subsection 8.3(a),
Article FOURTH, Part VIII, Subsection 8.3(a) and Article
FOURTH, Part IX, Subsection 8.3(a) of this Restated
Certificate, the vote of the stockholders of the Corporation
would have been sufficient, under applicable law, stock
exchange listing requirements and this Restated Certificate,
as applicable, to approve the Merger Transaction or other
Control Transaction (as defined in the ESOP) in question
(or, if no stockholder approval would be required by this
Restated Certificate, applicable stock exchange listing
requirements or applicable law, the trustee enters into a
binding commitment in connection with a Control Transaction
or a Control Transaction is consummated) or (ii) following
the Issue Date, the trustee disposes of an aggregate of 10%
or more of the Common Equity (as defined in Article FIFTH,
Section 1.26 of this Restated Certificate) initially
represented by the ESOP Convertible Preferred Stocks other
than in connection with Employee Plan distributions or
diversification requirements; and (z) any of the following
occur: (a) Instructions with respect to a matter are given,
the trustee fails to follow such Instructions and such
transaction would not have been approved by stockholders of
the Corporation in accordance with the applicable provisions
of this Restated Certificate (excluding Article FOURTH, Part
VII, Subsection 8.3(a), Article FOURTH, Part VIII,
Subsection 8.3(a) and Article FOURTH, Part IX, Subsection
8.3(a) of this Restated Certificate), applicable stock
exchange listing requirements or applicable law if the
trustee had acted in accordance with such Instructions (or,
if no vote of stockholders would be required by this
Restated Certificate, applicable stock exchange listing
requirements or applicable law, such action by the trustee
in respect of such transaction as to which Instructions were
so given would not have been authorized had the trustee
acted in accordance with such Instructions), (b) the trustee
fails to solicit timely Instructions with respect to such
matters, such transaction requires the approval of
stockholders of the Corporation under applicable provisions
of this Restated Certificate, applicable stock exchange
listing requirements or applicable law and such approval
would not have been obtained (without regard to the
provisions of Article FOURTH, Part VII, Subsection 8.3(a),
Article FOURTH, Part VIII, Subsection 8.3(a) and Article
FOURTH, Part IX, Subsection 8.3(a) of this Restated
Certificate) if the trustee had voted against such
transaction all of the votes entitled to be cast by such
trustee as the holder of securities of the Corporation held
under the Employee Plan, or (c) the trustee fails to follow
Instructions or to solicit timely Instructions with respect
to such matter and no vote of stockholders of the
Corporation is required by the Restated Certificate,
applicable stock exchange listing requirements or applicable
law to approve such transaction (an action or inaction by
the trustee under clauses (x) and (z) in connection with a
transaction referred to in clause (y) being referred to
herein as an "Uninstructed Trustee Action"); then each
outstanding share of Class P Voting Preferred Stock shall,
immediately and automatically, without any further action on
the part of holders thereof or of the Corporation, be
converted into shares of Common Stock at the applicable
Conversion Rate in accordance with Section 9 hereof.
Section 9. Automatic Conversion.
9.1 Shares of Class P Voting Preferred Stock shall, as
provided in Sections 1.2 and 8.4, be automatically
converted, from time to time, in part or in whole,
respectively, upon (i) any transfer thereof other than a
transfer described in clauses (x) and (y) of Section 1.2 or
(ii) an Uninstructed Trustee Action as described in Section
8.4, at a rate of one ten thousandth of a share of Common
Stock per share of Class P Voting Preferred Stock to be
converted (the "Conversion Rate").
9.2 At the time that all of the shares of the ESOP
Convertible Preferred Stocks cease to be outstanding for any
reason whatsoever, including, without limitation, their
conversion in full into Common Stock (the "Final Conversion
Date"), all outstanding shares of Class P Voting Preferred
Stock shall be automatically converted, in full, into shares
of Common Stock at the Conversion Rate then in effect.
9.3 Following any conversion in accordance with
Sections 9.1 and 9.2, (i) no holder of Class P Voting
Preferred Stock shall have any of the voting powers,
preferences, relative, participating, optional or special
rights ascribed to shares of Class P Voting Preferred Stock
hereunder, but, rather, shall have only the powers and
rights pertaining to the Common Stock into which such shares
of Class P Voting Preferred Stock have been so converted,
and (ii) any holder of Class P Voting Preferred Stock shall
be treated for all purposes as the record holder of the
shares of Common Stock into which the Class P Voting
Preferred Stock shall have been converted as of the date of
the conversion of the shares of Class P Voting Preferred
Stock.
9.4 On or after the date of (i) a transfer of shares
of Class P Voting Preferred Stock (other than as described
in clauses (x) and (y) of Section 1.2), (ii) the Final
Conversion Date or (iii) an Uninstructed Trustee Action,
each holder of a certificate or certificates formerly
representing shares of Class P Voting Preferred Stock
converted in accordance with Sections 9.1 and 9.2 shall
surrender such certificate or certificates, duly endorsed or
assigned to the Corporation or in blank, at the office of
the Transfer Agent (if other than the Corporation) in the
Borough of Manhattan, City of New York. Unless the shares
issuable on conversion are to be issued in the same name as
the name in which such certificate is registered, each such
certificate shall be accompanied by instruments of transfer,
in form satisfactory to the Corporation, duly executed by
the holder or such holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid or that no such
taxes are payable).
9.5 No fractional shares or scrip representing
fractions of shares of Common Stock shall be issued upon
conversion of the Class P Voting Preferred Stock. Instead
of any fractional interest in a share of Common Stock that
would otherwise be deliverable upon the conversion of a
share of Class P Voting Preferred Stock, the Corporation
shall pay to the holder of such share an amount in cash
based upon the Current Market Price of Common Stock on the
Trading Day immediately preceding the date of conversion.
If more than one certificate shall be surrendered in respect
of such conversion at one time by the same holder, the
number of full shares of Common Stock issuable upon
conversion shall be computed on the basis of the aggregate
number of shares of Class P Voting Preferred Stock formerly
represented by the certificates so surrendered.
9.6 In the event of an adjustment to the "Conversion
Rate" in effect with respect to the ESOP Convertible
Preferred Stocks, a corresponding adjustment shall be made
to the Conversion Rate with respect to the Class P Voting
Preferred Stock.
Section 10. Record Holders. The Corporation and
the Transfer Agent (if other than the Corporation) may deem
and treat the record holder of any shares of Class P Voting
Preferred Stock as the true and lawful owner thereof for all
purposes, and, except as otherwise provided by law, neither
the Corporation nor the Transfer Agent shall be affected by
any notice to the contrary.
PART V
Class M ESOP Voting Junior Preferred Stock
Unless otherwise indicated, any reference in this
Article FOURTH, Part V to "Section", "Subsection",
"paragraph", "subparagraph" or "clause" shall refer to a
Section, Subsection, paragraph, subparagraph or clause of
this Article FOURTH, Part V.
Section 1. Number of Shares; Designation;
Issuances; Automatic Conversion.
1.1 The Class M ESOP Voting Junior Preferred Stock of
the Corporation (the "Class M Voting Preferred Stock") shall
consist of 9,300,000 shares, par value $0.01 per share.
1.2 Shares of Class M Voting Preferred Stock shall be
issued only to a trustee or trustees acting on behalf of (i)
the UAL Corporation Employee Stock Ownership Plan (the
"ESOP"), (ii) the UAL Corporation Supplemental ESOP (the
"Supplemental ESOP") or (iii) any other employee stock
ownership trust or plan or other employee benefit plan of
the Corporation or any of its subsidiaries (each, a "Plan").
In the event of any sale, transfer or other disposition
(including, without limitation, upon a foreclosure or other
realization upon shares of Class M Voting Preferred Stock
pledged as security for any loan or loans made to a Plan or
to the trustee or the trustees acting on behalf of a Plan)
(hereinafter a "transfer") of shares of Class M Voting
Preferred Stock to any person (including, without
limitation, any participant in a Plan) other than (x) any
Plan or trustee or trustees of a Plan or (y) any pledgee of
such shares acquiring such shares as security for any loan
or loans made to the Plan or to any trustee or trustees
acting on behalf of the Plan, the shares of Class M Voting
Preferred Stock so transferred, upon such transfer and
without any further action by the Corporation or the holder,
shall be automatically converted into shares of Common Stock
at the applicable Conversion Rate in accordance with Section
9 hereof and thereafter such transferee shall not have any
of the voting powers, preferences or relative,
participating, optional or special rights ascribed to shares
of Class M Voting Preferred Stock hereunder, but, rather,
shall have only the powers and rights pertaining to the
Common Stock into which such shares of Class M Voting
Preferred Stock shall be so converted. In the event of any
such automatic conversion provided for in this Section 1.2,
such transferee shall be treated for all purposes as the
record holder of the shares of Common Stock into which the
Class M Voting Preferred Stock shall have been converted as
of the date of such conversion. Certificates representing
shares of Class M Voting Preferred Stock shall be legended
to reflect such consequences of a transfer. The shares of
Common Stock issued upon any conversion in accordance with
Section 9 hereof or this Section 1.2 may be transferred by
the holder thereof as permitted by law.
Section 2. Definitions. For purposes of the Class
M Voting Preferred Stock, the following terms shall have the
meanings indicated:
2.1 "Available Unissued ESOP Shares" shall have the
meaning set forth in Article FIFTH, Section 1.5 of this
Restated Certificate.
2.2 "Board of Directors" shall mean the board of
directors of the Corporation or any committee of such board
of directors authorized by such board of directors to
perform any of its responsibilities with respect to the
Class M Voting Preferred Stock.
2.3 "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which state or federally
chartered banking institutions in New York, New York are not
required to be open.
2.4 "Class 1 ESOP Convertible Preferred Stock" shall
mean the Class 1 ESOP Convertible Preferred Stock, par value
$0.01 per share, of the Corporation.
2.5 "Class 2 ESOP Convertible Preferred Stock" shall
mean the Class 2 ESOP Convertible Preferred Stock, par value
$0.01 per share, of the Corporation.
2.6 "Class I Preferred Stock" shall mean the Class I
Junior Preferred Stock, par value $0.01 per share, of the
Corporation.
2.7 "Class IAM Preferred Stock" shall mean the Class
IAM Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
2.8 "Class M Voting Preferred Stock" shall have the
meaning set forth in Section 1 hereof.
2.9 "Class P Voting Preferred Stock" shall mean the
Class P ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.10 "Class Pilot MEC Preferred Stock" shall mean the
Class Pilot MEC Junior Preferred Stock, par value $0.01 per
share, of the Corporation.
2.11 "Class S Voting Preferred Stock" shall mean the
Class S ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.12 "Class SAM Preferred Stock" shall mean the Class
SAM Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
2.13 "Common Stock" shall mean the common stock, par
value $0.01 per share, of the Corporation.
2.14 "Conversion Rate" shall have the meaning set forth
in Section 9.1 hereof.
2.15 "Current Market Price" of publicly traded shares
of Common Stock or any other class or series of capital
stock or other security of the Corporation or any other
issuer for any day shall mean the last reported sales price,
regular way on such day, or, if no sale takes place on such
day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported
on the New York Stock Exchange Composite Tape or, if such
security is not listed or admitted for trading on the New
York Stock Exchange, Inc. ("NYSE"), on the principal
national securities exchange on which such security is
listed or admitted for trading or quoted or, if not listed
or admitted for trading or quoted on any national securities
exchange, on the Nasdaq National Market or, if such security
is not quoted on such National Market, the average of the
closing bid and asked prices on such day in the over-the-
counter market as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or, if bid and asked prices for such security on
such day shall not have been reported through NASDAQ, the
average of the bid and asked prices on such day as furnished
by any NYSE member firm regularly making a market in such
security selected for such purpose by the Board of
Directors.
2.16 "Director Preferred Stocks" shall mean,
collectively, the Class I Preferred Stock, the Class Pilot
MEC Preferred Stock, the Class IAM Preferred Stock and the
Class SAM Preferred Stock.
2.17 "ESOP Convertible Preferred Stocks" shall mean,
collectively, the Class 1 ESOP Convertible Preferred Stock
and the Class 2 ESOP Convertible Preferred Stock.
2.18 "Issue Date" shall mean the first date on which
shares of Class M Voting Preferred Stock are issued.
2.19 "Liquidation Preference" shall have the meaning
set forth in Section 4.1 hereof.
2.20 "Machinist Fraction " shall mean 0.3713.
2.21 "Measuring Date" shall mean that date which is the
365th day following the Issue Date.
2.22 "Restated Certificate" shall mean the Restated
Certificate of Incorporation of the Corporation, as amended
from time to time.
2.23 "Series A Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series A Convertible Preferred Stock in
Article FOURTH, Part I.A of this Restated Certificate.
2.24 "Series B Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series B Preferred Stock in Article
FOURTH, Part I.B of this Restated Certificate.
2.25 "Series C Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series C Junior Participating Preferred
Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.26 "Series D Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series D Redeemable Preferred Stock in
Article FOURTH, Part I.D of this Restated Certificate.
2.27 "Set apart for payment" shall be deemed to
include, without any action other than the following, the
recording by the Corporation in its accounting ledgers of
any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so
paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any
class or series of stock of the Corporation ranking on a
parity with or junior to the Class M Voting Preferred Stock
as to distributions upon liquidation, dissolution or winding
up of the Corporation are placed in a separate account of
the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with
respect to the Class M Voting Preferred Stock shall mean,
with respect to such distributions, placing such funds in a
separate account or delivering such funds to a disbursing,
paying or other similar agent.
2.28 "Termination Date" shall have the meaning set
forth in Article FIFTH, Section 1.72 of this Restated
Certificate.
2.29 "Trading Day" shall mean any day on which the
securities in question are traded on the NYSE, or if such
securities are not listed or admitted for trading or quoted
on the NYSE, on the principal national securities exchange
on which such securities are listed or admitted, or if not
listed or admitted for trading or quoted on any national
securities exchange, on the Nasdaq National Market, or if
such securities are not quoted on such National Market, in
the applicable securities market in which the securities are
traded.
2.30 "Transfer Agent" means the Corporation or such
agent or agents of the Corporation as may be designated from
time to time by the Board of Directors as the transfer agent
for the Class M Voting Preferred Stock.
2.31 "Voting Fraction" shall mean 0.55 with respect to
votes and consents that have a record date on or prior to
the Measuring Date and a fraction that is equivalent to the
Adjusted Percentage (as defined in the Agreement and Plan of
Recapitalization, dated as of March 25, 1994, among the
Corporation, the Air Line Pilots Association, International
and International Association of Machinists and Aerospace
Workers, as amended from time to time) as in effect at the
close of business on the Measuring Date with respect to
votes and consents that have a record date after the
Measuring Date.
2.32 "Voting Preferred Stocks" shall mean,
collectively, the Class P Voting Preferred Stock, the Class
M Voting Preferred Stock and the Class S Voting Preferred
Stock.
Section 3. Dividends. The holders of shares of
the Class M Voting Preferred Stock as such shall not be
entitled to receive any dividends or other distributions
(except as provided in Section 4 below).
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or
set apart for payment to the holders of any class or series
of stock of the Corporation that ranks junior to the Class M
Voting Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation,
the holders of the shares of Class M Voting Preferred Stock
shall be entitled to receive $0.01 per share of Class M
Voting Preferred Stock (the "Liquidation Preference"), but
such holders shall not be entitled to any further payment.
If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of the shares of
Class M Voting Preferred Stock shall be insufficient to pay
in full the Liquidation Preference and the liquidation
preference on all other shares of any class or series of
stock of the Corporation that ranks on a parity with the
Class M Voting Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up of the
Corporation, then such assets, or the proceeds thereof,
shall be distributed among the holders of shares of Class M
Voting Preferred Stock and any such other parity stock
ratably in accordance with the respective amounts that would
be payable on such shares of Class M Voting Preferred Stock
and any such other parity stock if all amounts payable
thereon were paid in full. For the purposes of this Section
4, (i) a consolidation or merger of the Corporation with or
into one or more corporations, or (ii) a sale, lease,
exchange or transfer of all or substantially all of the
Corporation's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or
involuntary, of the Corporation.
4.2 Subject to the rights of the holders of shares of
any series or class of stock ranking prior to or on a parity
with the Class M Voting Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of
the Corporation, after payment shall have been made to the
holders of the Class M Voting Preferred Stock, as and to the
fullest extent provided in this Section 4, any other series
or class of stock of the Corporation that ranks junior to
the Class M Voting Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of
the Corporation, shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive
any and all assets remaining to be paid or distributed, and
the holders of the Class M Voting Preferred Stock shall not
be entitled to share therein.
Section 5. Shares to be Retired. All shares of
Class M Voting Preferred Stock which shall have been issued
and reacquired in any manner by the Corporation shall be
retired and shall not be reissued.
Section 6. Ranking.
6.1 Any class or series of stock of the Corporation
shall be deemed to rank:
(a) prior to the Class M Voting Preferred Stock
as to the distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class
or series shall be entitled to the receipt of amounts
distributable upon liquidation, dissolution or winding
up in preference or priority to the holders of Class M
Voting Preferred Stock;
(b) on a parity with the Class M Voting Preferred
Stock as to the distribution of assets upon
liquidation, dissolution or winding up, whether or not
the liquidation prices per share thereof be different
from those of the Class M Voting Preferred Stock, if
the holders of such class or series and the Class M
Voting Preferred Stock shall be entitled to the receipt
of amounts distributable upon liquidation, dissolution
or winding up in proportion to their respective
liquidation preferences, without preference or priority
one over the other; and
(c) junior to the Class M Voting Preferred Stock,
as to the distribution of assets upon liquidation,
dissolution or winding up, if the holders of Class M
Voting Preferred Stock shall be entitled to the receipt
of amounts distributable upon liquidation, dissolution
or winding up in preference or priority to the holders
of shares of such class or series.
6.2 The Series A Preferred Stock, the Series B
Preferred Stock, the Series D Preferred Stock and the ESOP
Convertible Preferred Stocks shall be deemed to rank prior
to the Class M Voting Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up.
The other Voting Preferred Stocks and the Director Preferred
Stocks shall each be deemed to rank on a parity with the
Class M Voting Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up. The Common
Stock and the Series C Preferred Stock shall each be deemed
to rank junior to the Class M Voting Preferred Stock as to
amounts distributable upon liquidation, dissolution or
winding up.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation shall enter into any
consolidation, merger, share exchange or similar
transaction, however named, pursuant to which the
outstanding shares of Common Stock are to be exchanged
solely for or changed, reclassified or converted solely into
stock of any successor, resulting or other company
(including the Corporation) (each of the foregoing is
referred to herein as "Merger Transaction") that constitutes
"qualifying employer securities" with respect to holders of
Class M Voting Preferred Stock within the meaning of Section
409(l) of the Code and Section 407(d)(5) of the Employee
Retirement Income Security Act of 1974, as amended, or any
successor provisions of law, and, if applicable, for a cash
payment in lieu of fractional shares, if any, proper
provisions shall be made so that upon consummation of such
transaction, the shares of Class M Voting Preferred Stock
shall be converted into or exchanged for preferred stock of
such successor, resulting or other company (the "New
Machinist Voting Preferred Stock"), having in respect of
such company, except as provided below, the same powers,
preferences and relative, participating, optional or other
special rights (including the rights provided by this
Section 7), and the qualifications, limitations or
restrictions thereof, that the Class M Voting Preferred
Stock had, in respect of the Corporation, immediately prior
to such transaction, except that after such transaction each
share of such New Machinist Voting Preferred Stock so
received in such transaction upon conversion or exchange of
the Class M Voting Preferred Stock shall be convertible,
otherwise on the terms and conditions provided by Section 9
hereof, into the number and kind of "qualifying employer
securities" receivable in such transaction by a holder of
the number of shares of Common Stock into which a share of
Class M Voting Preferred Stock could have been converted
immediately prior to such transaction; provided, however,
that the holder of each share of New Machinist Voting
Preferred Stock shall be entitled to a number of votes per
share equal to a fraction, the numerator of which is the
product of (x) the Machinist Fraction and (y) the aggregate
number of votes that would be entitled to be cast by the
holders of the securities of the surviving, resulting or
other corporation into which the ESOP Convertible Preferred
Stocks are changed, reclassified or converted (collectively,
the "New ESOP Convertible Preferred Stocks") upon
consummation of such transaction (assuming for such purpose
the conversion of the New ESOP Convertible Preferred
Stocks), and the denominator of which is the aggregate
number of shares of New Machinist Voting Preferred Stock
then outstanding; provided, further that if by virtue of the
structure of such transaction, a holder of Common Stock is
required to make an election with respect to the nature and
kind of consideration to be received in such transaction,
which election cannot practicably be made by the holders of
the Class M Voting Preferred Stock, then the shares of New
Machinist Voting Preferred Stock received in such
transaction upon conversion or exchange of Class M Voting
Preferred Stock shall, by virtue of such transaction and on
the same terms as apply to the holders of Common Stock, be
convertible into or exchangeable solely for "qualifying
employer securities" (together, if applicable, with a cash
payment in lieu of fractional shares) with the effect
provided above on the basis of the number and kind of
qualifying employer securities receivable in such
transaction by a holder of the number of shares of Common
Stock into which such shares of Class M Voting Preferred
Stock could have been converted immediately prior to such
transaction (provided that if the kind or amount of
qualifying employer securities receivable in such
transaction is not the same for each such share of Common
Stock, then the kind and amount so receivable in such
transaction for each share of Common Stock for this purpose
shall be deemed to be the kind and amount so receivable per
share by the plurality of such shares of Common Stock). The
rights of the New Machinist Voting Preferred Stock so
received in such transaction upon conversion or exchange of
the Class M Voting Preferred Stock shall successively be
subject to adjustment pursuant to Section 9 hereof following
such transaction as nearly equivalent to the adjustments
provided for by such Section prior to such transaction.
7.2 In case the Corporation shall enter into any
Merger Transaction, however named, pursuant to which the
outstanding shares of Common Stock are exchanged for or
changed, reclassified or converted into other stock or
securities or cash or any other property, or any combination
thereof, other than any such consideration which is
constituted solely of "qualifying employer securities" (as
referred to in Section 7.1) and cash payments, if
applicable, in lieu of fractional shares, proper provisions
shall be made so that each outstanding share of Class M
Voting Preferred Stock shall, by virtue of and upon
consummation of such transaction, on the same terms as are
applicable to the holders of Common Stock, be converted into
or exchanged for the aggregate amount of stock, securities,
cash or other property (payable in like kind) receivable by
holders of the number of shares of Common Stock into which
such shares of Class M Voting Preferred Stock could have
been converted immediately prior to such transaction;
provided, however, that if by virtue of the structure of
such transaction, a holder of Common Stock is required to
make an election with respect to the nature and kind of
consideration to be received in such transaction, which
election cannot practicably be made by holders of the Class
M Voting Preferred Stock, then the shares of Class M Voting
Preferred Stock shall, by virtue of such transaction and on
the same terms as apply to the holders of Common Stock, be
converted into or exchanged for the aggregate amount of
stock, securities, cash or other property (payable in kind)
receivable by a holder of the number of shares of Common
Stock into which such shares of Class M Voting Preferred
Stock could have been converted immediately prior to such
transaction if such holder of Common Stock failed to
exercise any rights of election to receive any kind or
amount of stock, securities, cash or other property
receivable in such transaction (provided that if the kind or
amount of stock, securities, cash or other property
receivable in such transaction are not the same for each non-
electing share, then the kind and amount of stock,
securities, cash or other property so receivable upon such
transaction for each non-electing share shall be the kind
and amount so receivable per share by the plurality of the
non-electing shares).
7.3 In case the Corporation shall enter into any
agreement providing for any Merger Transaction described in
Section 7.1 or 7.2, then the Corporation shall as soon as
practicable thereafter (and in any event at least fifteen
(15) Business Days before consummation of such transaction)
give notice of such agreement and the material terms thereof
to each holder of Class M Voting Preferred Stock. The
Corporation shall not consummate any such Merger Transaction
unless all of the terms of this Section 7 have been complied
with.
Section 8. Voting. The holders of shares of Class
M Voting Preferred Stock shall have the following voting
rights:
8.1 Except as otherwise required by law or provided in
this Restated Certificate, the holders of Class M Voting
Preferred Stock shall be entitled to vote on all matters
submitted to a vote of the holders of Common Stock of the
Corporation, voting together as a single class with the
holders of Common Stock and the holders of such other
classes and series of stock that vote together with the
Common Stock as a single class; provided, however, that
prior to the Termination Date, the holders of Class M Voting
Preferred Stock shall not be entitled to vote with respect
to the election of the members of the Board of Directors.
For purposes of this Section 8.1, with respect to any vote
or consent with a record date occurring prior to the
Termination Date, (a) the holders of the shares of Class M
Voting Preferred Stock from time to time outstanding shall,
collectively, be entitled to a number of votes (rounded to
the nearest whole vote) equal to the excess of (i) the
product of (I) the Machinist Fraction, (II) the Voting
Fraction and (III) a fraction, the numerator of which shall
be the number of votes entitled to be cast on the matter by
the holders of all outstanding securities of the Corporation
(excluding the Voting Preferred Stocks and the shares of
Common Stock issued upon conversion of the ESOP Convertible
Preferred Stocks and held on the applicable record date in
the ESOP or the Supplemental ESOP), and the denominator of
which shall be the excess of one (1.0) over the Voting
Fraction, over (ii) the sum of (A) the aggregate number of
shares of Common Stock held under the ESOP or the
Supplemental ESOP which have been issued upon conversion of
the ESOP Convertible Preferred Stocks and have been, on the
applicable record date, allocated under the ESOP or the
Supplemental ESOP to the accounts of individuals who are
members of the IAM Employee Group (as defined in the ESOP),
(B) the product of (x) the number of shares of Common Stock
held under the ESOP which have been issued upon conversion
of the Class 1 ESOP Convertible Preferred Stock and are held
on the applicable record date in the Loan Suspense Account
(as defined in the ESOP) under the ESOP multiplied by (y)
the Machinist Fraction, and (C) the product of (aa) the
number of shares of Common Stock held by the Supplemental
ESOP which have been issued upon conversion of the Class 2
ESOP Convertible Preferred Stock and are held on the
applicable record date in the Phantom Suspense Account (as
defined in the Supplemental ESOP) under the Supplemental
ESOP multiplied by (bb) the Machinist Fraction (the excess
of clause (i) over clause (ii) being referred to herein as
the "Attributed Votes"); and (b) the holder of each share of
the Class M Voting Preferred Stock shall be entitled to a
number of votes per share (rounded to the nearest one
hundred millionth of a vote) equal to the result of dividing
(x) the number of Attributed Votes by (y) the number of
shares of Class M Voting Preferred Stock outstanding on the
applicable record date. With respect to each vote or
consent with a record date occurring on or after the
Termination Date, each share of Class M Voting Preferred
Stock then outstanding shall be entitled to the number of
votes per share (rounded to the nearest one hundred
millionth of a vote) equal to a fraction, the numerator of
which is the product of (i) the sum of (x) the number of
shares of Common Stock into which the ESOP Convertible
Preferred Stocks then outstanding can be converted as of the
record date with respect to such vote or consent and (y) the
number of Available Unissued ESOP Shares as of such record
date and (ii) the Machinist Fraction, and the denominator of
which is the number of shares of Class M Voting Preferred
Stock outstanding as of such record date. For purposes of
this Section 8.1, the Corporation shall certify to the
holders of Class M Voting Preferred Stock and to the judges
or similar officials appointed for the purpose of tabulating
votes at any meeting of stockholders as soon as practicable
following the record date for the determination of
stockholders entitled to notice of or to vote at any meeting
of stockholders, but in no event less than five Trading Days
before such meeting, with respect to record dates prior to
the Termination Date, the number of shares of Common Stock
then outstanding and the number of votes entitled to be cast
on the matter or matters in question by the holders of all
outstanding securities of the Corporation (excluding the
Voting Preferred Stocks and the shares of Common Stock
issued upon conversion of the ESOP Convertible Preferred
Stocks and held on the applicable record date in the ESOP or
the Supplemental ESOP) and, with respect to record dates
from and after the Termination Date, the number of shares of
Common Stock into which a share of ESOP Convertible
Preferred Stock was convertible as of the record date for
such vote or votes. The Corporation shall be deemed to
satisfy the requirements of the preceding sentence if such
matters are specified in any proxy statement mailed to all
stockholders entitled to vote on such matter or matters.
Prior to the Termination Date, the outstanding shares
of the Voting Preferred Stocks, the Class Pilot MEC
Preferred Stock, the Class IAM Preferred Stock and the Class
SAM Preferred Stock, together with the shares of Common
Stock held by the ESOP and the Supplemental ESOP that were
received upon conversion of the ESOP Preferred Stocks, will
represent the Voting Fraction (expressed as a percentage) of
the votes to be cast in connection with matters (other than
the election of directors) submitted to the vote of the
holders of the Common Stock and the holders of all other
outstanding securities that vote as a single class together
with the Common Stock. Subject to any amendment of this
Restated Certificate after the date hereof, it is the intent
of this Restated Certificate that this Section 8.1 (with
respect to the Class M Voting Preferred Stock), Article
FOURTH, Part IV, Section 8.1 of the Restated Certificate
(with respect to the Class P Voting Preferred Stock) and
Article FOURTH, Part VI, Section 8.1 of the Restated
Certificate (with respect to the Class S Voting Preferred
Stock) be interpreted together to achieve the foregoing
result.
8.2 Unless the affirmative vote or consent of the
holders of a greater number of shares of Class M Voting
Preferred Stock shall then be required by law or this
Restated Certificate, and in addition to any other vote
required by law or this Restated Certificate, the
affirmative vote or written consent of the holders of at
least a majority of all of the outstanding shares of Class M
Voting Preferred Stock, voting separately as a class, shall
be necessary for authorizing, effecting or validating the
amendment, alteration or repeal (including any amendment,
alteration or repeal by operation of merger or
consolidation) of any of the provisions of this Restated
Certificate or of any certificate amendatory thereof or
supplemental thereto (including any Certificate of
Designation, Preferences and Rights or any similar document
relating to any series of Serial Preferred Stock) which
would adversely affect the preferences, rights, powers or
privileges of the Class M Voting Preferred Stock or of
either of the ESOP Convertible Preferred Stocks.
8.3 For purposes of the foregoing provisions of
Section 8.2, each share of Class M Voting Preferred Stock
shall have one (1) vote per share.
8.4 Notwithstanding anything to the contrary in
Sections 7 or 8.1, if at any time prior to the Termination
Date, (x) the trustee under either (i) the ESOP or (ii) the
Supplemental ESOP (together with the ESOP, the "Employee
Plan") either (a) fails to solicit, in accordance with the
Employee Plan, timely instructions from Employee Plan
participants, the Committee of the ESOP (as defined in the
ESOP and hereinafter referred to as the "ESOP Committee") or
the Committee of the Supplemental ESOP (as defined in the
Supplemental ESOP and, together with the ESOP Committee, the
"Committees"), as applicable ("Instructions"), with respect
to any matter referred to in clause (y) below, or (b) fails
to act in accordance with such Instructions with respect to
any matter referred to in clause (y) below (but only if such
failure to follow such Instructions is attributable to (i)
the trustee having concluded that, based upon the terms of
such transaction, the trustee's fiduciary duties require the
trustee to fail to follow such instructions or (ii) the
unenforceability of the provisions of the ESOP and/or the
Supplemental ESOP relating to the solicitation and/or
following of such Instructions); (y) either (i) but for the
provisions of Article FOURTH, Part VII, Subsection 8.3(a),
Article FOURTH, Part VIII, Subsection 8.3(a) and Article
FOURTH, Part IX, Subsection 8.3(a) of this Restated
Certificate, the vote of the stockholders of the Corporation
would have been sufficient, under applicable law, stock
exchange listing requirements and this Restated Certificate,
as applicable, to approve the Merger Transaction or other
Control Transaction (as defined in the ESOP) in question
(or, if no stockholder approval would be required by this
Restated Certificate, applicable stock exchange listing
requirements or applicable law, the trustee enters into a
binding commitment in connection with a Control Transaction
or a Control Transaction is consummated) or (ii) following
the Issue Date, the trustee disposes of an aggregate of 10%
or more of the Common Equity (as defined in Article FIFTH,
Section 1.26 of this Restated Certificate) initially
represented by the ESOP Convertible Preferred Stocks other
than in connection with Employee Plan distributions or
diversification requirements; and (z) any of the following
occur: (a) Instructions with respect to a matter are given,
the trustee fails to follow such Instructions and such
transaction would not have been approved by stockholders of
the Corporation in accordance with the applicable provisions
of this Restated Certificate (excluding Article FOURTH, Part
VII, Subsection 8.3(a), Article FOURTH, Part VIII,
Subsection 8.3(a) and Article FOURTH, Part IX, Subsection
8.3(a) of this Restated Certificate), applicable stock
exchange listing requirements or applicable law if the
trustee had acted in accordance with such Instructions (or,
if no vote of stockholders would be required by this
Restated Certificate, applicable stock exchange listing
requirements or applicable law, such action by the trustee
in respect of such transaction as to which Instructions were
so given would not have been authorized had the trustee
acted in accordance with such Instructions), (b) the trustee
fails to solicit timely Instructions with respect to such
matters, such transaction requires the approval of
stockholders of the Corporation under applicable provisions
of this Restated Certificate, applicable stock exchange
listing requirements or applicable law and such approval
would not have been obtained (without regard to the
provisions of Article FOURTH, Part VII, Subsection 8.3(a),
Article FOURTH, Part VIII, Subsection 8.3(a) and Article
FOURTH, Part IX, Subsection 8.3(a) of this Restated
Certificate) if the trustee had voted against such
transaction all of the votes entitled to be cast by such
trustee as the holder of securities of the Corporation held
under the Employee Plan, or (c) the trustee fails to follow
Instructions or to solicit timely Instructions with respect
to such matter and no vote of stockholders of the
Corporation is required by the Restated Certificate,
applicable stock exchange listing requirements or applicable
law to approve such transaction (an action or inaction by
the trustee under clauses (x) and (z) in connection with a
transaction referred to in clause (y) being referred to
herein as an "Uninstructed Trustee Action"); then each
outstanding share of Class M Voting Preferred Stock shall,
immediately and automatically, without any further action on
the part of holders thereof or of the Corporation, be
converted into shares of Common Stock at the applicable
Conversion Rate in accordance with Section 9 hereof.
Section 9. Automatic Conversion.
9.1 Shares of Class M Voting Preferred Stock shall, as
provided in Sections 1.2 and 8.4, be automatically
converted, from time to time, in part or in whole,
respectively, upon (i) any transfer thereof other than a
transfer described in clauses (x) and (y) of Section 1.2 or
(ii) an Uninstructed Trustee Action as described in Section
8.4, at a rate of one ten thousandth of a share of Common
Stock per share of Class M Voting Preferred Stock to be
converted (the "Conversion Rate").
9.2 At the time that all of the shares of the ESOP
Convertible Preferred Stocks cease to be outstanding for any
reason whatsoever, including, without limitation, their
conversion in full into Common Stock (the "Final Conversion
Date"), all outstanding shares of Class M Voting Preferred
Stock shall be automatically converted, in full, into shares
of Common Stock at the Conversion Rate then in effect.
9.3 Following any conversion in accordance with
Sections 9.1 and 9.2, (i) no holder of Class M Voting
Preferred Stock shall have any of the voting powers,
preferences, relative, participating, optional or special
rights ascribed to shares of Class M Voting Preferred Stock
hereunder, but, rather, shall have only the powers and
rights pertaining to the Common Stock into which such shares
of Class M Voting Preferred Stock have been so converted,
and (ii) any holder of Class M Voting Preferred Stock shall
be treated for all purposes as the record holder of the
shares of Common Stock into which the Class M Voting
Preferred Stock shall have been converted as of the date of
the conversion of the shares of Class M Voting Preferred
Stock.
9.4 On or after the date of (i) a transfer of shares
of Class M Voting Preferred Stock (other than as described
in clauses (x) and (y) of Section 1.2), (ii) the Final
Conversion Date or (iii) an Uninstructed Trustee Action,
each holder of a certificate or certificates formerly
representing shares of Class M Voting Preferred Stock
converted in accordance with Sections 9.1 and 9.2 shall
surrender such certificate or certificates, duly endorsed or
assigned to the Corporation or in blank, at the office of
the Transfer Agent (if other than the Corporation) in the
Borough of Manhattan, City of New York. Unless the shares
issuable on conversion are to be issued in the same name as
the name in which such certificate is registered, each such
certificate shall be accompanied by instruments of transfer,
in form satisfactory to the Corporation, duly executed by
the holder or such holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid or that no such
taxes are payable).
9.5 No fractional shares or scrip representing
fractions of shares of Common Stock shall be issued upon
conversion of the Class M Voting Preferred Stock. Instead
of any fractional interest in a share of Common Stock that
would otherwise be deliverable upon the conversion of a
share of Class M Voting Preferred Stock, the Corporation
shall pay to the holder of such share an amount in cash
based upon the Current Market Price of Common Stock on the
Trading Day immediately preceding the date of conversion.
If more than one certificate shall be surrendered in respect
of such conversion at one time by the same holder, the
number of full shares of Common Stock issuable upon
conversion shall be computed on the basis of the aggregate
number of shares of Class M Voting Preferred Stock formerly
represented by the certificates so surrendered.
9.6 In the event of an adjustment to the "Conversion
Rate" in effect with respect to the ESOP Convertible
Preferred Stocks, a corresponding adjustment shall be made
to the Conversion Rate with respect to the Class M Voting
Preferred Stock.
Section 10. Record Holders. The Corporation and
the Transfer Agent (if other than the Corporation) may deem
and treat the record holder of any shares of Class M Voting
Preferred Stock as the true and lawful owner thereof for all
purposes, and, except as otherwise provided by law, neither
the Corporation nor the Transfer Agent shall be affected by
any notice to the contrary.
PART VI
Class S ESOP Voting Junior Preferred Stock
Unless otherwise indicated, any reference in this
Article FOURTH, Part VI to "Section", "Subsection",
"paragraph", "subparagraph" or "clause" shall refer to a
Section, Subsection, paragraph, subparagraph or clause of
this Article FOURTH, Part VI.
Section 1. Number of Shares; Designation;
Issuances; Automatic Conversion.
1.1 The Class S ESOP Voting Junior Preferred Stock of
the Corporation (the "Class S Voting Preferred Stock") shall
consist of 4,200,000 shares, par value $0.01 per share.
1.2 Shares of Class S Voting Preferred Stock shall be
issued only to a trustee or trustees acting on behalf of (i)
the UAL Corporation Employee Stock Ownership Plan (the
"ESOP"), (ii) the UAL Corporation Supplemental ESOP (the
"Supplemental ESOP") or (iii) any other employee stock
ownership trust or plan or other employee benefit plan of
the Corporation or any of its subsidiaries (each, a "Plan").
In the event of any sale, transfer or other disposition
(including, without limitation, upon a foreclosure or other
realization upon shares of Class S Voting Preferred Stock
pledged as security for any loan or loans made to a Plan or
to the trustee or the trustees acting on behalf of a Plan)
(hereinafter a "transfer") of shares of Class S Voting
Preferred Stock to any person (including, without
limitation, any participant in a Plan) other than (x) any
Plan or trustee or trustees of a Plan or (y) any pledgee of
such shares acquiring such shares as security for any loan
or loans made to the Plan or to any trustee or trustees
acting on behalf of the Plan, the shares of Class S Voting
Preferred Stock so transferred, upon such transfer and
without any further action by the Corporation or the holder,
shall be automatically converted into shares of Common Stock
at the applicable Conversion Rate in accordance with Section
9 hereof and thereafter such transferee shall not have any
of the voting powers, preferences or relative,
participating, optional or special rights ascribed to shares
of Class S Voting Preferred Stock hereunder, but, rather,
shall have only the powers and rights pertaining to the
Common Stock into which such shares of Class S Voting
Preferred Stock shall be so converted. In the event of any
such automatic conversion provided for in this Section 1.2,
such transferee shall be treated for all purposes as the
record holder of the shares of Common Stock into which the
Class S Voting Preferred Stock shall have been converted as
of the date of such conversion. Certificates representing
shares of Class S Voting Preferred Stock shall be legended
to reflect such consequences of a transfer. The shares of
Common Stock issued upon any conversion in accordance with
Section 9 hereof or this Section 1.2 may be transferred by
the holder thereof as permitted by law.
Section 2. Definitions. For purposes of the Class
S Voting Preferred Stock, the following terms shall have the
meanings indicated:
2.1 "Available Unissued ESOP Shares" shall have the
meaning set forth in Article FIFTH, Section 1.5 of this
Restated Certificate.
2.2 "Board of Directors" shall mean the board of
directors of the Corporation or any committee of such board
of directors authorized by such board of directors to
perform any of its responsibilities with respect to the
Class S Voting Preferred Stock.
2.3 "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which state or federally
chartered banking institutions in New York, New York are not
required to be open.
2.4 "Class 1 ESOP Convertible Preferred Stock" shall
mean the Class 1 ESOP Convertible Preferred Stock, par value
$0.01 per share, of the Corporation.
2.5 "Class 2 ESOP Convertible Preferred Stock" shall
mean the Class 2 ESOP Convertible Preferred Stock, par value
$0.01 per share, of the Corporation.
2.6 "Class I Preferred Stock" shall mean the Class I
Junior Preferred Stock, par value $0.01 per share, of the
Corporation.
2.7 "Class IAM Preferred Stock" shall mean the Class
IAM Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
2.8 "Class M Voting Preferred Stock" shall mean the
Class M ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.9 "Class P Voting Preferred Stock" shall mean the
Class P ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.10 "Class Pilot MEC Preferred Stock" shall mean the
Class Pilot MEC Junior Preferred Stock, par value $0.01 per
share, of the Corporation.
2.11 "Class S Voting Preferred Stock" shall have the
meaning set forth in Section 1 hereof.
2.12 "Class SAM Preferred Stock" shall mean the Class
SAM Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
2.13 "Common Stock" shall mean the common stock, par
value $0.01 per share, of the Corporation.
2.14 "Conversion Rate" shall have the meaning set forth
in Section 9.1 hereof.
2.15 "Current Market Price" of publicly traded shares
of Common Stock or any other class or series of capital
stock or other security of the Corporation or any other
issuer for any day shall mean the last reported sales price,
regular way on such day, or, if no sale takes place on such
day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported
on the New York Stock Exchange Composite Tape or, if such
security is not listed or admitted for trading on the New
York Stock Exchange, Inc. ("NYSE"), on the principal
national securities exchange on which such security is
listed or admitted for trading or quoted or, if not listed
or admitted for trading or quoted on any national securities
exchange, on the Nasdaq National Market or, if such security
is not quoted on such National Market, the average of the
closing bid and asked prices on such day in the over-the-
counter market as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or, if bid and asked prices for such security on
such day shall not have been reported through NASDAQ, the
average of the bid and asked prices on such day as furnished
by any NYSE member firm regularly making a market in such
security selected for such purpose by the Board of
Directors.
2.16 "Director Preferred Stocks" shall mean,
collectively, the Class I Preferred Stock, the Class Pilot
MEC Preferred Stock, the Class IAM Preferred Stock and the
Class SAM Preferred Stock.
2.17 "ESOP Convertible Preferred Stocks" shall mean,
collectively, the Class 1 ESOP Convertible Preferred Stock
and the Class 2 ESOP Convertible Preferred Stock.
2.18 "Issue Date" shall mean the first date on which
shares of Class S Voting Preferred Stock are issued.
2.19 "Liquidation Preference" shall have the meaning
set forth in Section 4.1 hereof.
2.20 "Measuring Date" shall mean that date which is the
365th day following the Issue Date.
2.21 "Restated Certificate" shall mean the Restated
Certificate of Incorporation of the Corporation, as amended
from time to time.
2.22 "Salaried/Management Fraction" shall mean 0.1664.
2.23 "Series A Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series A Convertible Preferred Stock in
Article FOURTH, Part I.A of this Restated Certificate.
2.24 "Series B Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series B Preferred Stock in Article
FOURTH, Part I.B of this Restated Certificate.
2.25 "Series C Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series C Junior Participating Preferred
Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.26 "Series D Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series D Redeemable Preferred Stock in
Article FOURTH, Part I.D of this Restated Certificate.
2.27 [Reserved]
2.28 "Set apart for payment" shall be deemed to
include, without any action other than the following, the
recording by the Corporation in its accounting ledgers of
any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so
paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any
class or series of stock of the Corporation ranking on a
parity with or junior to the Class S Voting Preferred Stock
as to distributions upon liquidation, dissolution or winding
up of the Corporation are placed in a separate account of
the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with
respect to the Class S Voting Preferred Stock shall mean,
with respect to such distributions, placing such funds in a
separate account or delivering such funds to a disbursing,
paying or other similar agent.
2.29 "Termination Date" shall have the meaning set
forth in Article FIFTH, Section 1.72 of this Restated
Certificate.
2.30 "Trading Day" shall mean any day on which the
securities in question are traded on the NYSE, or if such
securities are not listed or admitted for trading or quoted
on the NYSE, on the principal national securities exchange
on which such securities are listed or admitted, or if not
listed or admitted for trading or quoted on any national
securities exchange, on the Nasdaq National Market, or if
such securities are not quoted on such National Market, in
the applicable securities market in which the securities are
traded.
2.31 "Transfer Agent" means the Corporation or such
agent or agents of the Corporation as may be designated from
time to time by the Board of Directors as the transfer agent
for the Class S Voting Preferred Stock.
2.32 "Voting Fraction" shall mean 0.55 with respect to
votes and consents that have a record date on or prior to
the Measuring Date and a fraction that is equivalent to the
Adjusted Percentage (as defined in Section 1.10 of the
Agreement and Plan of Recapitalization, dated as of March
25, 1994, among the Corporation, the Air Line Pilots
Association, International and International Association of
Machinists and Aerospace Workers, as amended from time to
time) as in effect at the close of business on the Measuring
Date with respect to votes and consents that have a record
date after the Measuring Date.
2.33 "Voting Preferred Stocks" shall mean,
collectively, the Class P Voting Preferred Stock, the Class
M Voting Preferred Stock and the Class S Voting Preferred
Stock.
Section 3. Dividends. The holders of shares of
the Class S Voting Preferred Stock as such shall not be
entitled to receive any dividends or other distributions
(except as provided in Section 4 below).
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or
set apart for payment to the holders of any class or series
of stock of the Corporation that ranks junior to the Class S
Voting Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation,
the holders of the shares of Class S Voting Preferred Stock
shall be entitled to receive $0.01 per share of Class S
Voting Preferred Stock (the "Liquidation Preference"), but
such holders shall not be entitled to any further payment.
If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of the shares of
Class S Voting Preferred Stock shall be insufficient to pay
in full the Liquidation Preference and the liquidation
preference on all other shares of any class or series of
stock of the Corporation that ranks on a parity with the
Class S Voting Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up of the
Corporation, then such assets, or the proceeds thereof,
shall be distributed among the holders of shares of Class S
Voting Preferred Stock and any such other parity stock
ratably in accordance with the respective amounts that would
be payable on such shares of Class S Voting Preferred Stock
and any such other parity stock if all amounts payable
thereon were paid in full. For the purposes of this Section
4, (i) a consolidation or merger of the Corporation with or
into one or more corporations, or (ii) a sale, lease,
exchange or transfer of all or substantially all of the
Corporation's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or
involuntary, of the Corporation.
4.2 Subject to the rights of the holders of shares of
any series or class of stock ranking prior to or on a parity
with the Class S Voting Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of
the Corporation, after payment shall have been made to the
holders of the Class S Voting Preferred Stock, as and to the
fullest extent provided in this Section 4, any other series
or class of stock of the Corporation that ranks junior to
the Class S Voting Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of
the Corporation, shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive
any and all assets remaining to be paid or distributed, and
the holders of the Class S Voting Preferred Stock shall not
be entitled to share therein.
Section 5. Shares to be Retired. All shares of
Class S Voting Preferred Stock which shall have been issued
and reacquired in any manner by the Corporation shall be
retired and shall not be reissued.
Section 6. Ranking.
6.1 Any class or series of stock of the Corporation
shall be deemed to rank:
(a) prior to the Class S Voting Preferred Stock
as to the distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class
or series shall be entitled to the receipt of amounts
distributable upon liquidation, dissolution or winding
up in preference or priority to the holders of Class S
Voting Preferred Stock;
(b) on a parity with the Class S Voting Preferred
Stock as to the distribution of assets upon
liquidation, dissolution or winding up, whether or not
the liquidation prices per share thereof be different
from those of the Class S Voting Preferred Stock, if
the holders of such class or series and the Class S
Voting Preferred Stock shall be entitled to the receipt
of amounts distributable upon liquidation, dissolution
or winding up in proportion to their respective
liquidation preferences, without preference or priority
one over the other; and
(c) junior to the Class S Voting Preferred Stock,
as to the distribution of assets upon liquidation,
dissolution or winding up, if the holders of Class S
Voting Preferred Stock shall be entitled to the receipt
of amounts distributable upon liquidation, dissolution
or winding up in preference or priority to the holders
of shares of such class or series.
6.2 The Series A Preferred Stock, the Series B
Preferred Stock, the Series D Preferred Stock and the ESOP
Convertible Preferred Stocks shall be deemed to rank prior
to the Class S Voting Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up.
The other Voting Preferred Stocks and the Director Preferred
Stocks shall each be deemed to rank on a parity with the
Class S Voting Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up. The Common
Stock and the Series C Preferred Stock shall each be deemed
to rank junior to the Class S Voting Preferred Stock as to
amounts distributable upon liquidation, dissolution or
winding up.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation shall enter into any
consolidation, merger, share exchange or similar
transaction, however named, pursuant to which the
outstanding shares of Common Stock are to be exchanged
solely for or changed, reclassified or converted solely into
stock of any successor, resulting or other company
(including the Corporation) (each of the foregoing is
referred to herein as "Merger Transaction") that constitutes
"qualifying employer securities" with respect to holders of
Class S Voting Preferred Stock within the meaning of Section
409(l) of the Code and Section 407(d)(5) of the Employee
Retirement Income Security Act of 1974, as amended, or any
successor provisions of law, and, if applicable, for a cash
payment in lieu of fractional shares, if any, proper
provisions shall be made so that upon consummation of such
transaction, the shares of Class S Voting Preferred Stock
shall be converted into or exchanged for preferred stock of
such successor, resulting or other company (the "New
Salaried/Management Voting Preferred Stock"), having in
respect of such company, except as provided below, the same
powers, preferences and relative, participating, optional or
other special rights (including the rights provided by this
Section 7), and the qualifications, limitations or
restrictions thereof, that the Class S Voting Preferred
Stock had, in respect of the Corporation, immediately prior
to such transaction, except that after such transaction each
share of such New Salaried/Management Voting Preferred Stock
so received in such transaction upon conversion or exchange
of the Class S Voting Preferred Stock shall be convertible,
otherwise on the terms and conditions provided by Section 9
hereof, into the number and kind of "qualifying employer
securities" receivable in such transaction by a holder of
the number of shares of Common Stock into which a share of
Class S Voting Preferred Stock could have been converted
immediately prior to such transaction; provided, however,
that the holder of each share of New Salaried/Management
Voting Preferred Stock shall be entitled to a number of
votes per share equal to a fraction, the numerator of which
is the product of (x) the Salaried/Management Fraction and
(y) the aggregate number of votes that would be entitled to
be cast by the holders of the securities of the surviving,
resulting or other corporation into which the ESOP
Convertible Preferred Stocks are changed, reclassified or
converted (collectively, the "New ESOP Convertible Preferred
Stocks") upon consummation of such transaction (assuming for
such purpose the conversion of the New ESOP Convertible
Preferred Stocks), and the denominator of which is the
aggregate number of shares of New Salaried/Management Voting
Preferred Stock then outstanding; provided, further that if
by virtue of the structure of such transaction, a holder of
Common Stock is required to make an election with respect to
the nature and kind of consideration to be received in such
transaction, which election cannot practicably be made by
the holders of the Class S Voting Preferred Stock, then the
shares of New Salaried/Management Voting Preferred Stock
received in such transaction upon conversion or exchange of
Class S Voting Preferred Stock shall, by virtue of such
transaction and on the same terms as apply to the holders of
Common Stock, be convertible into or exchangeable solely for
"qualifying employer securities" (together, if applicable,
with a cash payment in lieu of fractional shares) with the
effect provided above on the basis of the number and kind of
qualifying employer securities receivable in such
transaction by a holder of the number of shares of Common
Stock into which such shares of Class S Voting Preferred
Stock could have been converted immediately prior to such
transaction (provided that if the kind or amount of
qualifying employer securities receivable in such
transaction is not the same for each such share of Common
Stock, then the kind and amount so receivable in such
transaction for each share of Common Stock for this purpose
shall be deemed to be the kind and amount so receivable per
share by the plurality of such shares of Common Stock). The
rights of the New Salaried/Management Voting Preferred Stock
so received in such transaction upon conversion or exchange
of the Class S Voting Preferred Stock shall successively be
subject to adjustment pursuant to Section 9 hereof following
such transaction as nearly equivalent to the adjustments
provided for by such Section prior to such transaction.
7.2 In case the Corporation shall enter into any
Merger Transaction, however named, pursuant to which the
outstanding shares of Common Stock are exchanged for or
changed, reclassified or converted into other stock or
securities or cash or any other property, or any combination
thereof, other than any such consideration which is
constituted solely of "qualifying employer securities" (as
referred to in Section 7.1) and cash payments, if
applicable, in lieu of fractional shares, proper provisions
shall be made so that each outstanding share of Class S
Voting Preferred Stock shall, by virtue of and upon
consummation of such transaction, on the same terms as are
applicable to the holders of Common Stock, be converted into
or exchanged for the aggregate amount of stock, securities,
cash or other property (payable in like kind) receivable by
holders of the number of shares of Common Stock into which
such shares of Class S Voting Preferred Stock could have
been converted immediately prior to such transaction;
provided, however, that if by virtue of the structure of
such transaction, a holder of Common Stock is required to
make an election with respect to the nature and kind of
consideration to be received in such transaction, which
election cannot practicably be made by holders of the Class
S Voting Preferred Stock, then the shares of Class S Voting
Preferred Stock shall, by virtue of such transaction and on
the same terms as apply to the holders of Common Stock, be
converted into or exchanged for the aggregate amount of
stock, securities, cash or other property (payable in kind)
receivable by a holder of the number of shares of Common
Stock into which such shares of Class S Voting Preferred
Stock could have been converted immediately prior to such
transaction if such holder of Common Stock failed to
exercise any rights of election to receive any kind or
amount of stock, securities, cash or other property
receivable in such transaction (provided that if the kind or
amount of stock, securities, cash or other property
receivable in such transaction are not the same for each non-
electing share, then the kind and amount of stock,
securities, cash or other property so receivable upon such
transaction for each non-electing share shall be the kind
and amount so receivable per share by the plurality of the
non-electing shares).
7.3 In case the Corporation shall enter into any
agreement providing for any Merger Transaction described in
Sections 7.1 or 7.2, then the Corporation shall as soon as
practicable thereafter (and in any event at least fifteen
(15) Business Days before consummation of such transaction)
give notice of such agreement and the material terms thereof
to each holder of Class S Voting Preferred Stock. The
Corporation shall not consummate any such Merger Transaction
unless all of the terms of this Section 7 have been complied
with.
Section 8. Voting. The holders of shares of Class
S Voting Preferred Stock shall have the following voting
rights:
8.1 Except as otherwise required by law or provided in
this Restated Certificate, the holders of Class S Voting
Preferred Stock shall be entitled to vote on all matters
submitted to a vote of the holders of Common Stock of the
Corporation, voting together as a single class with the
holders of Common Stock and the holders of such other
classes and series of stock that vote together with the
Common Stock as a single class; provided, however, that
prior to the Termination Date, the holders of Class S Voting
Preferred Stock shall not be entitled to vote with respect
to the election of the members of the Board of Directors.
For purposes of this Section 8.1, with respect to any vote
or consent with a record date occurring prior to the
Termination Date, (a) the holders of the shares of Class S
Voting Preferred Stock from time to time outstanding shall,
collectively, be entitled to a number of votes (rounded to
the nearest whole vote) equal to the excess of (i) the
product of (I) the Salaried/Management Fraction, (II) the
Voting Fraction and (III) a fraction, the numerator of which
shall be the number of votes entitled to be cast on the
matter by the holders of all outstanding securities of the
Corporation (excluding the Voting Preferred Stocks and the
shares of Common Stock issued upon conversion of the ESOP
Convertible Preferred Stocks and held on the applicable
record date in the ESOP or the Supplemental ESOP), and the
denominator of which shall be the excess of one (1.0) over
the Voting Fraction, over (ii) the sum of (A) the aggregate
number of shares of Common Stock held under the ESOP or the
Supplemental ESOP which have been issued upon conversion of
the ESOP Convertible Preferred Stocks and have been, on the
applicable record date, allocated under the ESOP or the
Supplemental ESOP to the accounts of individuals who are
members of the Salaried/Management Employee Group (as
defined in the ESOP), (B) the product of (x) the number of
shares of Common Stock held under the ESOP which have been
issued upon conversion of the Class 1 ESOP Convertible
Preferred Stock and are held on the applicable record date
in the Loan Suspense Account (as defined in the ESOP) under
the ESOP multiplied by (y) the Salaried/Management Fraction,
and (C) the product of (aa) the number of shares of Common
Stock held by the Supplemental ESOP which have been issued
upon conversion of the Class 2 ESOP Convertible Preferred
Stock and are held on the applicable record date in the
Phantom Suspense Account (as defined in the Supplemental
ESOP) under the Supplemental ESOP multiplied by (bb) the
Salaried/Management Fraction (the excess of clause (i) over
clause (ii) being referred to herein as the "Attributed
Votes"); and (b) the holder of each share of the Class S
Voting Preferred Stock shall be entitled to a number of
votes per share (rounded to the nearest one hundred
millionth of a vote) equal to the result of dividing (x) the
number of Attributed Votes by (y) the number of shares of
Class S Voting Preferred Stock outstanding on the applicable
record date. With respect to each vote or consent with a
record date occurring on or after the Termination Date, each
share of Class S Voting Preferred Stock then outstanding
shall be entitled to the number of votes per share (rounded
to the nearest one hundred millionth of a vote) equal to a
fraction, the numerator of which is the product of (i) the
sum of (x) the number of shares of Common Stock into which
the ESOP Convertible Preferred Stocks then outstanding can
be converted as of the record date with respect to such vote
or consent and (y) the number of Available Unissued ESOP
Shares as of such record date and (ii) the
Salaried/Management Fraction, and the denominator of which
is the number of shares of Class S Voting Preferred Stock
outstanding as of such record date. For purposes of this
Section 8.1, the Corporation shall certify to the holders of
Class S Voting Preferred Stock and to the judges or similar
officials appointed for the purpose of tabulating votes at
any meeting of stockholders as soon as practicable following
the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of
stockholders, but in no event less than five Trading Days
before such meeting, with respect to record dates prior to
the Termination Date, the number of shares of Common Stock
then outstanding and the number of votes entitled to be cast
on the matter or matters in question by the holders of all
outstanding securities of the Corporation (excluding the
Voting Preferred Stocks and the shares of Common Stock
issued upon conversion of the ESOP Convertible Preferred
Stocks and held on the applicable record date in the ESOP or
the Supplemental ESOP) and, with respect to record dates
from and after the Termination Date, the number of shares of
Common Stock into which a share of ESOP Convertible
Preferred Stock was convertible as of the record date for
such vote or votes. The Corporation shall be deemed to
satisfy the requirements of the preceding sentence if such
matters are specified in any proxy statement mailed to all
stockholders entitled to vote on such matter or matters.
Prior to the Termination Date, the outstanding shares
of the Voting Preferred Stocks, the Class Pilot MEC
Preferred Stock, the Class IAM Preferred Stock and the Class
SAM Preferred Stock, together with the shares of Common
Stock held by the ESOP and the Supplemental ESOP that were
received upon conversion of the ESOP Preferred Stocks, will
represent the Voting Fraction (expressed as a percentage) of
the votes to be cast in connection with matters (other than
the election of directors) submitted to the vote of the
holders of the Common Stock and the holders of all other
outstanding securities that vote as a single class together
with the Common Stock. Subject to any amendment of this
Restated Certificate after the date hereof, it is the intent
of this Restated Certificate that this Section 8.1 (with
respect to the Class S Voting Preferred Stock), Article
FOURTH, Part V, Section 8.1 of the Restated Certificate
(with respect to the Class M Voting Preferred Stock) and
Article FOURTH, Part IV, Section 8.1 of the Restated
Certificate (with respect to the Class P Voting Preferred
Stock) be interpreted together to achieve the foregoing
result.
8.2 Unless the affirmative vote or consent of the
holders of a greater number of shares of Class S Voting
Preferred Stock shall then be required by law or this
Restated Certificate, and in addition to any other vote
required by law or this Restated Certificate, the
affirmative vote or written consent of the holders of at
least a majority of all of the outstanding shares of Class S
Voting Preferred Stock, voting separately as a class, shall
be necessary for authorizing, effecting or validating the
amendment, alteration or repeal (including any amendment,
alteration or repeal by operation of merger or
consolidation) of any of the provisions of this Restated
Certificate or of any certificate amendatory thereof or
supplemental thereto (including any Certificate of
Designation, Preferences and Rights or any similar document
relating to any series of Serial Preferred Stock) which
would adversely affect the preferences, rights, powers or
privileges of the Class S Voting Preferred Stock or of
either of the ESOP Convertible Preferred Stocks.
8.3 For purposes of the foregoing provisions of
Section 8.2, each share of Class S Voting Preferred Stock
shall have one (1) vote per share.
8.4 Notwithstanding anything to the contrary in
Sections 7 or 8.1, if at any time prior to the Termination
Date, (x) the trustee under either (i) the ESOP or (ii) the
Supplemental ESOP (together with the ESOP, the "Employee
Plan") either (a) fails to solicit, in accordance with the
Employee Plan, timely instructions from Employee Plan
participants, the Committee of the ESOP (as defined in the
ESOP and hereinafter referred to as the "ESOP Committee") or
the Committee of the Supplemental ESOP (as defined in the
Supplemental ESOP and, together with the ESOP Committee, the
"Committees"), as applicable ("Instructions"), with respect
to any matter referred to in clause (y) below, or (b) fails
to act in accordance with such Instructions with respect to
any matter referred to in clause (y) below (but only if such
failure to follow such Instructions is attributable to (i)
the trustee having concluded that, based upon the terms of
such transaction, the trustee's fiduciary duties require the
trustee to fail to follow such instructions or (ii) the
unenforceability of the provisions of the ESOP and/or the
Supplemental ESOP relating to the solicitation and/or
following of such Instructions); (y) either (i) but for the
provisions of Article FOURTH, Part VII, Subsection 8.3(a),
Article FOURTH, Part VIII, Subsection 8.3(a) and Article
FOURTH, Part IX, Subsection 8.3(a) of this Restated
Certificate, the vote of the stockholders of the Corporation
would have been sufficient, under applicable law, stock
exchange listing requirements and this Restated Certificate,
as applicable, to approve the Merger Transaction or other
Control Transaction (as defined in the ESOP) in question
(or, if no stockholder approval would be required by this
Restated Certificate, applicable stock exchange listing
requirements or applicable law, the trustee enters into a
binding commitment in connection with a Control Transaction
or a Control Transaction is consummated) or (ii) following
the Issue Date, the trustee disposes of an aggregate of 10%
or more of the Common Equity (as defined in Article FIFTH,
Section 1.26 of this Restated Certificate) initially
represented by the ESOP Convertible Preferred Stocks other
than in connection with Employee Plan distributions or
diversification requirements; and (z) any of the following
occur: (a) Instructions with respect to a matter are given,
the trustee fails to follow such Instructions and such
transaction would not have been approved by stockholders of
the Corporation in accordance with the applicable provisions
of this Restated Certificate (excluding Article FOURTH, Part
VII, Subsection 8.3(a), Article FOURTH, Part VIII,
Subsection 8.3(a) and Article FOURTH, Part IX, Subsection
8.3(a) of this Restated Certificate), applicable stock
exchange listing requirements or applicable law if the
trustee had acted in accordance with such Instructions (or,
if no vote of stockholders would be required by this
Restated Certificate, applicable stock exchange listing
requirements or applicable law, such action by the trustee
in respect of such transaction as to which Instructions were
so given would not have been authorized had the trustee
acted in accordance with such Instructions, (b) the trustee
fails to solicit timely Instructions with respect to such
matters, such transaction requires the approval of
stockholders of the Corporation under applicable provisions
of this Restated Certificate, applicable stock exchange
listing requirements or applicable law and such approval
would not have been obtained (without regard to the
provisions of Article FOURTH, Part VII, Subsection 8.3(a),
Article FOURTH, Part VIII, Subsection 8.3(a) and Article
FOURTH, Part IX, Subsection 8.3(a) of this Restated
Certificate) if the trustee had voted against such
transaction all of the votes entitled to be cast by such
trustee as the holder of securities of the Corporation held
under the Employee Plan, or (c) the trustee fails to follow
Instructions or to solicit timely Instructions with respect
to such matter and no vote of stockholders of the
Corporation is required by the Restated Certificate,
applicable stock exchange listing requirements or applicable
law to approve such transaction (an action or inaction by
the trustee under clauses (x) and (z) in connection with a
transaction referred to in clause (y) being referred to
herein as an "Uninstructed Trustee Action"); then each
outstanding share of Class S Voting Preferred Stock shall,
immediately and automatically, without any further action on
the part of holders thereof or of the Corporation, be
converted into shares of Common Stock at the applicable
Conversion Rate in accordance with Section 9 hereof.
Section 9. Automatic Conversion.
9.1 Shares of Class S Voting Preferred Stock shall, as
provided in Sections 1.2 and 8.4, be automatically
converted, from time to time, in part or in whole,
respectively, upon (i) any transfer thereof other than a
transfer described in clauses (x) and (y) of Section 1.2 or
(ii) an Uninstructed Trustee Action as described in Section
8.4, at a rate of one ten thousandth of a share of Common
Stock per share of Class S Voting Preferred Stock to be
converted (the "Conversion Rate").
9.2 At the time that all of the shares of the ESOP
Convertible Preferred Stocks cease to be outstanding for any
reason whatsoever, including, without limitation, their
conversion in full into Common Stock (the "Final Conversion
Date"), all outstanding shares of Class S Voting Preferred
Stock shall be automatically converted, in full, into shares
of Common Stock at the Conversion Rate then in effect.
9.3 Following any conversion in accordance with
Sections 9.1 and 9.2, (i) no holder of Class S Voting
Preferred Stock shall have any of the voting powers,
preferences, relative, participating, optional or special
rights ascribed to shares of Class S Voting Preferred Stock
hereunder, but, rather, shall have only the powers and
rights pertaining to the Common Stock into which such shares
of Class S Voting Preferred Stock have been so converted,
and (ii) any holder of Class S Voting Preferred Stock shall
be treated for all purposes as the record holder of the
shares of Common Stock into which the Class S Voting
Preferred Stock shall have been converted as of the date of
the conversion of the shares of Class S Voting Preferred
Stock.
9.4 On or after the date of (i) a transfer of shares
of Class S Voting Preferred Stock (other than as described
in clauses (x) and (y) of Section 1.2), (ii) the Final
Conversion Date or (iii) an Uninstructed Trustee Action,
each holder of a certificate or certificates formerly
representing shares of Class S Voting Preferred Stock
converted in accordance with Sections 9.1 and 9.2 shall
surrender such certificate or certificates, duly endorsed or
assigned to the Corporation or in blank, at the office of
the Transfer Agent (if other than the Corporation) in the
Borough of Manhattan, City of New York. Unless the shares
issuable on conversion are to be issued in the same name as
the name in which such certificate is registered, each such
certificate shall be accompanied by instruments of transfer,
in form satisfactory to the Corporation, duly executed by
the holder or such holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid or that no such
taxes are payable).
9.5 No fractional shares or scrip representing
fractions of shares of Common Stock shall be issued upon
conversion of the Class S Voting Preferred Stock. Instead
of any fractional interest in a share of Common Stock that
would otherwise be deliverable upon the conversion of a
share of Class S Voting Preferred Stock, the Corporation
shall pay to the holder of such share an amount in cash
based upon the Current Market Price of Common Stock on the
Trading Day immediately preceding the date of conversion.
If more than one certificate shall be surrendered in respect
of such conversion at one time by the same holder, the
number of full shares of Common Stock issuable upon
conversion shall be computed on the basis of the aggregate
number of shares of Class S Voting Preferred Stock formerly
represented by the certificates so surrendered.
9.6 In the event of an adjustment to the "Conversion
Rate" in effect with respect to the ESOP Convertible
Preferred Stocks, a corresponding adjustment shall be made
to the Conversion Rate with respect to the Class S Voting
Preferred Stock.
Section 10. Record Holders. The Corporation and
the Transfer Agent (if other than the Corporation) may deem
and treat the record holder of any shares of Class S Voting
Preferred Stock as the true and lawful owner thereof for all
purposes, and, except as otherwise provided by law, neither
the Corporation nor the Transfer Agent shall be affected by
any notice to the contrary.
PART VII
Class Pilot MEC Junior Preferred Stock
Unless otherwise indicated, any reference in this
Article FOURTH, Part VII to "Section", "Subsection",
"paragraph", "subparagraph" or "clause" shall refer to a
Section, Subsection, paragraph, subparagraph or clause of
this Article FOURTH, Part VII.
Section 1. Number of Shares; Designation; Issuance;
Restrictions on Transfer.
1.1 The Class Pilot MEC Junior Preferred Stock of the
Corporation (the "Class Pilot MEC Preferred Stock") shall
consist of one (1) share, par value $0.01.
1.2 The share of Class Pilot MEC Preferred Stock shall
be issued only to (i) the United Airlines Pilots Master
Executive Council of the Air Line Pilots Association,
International ("ALPA") pursuant to ALPA's authority as the
collective bargaining representative for the crafts or class
of pilots employed by United Air Lines, Inc. (the "MEC") or
(ii) a duly authorized agent acting for the benefit of the
MEC. Any purported sale, transfer, pledge or other
disposition (hereinafter a "transfer") of the share of Class
Pilot MEC Preferred Stock to any person, other than a
successor to the MEC or a duly authorized agent acting for
the benefit of such successor, shall be null and void and of
no force and effect. Upon any purported transfer of the
share of Class Pilot MEC Preferred Stock by the holder
thereof other than as expressly permitted above, and without
any further action by the Corporation or such holder, such
share shall, to the extent of funds legally available
therefor and subject to the other provisions of this
Restated Certificate, be automatically redeemed by the
Corporation in accordance with Section 9 hereof, and
thereupon such share shall no longer be deemed outstanding,
and neither such holder nor any purported transferee thereof
shall have in respect thereof any of the voting powers,
preferences or relative, participating, optional or special
rights ascribed to the share of Class Pilot MEC Preferred
Stock hereunder, but rather such holder thereafter shall
only be entitled to receive the amount payable upon
redemption in accordance with Section 9. The certificate
representing the share of Class Pilot MEC Preferred Stock
shall be legended to reflect the restrictions on transfer
and automatic redemption provided for herein.
Section 2. Definitions. For purposes of the Class
Pilot MEC Preferred Stock, the following terms shall have
the meanings indicated:
2.1 "Affiliate" shall have the meaning defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended,
or any successor thereto.
2.2 "ALPA Termination Date" shall have the meaning set
forth in Section 8 hereof.
2.3 "Board of Directors" shall mean the board of
directors of the Corporation or any committee thereof
authorized by such board of directors to perform any of its
responsibilities with respect to the Class Pilot MEC
Preferred Stock.
2.4 "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which state or federally
chartered banking institutions in New York, New York are not
required to be open.
2.5 "Class I Preferred Stock" shall mean the Class I
Junior Preferred Stock, par value $0.01 per share, of the
Corporation.
2.6 "Class IAM Preferred Stock" shall mean the Class
IAM Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
2.7 "Class M Voting Preferred Stock" shall mean the
Class M ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.8 "Class P Voting Preferred Stock" shall mean the
Class P ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.9 "Class Pilot MEC Preferred Stock" shall have the
meaning set forth in Section 1 hereof.
2.10 "Class S Voting Preferred Stock" shall mean the
Class S ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.11 "Class SAM Preferred Stock" shall mean the Class
SAM Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
2.12 "Common Stock" shall mean the common stock, par
value $0.01 per share, of the Corporation.
2.13 "Director Preferred Stocks" shall mean,
collectively, the Class I Preferred Stock, the Class IAM
Preferred Stock, the Class Pilot MEC Preferred Stock and the
Class SAM Preferred Stock.
2.14 "ESOP Convertible Preferred Stocks" shall mean,
collectively, the Class 1 ESOP Convertible Preferred Stock
and the Class 2 ESOP Convertible Preferred Stock, each of
the par value of $0.01 per share, of the Corporation.
2.15 "Issue Date" shall mean the first date on which
shares of Class Pilot MEC Preferred Stock are issued.
2.16 "Liquidation Preference" shall have the meaning
set forth in Section 4.1 hereof.
2.17 "Measuring Date" shall mean that date which is the
365th day following the Issue Date.
2.18 "Pilot Fraction" shall mean 0.4623.
2.19 "Restated Certificate" shall mean the Restated
Certificate of Incorporation of the Corporation, as amended
from time to time.
2.20 "Series A Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series A Convertible Preferred Stock in
Article FOURTH, Part I.A of this Restated Certificate.
2.21 "Series B Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series B Preferred Stock in Article
FOURTH, Part I.B of this Restated Certificate.
2.22 "Series C Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series C Junior Participating Preferred
Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.23 "Series D Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series D Redeemable Preferred Stock in
Article FOURTH, Part I.D of this Restated Certificate.
2.24 [Reserved]
2.25 "set apart for payment" shall be deemed to
include, without any action other than the following, the
recording by the Corporation in its accounting ledgers of
any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so
paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any
class or series of stock of the Corporation ranking on a
parity with or junior to the Class Pilot MEC Preferred Stock
as to distributions upon liquidation, dissolution or winding
up of the Corporation are placed in a separate account of
the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with
respect to the Class Pilot MEC Preferred Stock shall mean,
with respect to such distributions, placing such funds in a
separate account or delivering such funds to a disbursing,
paying or other similar agent.
2.26 "Termination Date" shall have the meaning set
forth in Article FIFTH, Section 1.72 of this Restated
Certificate.
2.27 "Trading Day" shall mean any day on which the
securities in question are traded on the New York Stock
Exchange, Inc. (the "NYSE"), or if such securities are not
listed or admitted for trading or quoted on the NYSE, on the
principal national securities exchange on which such
securities are listed or admitted, or if not listed or
admitted for trading or quoted on any national securities
exchange, on the Nasdaq National Market, or if such
securities are not quoted on such National Market, in the
applicable securities market in which the securities are
traded.
2.28 "Transfer Agent" means the Corporation or such
agent or agents of the Corporation as may be designated from
time to time by the Board of Directors as the transfer agent
for the Class Pilot MEC Preferred Stock.
2.29 "Voting Fraction" shall mean 0.55 with respect to
votes or consents that have a record date on or prior to the
Measuring Date, and a fraction that is equivalent to the
Adjusted Percentage (as defined in Section 1.10 of the
Agreement and Plan of Recapitalization, dated as of March
25, 1994, among the Corporation, the Air Line Pilots
Association, International and International Association of
Machinists and Aerospace Workers, as amended from time to
time) as in effect at the close of business on the Measuring
Date with respect to votes and consents that have a record
date after the Measuring Date.
2.30 "Voting Preferred Stocks" shall mean,
collectively, the Class P Voting Preferred Stock, the Class
M Voting Preferred Stock and the Class S Voting Preferred
Stock.
Section 3. Dividends. The holder of the share of
Class Pilot MEC Preferred Stock as such shall not be
entitled to receive any dividends or other distributions
(except as provided in Section 4).
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or
set apart for payment to the holders of any class or series
of stock of the Corporation that ranks junior to the Class
Pilot MEC Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation,
the holder of the share of Class Pilot MEC Preferred Stock
shall be entitled to receive $0.01 per share of Class Pilot
MEC Preferred Stock (the "Liquidation Preference"), but such
holder shall not be entitled to any further payment. If,
upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds
thereof, distributable to the holder of the share of Class
Pilot MEC Preferred Stock shall be insufficient to pay in
full the Liquidation Preference and the liquidation
preference on all other shares of any class or series of
stock of the Corporation that ranks on a parity with the
Class Pilot MEC Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up of the
Corporation, then such assets, or the proceeds thereof,
shall be distributed among the holder of the share of Class
Pilot MEC Preferred Stock and any such other parity stock
ratably in accordance with the respective amounts that would
be payable on such share of Class Pilot MEC Preferred Stock
and any such other parity stock if all amounts payable
thereon were paid in full. For the purposes of this Section
4, (i) a consolidation or merger of the Corporation with or
into one or more corporations, or (ii) a sale, lease,
exchange or transfer of all or substantially all of the
Corporation's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or
involuntary, of the Corporation.
4.2 Subject to the rights of the holders of shares of
any series or class of stock ranking prior to or on a parity
with the Class Pilot MEC Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of
the Corporation, after payment shall have been made to the
holder of the share of Class Pilot MEC Preferred Stock, as
and to the fullest extent provided in this Section 4, any
series or class of stock of the Corporation that ranks
junior to the Class Pilot MEC Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of
the Corporation, shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive
any and all assets remaining to be paid or distributed, and
the holder of the share of Class Pilot MEC Preferred Stock
shall not be entitled to share therein.
Section 5. Shares to be Retired. The share of
Class Pilot MEC Preferred Stock which shall have been issued
and reacquired in any manner (other than redemption pursuant
to Section 9.1) by the Corporation shall be retired and
restored to the status of an authorized but unissued share
of Class Pilot MEC Preferred Stock and, in the event of the
redemption of such share pursuant to Section 9.1 hereof,
shall not be reissued.
Section 6. Ranking.
6.1 Any class or series of stock of the Corporation
shall be deemed to rank:
(a) prior to the Class Pilot MEC Preferred Stock
as to the distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class
or series shall be entitled to the receipt of amounts
distributable upon liquidation, dissolution or winding
up in preference or priority to the holder of Class
Pilot MEC Preferred Stock;
(b) on a parity with the Class Pilot MEC
Preferred Stock as to the distribution of assets upon
liquidation, dissolution or winding up, whether or not
the liquidation prices per share thereof be different
from those of the Class Pilot MEC Preferred Stock, if
the holders of such class or series and the Class Pilot
MEC Preferred Stock shall be entitled to the receipt of
amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective
liquidation preferences, without preference or priority
one over the other; and
(c) junior to the Class Pilot MEC Preferred
Stock, as to the distribution of assets upon
liquidation, dissolution or winding up, if the holder
of Class Pilot MEC Preferred Stock shall be entitled to
the receipt of amounts distributable upon liquidation,
dissolution or winding up in preference or priority to
the holders of shares of such class or series.
6.2 The Series A Preferred Stock, the Series B
Preferred Stock, the Series D Preferred Stock and the ESOP
Convertible Preferred Stocks shall be deemed to rank prior
to the Class Pilot MEC Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up.
The other Director Preferred Stocks and the Voting Preferred
Stocks shall each be deemed to rank on a parity with the
Class Pilot MEC Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up. The Common
Stock and the Series C Preferred Stock shall each be deemed
to rank junior to the Class Pilot MEC Preferred Stock as to
amounts distributable upon liquidation, dissolution or
winding up.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation enters into any
consolidation, merger, share exchange or similar
transaction, however named, involving the Corporation or its
subsidiary, United Air Lines, Inc. ("United") (or any
successor to all or substantially all the assets or business
of United), pursuant to which the outstanding shares of
Common Stock are to be exchanged for or changed,
reclassified or converted into securities of any successor
or resulting or other company (including the Corporation),
or cash or other property (each of the foregoing
transactions is referred to herein as a "Merger
Transaction"), proper provision shall be made so that, upon
consummation of such transaction, the share of Class Pilot
MEC Preferred Stock shall be converted, reclassified or
changed into or exchanged for preferred stock of such
successor or resulting or other company having, in respect
of such company, the same powers, preferences and relative,
participating, optional or other special rights (including
the rights provided by this Section 7), and the
qualifications, limitations or restrictions thereof, that
the Class Pilot MEC Preferred Stock had, in respect of the
Corporation, immediately prior to such transaction;
specifically including, without limitation, the right, until
the ALPA Termination Date, to elect one member of the board
of directors (or similar governing body) of such company.
7.2 In case the Corporation shall enter into any
agreement providing for any Merger Transaction, then the
Corporation shall as soon as practicable thereafter (and in
any event at least fifteen (15) Business Days before
consummation of such transaction) give notice of such
agreement and the material terms thereof to the holder of
the share of Class Pilot MEC Preferred Stock. The
Corporation shall not consummate any such Merger Transaction
unless all of the terms of this Section 7 and Section 8 have
been complied with.
Section 8. Voting. The holder of the share of
Class Pilot MEC Preferred Stock shall have the following
voting rights:
8.1 Until the later of (i) the Termination Date and
(ii) such time as there are no longer any persons
represented by the Air Line Pilots Association,
International (or any successor organization) employed by
the Corporation or any of its Affiliates (the "ALPA
Termination Date"), the holder of the share of Class Pilot
MEC Preferred Stock shall have the right (a) voting as a
separate class, to elect one Class Pilot MEC Director (as
defined in Article FIFTH, Section 2.2 of this Restated
Certificate) to the Board of Directors and (b) voting
together as a single class with the holders of Common Stock
and the holders of such other classes or series of stock
that vote together with the Common Stock as a single class,
to vote on all matters submitted to a vote of the holders of
Common Stock of the Corporation (other than the election of
Public Directors, as defined in Article FIFTH, Section 2.3),
except as otherwise required by law.
8.2 Notwithstanding anything to the contrary in
Sections 7.1, 7.2 or 8.1, if at any time prior to the
Termination Date, (x) the trustee under either (i) the UAL
Corporation Employee Stock Ownership Plan (the "ESOP") or
(ii) the UAL Corporation Supplemental ESOP (together with
the ESOP, the "Plan") either (a) fails to solicit, in
accordance with the Plan, timely instructions from Plan
participants, the Committee of the ESOP (as defined in the
ESOP and hereinafter referred to as the "ESOP Committee") or
the Committee of the Supplemental ESOP (as defined in the
Supplemental ESOP and, together with the ESOP Committee, the
"Committees"), as applicable ("Instructions"), with respect
to any matter referred to in clause (y) below, or (b) fails
to act in accordance with such Instructions with respect to
any matter referred to in clause (y) below (but only if such
failure to follow such Instructions is attributable to (i)
the trustee having concluded that, based upon the terms of
such transaction, the trustee's fiduciary duties require the
trustee to fail to follow such Instructions or (ii) the
unenforceability of the provisions of the ESOP and/or the
Supplemental ESOP relating to the solicitation and/or
following of such Instructions); (y) either (i) but for the
provisions of Subsection 8.3(a) and Article FOURTH, Part
VIII, Subsection 8.3(a) and Article FOURTH, Part IX,
Subsection 8.3(a) of this Restated Certificate, the vote of
the stockholders of the Corporation would have been
sufficient, under applicable law, stock exchange listing
requirements and this Restated Certificate, as applicable,
to approve the Merger Transaction or other Control
Transaction (as defined in the ESOP) in question (or, if no
stockholder approval would be required by this Restated
Certificate, applicable stock exchange listing requirements
or applicable law, the trustee enters into a binding
commitment in connection with a Control Transaction or a
Control Transaction is consummated) or (ii) following the
Issue Date, the trustee disposes of an aggregate of 10% or
more of the Common Equity (as defined in Article FIFTH,
Section 1.26 of this Restated Certificate) initially
represented by the ESOP Convertible Preferred Stocks other
than in connection with Plan distributions; and (z) any of
the following occur: (a) Instructions with respect to a
matter are given, the trustee fails to follow such
Instructions and such transaction would not have been
approved by stockholders of the Corporation in accordance
with the applicable provisions of this Restated Certificate
(excluding Subsection 8.3(a) and Article FOURTH, Part VIII,
Subsection 8.3(a) and Article FOURTH, Part IX, Subsection
8.3(a) of this Restated Certificate), applicable stock
exchange listing requirements or applicable law if the
trustee had acted in accordance with such Instructions (or,
if no vote of stockholders would be required by this
Restated Certificate, applicable stock exchange listing
requirements or applicable law, such action by the trustee
in respect of such transaction as to which Instructions were
so given would not have been authorized had the trustee
acted in accordance with such Instructions), (b) the trustee
fails to solicit timely Instructions with respect to such
matters, such transaction requires the approval of
stockholders of the Corporation under applicable provisions
of this Restated Certificate, applicable stock exchange
listing requirements or applicable law and such approval
would not have been obtained (without regard to Subsection
8.3(a) and Article FOURTH, Part VIII, Subsection 8.3(a) and
Article FOURTH, Part IX, Subsection 8.3(a) of this Restated
Certificate) if the trustee had voted against such
transaction all of the votes entitled to be cast by such
trustee as the holder of securities of the Corporation held
under the Plan, or (c) the trustee fails to follow
Instructions or to solicit timely Instructions with respect
to such matter and no vote of stockholders of the
Corporation is required by the Restated Certificate,
applicable stock exchange listing requirements or applicable
law to approve such transaction (an action or inaction by
the trustee under clauses (x) and (z) in connection with a
transaction referred to in clause (y) being referred to
herein as an "Uninstructed Trustee Action"); then, (I) the
Merger Transaction or other Control Transaction referred to
in clause (y)(i) of Section 8.2 involving an Uninstructed
Trustee Action, if it requires stockholder approval under
applicable law, stock exchange listing requirements or this
Restated Certificate, must also be approved by the vote of
stockholders described in Subsection 8.3(a), and (II) from
and after such Uninstructed Trustee Action, in addition to
the voting rights provided for under Section 8.1, the share
of Class Pilot MEC Preferred Stock shall have the voting
rights set forth in Subsection 8.3(b).
8.3 (a) In addition to any other vote or consent of
stockholders required by this Restated Certificate,
applicable stock exchange listing requirements or
applicable law, any Merger Transaction or other Control
Transaction referred to in clause (y)(i) of Section 8.2
involving an Uninstructed Trustee Action that requires
stockholder approval under applicable law, stock
exchange listing requirements or this Restated
Certificate must also be approved by at least a
majority of the votes entitled to be cast in respect of
all outstanding shares of the Class Pilot MEC Preferred
Stock, the Class IAM Preferred Stock, the Class SAM
Preferred Stock, the Common Stock and such other
classes and series of stock that vote together with the
Common Stock as a single class (other than the Voting
Preferred Stocks), with all such shares voting, for
purposes of this paragraph, as a single class, and for
purposes of such vote the Class Pilot MEC Preferred
Stock shall be entitled to cast a number of votes
calculated in accordance with Subsection 8.3(c).
(b) Except as otherwise required by law or provided in
this Restated Certificate, from and after an
Uninstructed Trustee Action, the holder of the share of
Class Pilot MEC Preferred Stock shall be entitled to
vote on all matters submitted to a vote of the holders
of Common Stock, voting together as a single class with
the holders of Class IAM Preferred Stock, the holders
of Class SAM Preferred Stock, the holders of Common
Stock and the holders of such other classes and series
of stock that vote together with the Common Stock as a
single class (other than the Voting Preferred Stocks)
and for purposes of such vote the Class Pilot MEC
Preferred Stock shall be entitled to cast a number of
votes calculated in accordance with Subsection 8.3(c);
provided, however, that, except as provided in Section
8.1, prior to the Termination Date, the holder of the
share of Class Pilot MEC Preferred Stock shall not be
entitled to vote with the holders of Common Stock with
respect to the election of the members of the Board of
Directors.
(c) With respect to any vote or consent (i) with
respect to which the Class Pilot MEC Preferred Stock is
entitled to vote pursuant to Subsection 8.3(a) or (ii)
with respect to which the Class Pilot MEC Preferred
Stock is entitled to vote pursuant to Subsection 8.3(b)
and the record date for which occurs after an
Uninstructed Trustee Action and prior to the
Termination Date, the holder of the share of Class
Pilot MEC Preferred Stock shall be entitled to a number
of votes (rounded to the nearest whole vote) equal to
the product of (I) the Pilot Fraction, (II) the Voting
Fraction and (III) a fraction, the numerator of which
shall be the number of votes entitled to be cast on the
matter by the holders of all outstanding securities of
the Corporation (excluding the Class IAM Preferred
Stock and the Class SAM Preferred Stock), and the
denominator of which shall be the excess of one (1.0)
over the Voting Fraction (the "Attributed Vote"). If,
with respect to any matter as to which the immediately
preceding sentence shall apply, (i) shares of Common
Stock are held under the ESOP or the Supplemental ESOP
which have been issued upon conversion of the ESOP
Convertible Preferred Stocks ("Subject Shares"), (ii)
with respect to any action as to which the trustee is
required, in accordance with the terms of the ESOP or
the Supplemental ESOP, to solicit Instructions, the
trustee has solicited such Instructions and (iii) the
trustee has voted some or all of the Subject Shares in
accordance with such Instructions (the shares which the
trustee has voted in accordance with such Instructions,
"Instructed Trustee Common Shares"), then the
Attributed Votes shall be reduced by the Pro Rata
Reduction. The "Pro Rata Reduction" shall equal, with
respect to any such matter, the sum of (I) the product
of (x) a fraction, the numerator of which is the number
of votes represented by Subject Shares as to which
members of the ALPA Employee Group (or the Committees)
gave Instructions to the trustee to vote in favor of
the matter, and the denominator of which is the number
of votes represented by Subject Shares as to which
members of all Employee Groups (as defined in the ESOP)
(or the Committees) gave Instructions to the trustee to
vote in favor of the matter (such denominator being
referred to as the "Instructed Pro Vote") and (y) the
number of votes represented by Subject Shares that the
trustee actually voted in favor of the matter (but in
no event more than the Instructed Pro Vote); and (II)
the product of (x) a fraction, the numerator of which
is the number of votes represented by Subject Shares as
to which members of the ALPA Employee Group (or the
Committees) gave instructions to the trustee to vote
against the matter, and the denominator of which is the
number of votes represented by Subject Shares as to
which members of all Employee Groups (or the
Committees) gave Instructions to the trustee to vote
against the matter (such denominator being referred to
as the "Instructed Con Vote") and (y) the number of
votes represented by Subject Shares that the trustee
actually voted against the matter (but in no event more
than the Instructed Con Vote).
For purposes of this Section 8.3, the Corporation shall
certify to the holders of Class Pilot MEC Preferred Stock
and to the judges or similar officials appointed for the
purpose of tabulating votes at any meeting of stockholders
as soon as practicable following the record date for the
determination of stockholders entitled to notice of or to
vote at any meeting of stockholders, but in no event less
than five Trading Days before such meeting, the number of
shares of Common Stock then outstanding and the number of
votes entitled to be cast on the matter or matters in
question by the holders of all outstanding securities of the
Corporation (excluding the Class IAM Preferred Stock and the
Class SAM Preferred Stock). The Corporation shall be deemed
to satisfy the requirements of the preceding sentence if
such matters are specified in any proxy statement mailed to
all stockholders entitled to vote on such matter or matters.
With respect to any vote or consent as to which the first
sentence of this Subsection 8.3(c) applies, the outstanding
share of Class Pilot MEC Preferred Stock, together with the
outstanding shares of the Class IAM Preferred Stock and the
outstanding shares of Class SAM Preferred Stock, will
represent the Voting Fraction (expressed as a percentage) of
the votes to be cast in connection with matters (other than
the election of directors) submitted to the vote of the
holders of the Common Stock and the holders of all other
outstanding securities that vote as a single class together
with the Common Stock. Subject to any amendment of this
Restated Certificate after the date hereof, it is the intent
of this Restated Certificate that this Section 8.3 (with
respect to the Class Pilot MEC Preferred Stock), Article
FOURTH, Part VIII, Section 8.3 of the Restated Certificate
(with respect to the Class IAM Preferred Stock), and Article
FOURTH, Part IX, Section 8.3 of the Restated Certificate
(with respect to the Class SAM Preferred Stock), be
interpreted together to achieve the foregoing result. With
respect to any vote or consent as to which the first
sentence of this Section 8.3(c) does not apply, the Class
Pilot MEC Preferred Stock shall not have any voting rights
except as provided by Sections 8.1, 8.2 and 8.4 and
applicable law; provided, however, that if the Termination
Date occurs directly or indirectly as a result of an
Uninstructed Trustee Action then, notwithstanding anything
to the contrary contained herein, the voting rights of the
Class Pilot MEC Preferred Stock set forth in this Section
8.3 shall continue until the anniversary of the Issue Date
occurring in the year 2010. For purposes of the proviso in
the immediately preceding sentence, the Termination Date
shall be deemed to have occurred as a result of an
Uninstructed Trustee Action if the Termination Date occurs
within one year of such Uninstructed Trustee Action.
8.4 The affirmative vote or written consent of the
holder of the share of Class Pilot MEC Preferred Stock,
voting separately as a class, shall be necessary for
authorizing, effecting or validating the amendment,
alteration or repeal (including any amendment, alteration or
repeal by operation of merger or consolidation) of any of
the provisions of this Restated Certificate or of any
certificate amendatory thereof or supplemental thereto
(including any Certificate of Designation, Preferences and
Rights or any similar document relating to any series of
Serial Preferred Stock) which would adversely affect the
preferences, rights, powers or privileges of the Class Pilot
MEC Preferred Stock.
8.5 For purposes of the foregoing provisions of
Sections 8.1 and 8.4, each share of Class Pilot MEC
Preferred Stock shall have one (1) vote per share.
Section 9. Redemption.
9.1 The share of Class Pilot MEC Preferred Stock
shall, to the extent of funds legally available therefor and
subject to the other provisions of this Restated
Certificate, be automatically redeemed on the ALPA
Termination Date, at a price of $0.01 per share of Class
Pilot MEC Preferred Stock, as provided hereinbelow. As
promptly as reasonably possible following the occurrence of
the ALPA Termination Date, the Corporation shall give notice
thereof and of the redemption under this Section 9 to the
record holder of the Class Pilot MEC Preferred Stock. From
and after the redemption provided for in this Section 9.1,
all rights of the holder of the Class Pilot MEC Preferred
Stock as such, except the right to receive the redemption
price of such shares upon the surrender of the certificate
formerly representing the same, shall cease and terminate
and such share shall not thereafter be deemed to be
outstanding for any purpose whatsoever.
9.2 The share of Class Pilot MEC Preferred Stock
shall, to the extent of funds legally available therefor and
subject to the other provisions of this Restated
Certificate, be automatically redeemed upon any purported
transfer thereof other than as expressly permitted under
Section 1.2. The redemption price to be paid in connection
with any redemption shall be $0.01 per share of Class Pilot
MEC Preferred Stock. Upon any such redemption, all rights
of the holder of Class Pilot MEC Preferred Stock as such,
except the right to receive the redemption price of such
share upon the surrender of the certificate formerly
representing the same, shall cease and terminate and such
share shall not thereafter be deemed to be outstanding for
any purpose whatsoever.
9.3 The holder of the share of Class Pilot MEC
Preferred Stock so redeemed pursuant to Section 9.1 or 9.2
shall present and surrender his certificate formerly
representing such share to the Corporation and thereupon the
redemption price of such share shall be paid to or on the
order of the person whose name appears on such certificate
as the owner thereof and the surrendered certificate shall
be cancelled.
Section 10. Record Holders. The Corporation and
the Transfer Agent (if other than the Corporation) may deem
and treat the record holder of the share of Class Pilot MEC
Preferred Stock as the true and lawful owner thereof for all
purposes, and, except as otherwise provided by law, neither
the Corporation nor the Transfer Agent shall be affected by
any notice to the contrary.
PART VIII
Class IAM Junior Preferred Stock
Unless otherwise indicated, any reference in this
Article FOURTH, Part VIII to "Section", "Subsection",
"paragraph", "subparagraph" or "clause" shall refer to a
Section, Subsection, paragraph, subparagraph or clause of
this Article FOURTH, Part VIII.
Section 1. Number of Shares; Designation; Issuance;
Restrictions on Transfer.
1.1 The Class IAM Junior Preferred Stock of the
Corporation (the "Class IAM Preferred Stock") shall consist
of one (1) share, par value $0.01.
1.2 The share of Class IAM Preferred Stock shall be
issued only to (i) the International Association of
Machinists and Aerospace Workers (the "IAM") pursuant to the
IAM's 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 Air Lines, Inc. or (ii) a duly authorized agent
acting for the benefit of the IAM. Any purported sale,
transfer, pledge or other disposition (hereinafter a
"transfer") of the share of Class IAM Preferred Stock to any
person, other than a successor to the IAM or a duly
authorized agent acting for the benefit of such successor,
shall be null and void and of no force and effect. Upon any
purported transfer of the share of Class IAM Preferred Stock
by the holder thereof other than as expressly permitted
above, and without any further action by the Corporation or
such holder, such share shall, to the extent of funds
legally available therefor and subject to the other
provisions of this Restated Certificate, be automatically
redeemed by the Corporation in accordance with Section 9
hereof, and thereupon such share shall no longer be deemed
outstanding, and neither such holder nor any purported
transferee thereof shall have in respect thereof any of the
voting powers, preferences or relative, participating,
optional or special rights ascribed to the share of Class
IAM Preferred Stock hereunder, but rather such holder
thereafter shall only be entitled to receive the amount
payable upon redemption in accordance with Section 9. The
certificate representing the share of Class IAM Preferred
Stock shall be legended to reflect the restrictions on
transfer and automatic redemption provided for herein.
Section 2. Definitions. For purposes of the Class
IAM Preferred Stock, the following terms shall have the
meanings indicated:
2.1 "Affiliate" shall have the meaning defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended,
or any successor thereto.
2.2 "Board of Directors" shall mean the board of
directors of the Corporation or any committee thereof
authorized by such board of directors to perform any of its
responsibilities with respect to the Class IAM Preferred
Stock.
2.3 "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which state or federally
chartered banking institutions in New York, New York are not
required to be open.
2.4 "Class I Preferred Stock" shall mean the Class I
Junior Preferred Stock, par value $0.01 per share, of the
Corporation.
2.5 "Class IAM Preferred Stock" shall have the meaning
set forth in Section 1 hereof.
2.6 "Class M Voting Preferred Stock" shall mean the
Class M ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.7 "Class P Voting Preferred Stock" shall mean the
Class P ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.8 "Class Pilot MEC Preferred Stock" shall mean the
Class Pilot MEC Junior Preferred Stock, par value $0.01 per
share, of the Corporation.
2.9 "Class S Voting Preferred Stock" shall mean the
Class S ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.10 "Class SAM Preferred Stock" shall mean the Class
SAM Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
2.11 "Common Stock" shall mean the common stock, par
value $0.01 per share, of the Corporation.
2.12 "Director Preferred Stocks" shall mean,
collectively, the Class I Preferred Stock, the Class IAM
Preferred Stock, the Class Pilot MEC Preferred Stock and the
Class SAM Preferred Stock.
2.13 "ESOP Convertible Preferred Stocks" shall mean,
collectively, the Class 1 ESOP Convertible Preferred Stock
and the Class 2 ESOP Convertible Preferred Stock, each of
the par value of $0.01 per share, of the Corporation.
2.14 "IAM Fraction" shall mean 0.3713.
2.15 "IAM Termination Date" shall have the meaning set
forth in Section 8 hereof.
2.16 "Issue Date" shall mean the first date on which
shares of Class IAM Preferred Stock are issued.
2.17 "Liquidation Preference" shall have the meaning
set forth in Section 4.1 hereof.
2.18 "Measuring Date" shall mean that date which is the
365th day following the Issue Date.
2.19 "Restated Certificate" shall mean the Restated
Certificate of Incorporation of the Corporation, as amended
from time to time.
2.20 "Series A Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series A Convertible Preferred Stock in
Article FOURTH, Part I.A of this Restated Certificate.
2.21 "Series B Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series B Preferred Stock in Article
FOURTH, Part I.B of this Restated Certificate.
2.22 "Series C Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series C Junior Participating Preferred
Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.23 "Series D Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series D Redeemable Preferred Stock in
Article FOURTH, Part I.D of this Restated Certificate.
2.24 [Reserved]
2.25 "set apart for payment" shall be deemed to
include, without any action other than the following, the
recording by the Corporation in its accounting ledgers of
any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so
paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any
class or series of stock of the Corporation ranking on a
parity with or junior to the Class IAM Preferred Stock as to
distributions upon liquidation, dissolution or winding up of
the Corporation are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other
similar agent, then "set apart for payment" with respect to
the Class IAM Preferred Stock shall mean, with respect to
such distributions, placing such funds in a separate account
or delivering such funds to a disbursing, paying or other
similar agent.
2.26 "Termination Date" shall have the meaning set
forth in Article FIFTH, Section 1.72 of this Restated
Certificate.
2.27 "Trading Day" shall mean any day on which the
securities in question are traded on the New York Stock
Exchange, Inc. (the "NYSE"), or if such securities are not
listed or admitted for trading or quoted on the NYSE, on the
principal national securities exchange on which such
securities are listed or admitted, or if not listed or
admitted for trading or quoted on any national securities
exchange, on the Nasdaq National Market, or if such
securities are not quoted on such National Market, in the
applicable securities market in which the securities are
traded.
2.28 "Transfer Agent" means the Corporation or such
agent or agents of the Corporation as may be designated from
time to time by the Board of Directors as the transfer agent
for the Class IAM Preferred Stock.
2.29 "Voting Fraction" shall mean 0.55 with respect to
votes or consents that have a record date on or prior to the
Measuring Date, and a fraction that is equivalent to the
Adjusted Percentage (as defined in Section 1.10 of the
Agreement and Plan of Recapitalization, dated as of March
25, 1994, among the Corporation, the Air Line Pilots
Association, International and International Association of
Machinists and Aerospace Workers, as amended from time to
time) as in effect at the close of business on the Measuring
Date with respect to votes and consents that have a record
date after the Measuring Date.
2.30 "Voting Preferred Stocks" shall mean,
collectively, the Class P Voting Preferred Stock, the Class
M Voting Preferred Stock and the Class S Voting Preferred
Stock.
Section 3. Dividends. The holder of the share of
Class IAM Preferred Stock as such shall not be entitled to
receive any dividends or other distributions (except as
provided in Section 4).
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or
set apart for payment to the holders of any class or series
of stock of the Corporation that ranks junior to the Class
IAM Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation,
the holder of the share of Class IAM Preferred Stock shall
be entitled to receive $0.01 per share of Class IAM
Preferred Stock (the "Liquidation Preference"), but such
holder shall not be entitled to any further payment. If,
upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds
thereof, distributable to the holder of the share of Class
IAM Preferred Stock shall be insufficient to pay in full the
Liquidation Preference and the liquidation preference on all
other shares of any class or series of stock of the
Corporation that ranks on a parity with the Class IAM
Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation,
then such assets, or the proceeds thereof, shall be
distributed among the holder of the share of Class IAM
Preferred Stock and any such other parity stock ratably in
accordance with the respective amounts that would be payable
on such share of Class IAM Preferred Stock and any such
other parity stock if all amounts payable thereon were paid
in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with or into one
or more corporations, or (ii) a sale, lease, exchange or
transfer of all or substantially all of the Corporation's
assets, shall not be deemed to be a liquidation, dissolution
or winding up, voluntary or involuntary, of the Corporation.
4.2 Subject to the rights of the holders of shares of
any series or class of stock ranking prior to or on a parity
with the Class IAM Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of
the Corporation, after payment shall have been made to the
holder of the share of Class IAM Preferred Stock, as and to
the fullest extent provided in this Section 4, any series or
class of stock of the Corporation that ranks junior to the
Class IAM Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation,
shall, subject to the respective terms and provisions (if
any) applying thereto, be entitled to receive any and all
assets remaining to be paid or distributed, and the holder
of the share of Class IAM Preferred Stock shall not be
entitled to share therein.
Section 5. Shares to be Retired. The share of
Class IAM Preferred Stock which shall have been issued and
reacquired in any manner (other than redemption pursuant to
Section 9.1) by the Corporation shall be retired and
restored to the status of an authorized but unissued share
of Class IAM Preferred Stock and, in the event of the
redemption of such share pursuant to Section 9.1 hereof,
shall not be reissued.
Section 6. Ranking.
6.1 Any class or series of stock of the Corporation
shall be deemed to rank:
(a) prior to the Class IAM Preferred Stock as to
the distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class
or series shall be entitled to the receipt of amounts
distributable upon liquidation, dissolution or winding
up in preference or priority to the holder of Class IAM
Preferred Stock;
(b) on a parity with the Class IAM Preferred
Stock as to the distribution of assets upon
liquidation, dissolution or winding up, whether or not
the liquidation prices per share thereof be different
from those of the Class IAM Preferred Stock, if the
holders of such class or series and the Class IAM
Preferred Stock shall be entitled to the receipt of
amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective
liquidation preferences, without preference or priority
one over the other; and
(c) junior to the Class IAM Preferred Stock, as
to the distribution of assets upon liquidation,
dissolution or winding up, if the holder of Class IAM
Preferred Stock shall be entitled to the receipt of
amounts distributable upon liquidation, dissolution or
winding up in preference or priority to the holders of
shares of such class or series.
6.2 The Series A Preferred Stock, the Series B
Preferred Stock, the Series D Preferred Stock and the ESOP
Convertible Preferred Stocks shall be deemed to rank prior
to the Class IAM Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up. The other
Director Preferred Stocks and the Voting Preferred Stocks
shall each be deemed to rank on a parity with the Class IAM
Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up. The Common Stock
and the Series C Preferred Stock shall each be deemed to
rank junior to the Class IAM Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation enters into any
consolidation, merger, share exchange or similar
transaction, however named, involving the Corporation or its
subsidiary, United Air Lines, Inc. ("United") (or any
successor to all or substantially all the assets or business
of United), pursuant to which the outstanding shares of
Common Stock are to be exchanged for or changed,
reclassified or converted into securities of any successor
or resulting or other company (including the Corporation),
or cash or other property (each of the foregoing
transactions is referred to herein as a "Merger
Transaction"), proper provision shall be made so that, upon
consummation of such transaction, the share of Class IAM
Preferred Stock shall be converted, reclassified or changed
into or exchanged for preferred stock of such successor or
resulting or other company having, in respect of such
company, the same powers, preferences and relative,
participating, optional or other special rights (including
the rights provided by this Section 7), and the
qualifications, limitations or restrictions thereof, that
the Class IAM Preferred Stock had, in respect of the
Corporation, immediately prior to such transaction;
specifically including, without limitation, the right, until
the IAM Termination Date, to elect one member of the board
of directors (or similar governing body) of such company.
7.2 In case the Corporation shall enter into any
agreement providing for any Merger Transaction, then the
Corporation shall as soon as practicable thereafter (and in
any event at least fifteen (15) Business Days before
consummation of such transaction) give notice of such
agreement and the material terms thereof to the holder of
the share of Class IAM Preferred Stock. The Corporation
shall not consummate any such Merger Transaction unless all
of the terms of this Section 7 and Section 8 have been
complied with.
Section 8. Voting. The holder of the share of
Class IAM Preferred Stock shall have the following voting
rights:
8.1 Until the later of (i) the Termination Date and
(ii) such time as there are no longer any persons
represented by the IAM (or any successor organization)
employed by the Corporation or any of its Affiliates (the
"IAM Termination Date"), the holder of the share of Class
IAM Preferred Stock shall have the right (a) voting as a
separate class, to elect one Class IAM Director (as defined
in Article FIFTH, Section 2.2 of this Restated Certificate)
to the Board of Directors and (b) voting together as a
single class with the holders of Common Stock and the
holders of such other classes or series of stock that vote
together with the Common Stock as a single class, to vote on
all matters submitted to a vote of the holders of Common
Stock of the Corporation (other than the election of Public
Directors, as defined in Article FIFTH, Section 2.3), except
as otherwise required by law.
8.2 Notwithstanding anything to the contrary in
Sections 7.1, 7.2 or 8.1, if at any time prior to the
Termination Date, (x) the trustee under either (i) the UAL
Corporation Employee Stock Ownership Plan (the "ESOP") or
(ii) the UAL Corporation Supplemental ESOP (together with
the ESOP, the "Plan") either (a) fails to solicit, in
accordance with the Plan, timely instructions from Plan
participants, the Committee of the ESOP (as defined in the
ESOP and hereinafter referred to as the "ESOP Committee") or
the Committee of the Supplemental ESOP (as defined in the
Supplemental ESOP and, together with the ESOP Committee, the
"Committees"), as applicable ("Instructions"), with respect
to any matter referred to in clause (y) below, or (b) fails
to act in accordance with such Instructions with respect to
any matter referred to in clause (y) below (but only if such
failure to follow such Instructions is attributable to (i)
the trustee having concluded that, based upon the terms of
such transaction, the trustee's fiduciary duties require the
trustee to fail to follow such Instructions or (ii) the
unenforceability of the provisions of the ESOP and/or the
Supplemental ESOP relating to the solicitation and/or
following of such Instructions); (y) either (i) but for the
provisions of Subsection 8.3(a) and Article FOURTH, Part
VII, Subsection 8.3(a) and Article FOURTH, Part IX,
Subsection 8.3(a) of this Restated Certificate, the vote of
the stockholders of the Corporation would have been
sufficient, under applicable law, stock exchange listing
requirements and this Restated Certificate, as applicable,
to approve the Merger Transaction or other Control
Transaction (as defined in the ESOP) in question (or, if no
stockholder approval would be required by this Restated
Certificate, applicable stock exchange listing requirements
or applicable law, the trustee enters into a binding
commitment in connection with a Control Transaction or a
Control Transaction is consummated) or (ii) following the
Issue Date, the trustee disposes of an aggregate of 10% or
more of the Common Equity (as defined in Article FIFTH,
Section 1.26 of this Restated Certificate) initially
represented by the ESOP Convertible Preferred Stocks other
than in connection with Plan distributions; and (z) any of
the following occur: (a) Instructions with respect to a
matter are given, the trustee fails to follow such
Instructions and such transaction would not have been
approved by stockholders of the Corporation in accordance
with the applicable provisions of this Restated Certificate
(excluding Subsection 8.3(a) and Article FOURTH, Part VII,
Subsection 8.3(a) and Article FOURTH, Part IX, Subsection
8.3(a) of this Restated Certificate), applicable stock
exchange listing requirements or applicable law if the
trustee had acted in accordance with such Instructions (or,
if no vote of stockholders would be required by this
Restated Certificate, applicable stock exchange listing
requirements or applicable law, such action by the trustee
in respect of such transaction as to which Instructions were
so given would not have been authorized had the trustee
acted in accordance with such Instructions), (b) the trustee
fails to solicit timely Instructions with respect to such
matters, such transaction requires the approval of
stockholders of the Corporation under applicable provisions
of this Restated Certificate, applicable stock exchange
listing requirements or applicable law and such approval
would not have been obtained (without regard to Subsection
8.3(a) and Article FOURTH, Part VII, Subsection 8.3(a) and
Article FOURTH, Part IX, Subsection 8.3(a) of this Restated
Certificate) if the trustee had voted against such
transaction all of the votes entitled to be cast by such
trustee as the holder of securities of the Corporation held
under the Plan, or (c) the trustee fails to follow
Instructions or to solicit timely Instructions with respect
to such matter and no vote of stockholders of the
Corporation is required by the Restated Certificate,
applicable stock exchange listing requirements or applicable
law to approve such transaction (an action or inaction by
the trustee under clauses (x) and (z) in connection with a
transaction referred to in clause (y) being referred to
herein as an "Uninstructed Trustee Action"); then, (I) the
Merger Transaction or other Control Transaction referred to
in clause (y)(i) of Section 8.2 involving an Uninstructed
Trustee Action, if it requires stockholder approval under
applicable law, stock exchange listing requirements or this
Restated Certificate, must also be approved by the vote of
stockholders described in Subsection 8.3(a), and (II) from
and after such Uninstructed Trustee Action, in addition to
the voting rights provided for under Section 8.1, the share
of Class IAM Preferred Stock shall have the voting rights
set forth in Subsection 8.3(b).
8.3 (a) In addition to any other vote or consent of
stockholders required by this Restated Certificate,
applicable stock exchange listing requirements or
applicable law, any Merger Transaction or other Control
Transaction referred to in clause (y)(i) of Section 8.2
involving an Uninstructed Trustee Action that requires
stockholder approval under applicable law, stock
exchange listing requirements or this Restated
Certificate must also be approved by at least a
majority of the votes entitled to be cast in respect of
all outstanding shares of the Class Pilot MEC Preferred
Stock, the Class IAM Preferred Stock, the Class SAM
Preferred Stock, the Common Stock and such other
classes and series of stock that vote together with the
Common Stock as a single class (other than the Voting
Preferred Stocks), with all such shares voting, for
purposes of this paragraph, as a single class, and for
purposes of such vote the Class IAM Preferred Stock
shall be entitled to cast a number of votes calculated
in accordance with Subsection 8.3(c).
(b) Except as otherwise required by law or provided in
this Restated Certificate, from and after an
Uninstructed Trustee Action, the holder of the share of
Class IAM Preferred Stock shall be entitled to vote on
all matters submitted to a vote of the holders of
Common Stock, voting together as a single class with
the holders of Class Pilot MEC Preferred Stock, the
holders of Class SAM Preferred Stock, the holders of
Common Stock and the holders of such other classes and
series of stock that vote together with the Common
Stock as a single class (other than the Voting
Preferred Stocks) and for purposes of such vote the
Class IAM Preferred Stock shall be entitled to cast a
number of votes calculated in accordance with
Subsection 8.3(c); provided, however, that, except as
provided in Section 8.1, prior to the Termination Date,
the holder of the share of Class IAM Preferred Stock
shall not be entitled to vote with the holders of
Common Stock with respect to the election of the
members of the Board of Directors.
(c) With respect to any vote or consent (i) with
respect to which the Class IAM Preferred Stock is
entitled to vote pursuant to Subsection 8.3(a) or (ii)
with respect to which the Class IAM Preferred Stock is
entitled to vote pursuant to Subsection 8.3(b) and the
record date for which occurs after an Uninstructed
Trustee Action and prior to the Termination Date, the
holder of the share of Class IAM Preferred Stock shall
be entitled to a number of votes (rounded to the
nearest whole vote) equal to the product of (I) the IAM
Fraction, (II) the Voting Fraction and (III) a
fraction, the numerator of which shall be the number of
votes entitled to be cast on the matter by the holders
of all outstanding securities of the Corporation
(excluding the Class Pilot MEC Preferred Stock and the
Class SAM Preferred Stock), and the denominator of
which shall be the excess of one (1.0) over the Voting
Fraction (the "Attributed Vote"). If, with respect to
any matter as to which the immediately preceding
sentence shall apply, (i) shares of Common Stock are
held under the ESOP or the Supplemental ESOP which have
been issued upon conversion of the ESOP Convertible
Preferred Stocks ("Subject Shares"), (ii) with respect
to any action as to which the trustee is required, in
accordance with the terms of the ESOP or the
Supplemental ESOP, to solicit Instructions, the trustee
has solicited such Instructions and (iii) the trustee
has voted some or all of the Subject Shares in
accordance with such Instructions (the shares which the
trustee has voted in accordance with such Instructions,
"Instructed Trustee Common Shares"), then the
Attributed Votes shall be reduced by the Pro Rata
Reduction. The "Pro Rata Reduction" shall equal, with
respect to any such matter, the sum of (I) the product
of (x) a fraction, the numerator of which is the number
of votes represented by Subject Shares as to which
members of the IAM Employee Group (or the Committees)
gave Instructions to the trustee to vote in favor of
the matter, and the denominator of which is the number
of votes represented by Subject Shares as to which
members of all Employee Groups (as defined in the ESOP)
(or the Committees) gave Instructions to the trustee to
vote in favor of the matter (such denominator being
referred to as the "Instructed Pro Vote") and (y) the
number of votes represented by Subject Shares that the
trustee actually voted in favor of the matter (but in
no event more than the Instructed Pro Vote); and (II)
the product of (x) a fraction, the numerator of which
is the number of votes represented by Subject Shares as
to which members of the IAM Employee Group (or the
Committees) gave instructions to the trustee to vote
against the matter, and the denominator of which is the
number of votes represented by Subject Shares as to
which members of all Employee Groups (or the
Committees) gave Instructions to the trustee to vote
against the matter (such denominator being referred to
as the "Instructed Con Vote") and (y) the number of
votes represented by Subject Shares that the trustee
actually voted against the matter (but in no event more
than the Instructed Con Vote).
For purposes of this Section 8.3, the Corporation shall
certify to the holders of Class IAM Preferred Stock and to
the judges or similar officials appointed for the purpose of
tabulating votes at any meeting of stockholders as soon as
practicable following the record date for the determination
of stockholders entitled to notice of or to vote at any
meeting of stockholders, but in no event less than five
Trading Days before such meeting, the number of shares of
Common Stock then outstanding and the number of votes
entitled to be cast on the matter or matters in question by
the holders of all outstanding securities of the Corporation
(excluding the Class Pilot MEC Preferred Stock and the Class
SAM Preferred Stock). The Corporation shall be deemed to
satisfy the requirements of the preceding sentence if such
matters are specified in any proxy statement mailed to all
stockholders entitled to vote on such matter or matters.
With respect to any vote or consent as to which the first
sentence of this Subsection 8.3(c) applies, the outstanding
share of Class IAM Preferred Stock, together with the
outstanding shares of the Class Pilot MEC Preferred Stock
and the outstanding shares of Class SAM Preferred Stock,
will represent the Voting Fraction (expressed as a
percentage) of the votes to be cast in connection with
matters (other than the election of directors) submitted to
the vote of the holders of the Common Stock and the holders
of all other outstanding securities that vote as a single
class together with the Common Stock. Subject to any
amendment of this Restated Certificate after the date
hereof, it is the intent of this Restated Certificate that
this Section 8.3 (with respect to the Class IAM Preferred
Stock), Article FOURTH, Part VII, Section 8.3 of the
Restated Certificate (with respect to the Class Pilot MEC
Preferred Stock), and Article FOURTH, Part IX, Section 8.3
of the Restated Certificate (with respect to the Class SAM
Preferred Stock), be interpreted together to achieve the
foregoing result. With respect to any vote or consent as to
which the first sentence of this Subsection 8.3(c) does not
apply, the Class IAM Preferred Stock shall not have any
voting rights except as provided by Sections 8.1, 8.2 and
8.4 and applicable law provided, however, that if the
Termination Date occurs directly or indirectly as a result
of an Uninstructed Trustee Action then, notwithstanding
anything to the contrary contained herein, the voting rights
of the Class IAM Preferred Stock set forth in this Section
8.3 shall continue until the anniversary of the Issue Date
occurring in the year 2010. For purposes of the proviso in
the immediately preceding sentence, the Termination Date
shall be deemed to have occurred as a result of an
Uninstructed Trustee Action if the Termination Date occurs
within one year of such Uninstructed Trustee Action.
8.4 The affirmative vote or written consent of the
holder of the share of Class IAM Preferred Stock, voting
separately as a class, shall be necessary for authorizing,
effecting or validating the amendment, alteration or repeal
(including any amendment, alteration or repeal by operation
of merger or consolidation) of any of the provisions of this
Restated Certificate or of any certificate amendatory
thereof or supplemental thereto (including any Certificate
of Designation, Preferences and Rights or any similar
document relating to any series of Serial Preferred Stock)
which would adversely affect the preferences, rights, powers
or privileges of the Class IAM Preferred Stock.
8.5 For purposes of the foregoing provisions of
Sections 8.1 and 8.4, each share of Class IAM Preferred
Stock shall have one (1) vote per share.
Section 9. Redemption.
9.1 The share of Class IAM Preferred Stock shall, to
the extent of funds legally available therefor and subject
to the other provisions of this Restated Certificate, be
automatically redeemed on the IAM Termination Date, at a
price of $0.01 per share of Class IAM Preferred Stock, as
provided hereinbelow. As promptly as reasonably possible
following the occurrence of the IAM Termination Date, the
Corporation shall give notice thereof and of the redemption
under this Section 9 to the record holder of the Class IAM
Preferred Stock. From and after the redemption provided for
in this Section 9.1, all rights of the holder of the Class
IAM Preferred Stock as such, except the right to receive the
redemption price of such shares upon the surrender of the
certificate formerly representing the same, shall cease and
terminate and such share shall not thereafter be deemed to
be outstanding for any purpose whatsoever.
9.2 The share of Class IAM Preferred Stock shall, to
the extent of funds legally available therefor and subject
to the other provisions of this Restated Certificate, be
automatically redeemed upon any purported transfer thereof
other than as expressly permitted under Section 1.2. The
redemption price to be paid in connection with any
redemption shall be $0.01 per share of Class IAM Preferred
Stock. Upon any such redemption, all rights of the holder
of Class IAM Preferred Stock as such, except the right to
receive the redemption price of such share upon the
surrender of the certificate formerly representing the same,
shall cease and terminate and such share shall not
thereafter be deemed to be outstanding for any purpose
whatsoever.
9.3 The holder of the share of Class IAM Preferred
Stock so redeemed pursuant to Sections 9.1 or 9.2 shall
present and surrender his certificate formerly representing
such share to the Corporation and thereupon the redemption
price of such share shall be paid to or on the order of the
person whose name appears on such certificate as the owner
thereof and the surrendered certificate shall be cancelled.
Section 10. Record Holders. The Corporation and
the Transfer Agent (if other than the Corporation) may deem
and treat the record holder of the share of Class IAM
Preferred Stock as the true and lawful owner thereof for all
purposes, and, except as otherwise provided by law, neither
the Corporation nor the Transfer Agent shall be affected by
any notice to the contrary.
PART IX
Class SAM Junior Preferred Stock
Unless otherwise indicated, any reference in this
Article FOURTH, Part IX, to "Section", "Subsection",
"paragraph", "subparagraph" or "clause" shall refer to a
Section, Subsection, paragraph, subparagraph or clause of
this Article FOURTH, Part IX.
Section 1. Number of Shares; Designation; Issuance;
Restrictions on Transfer.
1.1 The Class SAM Junior Preferred Stock of the
Corporation (the "Class SAM Preferred Stock") shall consist
of ten shares, par value $0.01 per share.
1.2 Shares of Class SAM Preferred Stock shall be
issued only to the persons who are designated, pursuant to
Section 8 of the Class SAM Preferred Stock Stockholders'
Agreement, to be the nominee for election pursuant to
Article FIFTH, Section 2.2 of this Restated Certificate as
the Salaried/Management Employee Director (the
"Salaried/Management Director") or as a Designated
Stockholder (as defined in the Class SAM Stockholders'
Agreement, the "Designated Stockholder"). Any purported
sale, transfer, pledge (other than a pledge made in
accordance with the Class SAM Stockholders' Agreement) or
other disposition (hereinafter a "transfer") of shares of
Class SAM Preferred Stock by a holder thereof other than to
(x) any person to whom shares of Class SAM Preferred Stock
may be issued in accordance with the immediately prior
sentence, (y) another person designated pursuant to Section
8 of the Class SAM Stockholders' Agreement or (z) in the
case where no successor Salaried/Management Director (the
"Successor Salaried/Management Director") has been elected
concurrently with the Salaried/Management Director's
removal, resignation, failure to remain qualified, failure
to be re-elected or otherwise ceasing to serve as
Salaried/Management Director, to the Corporation (to be held
in escrow pending transfer to the Successor
Salaried/Management Director when such successor is duly
elected) shall be null and void and of no force and effect.
Upon any purported transfer other than as expressly
permitted above, and without any further action by the
Corporation or such holder, such share of Class SAM
Preferred Stock so purported to be transferred shall, to the
extent of funds legally available therefor and subject to
the other provisions of this Restated Certificate, be
automatically redeemed by the Corporation in accordance with
Section 9 hereof, and thereupon such share shall no longer
be deemed outstanding and neither such holder nor any
purported transferee thereof shall have in respect thereof
any of the voting powers, preferences or relative,
participating, optional or special rights ascribed to the
shares of Class SAM Preferred Stock hereunder, but rather
such holder thereafter shall only be entitled to receive the
amount payable upon redemption in accordance with Section 9.
Certificates representing the shares of Class SAM Preferred
Stock shall be legended to reflect the restrictions on
transfer and automatic redemption provided for herein.
Section 2. Definitions. For purposes of the Class
SAM Preferred Stock, the following terms shall have the
meanings indicated:
2.1 "ALPA Termination Date" shall have the meaning set
forth in Article FOURTH, Part VII, Section 8.1 of this
Restated Certificate.
2.2 "Board of Directors" shall mean the board of
directors of the Corporation or any committee thereof
authorized by such board of directors to perform any of its
responsibilities with respect to the Class SAM Preferred
Stock.
2.3 "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which state or federally
chartered banking institutions in New York, New York are not
required to be open.
2.4 "Class I Preferred Stock" shall mean the Class I
Junior Preferred Stock, par value $0.01 per share, of the
Corporation.
2.5 "Class IAM Preferred Stock" shall mean the Class
IAM Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
2.6 "Class M Voting Preferred Stock" shall mean the
Class M ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.7 "Class P Voting Preferred Stock" shall mean the
Class P ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.8 "Class Pilot MEC Preferred Stock" shall mean the
Class Pilot MEC Junior Preferred Stock, par value $0.01 per
share, of the Corporation.
2.9 "Class S Voting Preferred Stock" shall mean the
Class S ESOP Voting Junior Preferred Stock, par value $0.01
per share, of the Corporation.
2.10 "Class SAM Preferred Stock" shall have the meaning
set forth in Section 1 hereof.
2.11 "Class SAM Stockholders' Agreement" shall mean the
Class SAM Preferred Stockholders' Agreement dated as of July
12, 1994 among the Corporation and the individuals named
therein, a copy of which is on file at the office of the
Secretary of the Corporation.
2.12 "Common Stock" shall mean the common stock of the
Corporation, par value $0.01 per share.
2.13 "Director Preferred Stocks" shall mean
collectively, the Class I Preferred Stock, the Class IAM
Preferred Stock, the Class Pilot MEC Preferred Stock and the
Class SAM Preferred Stock.
2.14 "ESOP Convertible Preferred Stocks" shall mean,
collectively, the Class 1 ESOP Convertible Preferred Stock
and the Class 2 ESOP Convertible Preferred Stock, each of
the par value of $0.01 per share, of the Corporation.
2.15 "IAM Termination Date" shall have the meaning set
forth in Article FOURTH, Part VIII, Section 8.1 of this
Restated Certificate.
2.16 "Issue Date" shall mean the first date on which
shares of Class SAM Preferred Stock are issued.
2.17 "Liquidation Preference" shall have the meaning
set forth in Section 4.1 hereof.
2.18 "Measuring Date" shall mean that date which is the
365th day following the Issue Date.
2.19 "Restated Certificate" shall mean the Restated
Certificate of Incorporation of the Corporation, as amended
from time to time.
2.20 "Salaried/Management Employee Director" shall have
the meaning set forth in Section 1.2 hereof.
2.21 "SAM Fraction" shall mean 0.1664.
2.22 "Series A Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series A Convertible Preferred Stock in
Article FOURTH, Part I.A of this Restated Certificate.
2.23 "Series B Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series B Preferred Stock in Article
FOURTH, Part I.B of this Restated Certificate.
2.24 "Series C Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series C Junior Participating Preferred
Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.25 "Series D Preferred Stock" shall mean the series
of Serial Preferred Stock of the Corporation, without par
value, designated Series D Redeemable Preferred Stock in
Article FOURTH, Part I.D of this Restated Certificate.
2.26 [Reserved]
2.27 "set apart for payment" shall be deemed to
include, without any action other than the following, the
recording by the Corporation in its accounting ledgers of
any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so
paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any
class or series of stock of the Corporation ranking on a
parity with or junior to the Class SAM Preferred Stock as to
distributions upon liquidation, dissolution or winding up of
the Corporation are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other
similar agent, then "set apart for payment" with respect to
the Class SAM Preferred Stock shall mean, with respect to
such distributions, placing such funds in a separate account
or delivering such funds to a disbursing, paying or other
similar agent.
2.28 "Termination Date" shall have the meaning set
forth in Article FIFTH, Section 1.72 of this Restated
Certificate.
2.29 "Trading Day" shall mean any day on which the
securities in question are traded on the New York Stock
Exchange, Inc. (the "NYSE"), or if such securities are not
listed or admitted for trading or quoted on the NYSE, on the
principal national securities exchange on which such
securities are listed or admitted, or if not listed or
admitted for trading or quoted on any national securities
exchange, on the Nasdaq National Market, or if such
securities are not quoted on such National Market, in the
applicable securities market in which the securities are
traded.
2.30 "Transfer Agent" means the Corporation or such
agent or agents of the Corporation as may be designated from
time to time by the Board of Directors as the transfer agent
for the Class SAM Preferred Stock.
2.31 "Voting Fraction" shall mean 0.55 with respect to
votes or consents that have a record date on or prior to the
Measuring Date, and a fraction that is equivalent to the
Adjusted Percentage (as defined in Section 1.10 of the
Agreement and Plan of Recapitalization, dated as of March
25, 1994, among the Corporation, the Air Line Pilots
Association, International and International Association of
Machinists and Aerospace Workers, as amended from time to
time) as in effect at the close of business on the Measuring
Date with respect to votes and consents that have a record
date after the Measuring Date.
2.32 "Voting Preferred Stocks" shall mean,
collectively, the Class P Voting Preferred Stock, the Class
M Voting Preferred Stock and the Class S Voting Preferred
Stock.
Section 3. Dividends. The holders of shares of
the Class SAM Preferred Stock as such shall not be entitled
to receive any dividends or other distributions (except as
provided in Section 4).
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or
set apart for payment to the holders of any class or series
of stock of the Corporation that ranks junior to the Class
SAM Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation,
the holders of the shares of Class SAM Preferred Stock shall
be entitled to receive $0.01 per share of Class SAM
Preferred Stock (the "Liquidation Preference"), but such
holders shall not be entitled to any further payment. If,
upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds
thereof, distributable to the holders of the shares of Class
SAM Preferred Stock shall be insufficient to pay in full the
Liquidation Preference and the liquidation preference on all
other shares of any class or series of stock of the
Corporation that ranks on a parity with the Class SAM
Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation,
then such assets, or the proceeds thereof, shall be
distributed among the holders of shares of Class SAM
Preferred Stock and any such other parity stock ratably in
accordance with the respective amounts that would be payable
on such shares of Class SAM Preferred Stock and any such
other parity stock if all amounts payable thereon were paid
in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with or into one
or more corporations, or (ii) a sale, lease, exchange or
transfer of all or substantially all of the Corporation's
assets, shall not be deemed to be a liquidation, dissolution
or winding up, voluntary or involuntary, of the Corporation.
4.2 Subject to the rights of the holders of shares of
any series or class of stock ranking prior to or on a parity
with the Class SAM Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of
the Corporation, after payment shall have been made to the
holders of the Class SAM Preferred Stock, as and to the
fullest extent provided in this Section 4, any series or
other class of stock of the Corporation that ranks junior to
the Class SAM Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up of the
Corporation, shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive
any and all assets remaining to be paid or distributed, and
the holders of the Class SAM Preferred Stock shall not be
entitled to share therein.
Section 5. Shares to be Retired. All shares of
Class SAM Preferred Stock which shall have been issued and
reacquired in any manner (other than redemption pursuant to
Section 9.1) by the Corporation, other than in its capacity
as escrow agent in accordance with Section 1.2 hereof, shall
be retired and restored to the status of authorized but
unissued shares of Class SAM Preferred Stock and, in the
event of redemption of such shares pursuant to Section 9.1
hereof, shall not be reissued.
Section 6. Ranking.
6.1 Any class or series of stock of the Corporation
shall be deemed to rank:
(a) prior to the Class SAM Preferred Stock as to
the distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class
or series shall be entitled to the receipt of amounts
distributable upon liquidation, dissolution or winding
up in preference or priority to the holders of Class
SAM Preferred Stock;
(b) on a parity with the Class SAM Preferred
Stock as to the distribution of assets upon
liquidation, dissolution or winding up, whether or not
the liquidation prices per share thereof be different
from those of the Class SAM Preferred Stock, if the
holders of such class or series and the Class SAM
Preferred Stock shall be entitled to the receipt of
amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective
liquidation preferences, without preference or priority
one over the other; and
(c) junior to the Class SAM Preferred Stock, as
to the distribution of assets upon liquidation,
dissolution or winding up, if the holders of Class SAM
Preferred Stock shall be entitled to the receipt of
amounts distributable upon liquidation, dissolution or
winding up in preference or priority to the holders of
shares of such class or series.
6.2 The Series A Preferred Stock, the Series B
Preferred Stock, the Series D Preferred Stock and the ESOP
Convertible Preferred Stocks shall each be deemed to rank
prior to the Class SAM Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up.
The other Director Preferred Stocks and the Voting Preferred
Stocks shall each be deemed to rank on a parity with the
Class SAM Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up. The Common Stock
and the Series C Preferred Stock shall each be deemed to
rank junior to the Class SAM Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation enters into any
consolidation, merger, share exchange or similar
transaction, however named, involving the Corporation or its
subsidiary, United Air Lines, Inc. ("United") (or any
successor to all or substantially all the assets or business
of United), pursuant to which the outstanding shares of
Common Stock are to be exchanged for or changed,
reclassified or converted into securities of any successor
or resulting or other company (including the Corporation),
or cash or other property (each of the foregoing
transactions is referred to herein as a "Merger
Transaction"), proper provision shall be made so that, upon
consummation of such transaction, the shares of Class SAM
Preferred Stock shall be converted, reclassified or changed
into or exchanged for preferred stock of such successor or
resulting or other company having, in respect of such
company, the same powers, preferences and relative,
participating, optional or other special rights (including
the rights provided by this Section 7), and the
qualifications, limitations or restrictions thereof, that
the Class SAM Preferred Stock had, in respect of the
Corporation, immediately prior to such transaction;
specifically including, without limitation, the right, until
the Class SAM Preferred Stock Termination Date (as defined
in Section 9.1), to elect one member of the board of
directors (or similar governing body) of such company.
7.2 In case the Corporation shall enter into any
agreement providing for any Merger Transaction, then the
Corporation shall as soon as practicable thereafter (and in
any event at least fifteen (15) Business Days before
consummation of such transaction) give notice of such
agreement and the material terms thereof to the holders of
the shares of Class SAM Preferred Stock. The Corporation
shall not consummate any such Merger Transaction unless all
of the terms of this Section 7 and Section 8 have been
complied with.
Section 8. Voting. The holders of shares of Class
SAM Preferred Stock shall have the following voting rights;
provided, however, that no holder of shares of Class SAM
Preferred Stock shall have any right to vote unless at such
time such person is the Salaried/Management Director or the
Designated Stockholder under the Class SAM Stockholders'
Agreement:
8.1 Until the Class SAM Preferred Stock Termination
Date, the holders of the Class SAM Preferred Stock shall
have the right (i) voting separately as a class, to elect
one Salaried/Management Employee Director to the Board of
Directors and (ii) voting together as a single class with
the holders of Common Stock and the holders of such other
classes or series of stock that vote together with the
Common Stock as a single class, to vote on all matters
submitted to a vote of the holders of Common Stock of the
Corporation (other than the election of Public Directors, as
defined in Article FIFTH, Section 2.3), except as otherwise
required by law.
8.2 Notwithstanding anything to the contrary in
Sections 7.1, 7.2 or 8.1, if at any time prior to the
Termination Date, (x) the trustee under either (i) the UAL
Corporation Employee Stock Ownership Plan (the "ESOP") or
(ii) the UAL Corporation Supplemental ESOP (together with
the ESOP, the "Plan") either (a) fails to solicit, in
accordance with the Plan, timely instructions from Plan
participants, the Committee of the ESOP (as defined in the
ESOP and hereinafter referred to as the "ESOP Committee") or
the Committee of the Supplemental ESOP (as defined in the
Supplemental ESOP and, together with the ESOP Committee, the
"Committees"), as applicable ("Instructions"), with respect
to any matter referred to in clause (y) below, or (b) fails
to act in accordance with such Instructions with respect to
any matter referred to in clause (y) below (but only if such
failure to follow such Instructions is attributable to (i)
the trustee having concluded that, based upon the terms of
such transaction, the trustee's fiduciary duties require the
trustee to fail to follow such Instructions or (ii) the
unenforceability of the provisions of the ESOP and/or the
Supplemental ESOP relating to the solicitation and/or
following of such Instructions); (y) either (i) but for the
provisions of Subsection 8.3(a) and Article FOURTH, Part
VII, Subsection 8.3(a) and Article FOURTH, Part VIII,
Subsection 8.3(a) of this Restated Certificate, the vote of
the stockholders of the Corporation would have been
sufficient, under applicable law, stock exchange listing
requirements and this Restated Certificate, as applicable,
to approve the Merger Transaction or other Control
Transaction (as defined in the ESOP) in question (or, if no
stockholder approval would be required by this Restated
Certificate, applicable stock exchange listing requirements
or applicable law, the trustee enters into a binding
commitment in connection with a Control Transaction or a
Control Transaction is consummated) or (ii) following the
Issue Date, the trustee disposes of an aggregate of 10% or
more of the Common Equity (as defined in Article FIFTH,
Section 1.26 of this Related Certificate) initially
represented by the ESOP Convertible Preferred Stocks other
than in connection with Plan distributions; and (z) any of
the following occur: (a) Instructions with respect to a
matter are given, the trustee fails to follow such
Instructions and such transaction would not have been
approved by stockholders of the Corporation in accordance
with the applicable provisions of this Restated Certificate
(excluding Subsection 8.3(a) and Article FOURTH, Part VII,
Subsection 8.3(a) and Article FOURTH, Part VIII, subsection
8.3(a) of this Restated Certificate), applicable stock
exchange listing requirements or applicable law if the
trustee had acted in accordance with such Instructions (or,
if no vote of stockholders would be required by this
Restated Certificate, applicable stock exchange listing
requirements or applicable law, such action by the trustee
in respect of such transaction as to which Instructions were
so given would not have been authorized had the trustee
acted in accordance with such Instructions), (b) the trustee
fails to solicit timely Instructions with respect to such
matters, such transaction requires the approval of
stockholders of the Corporation under applicable provisions
of this Restated Certificate, applicable stock exchange
listing requirements or applicable law and such approval
would not have been obtained (without regard to Subsection
8.3(a) and Article FOURTH, Part VII, Subsection 8.3(a) and
Article FOURTH, Part VIII, Subsection 8.3(a) of this
Restated Certificate) if the trustee had voted against such
transaction all of the votes entitled to be cast by such
trustee as the holder of securities of the Corporation held
under the Plan, or (c) the trustee fails to follow
Instructions or to solicit timely Instructions with respect
to such matter and no vote of stockholders of the
Corporation is required by the Restated Certificate,
applicable stock exchange listing requirements or applicable
law to approve such transaction (an action or inaction by
the trustee under clauses (x) and (z) in connection with a
transaction referred to in clause (y) being referred to
herein as an "Uninstructed Trustee Action"); then, (I) the
Merger Transaction or other Control Transaction referred to
in clause (y)(i) of Section 8.2 involving an Uninstructed
Trustee Action, if it requires stockholder approval under
applicable law, stock exchange listing requirements or this
Restated Certificate, must also be approved by the vote of
stockholders described in Subsection 8.3(a), and (II) from
and after such Uninstructed Trustee Action, in addition to
the voting rights provided for under Section 8.1, the share
of Class SAM Preferred Stock shall have the voting rights
set forth in Subsection 8.3(b).
8.3 (a) In addition to any other vote or consent of
stockholders required by this Restated Certificate,
applicable stock exchange listing requirements or
applicable law, any Merger Transaction or other Control
Transaction referred to in clause (y)(i) of Section 8.2
involving an Uninstructed Trustee Action that requires
stockholder approval under applicable law, stock
exchange listing requirements or this Restated
Certificate must also be approved by at least a
majority of the votes entitled to be cast in respect of
all outstanding shares of the Class Pilot MEC Preferred
Stock, the Class IAM Preferred Stock, the Class SAM
Preferred Stock, the Common Stock and such other
classes and series of stock that vote together with the
Common Stock as a single class (other than the Voting
Preferred Stocks), with all such shares voting, for
purposes of this paragraph, as a single class, and for
purposes of such vote the Class SAM Preferred Stock
shall be entitled to cast a number of votes calculated
in accordance with Subsection 8.3(c).
(b) Except as otherwise required by law or provided in
this Restated Certificate, from and after an
Uninstructed Trustee Action, holders of shares of Class
SAM Preferred Stock shall be entitled to vote on all
matters submitted to a vote of the holders of Common
Stock, voting together as a single class with the
holders of Class IAM Preferred Stock, the holders of
Class Pilot MEC Preferred Stock, the holders of Common
Stock and the holders of such other classes and series
of stock that vote together with the Common Stock as a
single class (other than the Voting Preferred Stocks)
and for purposes of such vote the Class SAM Preferred
Stock shall be entitled to cast a number of votes
calculated in accordance with Subsection 8.3(c);
provided, however, that, except as provided in Section
8.1, prior to the Termination Date, holders of shares
of Class SAM Preferred Stock shall not be entitled to
vote with the holders of Common Stock with respect to
the election of the members of the Board of Directors.
(c) With respect to any vote or consent (i) with
respect to which the Class SAM Preferred Stock is
entitled to vote pursuant to Subsection 8.3(a) or (ii)
with respect to which the Class SAM Preferred Stock is
entitled to vote pursuant to Subsection 8.3(b) and the
record date for which occurs after an Uninstructed
Trustee Action and prior to the Termination Date, (x)
holders of shares of Class SAM Preferred Stock shall,
collectively, be entitled to a number of votes (rounded
to the nearest whole vote) equal to the product of (I)
the SAM Fraction, (II) the Voting Fraction and (III) a
fraction, the numerator of which shall be the number of
votes entitled to be cast on the matter by the holders
of all outstanding securities of the Corporation
(excluding the Class IAM Preferred Stock and the Class
Pilot MEC Preferred Stock), and the denominator of
which shall be the excess of one (1.0) over the Voting
Fraction (the "Aggregate SAM Vote"), and (y) the holder
of each share of the Class SAM Preferred Stock shall be
entitled to a number of votes per share equal to the
result of dividing (aa) the number of Aggregate SAM
Votes by (bb) the number of shares of Class SAM
Preferred Stock outstanding on the applicable record
date. If, with respect to any matter as to which the
immediately preceding sentence shall apply, (i) shares
of Common Stock are held under the ESOP or the
Supplemental ESOP which have been issued upon
conversion of the ESOP Convertible Preferred Stocks
("Subject Shares"), (ii) with respect to any action as
to which the trustee is required, in accordance with
the terms of the ESOP or the Supplemental ESOP, to
solicit Instructions, the trustee has solicited such
Instructions and (iii) the trustee has voted some or
all of the Subject Shares in accordance with such
Instructions (the shares which the trustee has voted in
accordance with such Instructions, "Instructed Trustee
Common Shares"), then the Attributed Votes shall be
reduced by the Pro Rata Reduction. The "Pro Rata
Reduction" shall equal, with respect to any such
matter, the sum of (I) the product of (x) a fraction,
the numerator of which is the number of votes
represented by Subject Shares as to which members of
the Management and Salaried Employee Group (or the
Committees) gave Instructions to the trustee to vote in
favor of the matter, and the denominator of which is
the number of votes represented by Subject Shares as to
which members of all Employee Groups (as defined in the
ESOP) (or the Committees) gave Instructions to the
trustee to vote in favor of the matter (such
denominator being referred to as the "Instructed Pro
Vote") and (y) the number of votes represented by
Subject Shares that the trustee actually voted in favor
of the matter (but in no event more than the Instructed
Pro Vote); and (II) the product of (x) a fraction, the
numerator of which is the number of votes represented
by Subject Shares as to which members of the Management
and Salaried Employee Group (or the Committees) gave
instructions to the trustee to vote against the matter,
and the denominator of which is the number of votes
represented by Subject Shares as to which members of
all Employee Groups (or the Committees) gave
Instructions to the trustee to vote against the matter
(such denominator being referred to as the "Instructed
Con Vote") and (y) the number of votes represented by
Subject Shares that the trustee actually voted against
the matter (but in no event more than the Instructed
Con Vote).
For purposes of this Section 8.3, the Corporation shall
certify to the holders of Class SAM Preferred Stock and to
the judges or similar officials appointed for the purpose of
tabulating votes at any meeting of stockholders as soon as
practicable following the record date for the determination
of stockholders entitled to notice of or to vote at any
meeting of stockholders, but in no event less than five
Trading Days before such meeting, the number of shares of
Common Stock then outstanding and the number of votes
entitled to be cast on the matter or matters in question by
the holders of all outstanding securities of the Corporation
(excluding the Class IAM Preferred Stock and the Class Pilot
MEC Preferred Stock). The Corporation shall be deemed to
satisfy the requirements of the preceding sentence if such
matters are specified in any proxy statement mailed to all
stockholders entitled to vote on such matter or matters.
With respect to any vote or consent as to which the first
sentence of this Subsection 8.3(c) applies, the outstanding
share of Class SAM Preferred Stock, together with the
outstanding shares of the Class IAM Preferred Stock and the
outstanding shares of Class Pilot MEC Preferred Stock, will
represent the Voting Fraction (expressed as a percentage) of
the votes to be cast in connection with matters (other than
the election of directors) submitted to the vote of the
holders of the Common Stock and the holders of all other
outstanding securities that vote as a single class together
with the Common Stock. Subject to any amendment of this
Restated Certificate after the date hereof, it is the intent
of this Restated Certificate that this Section 8.3 (with
respect to the Class SAM Preferred Stock), Article FOURTH,
Part VIII, Section 8.3 of the Restated Certificate (with
respect to the Class IAM Preferred Stock), and Article
FOURTH, Part VII, Section 8.3 of the Restated Certificate
(with respect to the Class Pilot MEC Preferred Stock), be
interpreted together to achieve the foregoing result. With
respect to any vote or consent as to which the first
sentence of this Subsection 8.3(c) does not apply, the Class
SAM Preferred Stock shall not have any voting rights except
as provided by Sections 8.1, 8.2 and 8.4 and applicable law;
provided, however, that if the Termination Date occurs
directly or indirectly as a result of an Uninstructed
Trustee Action then, notwithstanding anything to the
contrary contained herein, the voting rights of the Class
SAM Preferred Stock set forth in this Section 8.3 shall
continue until the anniversary of the Issue Date occurring
in the year 2010. For purposes of the proviso in the
immediately preceding sentence, the Termination Date shall
be deemed to have occurred as a result of an Uninstructed
Trustee Action if the Termination Date occurs within one
year of such Uninstructed Trustee Action.
8.4 The affirmative vote or written consent of the
holders of a majority of the outstanding shares of Class SAM
Preferred Stock, voting separately as a class, shall be
necessary for authorizing, effecting or validating the
amendment, alteration or repeal (including any amendment,
alteration or repeal by operation of merger or
consolidation) of any of the provisions of this Restated
Certificate or of any certificate amendatory thereof or
supplemental thereto (including any Certificate of
Designation, Preferences and Rights or any similar document
relating to any series of Serial Preferred Stock) which
would adversely affect the preferences, rights, powers or
privileges of the Class SAM Preferred Stock.
8.5 For purposes of the foregoing provisions of
Sections 8.1 and 8.4, each share of Class SAM Preferred
Stock shall have one (1) vote per share.
Section 9. Redemption.
9.1 All outstanding shares of Class SAM Preferred
Stock shall, to the extent of funds legally available
therefor and subject to the other provisions of this
Restated Certificate, be automatically redeemed on the
earlier of the ALPA Termination Date and the IAM Termination
Date (the "Class SAM Preferred Stock Termination Date"), at
a price of $0.01 per share of Class SAM Preferred Stock, as
provided below. As promptly as reasonably possible
following the occurrence of the Class SAM Preferred Stock
Termination Date, the Corporation shall give notice thereof
and of the redemption under this Section 9 to all record
holders of the Class SAM Preferred Stock. From and after
the redemption provided for in this Section 9.1, all rights
of the holder of Class SAM Preferred Stock as such, except
the right to receive the redemption price of such shares
upon the surrender of certificates formerly representing the
same, shall cease and terminate and such shares shall not
thereafter be deemed to be outstanding for any purpose
whatsoever.
9.2 The shares of Class SAM Preferred Stock shall, to
the extent of funds legally available therefor and subject
to the other provisions of this Restated Certificate, be
automatically redeemed from time to time, in part,
concurrently with any purported transfer of shares of Class
SAM Preferred Stock other than as expressly permitted under
Section 1.2, and the number of shares so redeemed shall be
equal to the number of shares purported to be transferred.
The redemption price to be paid in connection with any
redemption shall be $0.01 per share of Class SAM Preferred
Stock. From and after the redemption provided for in this
Section 9.2, all rights of the holders of the shares of
Class SAM Preferred Stock so redeemed, except the right to
receive the redemption price of such shares upon the
surrender of certificates formerly representing the same,
shall cease and terminate and such shares shall not
thereafter be deemed to be outstanding for any purpose
whatsoever.
9.3 Upon any such redemption provided for in Sections
9.1 or 9.2 above, each holder of a certificate formerly
representing the shares of Class SAM Preferred Stock so
redeemed shall present and surrender such certificate to the
Corporation and thereupon the redemption price of such
shares shall be paid to or on the order of the person whose
name appears on such certificate or certificates as the
owner thereof and each surrendered certificate shall be
cancelled.
Section 10. Record Holders. The Corporation and the
Transfer Agent (if other than the Corporation) may deem and treat
the record holder of any shares of Class SAM Preferred Stock as
the true and lawful owner thereof for all purposes, and, except
as otherwise provided by law, neither the Corporation nor the
Transfer Agent shall be affected by any notice to the contrary.
PART X
Class I Junior Preferred Stock
Unless otherwise indicated, any reference in this Article
FOURTH, Part X, to "Section", "Subsection", "paragraph",
"subparagraph" or "clause" shall refer to a Section, Subsection,
paragraph, subparagraph or clause of this Article FOURTH, Part X.
Section 1. Number of Shares; Designations; Issuance;
Restrictions on Transfer.
1.1 The Class I Junior Preferred Stock of the Corporation
(the "Class I Preferred Stock") shall consist of ten shares, par
value $0.01 per share.
1.2 Each share of Class I Preferred Stock shall be issued
only to a person who serves as an Independent Director of the
Corporation meeting the requirements set forth in Article FIFTH,
Section 2.4 of this Restated Certificate or to the initial
"Individual Parties" under the Class I Stockholders' Agreement
(as such term is defined in Article FIFTH, Section 1.15 of this
Restated Certificate) (the "Class I Stockholders' Agreement")
(each such person, an "Independent Director") and may be held by
such person only so long as such person shall continue to serve
as an Independent Director. Any purported sale, transfer, pledge
(other than a pledge made in accordance with the Class I
Stockholders' Agreement), or other disposition (hereinafter a
"transfer") of shares of Class I Preferred Stock by a holder
thereof to any person other than to (x) such holder's successor
as an Independent Director (any such individual, a "Successor
Independent Director") or (y) in the case where no such Successor
Independent Director has been elected concurrently with such
holder's removal, resignation, failure to remain qualified,
failure to be re-elected or otherwise ceasing to serve as an
Independent Director, to any Independent Director then in office,
or if there are no Independent Directors then in office, to the
Corporation (to be held in escrow by such Independent Director or
the Corporation, as the case may be, pending transfer to such
holder's Successor Independent Director when such successor is
duly elected) shall be null and void and of no force and effect.
Upon any purported transfer of a share of Class I Preferred Stock
by the holder thereof other than as expressly permitted above,
without any further action by the Corporation or such holder,
such share of Class I Preferred Stock so purported to be
transferred shall, to the extent of funds legally available
therefor and subject to the other provisions of this Restated
Certificate, be automatically redeemed by the Corporation in
accordance with Section 8 hereof, and thereupon such share shall
no longer be deemed outstanding, and neither such holder nor any
purported transferee thereof shall have in respect thereof any of
the voting powers, preferences or relative, participating,
optional or special rights ascribed to the shares of Class I
Preferred Stock hereunder, but rather such holder thereafter
shall only be entitled to receive the amount payable upon
redemption in accordance with Section 8. Certificates
representing shares of Class I Preferred Stock shall be legended
to reflect the restrictions on transfer and automatic redemption
provided for herein.
Section 2. Definitions. For purposes of the Class I
Preferred Stock, the following terms shall have the meanings
indicated:
2.1 "Board of Directors" shall mean the board of
directors of the Corporation or any committee thereof authorized
by such board of directors to perform any of its responsibilities
with respect to the Class I Preferred Stock.
2.2 "Class I Preferred Stock" shall have the meaning set
forth in Section 1 hereof.
2.3 "Class IAM Preferred Stock" shall mean the Class IAM
Junior Preferred Stock, par value $0.01 per share, of the
Corporation.
2.4 "Class M Voting Preferred Stock" shall mean the Class
M ESOP Voting Junior Preferred Stock, par value $0.01 per share,
of the Corporation.
2.5 "Class P Voting Preferred Stock" shall mean the Class
P ESOP Voting Junior Preferred Stock, par value $0.01 per share,
of the Corporation.
2.6 "Class Pilot MEC Preferred Stock" shall mean the
Class Pilot MEC Junior Preferred Stock, par value $0.01 per
share, of the Corporation.
2.7 "Class S Voting Preferred Stock" shall mean the Class
S ESOP Voting Junior Preferred Stock, par value $0.01 per share,
of the Corporation.
2.8 "Class SAM Preferred Stock" shall mean the Class SAM
Junior Preferred Stock, par value $0.01 per share, of the
Corporation.
2.9 "Common Stock" shall mean the common stock of the
Corporation, par value $0.01 per share.
2.10 "Director Preferred Stocks" shall mean collectively,
the Class I Preferred Stock, the Class IAM Preferred Stock, the
Class Pilot MEC Preferred Stock and the Class SAM Preferred
Stock.
2.11 "ESOP Convertible Preferred Stocks" shall mean,
collectively, the Class 1 ESOP Convertible Preferred Stock and
the Class 2 ESOP Convertible Preferred Stock, each of the par
value of $0.01 per share, of the Corporation.
2.12 "Issue Date" shall mean the first date on which
shares of Class I Preferred Stock are issued.
2.13 "Liquidation Preference" shall have the meaning set
forth in Section 4.1 hereof.
2.14 "Restated Certificate" shall mean the Restated
Certificate of Incorporation of the Corporation, as amended from
time to time.
2.15 "Series A Preferred Stock" shall mean the series of
Serial Preferred Stock of the Corporation, without par value,
designated Series A Convertible Preferred Stock in Article
FOURTH, Part I.A of this Restated Certificate.
2.16 "Series B Preferred Stock" shall mean the series of
Serial Preferred Stock of the Corporation, without par value,
designated Series B Preferred Stock in Article FOURTH, Part I.B
of this Restated Certificate.
2.17 "Series C Preferred Stock" shall mean the series of
Serial Preferred Stock of the Corporation, without par value,
designated Series C Junior Participating Preferred Stock in
Article FOURTH, Part I.C of this Restated Certificate.
2.18 "Series D Preferred Stock" shall mean the series of
Serial Preferred Stock of the Corporation, without par value,
designated Series D Redeemable Preferred Stock in Article FOURTH,
Part I.D of this Restated Certificate.
2.19 [Reserved]
2.20 "set apart for payment" shall be deemed to include,
without any action other than the following, the recording by the
Corporation in its accounting ledgers of any accounting or
bookkeeping entry which indicates, pursuant to a declaration of
dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of
capital stock of the Corporation; provided, however, that if any
funds for any class or series of stock of the Corporation ranking
on a parity with or junior to the Class I Preferred Stock as to
distributions upon liquidation, dissolution or winding up of the
Corporation are placed in a separate account of the Corporation
or delivered to a disbursing, paying or other similar agent, then
"set apart for payment" with respect to the Class I Preferred
Stock shall mean, with respect to such distributions, placing
such funds in a separate account or delivering such funds to a
disbursing, paying or other similar agent.
2.20 "Termination Date" shall have the meaning set forth
in Article FIFTH, Section 1.72 of this Restated Certificate.
2.21 "Transfer Agent" means the Corporation or such agent
or agents of the Corporation as may be designated from time to
time by the Board of Directors as the transfer agent for the
Class I Preferred Stock.
2.22 "Voting Preferred Stocks" shall mean, collectively,
the Class M Voting Preferred Stock, the Class P Voting Preferred
Stock and the Class S Voting Preferred Stock.
Section 3. Dividends. The holders of shares of the Class I
Preferred Stock as such shall not be entitled to receive any
dividends or other distributions (except as provided in Section
4).
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, before
any payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for
payment to the holders of any class or series of stock of the
Corporation that ranks junior to the Class I Preferred Stock as
to amounts distributable upon liquidation, dissolution or winding
up of the Corporation, the holders of the shares of Class I
Preferred Stock shall be entitled to receive $0.01 per share of
Class I Preferred Stock (the "Liquidation Preference"), but such
holders shall not be entitled to any further payment. If, upon
any liquidation, dissolution or winding up of the Corporation,
the assets of the Corporation, or proceeds thereof, distributable
among the holders of the shares of Class I Preferred Stock shall
be insufficient to pay in full the Liquidation Preference and the
liquidation preference on all other shares of any class or series
of stock of the Corporation that ranks on a parity with the Class
I Preferred Stock as to amounts distributable upon liquidation,
dissolution or winding up of the Corporation, then such assets,
or the proceeds thereof, shall be distributed to the holders of
shares of Class I Preferred Stock and any such other parity stock
ratably in accordance with the respective amounts that would be
payable on such shares of Class I Preferred Stock and any such
other parity stock if all amounts payable thereon were paid in
full. For the purposes of this Section 4, (i) a consolidation or
merger of the Corporation with or into one or more corporations,
or (ii) a sale, lease, exchange or transfer of all or
substantially all of the Corporation's assets, shall not be
deemed to be a liquidation, dissolution or winding up, voluntary
or involuntary, of the Corporation.
4.2 Subject to the rights of the holders of shares of any
series or class of stock ranking prior to or on a parity with the
Class I Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation, after
payment shall have been made to the holders of the Class I
Preferred Stock, as and to the fullest extent provided in this
Section 4, any series or other class of stock of the Corporation
that ranks junior to the Class I Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of the
Corporation, shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any
and all assets remaining to be paid or distributed, and the
holders of the Class I Preferred Stock shall not be entitled to
share therein.
Section 5. Shares to be Retired. All shares of Class I
Preferred Stock which shall have been issued and reacquired in
any manner (other than pursuant to Section 8.1) by the
Corporation, other than in its capacity as escrow agent in
accordance with Section 1.2 hereof, shall be retired and restored
to the status of authorized but unissued shares of Class I
Preferred Stock and, in the case of shares redeemed pursuant to
Section 8.1 hereof, shall not be reissued.
Section 6. Ranking.
6.1 Any class or series of stock of the Corporation shall
be deemed to rank:
(a) prior to the Class I Preferred Stock as to the
distribution of assets upon liquidation, dissolution or
winding up if the holders of such class or series shall be
entitled to the receipt of amounts distributable upon
liquidation, dissolution or winding up, in preference or
priority to the holders of Class I Preferred Stock;
(b) on a parity with the Class I Preferred Stock as to
the distribution of assets upon liquidation, dissolution or
winding up, whether or not the liquidation prices per share
thereof be different from those of the Class I Preferred
Stock, if the holders of such class or series and the Class
I Preferred Stock shall be entitled to the receipt of
amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective liquidation
preferences, without preference or priority one over the
other; and
(c) junior to the Class I Preferred Stock, as to the
distribution of assets upon liquidation, dissolution or
winding up, if the holders of Class I Preferred Stock shall
be entitled to the receipt of amounts distributable upon
liquidation, dissolution or winding up in preference or
priority to the holders of shares of such class or series.
6.2 The Series A Preferred Stock, the Series B Preferred
Stock, the Series D Preferred Stock and the ESOP Convertible
Preferred Stocks shall each be deemed to rank prior to the Class
I Preferred Stock as to amounts distributable upon liquidation,
dissolution or winding up. The other Director Preferred Stocks
and the Voting Preferred Stocks shall each be deemed to rank on a
parity with the Class I Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up. The
Common Stock and the Series C Preferred Stock shall each be
deemed to rank junior to the Class I Preferred Stock as to
amounts distributable upon liquidation, dissolution or winding
up.
Section 7. Voting. The holders of shares of Class I
Preferred Stock shall have the following voting rights; provided,
however, that no holder of shares of Class I Preferred Stock
shall have any right to vote unless at such time such person is
an Independent Director or an initial "Individual Party" under
the Class I Stockholders' Agreement:
7.1 Until the Termination Date, the holders of the Class
I Preferred Stock shall have the right, voting separately as a
class, to elect four Independent Directors to the Board of
Directors.
7.2 Unless the affirmative vote or consent of the holders
of a greater number of shares of Class I Preferred Stock shall
then be required by law or this Restated Certificate, and in
addition to any other vote required by law or this Restated
Certificate, the affirmative vote or written consent of the
holders of at least a majority of all of the outstanding shares
of Class I Preferred Stock, voting separately as a class, shall
be necessary for authorizing, effecting or validating the
amendment, alteration or repeal (including any amendment,
alteration or repeal by operation of merger or consolidation) of
any of the provisions of this Restated Certificate or of any
certificate amendatory thereof or supplemental thereto (including
any Certificate of Designation, Preferences and Rights or any
similar document relating to any series of Serial Preferred
Stock) which would adversely affect the preferences, rights,
powers or privileges of the Class I Preferred Stock.
7.3 For purposes of the foregoing provisions of Sections
7.1 and 7.2, each share of Class I Preferred Stock shall have one
(1) vote per share. Except as otherwise required by applicable
law or as set forth herein, the shares of Class I Preferred Stock
shall not have any relative participating, optional or other
special voting rights and powers and the consent of the holder
thereof shall not be required for the taking of any corporate
action.
Section 8. Redemption.
8.1 All outstanding shares of Class I Preferred Stock
shall, to the extent of funds legally available therefor and
subject to the other provisions of this Restated Certificate, be
automatically redeemed on the Termination Date, at a price of
$0.01 per share of Class I Preferred Stock, as provided below.
As promptly as reasonably possible following the occurrence of
the Termination Date, the Corporation shall give notice thereof
and of the redemption under this Section 8 to all record holders
of the Class I Preferred Stock.
From and after the redemption provided for in this Section
8.1, all rights of the holders of Class I Preferred Stock as
such, except the right to receive the redemption price of such
shares upon the surrender of certificates therefor, shall cease
and terminate and such shares shall not thereafter be deemed to
be outstanding for any purpose whatsoever.
8.2 The shares of Class I Preferred Stock shall, to the
extent of funds legally available therefor and subject to the
other provisions of this Restated Certificate, be automatically
redeemed from time to time, in part, concurrently with any
purported transfer of shares of Class I Preferred Stock other
than as expressly permitted under Section 1.2 and the number of
shares so redeemed shall be equal to the number of shares so
purported to be transferred. The redemption price to be paid in
connection with any redemption shall be $0.01 per share of Class
I Preferred Stock. From and after the redemption provided for in
this Section 8.2, all rights of such holder of Class I Preferred
Stock as such, except the right to receive the redemption price
of such shares upon the surrender of certificates representing
the same, shall cease and terminate and such share(s) shall not
thereafter be deemed to be outstanding for any purpose
whatsoever.
8.3 Upon any such redemption provided for in Sections 8.1
or 8.2 above, each holder of a certificate formerly representing
the share(s) of Class I Preferred Stock so redeemed shall present
and surrender such certificate to the Corporation and thereupon
the redemption price of such share(s) shall be paid to or on the
order of the person whose name appears on such certificate or
certificates as the owner thereof and each surrendered
certificate shall be cancelled.
Section 9. Record Holders.
The Corporation and the Transfer Agent (if other than the
Corporation) may deem and treat the record holder of any share(s)
of Class I Preferred Stock as the true and lawful owner thereof
for all purposes, and, except as otherwise provided by law,
neither the Corporation nor the Transfer Agent shall be affected
by any notice to the contrary.
PART XI
Common Stock
Unless otherwise indicated, any reference in this Article
FOURTH, Part XI to "Section", "Subsection", "paragraph",
"subparagraph" or "clause" shall refer to a Section, Subsection,
paragraph, subparagraph or clause of this Article FOURTH, Part
XI. Capitalized terms used and not otherwise defined in this
Article FOURTH, Part XI, shall have the respective meanings given
those terms in the introductory sentence of Article FOURTH.
Section 1. Dividends. Subject to any rights to receive
dividends to which the holders of the shares of any other class
or series of stock may be entitled, the holders of shares of
Common Stock shall be entitled to receive dividends, if and when
declared payable from time to time by the Board of Directors,
from any funds legally available therefor.
Section 2. Liquidation. In the event of any dissolution,
liquidation or winding up of the Corporation, whether voluntary
or involuntary, after there shall have been paid to the holders
of shares of any other class or series of stock ranking prior to
the Common Stock in respect thereof the full amounts to which
they shall be entitled, and subject to any rights of the holders
of any other class or series of stock to participate therein, the
holders of the then outstanding shares of Common Stock shall be
entitled to receive, pro rata, any remaining assets of the
Corporation available for distribution to its stockholders.
Subject to the foregoing, the Board of Directors may distribute
in kind to the holders of the shares of Common Stock such
remaining assets of the Corporation, or may sell, transfer or
otherwise dispose of all or any part of such remaining assets to
any other corporation, trust or other entity and receive payment
therefor in cash, stock or obligations of such, other
corporations, trust or entity or any combination thereof, and may
sell all or any part of the consideration so received, and may
distribute the consideration so received or any balance thereof
in kind to holders of the shares of Common Stock. The voluntary
sale, conveyance, lease, exchange or transfer of all or
substantially all the property or assets of the Corporation
(unless in connection therewith the dissolution, liquidation or
winding up of the Corporation is specifically approved), or the
merger or consolidation of the Corporation into or with any other
corporation, or the merger of any other corporation into it, or
any purchase or redemption of shares of stock of the Corporation
of any class, shall not be deemed to be a dissolution,
liquidation or winding up of the corporation for the purpose of
this Section 2.
Section 3. Voting. Except as provided by law or this
Restated Certificate of Incorporation:
a. each outstanding share of Common Stock of the
Corporation shall entitle the holder thereof to one vote on
each matter submitted to a vote at a meeting of
stockholders; and
b. until the Termination Date (as defined in Article
FIFTH, Section 1.72), the holders of Common Stock, voting as
a separate class, shall be entitled to elect five Public
Directors (as defined in Article FIFTH, Section 2.3) of the
Corporation.
PART XII
General Provisions
No Preemptive Rights, Etc. Except as otherwise provided
herein, no holder of stock of the Corporation of any class shall
have any preemptive, preferential or other right to purchase or
subscribe for any shares of stock, whether now or hereafter
authorized, of the Corporation of any class, or any obligations
convertible into, or any options or warrants to purchase, any
shares of stock, whether now or hereafter authorized, of the
Corporation of any class, other than such, if any, as the Board
of Directors may from time to time determine, and at such price
as the Board of Directors may from time to time fix; and any
shares of stock or any obligations, options or warrants which the
Board of Directors may determine to offer for subscription to
holders of any shares of stock of the Corporation may, as the
Board of Directors shall determine, be offered to holders of
shares of stock of the Corporation of any class or classes or
series, and if offered to holders of shares of stock of more than
one class or series, in such proportions as between such classes
and series as the Board of Directors may determine.
FIFTH. GOVERNANCE. Unless otherwise expressly indicated,
references in this Article FIFTH to any "Section", "Subsection",
"paragraph", "subparagraph" or "clause" shall refer to such
Section, Subsection, paragraph, subparagraph or clause of this
Article FIFTH.
Section 1. Definitions. As used in this Restated
Certificate, unless the context otherwise requires, the following
terms shall have the following meanings:
1.1 "Affiliate" has the meaning defined in Rule 12b-2
promulgated under the Exchange Act.
1.2 "Airline Business" means the business of operating an
Air Carrier, together with any business or activity reasonably
related to or in support of any and all such operations engaged
in by the Corporation or any of its Subsidiaries at or during the
one year period immediately prior to the Effective Time.
1.3 "Air Carrier" means an "air carrier" as defined in
Section 1301(3) of the Federal Aviation Act of 1958, 49 U.S.C.
1301 et seq., as amended, or any successor act thereto.
1.4 "ALPA" means the Air Line Pilots Association,
International.
1.5 "Available Unissued ESOP Shares" shall mean as of the
date of determination and without duplication, (a) the number of
shares of Common Stock that would be issuable upon conversion of
that portion of (w) 17,675,345 shares of ESOP Convertible
Preferred Stock plus (x) an aggregate of 17,675,345 shares of
Class P Voting Preferred Stock, Class M Voting Preferred Stock
and Class S Voting Preferred Stock plus (y) the number of
Additional Shares (as defined in Section 1.10 of the
Recapitalization Agreement) plus (z) an aggregate number of
shares of Class P Voting Preferred Stock, Class M Voting
Preferred Stock and Class S Voting Preferred Stock that is equal
to the number of Additional Shares that, in the case of each of
clause (w), (x), (y) and (z), as of the date of determination of
Available Unissued ESOP Shares, have not been issued pursuant to
Section 1.6 or 1.10 of the Recapitalization Agreement as ESOP
Convertible Preferred Stock, Class P Voting Preferred Stock,
Class M Voting Preferred Stock, Class S Voting Preferred Stock or
Common Stock, plus (b) the number of shares of Common Stock that
have been credited to the Supplemental ESOP (other than pursuant
to Section 1.6 or 1.10 of the Recapitalization Agreement) and
that have not been issued.
1.6 "Bankrupt" means "insolvent" as defined in Section
101(32) of the Bankruptcy Code, 11 U.S.C. 101 et seq., as
amended.
1.7 "Bankruptcy Opinions" has the meaning defined in
Subsection 3.4(b)(vii)(B).
1.8 "Board" means the Board of Directors of the
Corporation.
1.9 "Board Committees" has the meaning defined in
Subsection 4.1.10.
1.10 "Business Combination" means a "business combination"
as defined in Section 203 of the GCL.
1.11 "Chief Executive Officer" means the Chief Executive
Officer of the Corporation.
1.12 "Class 1 ESOP Convertible Preferred Stock" means the
Class 1 ESOP Convertible Preferred Stock, par value $0.01 per
share, of the Corporation.
1.13 "Class 2 ESOP Convertible Preferred Stock" means the
Class 2 ESOP Convertible Preferred Stock, par value $0.01 per
share, of the Corporation.
1.14 "Class I Preferred Stock" means the Class I Junior
Preferred Stock, par value $0.01 per share, of the Corporation.
1.15 "Class I Stockholders' Agreement" means the Class I
Preferred Stockholders' Agreement, dated as of the date of the
Effective Time, among the Corporation, ALPA, the IAM and the
holders of the Class I Preferred Stock, as amended from time to
time.
1.16 "Class IAM Director" has the meaning defined in
Subsection 2.2.
1.17 "Class IAM Preferred Stock" means the Class IAM
Junior Preferred Stock, par value $0.01 per share, of the
Corporation.
1.18 "Class M Voting Preferred Stock" means the Class M
ESOP Voting Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
1.19 "Class P Voting Preferred Stock" means the Class P
ESOP Voting Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
1.20 "Class Pilot MEC Director" has the meaning defined in
Subsection 2.2.
1.21 "Class Pilot MEC Preferred Stock" means the Class
Pilot MEC Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
1.22 "Class SAM Preferred Stock" means the Class SAM
Junior Preferred Stock, par value $0.01 per share, of the
Corporation.
1.23 "Class SAM Stockholders' Agreement" means the Class
SAM Stockholders' Agreement, dated as of the date of the
Effective Time, between the Corporation and the holders of Class
SAM Preferred Stock, as amended from time to time.
1.24 "Class S Voting Preferred Stock" means the Class S
ESOP Voting Junior Preferred Stock, par value $0.01 per share, of
the Corporation.
1.25 "Collective Bargaining Agreement" means any agreement
between the Corporation or any of its Subsidiaries and any labor
union representing the Corporation's or any of its Subsidiaries'
employees based in the United States that relates to rates of
pay, rules, working conditions or any other incident or aspect of
employment with the Corporation or any of its Subsidiaries.
1.26 "Common Equity" means, in the aggregate and without
double-counting:
(a) the Common Stock outstanding at the time in question
that satisfies any one or more of the following clauses (i)
through (vi):
(i) that was issued upon conversion of ESOP
Convertible Preferred Stock or Voting Stock (other than
Common Stock);
(ii) that was issued upon conversion of the
Series A Preferred Stock or any Pre-Closing Covered
Convertible;
(iii) that was issued upon exercise of any Pre-
Closing Covered Option;
(iv) that constitutes Permitted Bankruptcy
Equity or was issued upon conversion, exercise or
exchange of any Permitted Bankruptcy Equity;
(v) that was outstanding immediately prior to the
close of business on the Measuring Date (as defined in
the Recapitalization Agreement), other than as a result
of an issuance initially approved after the Effective
Time; or
(vi) that was issued in a transaction described
in Part II, Section 6.4(a) (i), (ii) or (iii), of
Article FOURTH of this Restated Certificate in respect
of the number of shares of Common Stock that at the
time of such transaction were included in the
definition of Common Equity;
(b) the Common Stock issuable upon conversion of ESOP
Convertible Preferred Stock or Voting Stock (other than
Common Stock) outstanding at the time in question;
(c) the Common Stock issuable upon conversion of any
Series A Preferred Stock or Pre-Closing Covered Convertible
outstanding at the time in question;
(d) the Common Stock issuable upon conversion, exercise
or exchange of any Permitted Bankruptcy Equity outstanding
at the time in question; and
(e) the Common Stock issuable upon exercise of any Pre-
Closing Covered Option outstanding at the time in question.
For purposes of the foregoing, if the Corporation reacquires
any shares of outstanding Common Stock at a time that shares of
Common Stock not included in the definition of Common Equity are
outstanding, the Corporation shall make an assessment as to
whether or not the shares so reacquired are included in the
definition of Common Equity. If the Corporation cannot
conclusively establish whether or not the shares so reacquired
are included in the definition of Common Equity, then the number
of outstanding shares of Common Stock included in the definition
of Common Equity pursuant to clause (a) above shall be deemed
reduced as a result of such reacquisition by the number
determined by multiplying the number of shares of Common Stock so
reacquired by a fraction, the numerator of which is the number of
shares of Common Stock included in the definition of Common
Equity outstanding immediately prior to the reacquisition and the
denominator of which is the aggregate number of shares of Common
Stock outstanding immediately prior to the reacquisition.
1.27 "Common Stock" means the common stock, par value
$0.01 per share, of the Corporation.
1.28 "Common Stock Transaction" has the meaning defined in
Subsection 3.5.
1.29 "Competitive Action Plan" means the Corporation's
business plan to develop a low cost operation, which is intended
to compete against other low cost Air Carriers.
1.30 "Corporation" means UAL Corporation.
1.31 "Director" means a director of the Corporation.
1.32 "Director Incentive Plan" means the UAL Corporation
1992 Stock Plan for Outside Directors.
1.33 "Distribution Companies" means Galileo International
Partnership, Apollo Travel Services Partnership and Galileo Japan
Partnership, each a Delaware general partnership.
1.34 "Effective Time" has the meaning defined in the
Recapitalization Agreement.
1.35 "Employee Directors" has the meaning defined in
Subsection 2.2.
1.36 "entire Board" means all Directors of the Corporation
who would be in office if there were no vacancies.
1.37 "Equity Securities" means common stock of the
Corporation or any debt, equity or other security or contractual
right convertible into or exercisable or exchangeable for common
stock or any warrants, options or other rights to purchase common
stock or such other Equity Securities, but in no event shall the
term "Equity Securities" include non-voting, non-convertible
preferred stock.
1.38 "ESOP Convertible Preferred Stock" means
collectively, the Class 1 ESOP Convertible Preferred Stock and
the Class 2 ESOP Convertible Preferred Stock and any other
securities into which such preferred stocks are changed or
reclassified, into which they are converted or for which they are
exchanged.
1.39 "ESOPs" means collectively, the UAL Corporation
Employee Stock Ownership Plan and the UAL Corporation
Supplemental ESOP and any similar or successor plans thereto.
1.40 "Exchange Act" means the Securities Exchange Act of
1934, as amended, or any successor act thereto.
1.41 "Existing Plans" means collectively, the United Air
Lines, Inc. Flight Attendant Employees' Savings Plan; the United
Air Lines, Inc. Management and Salaried Employees' Personal
Investment Program; the United Air Lines, Inc. Union Ground
Employees' Long Term Investment Program; the United Air Lines,
Inc. Pilots' Directed Account Retirement Income Plan; and the
Employees' Stock Purchase Plan of UAL Corporation.
1.42 "Extraordinary Matters" means (a) any matter that
pursuant to the GCL requires stockholder approval, (b) any
Substantive Amendment to the Restated Bylaws and (c) any Other
Extraordinary Matters.
1.43 "First Refusal Agreement" means the First Refusal
Agreement, dated as of the date of the Effective Time, among the
Corporation, ALPA, the IAM and the Salaried/Management Employee
Director, as amended from time to time.
1.44 "GCL" means the General Corporation Law of the State
of Delaware, as amended from time to time.
1.45 "Gross Proceeds" means, with respect to any sale,
lease, exchange, surrender to or at the direction of a lessor, or
other disposition of assets, whether tangible or intangible, real
or personal, or the issuance of ownership interests, by any
Person (each, a "Gross Proceeds Event"), (a) (i) with respect to
owned assets or the issuance of ownership interests, the sum of
(A) the aggregate cash consideration received by such Person in
connection with such Gross Proceeds Event, (B) the fair market
value of (1) all cash consideration to be received in the future
(including future payments evidenced by a note or other
instrument) by such Person in connection with such Gross Proceeds
Event and (2) all future payments that are obligations of such
Person and are assumed by another Person in connection with such
Gross Proceeds Event and (C) the fair market value of all other
non-cash consideration, and (ii) with respect to leased assets,
the fair market value of such assets (in each case with respect
to clauses (i)(B) and (i)(C) and clause (ii), such fair market
value as determined in good faith by the Corporation as of the
date of such Gross Proceeds Event), minus (b) the sum, without
duplication, of:
(i) any taxes (including, but not limited to, any
alternative minimum taxes and other similar taxes) that are
paid, actually payable or would be payable (absent the
availability of any net operating loss carryover, tax credit
or other tax benefit that reduces the amount paid or
payable) to any Federal, state, local or foreign taxing
athority and that are directly or indirectly attributable to
such Gross Proceeds Event; and
(ii) the amount of fees and commissions (including,
without limitation, reasonable investment banking fees),
legal, title and recording tax expenses and other similar
costs and expenses directly incident to such Gross Proceeds
Event that are paid or payable by such Person, other than
fees and commissions (including, without limitation,
management consulting and financial services fees) paid or
payable to Affiliates of such Person (or officers or
employees of such Person or any Affiliate of such Person).
1.46 "IAM" means the International Association of
Machinists and Aerospace Workers.
1.47 "Investment" means all (A) investments in any Person
by stock purchase, capital contribution, loan, advance, guarantee
of obligations of (other than any guarantee of an obligation of
the Corporation or any of its Subsidiaries) or creation or
assumption by the Corporation or any of its Subsidiaries of any
other liability in respect of any indebtedness (other than
indebtedness of the Corporation or any of its Subsidiaries) of
such Person and (B) investments in any other property, other
than:
(i) an investment in the ordinary course of business in
the Corporation, any of its Subsidiaries or the Distribution
Companies, so long as such investment is in the Airline
Business;
(ii) investments in the ordinary course of business
in direct obligations of the United States of America, or
obligations of any instrumentality or agency thereof, or
obligations the payment of which is unconditionally
guaranteed by the United States of America or any
instrumentality or agency thereof;
(iii) investments in the ordinary course of business
in obligations of any state or municipal government or
obligations of any instrumentality or agency thereof;
(iv) investments in the ordinary course of business
in readily marketable commercial paper;
(v) investments in the ordinary course of business in
short-term deposit accounts in, or negotiable certificates
of deposit or negotiable bankers acceptances issued by, any
bank or trust company organized under the laws of the United
States or a state thereof or Canada, Western Europe or
Japan;
(vi) investments in negotiable instruments for
collection in the ordinary course of business;
(vii) investments in tangible assets to be used in the
ordinary course of business of the Corporation or any of its
Subsidiaries;
(viii) investments in the ordinary course of business
in stocks of investment companies registered under the
Investment Company Act of 1940, as amended, which are no-
load money market funds and which invest primarily in
obligations of the type described in clause (ii), (iii) or
(iv) above and which are classified as current assets in
accordance with generally accepted accounting principles;
(ix) investments in Persons resulting from non-
payment by such Persons of receivables of the Corporation or
any of its Subsidiaries arising in the ordinary course of
business;
(x) investments in connection with the settlement of
claims of the Corporation or any of its Subsidiaries in
financially-distressed companies or in connection with
bankruptcy proceedings;
(xi) investments in airline clearing houses, other
similar industry organizations or other Air Carriers arising
out of receivables payable to the Corporation or any of its
Subsidiaries relating to airline tickets and similar
liabilities and arising in the ordinary course of business
of the Corporation or its Subsidiaries;
(xii) advances to employees of the Corporation or its
Subsidiaries made in the ordinary course of business;
(xiii) investments in Persons pursuant to obligations
of the Corporation or any of its Subsidiaries, including
contingent obligations, in effect on the Effective Time;
(xiv) other investments made in the ordinary course of
the Corporation's and its Subsidiaries' business in
connection with the Corporation's and its Subsidiaries' cash
management program or fiscal management policies and
practices (including, without limitation, interest rate,
currency and commodity risk management and similar
activities);
(xv) investments in the ordinary course of business
of the Corporation or its Subsidiaries in ARINC, SITA, Air
Cargo, Inc., Scheduled Airline Traffic Offices, Inc.,
organizations used to provide aircraft fuel services or
other similar industry organizations;
(xvi) the purchase or other acquisition by the
Corporation or any of its Subsidiaries from Persons other
than the Corporation or any of its Subsidiaries of evidences
of indebtedness or other obligations or securities issued by
the Corporation or any of its Subsidiaries;
(xvii) investments in Persons through customary
indemnity obligations contained in contracts of the
Corporation or its Subsidiaries; and
(xviii) loans or advances to the Corporation by any of
its Subsidiaries.
1.48 "Labor Affiliate" means (a) any Person that has been
formed by or is an Affiliate of one or more labor groups
representing employees of the Corporation or any of its
Subsidiaries or (b) any Person determined by the Board to be a
Person in which a substantial group of employees of the
Corporation or any of its Subsidiaries, acting as an organized
group, owns a majority ownership interest.
1.49 "Management Public Directors" has the meaning defined
in Subsection 2.3.
1.50 "Market Capitalization" means the aggregate market
value of a Public Company's voting stock held by Persons that are
not Affiliates of such Public Company as set forth in the most
recent Form 10-K or any successor form of such Public Company
preceding the date of determination.
1.51 "Measuring Period" means the 365-day period
commencing on the Effective Time.
1.52 "Non-Dilutive Issuance" has the meaning defined in
Subsection 3.4(b)(vii).
1.53 "Other Board Committee" has the meaning defined in
Subsection 4.1.10.
1.54 "Other Extraordinary Matters" has the meaning defined
in Subsection 3.4(b).
1.55 "Outside Public Directors" has the meaning defined in
Subsection 2.3.
1.56 "Permitted Bankruptcy Equity" has the meaning defined
in Subsection 3.4(b)(vii)(B).
1.57 "Person" means an individual, corporation,
association, partnership, joint venture, limited liability
company, trust, estate, unincorporated organization, governmental
authority, judicial entity or other entity.
1.58 "Post-Termination Meeting" has the meaning defined in
Subsection 2.13(b).
1.58.1 "Pre-Closing Covered Convertible" means any
Convertible Company Securities (as defined in Section 1.8 of the
Recapitalization Agreement), other than the Series A Preferred
Stock, outstanding immediately prior to the Effective Time with a
conversion price equal to or less than the Old Share Equivalent
Price (as defined in Section 1.10 of the Recapitalization
Agreement).
1.58.2 "Pre-Closing Covered Option" means any employee stock
option granted under any employee stock option or compensation
plan or arrangement of the Corporation outstanding immediately
prior to the Effective Time with an exercise price of less than
the Old Share Equivalent Price (as defined in Section 1.10 of the
Recapitalization Agreement).
1.59 "Public Company" means a Person with a class of
securities registered pursuant to Section 12 of the Exchange Act.
1.60 "Public Directors" has the meaning defined in
Subsection 2.3.
1.61 "Recapitalization Agreement" means the
Recapitalization Agreement, dated as of March 25, 1994, among the
Corporation, ALPA and the IAM, as amended from time to time.
1.62 "Restated Bylaws" means the Amended and Restated
Bylaws of the Corporation, as amended from time to time.
1.63 "Restated Certificate" means the Restated Certificate
of Incorporation of the Corporation, as amended from time to
time.
1.64 "Rights Agreement" means the Rights Agreement, dated
as of December 11, 1986, between the Corporation and First
Chicago Trust Company of New York (formerly Morgan Shareholder
Services Trust Company), as amended from time to time.
1.65 "Salaried and Management Employee Investment" means
the concessions and other investments of employees who perform
the functions currently performed by the salaried and management
employees of the Corporation or United Air Lines, Inc.
(including any functions which such group of employees begins
performing in the future) as set forth in Schedule 5.8(iii) to
the Recapitalization Agreement, which shall be provided for the
term identified in such Schedule 5.8(iii).
1.66 "Salaried/Management Employee Director" has the
meaning defined in Subsection 2.2.
1.66.1 "Series A Preferred Stock" means the series of Serial
Preferred Stock of the Corporation, without par value, designated
Series A Convertible Preferred Stock in Article FOURTH, Part I.A,
of this Restated Certificate.
1.67 "Significant Labor-Related Business Transaction"
means any purchase, sale, transfer or other disposition of
assets, or the issuance of capital stock, by any Person, or any
merger or consolidation with any Person, in a single transaction
or series of related transactions, in which the Gross Proceeds to
be received by any Person or Persons in connection with such
purchase, sale, transfer, disposition, issuance, merger or
consolidation exceeds $1,000,000.
1.68 "Solvency Determination" has the meaning defined in
Subsection 3.4(b)(vii)(B).
1.69 "Stockholders" means the stockholders of the
Corporation.
1.70 "Subsidiary" means, with respect to any Person
(herein referred to as the "parent"), any corporation,
partnership, association or other business entity which such
parent, directly or indirectly, controls, including, without
limitation, any such Person of which securities or other
ownership interests representing 50% or more of the equity, or
50% or more of the ordinary voting power or voting power
representing the right to elect 50% or more of the Board of
Directors or similar governing body, or 50% or more of the
general partnership interests, are, at the time any determination
is being made, owned, controlled or held by such parent;
provided, however, that the term "Subsidiary" shall not include a
Distribution Company where the Corporation does not, directly or
indirectly, control the particular actions or activities under
consideration (including the power, under the relevant
organizational documents of such Distribution Company, to block
such actions or activities) with respect to such Distribution
Company.
1.71 "Substantive Amendment" means the adoption of any
material amendment to, the deletion or repeal of, or the adoption
of any provision materially inconsistent with, any of the
following sections of the Restated Bylaws: 2.2(a), 2.6(a),
2.6(c), 3.1, 3.2, 3.3, 3.6, 3.7, 3.8, 3.9(a), 3.10, 3.12(a),
3.14(a), 4.1(a), 4.2, 4.3, 4.5(a), 4.7(a), 4.8(a), 5.1, 5.2(a),
5.3(a), 5.4(a), 5.6(a) and 8.1.
1.72 "Termination Date" means, except as otherwise
provided in this Restated Certificate, the date on which (a) the
Common Equity held in the ESOPs, the Existing Plans or in any
other employee trusts or pension, retirement or other employee
benefit plans sponsored by the Corporation or any of its
Subsidiaries for the benefit of its employees as of the close of
business on such date, plus (b) the number of Available Unissued
ESOP Shares, plus, but without double-counting (c) the number of
other shares of Common Stock that are held in the ESOPs, the
Existing Plans or in any other employee trusts or pension,
retirement or other employee benefit plans sponsored by the
Corporation or any of its Subsidiaries for the benefit of its
employees as of the close of business on such date and that were
acquired (i) in open market transactions or (ii) in privately
negotiated transactions from a person other than the Corporation
or one or more Subsidiaries, represent, in the aggregate, less
than 20% of (x) the Common Equity of the Corporation plus (y) the
number of Available Unissued ESOP Shares.
1.73 "Union Directors" has the meaning defined in
Subsection 2.2.
1.74 "United Air Lines, Inc." means United Air Lines,
Inc., a Delaware corporation, or any successor to all or
substantially all of the assets thereof.
1.75 "Voting Stock" means collectively, the Common Stock,
Class IAM Preferred Stock, Class M Voting Preferred Stock, Class
Pilot MEC Preferred Stock, Class P Voting Preferred Stock, Class
SAM Preferred Stock and Class S Voting Preferred Stock.
Section 2. Directors.
2.1 General Powers. Except as otherwise provided in
this Restated Certificate, the business and affairs of the
Corporation shall be managed by or under the direction of the
Board. The Board may adopt such rules and regulations, not
inconsistent with this Restated Certificate, the Restated Bylaws
or applicable law, as it may deem proper for the conduct of its
meetings and the management of the Corporation. In addition to
the powers conferred expressly by this Restated Certificate and
the Restated Bylaws, the Board may exercise all powers and
perform all acts that are not required, by this Restated
Certificate, the Restated Bylaws or applicable law, to be
exercised or performed by the Stockholders.
2.2 Number and Composition. Subject to Article FOURTH,
Parts I.A and I.B of this Restated Certificate and Subsection
2.13 of this Article FIFTH, the Board shall consist of twelve
members and shall be comprised as follows: five Directors shall
be designated Public Directors who shall be elected, subject to
Subsection 2.3, by the holders of the Common Stock in accordance
with Article FOURTH, Part XI of this Restated Certificate, voting
separately as a class; four Directors shall be designated
Independent Directors who shall be elected, subject to Subsection
2.4, by the holders of the Class I Preferred Stock in accordance
with Article FOURTH, Part X of this Restated Certificate, voting
separately as a class; and three Directors shall be designated
Employee Directors, of whom one shall be elected by the holders
of the Class IAM Preferred Stock, voting separately as a class,
in accordance with Article FOURTH, Part VIII of this Restated
Certificate (the "Class IAM Director"), one shall be elected by
the holders of the Class Pilot MEC Preferred Stock, voting
separately as a class, in accordance with Article FOURTH, Part
VII of this Restated Certificate (the "Class Pilot MEC Director,"
"Union Directors") and one shall be elected by the holders of the
Class SAM Preferred Stock, voting separately as a class, in
accordance with Article FOURTH, Part IX of this Restated
Certificate (the "Salaried/Management Employee Director"). The
Union Directors and the Salaried/Management Employee Director are
referred to in this Restated Certificate collectively as the
"Employee Directors."
2.3 Qualifications of Public Directors. Until the
Termination Date, of the five Public Directors, (a) three shall
be individuals who are not and have never been an officer or
employee of, or a provider of professional services to, the
Corporation or any of its Subsidiaries (collectively, the
"Outside Public Directors") and (b) two shall be, at the time of
their election, substantially full-time employees of the
Corporation or one of its Subsidiaries, one of whom, in addition,
to the fullest extent such additional qualification is permitted
by law, shall be, at the time of such election, the Chief
Executive Officer, and the second of whom, in addition, to the
fullest extent such additional qualification is permitted by law,
shall be a senior executive officer of the Corporation
satisfactory to the Chief Executive Officer (collectively, the
"Management Public Directors"). The Outside Public Directors and
the Management Public Directors are referred to in this Restated
Certificate collectively as the "Public Directors."
2.4 Qualifications of Independent Directors. Until the
Termination Date, no Independent Director shall either (a)
without the consent of both Union Directors and all of the Public
Directors, have a current affiliation (other than an affiliation
that may result from being a member of the Board) or business
relationship with the Corporation or any of its Subsidiaries
(collectively, an "affiliation") which is required to be
disclosed or have had a prior such affiliation (other than an
affiliation that may result from having been an Independent
Director) which, had such Independent Director been a Director of
the Corporation at the time of such prior affiliation, would have
been required to be disclosed, pursuant to Item 7 of Schedule 14A
promulgated under the Exchange Act (or any successor provision
thereto) or (b) be an officer, director, trustee or official of
any labor organization that serves as a collective bargaining
"representative" under the Railway Labor Act, 45 U.S.C. 151
et seq., or the National Labor Relations Act, 29 U.S.C. 141
et seq. or any similar laws as may from time to time be in
effect. In addition to the foregoing, until the Termination
Date, at the time of the election or appointment of an
Independent Director to the Board, at least two of the
Independent Directors (or at least one of the Independent
Directors if only one Independent Director vacancy is being
filled and none of the incumbent Independent Directors meet the
criteria specified in clause (i) or (ii) below), after giving
effect to the election or appointment of the Independent
Directors being elected or appointed, shall be, or have been at
the time of their initial election or appointment as Independent
Directors, either (i) a senior executive officer of a company
(other than the Corporation) with revenues during such company's
prior fiscal year in excess of $1 billion as set forth in such
company's most recent annual financial statements or (ii) a
member of the board of directors of at least one other Public
Company with a Market Capitalization in excess of $1 billion as
of the date of such Public Company's most recent annual financial
statements.
2.5 Nomination of Board's Nominees for Public Directors.
Until the Termination Date, the Board's nominees for the Outside
Public Directors shall be nominated by the Outside Public
Director Nomination Committee in accordance with Subsection
4.1.8. Until the Termination Date, the Board's nominees for the
Management Public Directors shall be nominated by action of the
Board by the affirmative vote of at least a majority of the votes
entitled to be cast by the entire Board. For purposes of this
Subsection 2.5 and Subsection 4.1.8, "nominate" means to
designate those persons who are recommended by the Board for
election as Public Directors in the proxy materials distributed
by the Corporation to the holders of its Voting Stock and to take
such other action as required to place their name in nomination
for election at the meeting of Stockholders called in accordance
with such proxy material.
2.6 Term of Office. Subject to Subsection 2.13(b), and
except as otherwise provided in this Restated Certificate, each
Director shall hold office until the next annual meeting of
Stockholders and until his or her successor is elected and
qualified, subject to such Director's earlier death, resignation
or removal; provided, however, that, until the Termination Date,
the term of an Outside Public Director or an Independent Director
shall automatically terminate if during such term the status of
such Director shall change such that the qualification
requirements set forth in Subsection 2.3(a) or the first sentence
of Subsection 2.4, as applicable, are no longer satisfied.
2.7 Resignation of Directors. Any Director may resign
at any time upon written notice to the Corporation.
2.8 Removal of Directors. (a) Any Director may be
removed without cause at any time only by the affirmative vote of
the holders of a majority in voting power of the shares of the
class or classes or series of stock that are entitled to vote for
the election of such Director, voting separately as a class or
series.
(b) Any Director or the entire Board may be removed for
cause as provided under the GCL.
2.9 Vacancies on the Board. Vacancies on the Board may
only be filled as follows:
2.9.1 Vacancies of Public Directors. Until the
Termination Date, in the event of a vacancy of an Outside Public
Director, such vacancy may be filled only by the Outside Public
Director Nomination Committee in accordance with Subsection
4.1.8. Until the Termination Date, in the event of a vacancy of
a Management Public Director, such vacancy may be filled only by
action of the Board by the affirmative vote of at least a
majority of the votes entitled to be cast by the entire Board
with an individual who would be eligible to be nominated for
election to such position in accordance with Subsections 2.3 and
2.5.
2.9.2 Vacancies of Independent Directors. Until the
Termination Date, in the event of a vacancy of an Independent
Director, such vacancy may be filled only by the Independent
Director Nomination Committee in accordance with Subsection
4.1.6.
2.9.3 Vacancies of Employee Directors. In the event of a
vacancy of an Employee Director, such vacancy may be filled only
by a vote of the class or series of stock that elected such
Director.
2.9.4 Board Action During Vacancies. Until the
Termination Date, in the event of a vacancy on the Board of an
Employee Director or Public Director, or in the event of a
vacancy of an Independent Director who immediately prior to the
occurrence of such vacancy was a member of a Board Committee of
which only one Independent Director was a member, then, subject
to the fiduciary duties of the remaining Directors or members of
such Board Committee, as the case may be, then in office, neither
the Board nor such Board Committee may take any action (other
than to fill such vacancy of such Public Director), until after
the earlier of (a) 20 days following the occurrence of such
vacancy and (b) the time that such vacancy is filled in
accordance with the provisions of this Restated Certificate.
2.10 Quorum Requirements of Board Meetings. Until the
Termination Date, at all meetings of the Board, other than
meetings of Board Committees, a quorum shall exist only if (a)
Directors having at least a majority of the votes entitled to be
cast by the entire Board are present at the meeting and (b)
unless otherwise consented to by each of the Union Directors, if
less than all of the Public Directors, Independent Directors and
Employee Directors are present, or if Directors other than the
Public Directors, Independent Directors and Employee Directors
are present, the number of votes constituting a majority of the
votes present is no greater than the sum of (i) two plus (ii) the
aggregate number of votes entitled to be cast by the Independent
Directors present at such meeting.
2.11 Voting by Directors. Subject to any greater or
additional vote of the Board or of any class of Directors
required by law or by this Restated Certificate, including,
without limitation, Section 3, an act of the Board shall require
the affirmative vote of at least a majority of the votes entitled
to be cast by the Directors present at a meeting of the Board at
which a quorum is present. Each Director shall have one vote;
provided, however, that, until the Termination Date, at any time
there is a vacancy of one or more Independent Directors, then
with respect to any action of the Board (but not including any
action of a Board Committee), each Independent Director shall
have the number of votes equal to a fraction, (a) the numerator
of which equals four and (b) the denominator of which equals four
minus the number of vacancies then existing among the Independent
Directors.
2.12 Quorum Requirements of Stockholder Meetings. Until
the Termination Date, except as otherwise required by law or by
this Restated Certificate, the presence in person or by proxy of
the holders of outstanding shares representing at least a
majority of the total voting power of all outstanding shares
entitled to vote at a meeting of Stockholders shall constitute a
quorum at a meeting of Stockholders; provided, however, that
where a separate vote of a class or classes or series of stock is
required, the presence in person or by proxy of the holders of
outstanding shares representing at least a majority of the total
voting power of all outstanding shares of such class or classes
or series shall constitute a quorum thereof entitled to take
action with respect to such separate vote.
2.13 Events Upon the Occurrence of the Termination Date.
(a) Upon the occurrence of the Termination Date, the
Board shall take all necessary and appropriate actions to
cause to be filed and become effective a restated
certificate of incorporation of the Corporation under
Section 245 of the GCL, or any successor provision then in
effect, deleting all provisions in this Restated Certificate
that, by their terms, are no longer in effect and operative
as a result of the occurrence of the Termination Date and
integrating into a single document all other amendments to
this Restated Certificate that have been adopted between the
date hereof and the Termination Date.
(b) Upon the occurrence of the Termination Date, the
Outside Public Director Nomination Committee shall, on
behalf of the Board, subject to Subsection 2.13(c), nominate
the individuals to be the Board's nominees for election as
Directors (other than the Employee Directors) to be
recommended for election by the Stockholders entitled to
vote thereon at a meeting of Stockholders to be held
promptly following the Termination Date (the "Post-
Termination Meeting"), and the officers of the Corporation
shall take all necessary and appropriate actions to promptly
call and hold the Post-Termination Meeting. Upon the
effectiveness of the election of the Directors elected at
such Post-Termination Meeting, the term of office of each
Director in office immediately prior thereto (except any
such Director re-elected in such election or as to whom no
successor is elected in such election) shall terminate.
(c) Notwithstanding any other provision in this Restated
Certificate, but subject to Article FOURTH, Parts I.A and
I.B, following the Termination Date the Board shall consist
of twelve members and shall be comprised as follows: nine
Directors shall be elected by the holders of the outstanding
Common Stock and of any other class or series of stock
entitled to vote thereon together with the Common Stock,
voting together as a single class; one Director shall be
elected by the holders of the outstanding Class IAM
Preferred Stock, voting separately as a class; one Director
shall be elected by the holders of the outstanding Class
Pilot MEC Preferred Stock, voting separately as a class; and
one Director shall be elected by the holders of the
outstanding Class SAM Preferred Stock, voting separately as
a class. After the Termination Date, and until the IAM
Termination Date (as defined in Article FOURTH, Part VIII of
this Restated Certificate) in the case of the Director
elected by the holders of the outstanding Class IAM
Preferred Stock or the ALPA Termination Date (as defined in
Article FOURTH, Part VII of this Restated Certificate) in
the case of the Director elected by the holders of the
outstanding Class Pilot MEC Preferred Stock, the Director
elected by the holders of the outstanding Class IAM
Preferred Stock and the Director elected by the holders of
the outstanding Class Pilot MEC Preferred Stock shall each
be deemed a "Union Director," and collectively shall be
deemed "Union Directors," for purposes of this Restated
Certificate. After the Termination Date, and until the IAM
Termination Date in the case of the Director elected by the
holders of the outstanding Class IAM Preferred Stock, until
the ALPA Termination Date in the case of the Director
elected by the holders of the outstanding Class Pilot MEC
Preferred Stock, and until the earlier of the IAM
Termination Date and the ALPA Termination Date in the case
of the Director elected by the holders of the outstanding
Class SAM Preferred Stock, the Director elected by the
holders of the outstanding Class IAM Preferred Stock, the
Director elected by the holders of the outstanding Class
Pilot MEC Preferred Stock and the Director elected by the
holders of the outstanding Class SAM Preferred Stock shall
each be deemed an "Employee Director," and collectively
shall be deemed "Employee Directors," for purposes of this
Restated Certificate.
Section 3. Special Voting Provisions.
3.1 Matters Requiring Stockholder Vote under the GCL.
3.1.1 Amendment to the Restated Certificate. Until the
Termination Date, subject to Subsection 3.8, notwithstanding that
a lesser or no vote may be required by law of either the Board or
the Stockholders, and in addition to any other vote of the Board
or the Stockholders required by law or this Restated Certificate,
any amendment to the Restated Certificate (excluding a
restatement of the Restated Certificate effected solely pursuant
to Section 245 of the GCL (which merely restates and integrates
but does not further amend this Restated Certificate) and any
action taken by the Board in accordance with this Restated
Certificate pursuant to Section 151(g) of the GCL not
inconsistent with this Restated Certificate) must be approved by
one of the following:
(a) (i) the affirmative vote of at least a majority of
the votes entitled to be cast by the Directors present at a
meeting of the Board at which a quorum is present, which
vote must include the affirmative vote of at least six of
the votes entitled to be cast by the Directors present at
the Board meeting other than the Employee Directors, plus
(ii) the affirmative vote of at least 75% in voting power of
the Voting Stock present in person or represented by proxy
at a meeting of Stockholders at which a quorum is present;
(b) (i) the affirmative vote of at least 75% in voting
power of the Voting Stock present in person or represented
by proxy at a meeting of Stockholders at which a quorum is
present, plus (ii) the affirmative vote of at least a
majority in voting power of the outstanding capital stock of
the Corporation entitled to vote thereon not held by the
trustees, in their capacity as such, under the ESOPs, voting
separately as a class;
(c) the affirmative vote of at least 75% of the votes
entitled to be cast by the entire Board, which vote must
include (i) the affirmative vote of at least one Union
Director and (ii) the affirmative vote of at least a
majority of the votes entitled to be cast by the Directors
present at a meeting of the Board at which a quorum is
present, which vote must include the affirmative vote of at
least six of the votes entitled to be cast by the Directors
present at the Board meeting other than the Employee
Directors; or
(d) (i) the affirmative vote of at least 75% of the
votes entitled to be cast by the entire Board, which vote
must include the affirmative vote of at least one Union
Director, plus (ii) the affirmative vote of at least a
majority in voting power of the outstanding capital stock of
the Corporation entitled to vote thereon not held by the
trustees, in their capacity as such, under the ESOPs, voting
separately as a class.
3.1.2 Merger or Consolidation. Until the Termination
Date, subject to Subsection 3.8, notwithstanding that a lesser or
no vote may be required by law of either the Board or the
Stockholders, and in addition to any other vote of the Board or
the Stockholders required by law or this Restated Certificate,
but subject in each case to the provisions of Section 253 of the
GCL, any merger or consolidation of the Corporation or any of its
Subsidiaries must be approved,
(a) if the merger or consolidation is with or into a
Labor Affiliate, by one of the following:
(i) (A) the affirmative vote of at least a majority
of the votes entitled to be cast by the Directors
present at a meeting of the Board at which a quorum is
present, which vote must include the affirmative vote
of at least six of the votes entitled to be cast by the
Directors present at the Board meeting other than the
Employee Directors, plus (B) the affirmative vote of at
least 75% in voting power of the Voting Stock present
in person or represented by proxy at a meeting of
Stockholders at which a quorum is present;
(ii) (A) the affirmative vote of at least 75% in
voting power of the Voting Stock present in person or
represented by proxy at a meeting of Stockholders at
which a quorum is present, plus (B) the affirmative
vote of at least a majority in voting power of the
outstanding capital stock of the Corporation entitled
to vote thereon not held by the trustees, in their
capacity as such, under the ESOPs, voting separately as
a class;
(iii) the affirmative vote of at least 75% of the
votes entitled to be cast by the entire Board, which
vote must include (A) the affirmative vote of at least
one Union Director and (B) the affirmative vote of at
least a majority of the votes entitled to be cast by
the Directors present at a meeting of the Board at
which a quorum is present, which vote must include the
affirmative vote of at least six of the votes entitled
to be cast by the Directors present at the Board
meeting other than the Employee Directors; or
(iv) (A) the affirmative vote of at least 75% of
the votes entitled to be cast by the entire Board,
which vote must include the affirmative vote of at
least one Union Director, plus (B) the affirmative vote
of at least a majority in voting power of the
outstanding capital stock of the Corporation entitled
to vote thereon not held by the trustees, in their
capacity as such, under the ESOPs, voting separately as
a class; or
(b) if the merger or consolidation is not with or into
a Labor Affiliate, by either:
(i) the affirmative vote of at least 75% in voting
power of the Voting Stock present in person or
represented by proxy at a meeting of Stockholders at
which a quorum is present; or
(ii) the affirmative vote of at least 75% of the
votes entitled to be cast by the entire Board, which
vote must include the affirmative vote of at least one
Union Director.
3.1.3 Sale, Lease or Exchange of All or Substantially All
Assets. Until the Termination Date, subject to Subsection 3.8,
notwithstanding that a lesser or no vote may be required by law
of either the Board or the Stockholders, and in addition to any
other vote of the Board or the Stockholders required by law or
this Restated Certificate, the sale, lease or exchange of all or
substantially all of the property and assets of the Corporation
or of United Air Lines, Inc., including its goodwill and its
corporate franchises (treating as a sale, lease or exchange of
assets for purposes of Subsection 3.1.3(a) below, the issuance of
ownership interests by any Subsidiary of the Corporation to a
Person other than the Corporation or a wholly-owned Subsidiary of
the Corporation if such issuance would diminish the percentage
ownership held by the Corporation or any of its Subsidiaries),
must be approved,
(a) if such sale, lease or exchange is to or with a
Labor Affiliate, by one of the following:
(i) (A) the affirmative vote of at least a majority
of the votes entitled to be cast by the Directors
present at a meeting of the Board at which a quorum is
present, which vote must include the affirmative vote
of at least six of the votes entitled to be cast by the
Directors present at the Board meeting other than the
Employee Directors, plus (B) the affirmative vote of at
least 75% in voting power of the Voting Stock present
in person or represented by proxy at a meeting of
Stockholders at which a quorum is present;
(ii) (A) the affirmative vote of at least 75% in
voting power of the Voting Stock present in person or
represented by proxy at a meeting of Stockholders at
which a quorum is present, plus (B) the affirmative
vote of at least a majority in voting power of the
outstanding capital stock of the Corporation entitled
to vote thereon not held by the trustees, in their
capacity as such, under the ESOPs, voting separately as
a class;
(iii) the affirmative vote of at least 75% of the
votes entitled to be cast by the entire Board, which
vote must include (A) the affirmative vote of at least
one Union Director and (B) the affirmative vote of at
least a majority of the votes entitled to be cast by
the Directors present at a meeting of the Board at
which a quorum is present, which vote must include the
affirmative vote of at least six of the votes entitled
to be cast by the Directors present at the Board
meeting other than the Employee Directors; or
(iv) (A) the affirmative vote of at least 75% of
the votes entitled to be cast by the entire Board,
which vote must include the affirmative vote of at
least one Union Director, plus (B) the affirmative vote
of at least a majority in voting power of the
outstanding capital stock of the Corporation entitled
to vote thereon not held by the trustees, in their
capacity as such, under the ESOPs, voting separately as
a class; or
(b) if such sale, lease or exchange is not to or with a
Labor Affiliate, by either:
(i) the affirmative vote of at least 75% in voting
power of the Voting Stock present in person or
represented by proxy at a meeting of Stockholders at
which a quorum is present; or
(ii) the affirmative vote of at least 75% of the
votes entitled to be cast by the entire Board, which
vote must include the affirmative vote of at least one
Union Director.
3.1.4 Dissolution. Until the Termination Date, subject to
Subsection 3.8, notwithstanding that a lesser or no vote may be
required by law of either the Board or the Stockholders, and in
addition to any other vote of the Board or the Stockholders
required by law or this Restated Certificate, but subject to the
provisions of Section 275(c) of the GCL, the dissolution of the
Corporation must be approved by either:
(a) the affirmative vote of at least 75% in voting power
of the Voting Stock present in person or represented by
proxy at a meeting of Stockholders at which a quorum is
present; or
(b) the affirmative vote of at least 75% of the votes
entitled to be cast by the entire Board, which vote must
include the affirmative vote of at least one Union Director.
3.2 Substantive Amendment to the Restated Bylaws.
Subject to the provisions of this Subsection 3.2 and the bylaws
of the Corporation, the Board is expressly authorized to make,
alter or repeal the bylaws of the Corporation. Until the
Termination Date, subject to Subsection 3.8, notwithstanding that
a lesser or no vote may be required by law of either the Board or
the Stockholders, and in addition to any other vote of the Board
or the Stockholders required by law or this Restated Certificate,
any Substantive Amendment to the Restated Bylaws must be approved
by one of the following:
(a) (i) the affirmative vote of at least a majority of
the votes entitled to be cast by the Directors present at a
meeting of the Board at which a quorum is present, which
vote must include the affirmative vote of at least six of
the votes entitled to be cast by the Directors present at
the Board meeting other than the Employee Directors, plus
(ii) the affirmative vote of at least 75% in voting power of
the Voting Stock present in person or represented by proxy
at a meeting of Stockholders at which a quorum is present;
(b) (i) the affirmative vote of at least 75% in voting
power of the Voting Stock present in person or represented
by proxy at a meeting of Stockholders at which a quorum is
present, plus (ii) the affirmative vote of at least a
majority in voting power of the outstanding capital stock of
the Corporation entitled to vote thereon not held by the
trustees, in their capacity as such, under the ESOPs, voting
separately as a class;
(c) the affirmative vote of at least 75% of the votes
entitled to be cast by the entire Board, which vote must
include (i) the affirmative vote of at least one Union
Director and (ii) the affirmative vote of at least a
majority of the votes entitled to be cast by the Directors
present at a meeting of the Board at which a quorum is
present, which vote must include the affirmative vote of at
least six of the votes entitled to be cast by the Directors
present at the Board meeting other than the Employee
Directors; or
(d) (i) the affirmative vote of at least 75% of the
votes entitled to be cast by the entire Board, which vote
must include the affirmative vote of at least one Union
Director, plus (ii) the affirmative vote of at least a
majority in voting power of the outstanding capital stock of
the Corporation entitled to vote thereon not held by the
trustees, in their capacity as such, under the ESOPs, voting
separately as a class.
3.3 Significant Labor-Related Business Transaction with a
Labor Affiliate. Until the Termination Date, subject to
Subsection 3.8, notwithstanding that a lesser or no vote may be
required by law of either the Board or the Stockholders, and in
addition to any other vote of the Board or the Stockholders
required by law or this Restated Certificate, any Significant
Labor-Related Business Transaction (other than entering into or
modifying, amending or supplementing a Collective Bargaining
Agreement) between the Corporation or any of its Subsidiaries and
a Labor Affiliate must be approved on behalf of the Corporation
by either:
(a) the affirmative vote of at least a majority of the
votes entitled to be cast by the Directors present at a
meeting of the Board at which a quorum is present, which
vote must include the affirmative vote of at least six of
the votes entitled to be cast by the Directors present at
the Board meeting other than the Employee Directors;
(b) the affirmative vote of at least a majority in
voting power of the outstanding capital stock of the
Corporation entitled to vote thereon not held by the
trustees, in their capacity as such, under the ESOPs, voting
separately as a class.
3.4 Other Extraordinary Matters Requiring Special Voting.
(a) Until the Termination Date, subject to Subsection
3.8, notwithstanding that a lesser or no vote may be
required by law of either the Board or the Stockholders, and
in addition to any other vote of the Board or the
Stockholders required by law or this Restated Certificate,
any Other Extraordinary Matters must be approved by either:
(i) the affirmative vote of at least 75% of the
votes entitled to be cast by the entire Board, which
vote must include the affirmative vote of at least one
Union Director; or
(ii) the affirmative vote of at least 75% in
voting power of the Voting Stock present in person or
represented by proxy at a meeting of Stockholders at
which a quorum is present.
(b) For purposes of this Restated Certificate, the term
"Other Extraordinary Matters" means any of the following:
(i) The entry by the Corporation or any of its
Subsidiaries into any line of business outside the
Airline Business;
(ii) The making by the Corporation or any of its
Subsidiaries of any Investment outside the Airline
Business if immediately after giving effect to such
proposed Investment the aggregate Investments made by
the Corporation and its Subsidiaries outside the
Airline Business would exceed five percent of the total
assets of the Corporation and its Subsidiaries on a
consolidated basis as set forth in the most recent
audited financial statements of the Corporation;
provided, that an Investment shall be excluded from
such calculation if the Board determines, pursuant to
the affirmative vote set forth in Subsection 3.4(a)(i),
or if the Stockholders determine, pursuant to the
affirmative vote set forth in Subsection 3.4(a)(ii),
not to include such Investment for purposes of the test
set forth in this Subsection 3.4(b)(ii);
(iii) The acquisition, directly or indirectly, by
the Corporation or any of its Subsidiaries of all or
substantially all of the assets or a majority of the
voting stock or other ownership interests of any
Person, whether or not organized in the United States,
engaged, either directly or indirectly, in the business
of transporting persons, property or mail, separately
or in combination, for hire as a common or private air
carrier;
(iv) The making by the Corporation or any of its
Subsidiaries of any Investment in any Person, whether
or not organized in the United States, engaged, either
directly or indirectly, in the business of transporting
persons, property or mail, separately or in
combination, for hire as a common or private air
carrier, other than such Investments made by the
Corporation and its Subsidiaries in the ordinary course
of business ("Ordinary Course Air Carrier
Investments"); provided, that the aggregate of all
Ordinary Course Air Carrier Investments outstanding at
any time shall not exceed one-half of one percent of
the total assets of the Corporation and its
Subsidiaries on a consolidated basis as set forth in
the most recent audited financial statements of the
Corporation; and provided, further, that an Ordinary
Course Air Carrier Investment shall be excluded from
such calculation if the Board determines, pursuant to
the affirmative vote set forth in Subsection 3.4(a)(i),
or if the Stockholders determine, pursuant to the
affirmative vote set forth in Subsection 3.4(a)(ii),
not to include such Ordinary Course Air Carrier
Investment for purposes of the test set forth in this
Subsection 3.4(b)(iv);
(v) The adoption of any material amendment or
supplement to the Rights Agreement or the taking by the
Corporation of any material actions pursuant to the
Rights Agreement, including, without limitation, the
redemption of rights under the Rights Agreement;
(vi) The sale, lease, exchange, surrender to or
at the direction of a lessor, or other disposition (any
of such transactions being referred to herein as a
"Disposition") by the Corporation or any of its
Subsidiaries of assets, tangible or intangible, real or
personal (including, without limitation, goodwill,
franchises and the sale of ownership interests in, or
the issuance of ownership interests by (other than
director qualifying shares or the issuance of any other
minority ownership interests to the extent required by
law), any of the Corporation's Subsidiaries to a Person
other than the Corporation or a wholly-owned Subsidiary
of the Corporation if such issuance would diminish the
percentage ownership held by the Corporation or any of
its Subsidiaries, but excluding from the term "assets"
for purposes of this Subsection (vi) fixtures, office
equipment and office, cleaning, packaging, lubricating,
deicing, sanitation and similar supplies which for
accounting purposes are expensed upon acquisition and
items which but for the application of clauses (ii)
through (vi), (viii) through (xi), (xiv) and (xvi) of
Section 1.47 would constitute Investments)), for Gross
Proceeds which, when added to the Gross Proceeds from
(aa) the Disposition of other such assets
during the immediately preceding 365 day period
which ended one business day prior to the date of
such Disposition resulting in Gross Proceeds in
excess of $5 million and
(bb) the Disposition of other such assets
during the immediately preceding twelve calendar
month period which ended not less than 45 days nor
more than 2 full calendar months prior to the date
of such Disposition resulting in Gross Proceeds of
$5 million or less, collectively exceeds $200
million; provided, however, in all cases the Gross
Proceeds identified in clause (aa) and (bb) shall
not include any transactions consummated prior to
the Effective Time and the $5 million set forth in
clauses (aa) and (bb) may be increased by action
of the Board on an annual basis based on the
affirmative vote of at least 75% of the votes
entitled to be cast by the entire Board, which
vote must include the affirmative vote of at least
one Union Director; provided, further, however,
that none of the following transactions shall
constitute an Other Extraordinary Matter for
purposes of this Subsection (vi) (or count against
the $200 million Gross Proceeds calculation
above):
(A) secured aircraft financings,
(B) sale-leaseback and leveraged lease
transactions, or sales or similar transfers
of receivables, for financing purposes,
(C) foreclosure sales of assets subject
to bona fide security interests, and deeds
and other dispositions of assets subject to
bona fide security interests in lieu of
foreclosure,
(D) Dispositions of assets if replacement
assets (consisting of assets of the same
class (i.e., airframes of similar range and
payload capability, engines and facilities
similar in character to the assets disposed
of, and ground equipment, spare parts and
fixtures) as the assets being disposed of
(which for these purposes shall include the
Disposition of assets from a disassembled
aircraft or engine which shall be replaced by
a fully assembled aircraft of similar range
and payload capability or engine of similar
character, and similar transactions)) have
been ordered (pursuant to firm commitment,
bona fide orders) or acquired within the six
calendar month period prior to such
Dispositions of assets (provided, further,
that if replacement assets are so ordered or
acquired within 365 days following the
Disposition of assets for which no
replacement assets had been previously
acquired, Gross Proceeds from such
Disposition shall not thereafter be included
in the $200 million Gross Proceeds
calculation above unless such replacement
assets are not actually acquired),
(E) Disposition providing Gross Proceeds
in an amount up to 10% of the book value (net
of depreciation) of the Corporation's fixed
assets at the time of the most recent
quarterly financial statements of the
Corporation if (x) Directors entitled to cast
at least 75% of the votes entitled to be cast
by the entire Board, including all of the
Independent Directors, determine by
resolution of the Board that such asset
Disposition is necessary to (I) cure a
default under material financing agreements
binding upon the Corporation or any of its
Subsidiaries or any of their respective
properties, or avoid a default thereunder
that, absent such Disposition, would be
reasonably likely to occur within 90 days, or
(II) remedy a material adverse development in
the Corporation's business or condition, and
(y) the Gross Proceeds of such asset
Disposition are used to remedy the condition
referred to in clause (x) (provided, that the
exception afforded by this clause (E) shall
be available not more than once in any
consecutive five-year period),
(F) Dispositions of damaged tangible
assets or tangible assets that are obsolete
in the Airline Business used in the ordinary
course of business of the Corporation or any
of its Subsidiaries, excluding airframes,
engines and related spare parts (other than
aircraft which may no longer be legally
operated in the United States by the
Corporation or United Air Lines, Inc. and
airframes, engines and related spare parts
which under applicable insurance policies
have been declared to be a total loss or a
constructive total loss),
(G) without limiting clause (D), (1)
leases, subleases, slides, swaps, trades,
transfers, exchanges or similar transactions
involving aircraft take-off and landing
authorizations, slots or similar rights, (2)
leases, subleases, exchanges or similar
transactions involving vacant land, building
space, parking areas, airport gates or
similar real property and (3) Dispositions of
consumables, spare parts, ground equipment or
other similar goods, in each case (x) entered
into in the ordinary course of business,
consistent with past practice, and (y) to the
extent, in connection with such Disposition,
the Corporation or its Subsidiaries receives
(contemporaneously or over a reasonable time
frame) benefits of substantially the same or
similar value and either class or character,
(H) without limiting clause (D), leases,
subleases, swaps, trades, exchanges or
similar transactions involving aircraft
takeoff and landing authorization, slots, or
similar rights which are not being utilized
by the Corporation or a Subsidiary and where
such lack of utilization may subject such
authorizations, slots or rights to loss or
forfeiture,
(I) without limiting clause (D),
subleases or licenses, in the ordinary course
of business and consistent with past
practices, of gates or other airport
facilities not being utilized by the
Corporation or a Subsidiary pursuant to
agreements which are cancelable or terminable
by the Corporation on 90 days' notice or
less;
(J) Dispositions of assets (other than
airframes, engines and related spare parts)
if (x) made pursuant to a discrete asset
management program that provides for the
Disposition of not more than an aggregate of
$25 million of assets and (y) such discrete
asset management program is approved by
either the Board pursuant to the affirmative
vote set forth in Subsection 3.4(a)(i), or
the Stockholders (following the
recommendation of the Board), pursuant to the
affirmative vote set forth in Subsection
3.4(a)(ii); provided, that only one asset
management program referred to in this clause
(J) shall be in place in any fiscal year and
such program is subject to such approval on
an annual basis;
(K) Dispositions, in the ordinary course
of business, of supplies or spare parts
pursuant to ground support, spare part or
similar mutual accommodation arrangements
with other United States or foreign air
carriers or pursuant to the provision of
maintenance, ground support or similar
support services by the Corporation or any
Subsidiary,
(L) Dispositions, in the ordinary course
of business consistent with past practices,
of assets which are held for resale by the
Corporation or any Subsidiary (other than
airframes and engines),
(M) Dispositions, in the ordinary course
of business, of flight equipment spare parts
(other than as part of a transaction or
series of related transactions involving the
Disposition of airframes or engines) (x)
which are obsolete, or in excess of
reasonably projected needs, with respect to
United's fleet, or (y) for which the costs of
repair, or of redistribution within the
Corporation or its Subsidiaries, would exceed
the value of such assets to the Corporation
or its Subsidiaries,
(N) Dispositions, in the ordinary course
of business, of ground equipment, fixtures
and related spare parts (x) which are
obsolete, or in excess of reasonably
projected needs, with respect to the
Corporation's or its Subsidiaries' operations
or (y) for which the costs of repair, or of
redistribution within the Corporation or its
Subsidiaries, would exceed the value of such
assets to the Corporation or its
Subsidiaries,
(O) Dispositions of fuel in the ordinary
course of business,
(P) Dispositions of aircraft, engines,
propellers, and spare parts owned or leased
by Air Wisconsin, Inc. on the date of
execution of the Recapitalization Agreement,
(Q) Dispositions of assets to lessors, in
the ordinary course of business, in
connection with the provision by the
Corporation or any Subsidiary of any
replacement engines or spare parts pursuant
to replacement, modification or maintenance
obligations under aircraft leases (financing
or otherwise), and
(R) Dispositions of assets which
individually, or when aggregated with other
assets in the same or related Dispositions,
are not in excess of $25,000, either with
respect to periods prior to December 31, 1994
or pursuant to a distinct asset management
program approved in the same manner as the
procedures set forth in clause (J) above; and
(vii) The issuance by the
Corporation of Equity Securities (a "Non-
Dilutive Issuance") other than pursuant
to Sections 1.6 and 1.10 of the
Recapitalization Agreement to the ESOPs;
provided, that such an issuance shall
not constitute an Other Extraordinary
Matter if:
(A) (I) Directors entitled to
cast at least 75% of the votes
entitled to be cast by the entire
Board, including all of the
Independent Directors, determine by
resolution of the Board that it is
in the best interests of the
Corporation to issue shares of
Equity Securities, (II) such
issuance is subject to the First
Refusal Agreement and (III) if such
issuance occurs during the
Measuring Period (as defined in the
Recapitalization Agreement), the
Board by the affirmative vote of a
majority of the votes entitled to
be cast by the Directors present at
a meeting of the Board at which a
quorum is present, which vote must
include the affirmative votes of
both Union Directors, approves an
equitable adjustment to the number
of Additional Shares (as defined in
Subsection 1.10(b) of the
Recapitalization Agreement) to be
issued pursuant to Sections 1.6 and
1.10 of the Recapitalization
Agreement. Any shares of Equity
Securities issued in accordance
with the provisions of this
Subsection 3.4(b)(vii)(A) shall not
be deemed to be Common Equity for
purposes of this Restated
Certificate;
(B) Directors entitled to cast
at least 75% of the votes entitled
to be cast by the entire Board,
including all of the Independent
Directors, determine by a
resolution of the Board (I) that
the Corporation is Bankrupt (or,
absent a material positive change
in the Corporation's results of
operations over the immediately
succeeding 90 days from the results
contained in the Corporation's
regularly prepared projections,
that in their opinion the
Corporation will become Bankrupt
within 90 days), which
determination is confirmed by
written opinions of two nationally
recognized investment banking firms
that further opine (giving effect
to the facts and circumstances
applicable to the Corporation,
including discussions with
prospective equity investors) that
the sale of Equity Securities is
necessary to avoid or remedy such
Bankruptcy (the "Bankruptcy
Opinions"), and (II) that the
issuance of additional Equity
Securities (the "Permitted
Bankruptcy Equity") would cause the
Corporation, after giving effect to
the proposed issuance, no longer to
be or not to become Bankrupt in the
time frame referred to in the
Bankruptcy Opinions (the "Solvency
Determination"). Notwithstanding
the foregoing, the issuance of
Permitted Bankruptcy Equity shall
constitute an Other Extraordinary
Matter unless (I) such issuance is
in an amount that does not exceed
the amount determined by the Board
to be reasonably necessary to
obtain sufficient equity investor
participation so as to allow the
Board to make the Solvency
Determination, (II) a binding
commitment for the sale of such
Permitted Bankruptcy Equity is
entered into within 90 days of the
delivery of the Bankruptcy Opinions
and (III) the terms of the First
Refusal Agreement have been
complied with in all material
respects by the Corporation. Any
Permitted Bankruptcy Equity issued
in accordance with this Subsection
3.4(b)(vii)(B) shall be included as
outstanding Common Equity for
purposes of the definition of the
Termination Date; or
(C) Such issuance is pursuant
to (I) the exercise, conversion or
exchange of Equity Securities
outstanding immediately prior to
the Effective Time, (II) the
Corporation's 1981 Incentive Stock
Program, 1988 Restricted Stock Plan
and Incentive Compensation Plan,
each as amended in accordance with
the Recapitalization Agreement,
(III) the Director Incentive Plan
or (IV) any other equity incentive
compensation plan approved by the
affirmative vote of Directors
entitled to cast at least 75% of
the votes entitled to be cast by
the entire Board, including all of
the Independent Directors. The
shares of Equity Securities (x)
outstanding immediately prior to
the Effective Time that were not
included in the definition of
"Fully Diluted Shares" pursuant to
Subsection 1.10(d) of the
Recapitalization Agreement and (y)
issued in accordance with clauses
(II), (III) and (IV) of this
Subsection 3.4(b)(vii)(C) (in each
case including the shares of Equity
Securities underlying such Equity
Securities or issuable upon the
exercise, conversion or exchange
thereof), shall not be deemed to be
Common Equity for purposes of this
Restated Certificate and, along
with the other Equity Securities
issued in accordance with clause
(I) of this Subsection
3.4(b)(vii)(C) (and the shares of
Equity Securities underlying such
Equity Securities or issuable upon
the exercise, conversion or
exchange thereof), shall not be
subject to the First Refusal
Agreement.
3.5 Special Voting Provisions with Respect to the
Purchase and Sale of Common Stock. Until the Termination Date,
notwithstanding that a lesser or no vote may be required by law
of either the Board or the Stockholders, and in addition to any
other vote of the Board or the Stockholders required by law or
this Restated Certificate, subject, in the case of clause (b)
below, to Subsection 3.9, any Common Stock Transaction must be
approved by the affirmative vote of at least a majority of the
votes entitled to be cast by the entire Board, which vote must
include the affirmative vote of at least 80% of the votes
entitled to be cast by the Public Directors. For purposes of
this Restated Certificate, the term "Common Stock Transaction"
means (a) any purchase by the Corporation of any shares of Common
Stock (other than to fulfill its obligations to issue or retain
Common Stock in connection with the exercise of employee options
issued pursuant to employee benefit plans or to retain Common
Stock in connection with tax withholding obligations in
connection with the exercise of employee options or restricted
stock) or (b) any sale by the Corporation of any shares of Common
Stock to a company sponsored pension, retirement or other
employee benefit plan for the account of employees (other than
pursuant to the first refusal rights provided in the First
Refusal Agreement or in connection with the creation and
operation of the employee stock ownership plans and programs of
the Corporation under which the ESOP Convertible Preferred Stock
is issued), whether for cash or non-cash consideration,
including, without limitation, changes in the rates of pay, rules
or working conditions for employees holding beneficial ownership
interests in the ESOP Convertible Preferred Stock.
3.6 Special Provisions with Respect to the Appointment
and Removal of Officers.
3.6.1 Appointment of Successor Chief Executive Officer.
Until the Termination Date, upon the death, resignation, removal
or other termination of employment of the Chief Executive Officer
and following the making of a recommendation by the Executive
Committee as to a successor Chief Executive Officer as provided
in Subsection 4.1.5, the affirmative vote of at least a majority
of the votes entitled to be cast by the entire Board shall be
required to elect a successor Chief Executive Officer; provided,
however, that the Board may elect as a successor Chief Executive
Officer only a person who is recommended for such position by the
Executive Committee.
3.6.2 Appointment of Other Officers. The officers of the
Corporation (other than the Chief Executive Officer) shall be
elected or appointed, annually or at such other time or times as
the Board shall determine, by the Board or by the Chief Executive
Officer pursuant to authority delegated by the Board to the Chief
Executive Officer; provided, however, with respect to the initial
appointment of the Chief Operating Officer following the
Effective Time, such person shall be elected or appointed by the
Board and shall not be found to be unacceptable by two of the
three Outside Public Directors.
3.6.3 Term of Office. Each officer of the Corporation
shall hold office until such officer's successor is chosen and
qualifies or until such officer's earlier death, resignation or
removal. Any such officer may resign at any time upon written
notice to the Corporation. Such resignation shall take effect on
the date of receipt of such notice or at such later date as is
therein specified, and, unless otherwise specified, the
acceptance of such resignation shall not be necessary to make it
effective. The resignation of such officer shall be without
prejudice to the contract rights of the Corporation, if any.
3.6.4 Removal. Until the Termination Date, any officer
elected or appointed by the Board (including, without limitation,
the Chief Executive Officer) may be removed at any time, with or
without cause, only by (a) the affirmative vote of at least a
majority of the votes entitled to be cast by the entire Board or
(b) the Chief Executive Officer pursuant to authority delegated
by the Board (by the same vote specified in clause (a) of this
Subsection 3.6.4) to the Chief Executive Officer.
3.6.5 Vacancy. Until the Termination Date, any vacancy
occurring in any office of the Corporation (other than the Chief
Executive Officer) shall be filled either by the Board or the
Chief Executive Officer pursuant to authority delegated by the
Board to the Chief Executive Officer.
3.7 Certain Provisions with Respect to (a) the Class I
Preferred Stock and the Independent Directors and (b) the Class
SAM Preferred Stock and the Salaried/Management Employee
Director.
(a) Notwithstanding any other provision of this Restated
Certificate, (i) the Corporation may issue Class I Preferred
Stock only to an Independent Director or the initial
"Individual Parties" under the Class I Stockholders'
Agreement, and (ii) a holder of Class I Preferred Stock may
not sell, transfer, pledge or assign any shares of Class I
Preferred Stock or any interest therein, including, without
limitation, by operation of law or otherwise, other than to
the Corporation or to another Independent Director in
accordance with the Class I Stockholders' Agreement. Any
sale, transfer, pledge or assignment of any shares of Class
I Preferred Stock, whether by operation of law or otherwise,
in violation of this Subsection 3.7(a) shall be null and
void and of no force and effect. The certificates
evidencing shares of Class I Preferred Stock shall bear a
legend describing the transfer restrictions set forth in
this Subsection 3.7(a).
(b) Notwithstanding any other provision of this Restated
Certificate, (i) the Corporation may issue Class SAM
Preferred Stock only to a Salaried/Management Employee
Director, a "Designated Shareholder" under the Class SAM
Stockholders' Agreement or the initial "Designated Nominee"
under the Class SAM Stockholders' Agreement, and (ii) a
holder of Class SAM Preferred Stock may not sell, transfer,
pledge or assign any shares of Class SAM Preferred Stock or
any interest therein, including, without limitation, by
operation of law or otherwise, other than to the Corporation
or to another Salaried/Management Employee Director in
accordance with the Class SAM Stockholders' Agreement. Any
sale, transfer, pledge or assignment of any shares of Class
SAM Preferred Stock, whether by operation of law or
otherwise, in violation of this Subsection 3.7(b) shall be
null and void and of no force and effect. The certificates
evidencing shares of Class SAM Preferred Stock shall bear a
legend describing the transfer restrictions set forth in
this Subsection 3.7(b).
3.8 Section 203 of the GCL. Notwithstanding any
provision of this Restated Certificate to the contrary, if any
provision of this Restated Certificate by its terms purports to
require for any vote of Stockholders required by Section 203 of
the GCL (or any successor section thereto) a greater vote of
Stockholders than that specified in Section 203 of the GCL, then,
to the fullest extent required by law, the provision of Section
203 of the GCL that requires such specific vote of the
Stockholders shall govern and the provision of this Restated
Certificate that would require a greater vote of the Stockholders
shall not apply.
3.9 Employees' Purchase of Equity Securities. Until the
Termination Date, any repeal or modification of, or any amendment
or supplement to, the terms of any resolution of the Board or any
of the Corporation's or any of its Subsidiaries' policies,
practices, procedures or employee benefit plans, which would
increase the aggregate amount of Common Equity that may be
acquired or held by the employee trusts or pension, retirement or
other employee benefit plans (including the ESOPs and the
Existing Plans) sponsored by the Corporation or any of its
Subsidiaries ("Plans"), may be approved by the affirmative vote
of at least a majority of the votes entitled to be cast by the
Directors present at a meeting of the Board at which a quorum is
present, provided that such vote includes the affirmative vote of
both Union Directors, but only if such approval does not increase
the maximum aggregate amount of Common Equity that may be held by
the Plans by an amount in excess of (a) the Adjusted Percentage
(as defined in Section 1.10 of the Recapitalization Agreement),
minus (b) the percentage of the Common Equity then held by the
ESOPs. Until the Termination Date, any other repeal or
modification of, or amendment or supplement to, the terms of any
such resolution of the Board or any of such policies, practices,
procedures or employee benefit plans that would in any manner
materially affect (other than as provided in the preceding
sentence) the right or ability of the employees of the
Corporation or any of its Subsidiaries to purchase, directly or
indirectly, any Equity Securities, must be approved by the
affirmative vote of at least a majority of the votes entitled to
be cast by the Directors present at a meeting of the Board at
which a quorum is present, which vote must include the
affirmative vote of both Union Directors and all of the Outside
Public Directors.
3.10 Construction of Special Voting Provisions. Except
as otherwise expressly provided in this Restated Certificate,
where more than one Subsection of this Section 3 is applicable to
an event, transaction or other matter, the provisions contained
in each such Subsection shall apply independently to such event,
transaction or other matter.
3.11 Participation of Flight Attendants. Notwithstanding
any other provision of this Restated Certificate, until the
Termination Date, the Corporation shall not (a) amend in any way
this Restated Certificate, (b) amend in any way the Restated
Bylaws, (c) issue any securities of the Corporation or any of its
Subsidiaries or (d) enter into or amend any contract, agreement,
arrangement, understanding or instrument to which the Corporation
is a party, in connection with the participation of the
Association of Flight Attendants or any of its members in any
investment in the Corporation or any of its Subsidiaries, unless
the Labor Committee (as defined in Subsection 4.1.7), after
complete examination, with the assistance of outside financial
and legal counsel, of such proposed participation, shall
determine (by the affirmative vote of at least a majority of the
votes entitled to be cast by the Directors present at a meeting
of such committee at which a quorum is present, which vote must
include the affirmative vote of at least one Outside Public
Director) that the terms of such participation are fair from a
financial point of view to the holders of the outstanding Common
Stock of the Corporation.
Section 4. Board Committees.
4.1 Committees of the Board. Until the Termination Date
(subject to Subsection 2.13(b)), the following committees of the
Board shall be constituted and exist with the membership,
functions, powers and authorizations set forth below: Audit
Committee, CAP Committee, Compensation Committee, Compensation
Administration Committee, Executive Committee, Independent
Director Nomination Committee, Labor Committee, Outside Public
Director Nomination Committee and Transaction Committee.
4.1.1 Audit Committee. The Audit Committee shall consist
of the four Independent Directors and the three Outside Public
Directors or such fewer number of such Directors (in as nearly as
practicable that same proportion of Independent Directors and
Outside Public Directors) as shall qualify for audit committee
membership under applicable rules of the securities exchanges or
other similar trading market on which the Common Stock is traded.
The function of the Audit Committee shall be (a) to review the
professional services and independence of the Corporation's
independent auditors and the scope of the annual external audit
as recommended by the independent auditors, (b) to ensure that
the scope of the annual external audit is sufficiently
comprehensive, (c) to review, in consultation with the
independent auditors and the internal auditors, the plan and
results of the annual external audit, the adequacy of the
Corporation's internal control systems, and the results of the
Corporation's internal audits, (d) to review, with management and
the independent auditors, the Corporation's annual financial
statements, financial reporting practices and the results of each
external audit, (e) to review the Corporation's cash management,
risk management, investment management and foreign exchange
management policies, and (f) to undertake reasonably related
activities to those set forth in clauses (a) through (e) of this
Subsection 4.1.1. The Audit Committee shall also have the
authority to consider the qualification of the Corporation's
independent auditors, to make recommendations to the Board as to
their selection and to review and resolve disputes between such
independent auditors and management relating to the preparation
of the annual financial statements.
4.1.2 CAP Committee. The CAP Committee shall consist of
eight Directors, including four Public Directors, two Independent
Directors and the two Union Directors. Of the four Public
Directors, three shall be Outside Public Directors and one shall
be the Chief Executive Officer, if the Chief Executive Officer is
a Public Director. The two Independent Director members shall be
appointed by the Independent Director Nomination Committee, which
appointment shall require the affirmative vote of all of the
votes entitled to be cast by the Independent Directors. The
function of the CAP Committee shall be to oversee implementation
of the Corporation's Competitive Action Plan. The CAP Committee
shall have the exclusive authority, acting for and on behalf of
the Board and consistent with the protection of the interests of
the holders of the Common Stock, to approve on behalf of the
Corporation any and all modifications of or amendments to the
Competitive Action Plan; provided, however, that to the extent
such modifications or amendments relate to changes to any
provision of the Corporation's Collective Bargaining Agreements,
the two Union Directors on the CAP Committee shall not be
considered members of the CAP Committee in connection therewith
and shall neither be entitled to vote nor be counted in
determining the presence of a quorum of such committee in
connection therewith. Notwithstanding the foregoing, the Labor
Committee shall have the exclusive authority on behalf of the
Board to approve on behalf of the Corporation any such
modifications or amendments to such Collective Bargaining
Agreements. The CAP Committee shall have the exclusive
authority, acting for and on behalf of the Board, to approve on
behalf of the Corporation any and all modifications of or
amendments to the Salaried and Management Employee Investment;
provided, however, that such modifications or amendments must be
approved by the affirmative vote of at least a majority of the
votes entitled to be cast by all the members of the CAP
Committee, which vote must include the affirmative vote of at
least two Union Directors and all of the Outside Public
Directors.
4.1.3 Compensation Committee. The Compensation Committee
shall consist of seven Directors, including two Independent
Directors, two Public Directors and the three Employee Directors.
Of the two Public Directors, one shall be an Outside Public
Director appointed by the Outside Public Director Nomination
Committee, and one shall be the Chief Executive Officer, if the
Chief Executive Officer is a Public Director. The two
Independent Director members shall be appointed by the
Independent Director Nomination Committee, which appointment
shall require the affirmative vote of all of the votes entitled
to be cast by the Independent Directors. At all meetings of the
Compensation Committee, the presence of Directors entitled to
cast at least a majority of the aggregate number of votes
entitled to be cast by all Directors on such committee,
including, unless otherwise consented to by all Employee
Directors, the presence of at least one Independent Director,
shall be required to constitute a quorum for the transaction of
business. The principal functions of the Compensation Committee
shall be (a) to review and recommend to the Board the
compensation and benefit policies to be established for the
officers of the Corporation, (b) to review and approve the
individual compensation and benefit arrangements for the officers
of the Corporation, except as provided in Subsection 4.1.4, (c)
to review general policy matters relating to compensation and
benefit arrangements of non-union employees of the Corporation,
(d) to administer the stock option plans and executive
compensation programs of the Corporation, including bonus and
incentive plans applicable to officers and key employees of the
Corporation, except as provided in Subsection 4.1.4, and (e) to
undertake administrative activities reasonably related to the
functions set forth in clauses (a) through (d) of this sentence.
Subject to final approval by the Compensation Committee in
accordance with Subsection 4.1.4, the Compensation Committee may
delegate to the Compensation Administration Committee specific
responsibilities with respect to the Chief Executive Officer's
compensation.
4.1.4 Compensation Administration Committee. The
Compensation Administration Committee shall consist of two
Independent Directors and one Outside Public Director, each of
whom shall be (a) a "disinterested person" or "disinterested
administrator" or any related successor concepts under Rule 16b-3
(or any successor provision) promulgated pursuant to Section 16
of the Exchange Act and (b) an "outside director" or any related
successor concepts under Section 162(m) (or any successor
provision) of the Internal Revenue Code of 1986, as amended from
time to time (the "Code"). The Outside Public Director shall be
appointed by the Outside Public Director Nomination Committee.
The two Independent Directors shall be appointed by the
Independent Director Nomination Committee, which appointment
shall require the affirmative vote of all the votes entitled to
be cast by the Independent Directors. The principal functions of
the Compensation Administration Committee shall be to administer
the stock option plans and executive compensation programs of the
Corporation to the extent such functions cannot or are not
appropriate to be performed by the Compensation Committee in
light of any provision of the Code, the securities laws, any
other applicable law or any regulations promulgated under any of
the foregoing and to perform such responsibilities with respect
to the Chief Executive Officer's compensation as shall be
delegated by the Compensation Committee; provided, however, that
in order for any action of the Compensation Administration
Committee to be effective, such action must also be approved by
the Compensation Committee (unless such approval could reasonably
be expected to prevent a stock option plan, restricted stock
plan, other equity incentive plan or other executive compensation
program (or a component thereof) that is intended to qualify
under Rule 16b-3 (or any successor provision) or to qualify for
an exception under Section 162(m) (or any successor provision)
from receiving the benefits of Rule 16b-3 or qualifying for such
exception, respectively).
4.1.5 Executive Committee. The Executive Committee shall
consist of six Directors, including two Independent Directors,
two Public Directors and the two Union Directors. Of the two
Public Directors, one shall be an Outside Public Director
appointed by the Outside Public Director Nomination Committee,
and one shall be the Chief Executive Officer, if the Chief
Executive Officer is a Public Director. The two Independent
Director members shall be appointed by the Independent Director
Nomination Committee, which appointment shall require the
affirmative vote of all of the votes entitled to be cast by the
Independent Directors. At all meetings of the Executive
Committee, the presence of Directors entitled to cast at least a
majority of the aggregate number of votes entitled to be cast by
all Directors on such committee, including, unless otherwise
consented to by all Employee Directors who are members of the
Executive Committee, the presence of at least one Independent
Director, shall be required to constitute a quorum for the
transaction of business. Subject to the provisions of the GCL,
and except as otherwise expressly provided in this Restated
Certificate, the Executive Committee shall have and may exercise
all of the powers of the Board in the management and affairs of
the Corporation; provided, however, that the Executive Committee
shall not be authorized to (a) take any action with respect to
any Extraordinary Matters, (b) take any action with respect to
matters specifically vested by this Restated Certificate in
either the Audit Committee, CAP Committee, Compensation
Committee, Compensation Administration Committee, Independent
Director Nomination Committee, Labor Committee, Outside Public
Director Nomination Committee or Transaction Committee or (c)
take any action which under this Restated Certificate may be
taken by the Board only with a greater or additional vote of the
Board or any class of Directors than that provided for in
Subsection 2.11, including, without limitation, any action that
is subject to the requirements of Section 3. In addition to the
foregoing, in the event of the death, resignation, removal or
other termination of employment of the Chief Executive Officer,
the Executive Committee shall act as a search committee in
connection with and shall recommend to the Board the appointment
of a successor Chief Executive Officer. The affirmative vote of
at least four of the votes entitled to be cast by the members of
the Executive Committee (excluding the departing Chief Executive
Officer, if he or she is a member of the Executive Committee)
shall be required for the Executive Committee to recommend to the
Board a successor Chief Executive Officer; provided, however,
that if the departing Chief Executive Officer is not a member of
the Executive Committee, the affirmative vote of at least five of
the votes entitled to be cast by the members of the Executive
Committee shall be required for the Executive Committee to
recommend to the Board a successor Chief Executive Officer.
4.1.6 Independent Director Nomination Committee. The
Independent Director Nomination Committee shall consist of seven
Directors, consisting of the four Independent Directors and the
three Employee Directors. The function of the Independent
Director Nomination Committee shall be (a) to nominate, on behalf
of the Board, individuals satisfying the qualifications for
Independent Directors set forth in Subsection 2.4 to be the
Board's nominees for election by the holders of the Class I
Preferred Stock to serve as Independent Directors upon the
expiration of the term of Independent Directors then in office,
(b) to appoint, on behalf of the Board, individuals satisfying
such qualifications to serve as Independent Directors upon the
occurrence of a vacancy on the Board as a result of the death,
resignation, removal or disqualification of an Independent
Director during his or her term for the remainder of such term
and (c) to appoint Independent Directors to serve on certain
Board Committees. The vote of the Independent Director
Nomination Committee required to approve any such nomination or
appointment shall be (i) the affirmative vote of at least a
majority of the votes entitled to be cast by the Independent
Directors, plus (ii) the affirmative vote of at least one Union
Director.
4.1.7 Labor Committee. The Labor Committee shall consist
of three or more Directors, including one Outside Public
Director, at least one Independent Director and at least one
other Director, as designated by the Board, but shall not include
any Employee Directors. The Labor Committee shall have the
exclusive authority on behalf of the Board to approve on behalf
of the Corporation the entering into of, or any modification or
amendment to, a Collective Bargaining Agreement to which the
Corporation or any of its Subsidiaries is a party.
Notwithstanding the foregoing, by resolutions approved by both
the Labor Committee and the Board (which vote must include the
affirmative vote of at least 80% of the votes entitled to be cast
by the entire Board, all Outside Public Directors and at least
one Union Director) the officers of the Corporation or the
applicable Subsidiary may be authorized to approve such
modifications or amendments, or such Collective Bargaining
Agreements with any labor union representing in the aggregate not
more than 100 of the Corporations' or any of its Subsidiaries'
employees based in the United States, in each case of the type or
types provided for in such resolutions and which are determined
pursuant to such resolutions not to be material to the
Corporation and its Subsidiaries.
4.1.8 Outside Public Director Nomination Committee. The
Outside Public Director Nomination Committee shall consist of all
three Outside Public Directors. The function of the Outside
Public Director Nomination Committee shall be (a) to nominate on
behalf of the Board individuals satisfying the qualifications for
Outside Public Directors set forth in Subsection 2.3 to be the
Board's nominees for election by the holders of the Common Stock
to serve as Outside Public Directors upon the expiration of the
term of Outside Public Directors, (b) to appoint on behalf of the
Board individuals satisfying such qualifications to serve as
Outside Public Directors upon the occurrence of a vacancy on the
Board as a result of the death, resignation, removal or
disqualification of an Outside Public Director during his or her
term for the remainder of such term and (c) to appoint Outside
Public Directors to serve on certain Board Committees. In
addition to any approval required by law or by Subsection 3.1.1,
any amendment or modification of the rights, powers, privileges
or qualifications of the Outside Public Directors or the Outside
Public Director Nomination Committee must be approved by either
(a) all of the Outside Public Directors or (b) the affirmative
vote of at least a majority in voting power of the
outstanding capital stock of the
Corporation entitled to vote thereon not held by the trustees, in
their capacity as such, under the ESOPs, voting separately as a
class.
4.1.9 Transaction Committee. The Transaction Committee
shall consist of seven Directors, consisting of the four
Independent Directors and the three Outside Public Directors.
The function of the Transaction Committee shall be to evaluate
and advise the Board with respect to any proposed merger or
consolidation of the Corporation or any of its Subsidiaries with
or into, the sale, lease or exchange of all or substantially all
of the Corporation's or any of its Subsidiaries' property or
assets to, or a Significant Labor-Related Business Transaction
(other than entering into or modifying, supplementing or amending
a Collective Bargaining Agreement, which shall be within the
exclusive authority of the Labor Committee) with, any Labor
Affiliate.
4.1.10 Other Board Committees. Until the Termination Date,
at any time, and from time to time, the Board may, by resolution
passed by the affirmative vote of 80% of the votes entitled to be
cast by the entire Board, which vote must include the affirmative
vote of at least one Union Director, designate one or more other
committees of the Board (an "Other Board Committee" and, together
with the Audit Committee, CAP Committee, Compensation Committee,
Compensation Administration Committee, Executive Committee,
Independent Director Nomination Committee, Labor Committee,
Outside Public Director Nomination Committee and Transaction
Committee, collectively the "Board Committees"). Except as
otherwise provided in this Restated Certificate, any Other Board
Committee, to the extent permitted under the GCL and provided in
a resolution of the Board passed as aforesaid, shall have and may
exercise any of the powers and authority of the Board in the
management of the business and affairs of the Corporation;
provided, however, that, until the Termination Date, no Other
Board Committee shall have the power or authority of the Board
with respect to (a) matters specifically vested by this Restated
Certificate in either the Audit Committee, CAP Committee,
Compensation Committee, Compensation Administration Committee,
Executive Committee, Independent Director Nomination Committee,
Labor Committee, Outside Public Director Nomination Committee or
Transaction Committee, (b) Extraordinary Matters, (c) the
appointment or removal of officers of the Corporation or (d) any
action which under this Restated Certificate may be taken by the
Board only with a greater or additional vote of the Board or any
class of Directors than that provided for in Subsection 2.11,
including, without limitation, any action that is subject to the
requirements of Section 3. Other Board Committees shall have such
name or names as may be determined from time to time by
resolution adopted by the Board. Except as otherwise provided in
this Restated Certificate, until the Termination Date each Other
Board Committee shall consist of at least three Directors,
including at least one Independent Director, at least one Union
Director (unless both Union Directors consent that a Union
Director need not be a member of such Other Board Committee) and
at least one other Director as designated by the Board. Until
the Termination Date, the Board, by resolution passed as
aforesaid, may also delegate to the CAP Committee and the
Compensation Committee, or any of them, such other power and
authority as could have been delegated to an Other Board
Committee.
4.1.11 Union Director Membership on Board Committees.
Unless otherwise agreed upon by both Union Directors, the Union
Director membership on each of the Board Committees on which only
one Union Director serves shall be rotated biennially between the
Class IAM Director and the Class Pilot MEC Director.
4.1.12 Quorum and Voting Requirements of Board Committees.
Except as otherwise provided in this Restated Certificate, at all
meetings of a Board Committee the presence of Directors entitled
to cast at least a majority of the aggregate number of votes
entitled to be cast by all Directors on such committee shall
constitute a quorum for the transaction of business; provided,
however, that, until the Termination Date, at all meetings of an
Other Board Committee, unless otherwise consented to by all
Employee Directors who are members of such Other Board Committee,
if less than all of the members of such Other Board Committee are
present, a quorum shall exist only if the number of votes
constituting a majority of the votes present is no greater than
the sum of (a) one, plus (b) the aggregate number of votes
entitled to be cast by the Independent Directors present at such
meeting. Each Director serving on a Board Committee shall have
one vote; provided, however, that, until the Termination Date, at
any time there is a vacancy among the Independent Directors
designated as members of a Board Committee of which two or more
Independent Directors are members, then with respect to any
action of such Board Committee while such vacancy exists, each
Independent Director serving on such Board Committee shall have a
number of votes equal to a fraction, (a) the numerator of which
equals the number of Independent Directors who would be serving
on such committee if there were no vacancies and (b) the
denominator of which equals (i) the number of Independent
Directors who would be serving on such committee if there were no
vacancies minus (ii) the number of vacancies in the Independent
Directors designated as members of such committee. Except as
otherwise provided in this Restated Certificate, any act of a
Board Committee shall require the affirmative vote of a majority
of the votes entitled to be cast by the Directors present at a
meeting of such Board Committee (at which a quorum is present)
and entitled to vote on the matter in question.
4.1.13 Effect of Board Committee Action. Any action that
is authorized pursuant to this Restated Certificate or pursuant
to a Board resolution adopted in accordance with Subsection
4.1.10 to be taken by a Board Committee and that is duly taken by
such committee in accordance therewith shall have the same effect
as if such action were taken by the Board.
4.1.14 Retainer of Counsel and Advisors. The CAP Committee
and the Transaction Committee shall have the authority at any
time, and from time to time, to retain independent counsel and
independent financial advisors, at the reasonable expense of the
Corporation, for the purpose of advising such committees in
connection with the performance of their functions as described
in this Restated Certificate.
4.2 Board Committees Following the Termination Date.
(a) Upon the occurrence of the Termination Date, the
Board may by the affirmative vote of a majority of the votes
entitled to be cast by the entire Board designate one or
more committees of the Board and provide in a resolution of
the Board passed as aforesaid the powers and functions of
such committees to the extent permitted under the GCL;
provided, however, that the number of Union Directors that
shall be members of each such committee shall be the same as
the number of Union Directors that served immediately prior
to the Termination Date on the Board Committee, if any, the
function of which was substantially the same as such newly
designated committee.
(b) Unless otherwise agreed upon by both Union
Directors, the Union Director membership on each committee
of the Board following the Termination Date on which only
one Union Director serves shall be rotated annually between
the Class IAM Director and the Class Pilot MEC Director.
SIXTH. (a) A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal
benefit.
(b) Each person who was or is made a party or is
threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact
that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer, of the
Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in
an official capacity as a director, officer, employee or agent or
in any other capacity while serving as a director, officer,
employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered
by such person in connection therewith and such indemnification
shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his
or her heirs, executors and administrators: provided, however,
that, except as provided in paragraph (c) hereof, the Corporation
shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such
person only if such proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation. The right to
indemnification conferred in this Article SIXTH shall be a
contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition: provided,
however, that, if the Delaware General Corporation Law requires,
the payment of such expense incurred by a director or officer in
his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such person
while a director or officer, including, without limitation,
service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not
entitled to be indemnified under this Article SIXTH or otherwise.
The Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the Corporation with
the same scope and effect as the foregoing indemnification of
directors and officers.
(c) If a claim under paragraph (b) of this Article SIXTH
is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant
may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that the claimant
has not met the standards of conduct which make it permissible
under the Delaware General Corporation Law for the Corporation to
indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set
forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that
the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(d) The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article SIXTH shall not be
exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of this Restated
Certificate of Incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
(e) The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or
agent of the Corporation or another corporation, partnership,
joint venture, trust or other enterprise against any such
expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
SEVENTH. The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Restated
Certificate, in the manner now or hereafter prescribed by the
laws of Delaware and this Restated Certificate, and all rights
and powers conferred herein upon stockholders and directors are
granted subject to this reservation.
Upon this Restated Certificate of Incorporation becoming
effective (the "Effective Time"), each share of common stock, par
value $5.00 per share, of the Corporation ("Common Stock")
outstanding immediately prior to the Effective Time, and each
share of Common Stock which immediately prior to the Effective
Time was held by the Corporation as treasury stock, shall be
reclassified as and converted into the following: (i) 0.5 shares
of common stock, par value $0.01 per share, of the Corporation
(the "New Shares") and (ii) one one-thousandth of a share of
Series D Redeemable Preferred Stock, par value $.01 per share, of
the Corporation; provided, however, that no fractional New Shares
shall be issued, and in lieu thereof the Corporation shall make
cash payments as provided in Section 1.5(f) of the Agreement and
Plan of Recapitalization, dated as of March 25, 1994, as amended
from time to time, among the Corporation and the other parties
thereto.
I, the undersigned officer of UAL Corporation, a corporation
of the State of Delaware, Hereby Certify that the foregoing is a
true, correct and complete copy of the Restated Certificate of
Incorporation of said Corporation as at present in force.
In Witness Whereof, I have hereunto subscribed by name and
affixed the seal of this Corporation this 12th day of July 1994.
UAL Corporation
Name:
Title:
Attest:
Name:
Title:
EXHIBIT 10.1
------------
UAL CORPORATION
---------------
2000 INCENTIVE STOCK PLAN
-------------------------
1. Purpose. The purpose of the UAL Corporation 2000
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, to further
align participants' interests with those of the Company's
shareholders through compensation that is based on shares of
the Company's common stock, par value $.01 per share
("Common Stock") and to furnish incentives to such persons
by providing such persons opportunities to acquire shares of
Common Stock or monetary payments based on the value of such
shares or both, on advantageous terms as herein provided.
2. Administration. All benefits granted under the
Plan shall be granted by either the Compensation
Administration Committee or the Compensation Committee of
the Board of Directors of the Company (such committee, as
applicable, herein called the "Committee"). The Plan shall
be administered by the Compensation Administration Committee
for (I) all grants with respect to any "officer" as such
term is defined in Rule 16a-1(f) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or
(II) any other grant to covered employees for purposes of
Section 162(m) of the Internal Revenue Code of 1986, as
amended and the regulations promulgated thereunder (the
"Code"), to the extent necessary or proper to preserve
deductibility of the compensation expense associated with
such grant under Section 162(m); and by the Compensation
Committee for all grants to participants who are not covered
employees under the Code or officers under Rule 16-1(f) of
the Exchange Act. However, a benefit granted under the Plan
shall not be ineffective solely because it is granted by the
Compensation Administration Committee or the Compensation
Committee not in accordance with the preceding sentence.
The Committee is authorized to interpret the provisions of
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.
Determinations, decisions and actions of the Committee, in
connection with the construction, interpretation,
administration, or application of the Plan will be final,
conclusive, and binding upon any participant and any person
claiming under or through the participant. No member of the
Committee will be liable for any determination, decision, or
action made in good faith with respect to the Plan or any
benefits granted under the Plan. To the extent that the
Committee determines that the restrictions imposed by the
Plan preclude the achievement of the material purposes of
the benefits in jurisdictions outside the United States, the
Committee will have the authority and discretion to modify
those restrictions as the Committee determines to be
necessary or appropriate to conform to applicable
requirements or practices of jurisdictions outside of the
United States. This Plan is not intended to modify or limit
the powers, duties or responsibilities of either the Board
of Directors or the Committee as set forth under the UAL
Corporation Restated Certificate of Incorporation.
3. Participants. Participants in the Plan will
consist of such officers or other key employees of the
Company and its subsidiaries as the Committee in its sole
discretion may designate from time to time to receive
benefits hereunder. 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) Nonqualified 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 the sum of: (i)
8,000,000 shares of Common Stock, which may be newly issued
or treasury shares, (ii) any shares of Common Stock
available for future awards under any prior plan of the
Company (the "Prior Plans") as of May 18, 2000; and (iii)
any shares of Common Stock that are represented by benefits
granted under the Plan or any Prior Plans which are
forfeited, expired or canceled without delivery of shares of
Common Stock or which are used to satisfy the applicable tax
withholding obligations. All of such shares described in
(i) above may, but need not be issued pursuant to the
exercise of Incentive Stock Options. If the purchase price
of any option granted under the Plan is satisfied by
tendering shares of Common Stock to the Company (either by
actual delivery or by attestation), only the number of
shares of Common Stock issued net of the shares of Common
Stock tendered shall be deemed delivered for purposes of
determining the maximum number of shares of Common Stock
available for delivery under the Plan. Subject to Section
15, 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 250,000 during
any one calendar year period; provided, however, that grants
made to any new employee as a condition of employment may
not exceed two times such annual limit during the first year
of employment.
6. Incentive Stock Options. Incentive Stock Options
will consist of options to purchase shares of Common Stock
that are intended to satisfy the requirements applicable to
"incentive stock options" described in Section 422(b) of the
Code or any successor provision. The purchase price for
Incentive Stock Options will not be 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 the date
of grant. The aggregate fair market value (determined on
the date of grant) of the shares of Common Stock with
respect to which Incentive Stock Options are exercisable 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. Nonqualified Stock Options. Nonqualified Stock
Options will consist of options to purchase shares of Common
Stock that are not intended to satisfy the requirements
applicable to "incentive stock options" described in Section
422(b) of the Code or any successor provision. The purchase
price for Nonqualified Stock Options will not be less than
one hundred percent (100%) of the fair market value of
shares on the date of grant. Nonqualified Stock Options
will be exercisable over not more than ten (10) years after
the date of grant.
8. Stock Appreciation Rights. The Committee may, in
its discretion, grant a Stock Appreciation Right to the
holder of any Nonqualified 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 Nonqualified 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 in cash 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 Nonqualified 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. Except as otherwise provided
by the Committee, 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 requiring that
grants of benefits under the Plan be evidenced by an
agreement (in writing or other form deemed appropriate by
the Committee); provisions concerning vesting; provisions
concerning exercise periods following termination of
employment; 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. Subject to the approval of the
shareholders of the Company at the Company's annual meeting
of its shareholders, the Plan shall be effective as of May
18, 2000 and shall remain in effect as long as any benefits
under it remain outstanding. No benefit shall be granted
after May 18, 2010.
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. Unless otherwise determined by
the Committee, the fair market value of the Company's shares
of Common Stock as of any date shall be the mean between the
lowest and highest reported sale prices of the Common Stock
on that date on the New York Stock Exchange.
14. Limitation of Implied Rights.
(a) Neither a participant nor any other person
shall, by reason of participation in the Plan,
acquire any right in or title to any assets, funds
or property of the Company or any subsidiary
whatsoever, including, without limitation, any
specific funds, assets, or other property which
the Company or any subsidiary, in its sole
discretion, may set aside in anticipation of a
liability under the Plan. A participant shall
have only a contractual right to the shares of
Common Stock or amounts, if any, payable under the
Plan, unsecured by any assets of the Company or
any subsidiary, and nothing contained in the Plan
shall constitute a guarantee that the assets of
the Company or any subsidiary shall be sufficient
to pay any amounts to any person.
(b) The Plan does not constitute a contract of
employment, and selection as a participant will
not give any participating employee the right to
be so retained in the employ of the Company or any
subsidiary, nor any right or claim to any benefit
under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan.
Except as otherwise provided in the Plan, no
benefit under the Plan shall confer upon the
holder thereof any rights as a shareholder of the
Company prior to the date on which the individual
fulfills all conditions for receipt of such
rights.
15. Adjustment Provisions. In the event of a
corporate transaction involving the Company (including,
without limitation, any Common Stock dividend, Common Stock
split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off,
combination or exchange of shares), the Committee may adjust
awards without enlargement or diminution to preserve the
benefits or potential benefits of the awards intended to be
made available under the Plan. Action by the Committee may
include: (i) adjustment of the number and kind of shares
which may be delivered under the Plan; (ii) adjustment of
the number and kind of shares subject to outstanding Awards;
(iii) adjustment of the exercise price of outstanding
options and Stock Appreciation Rights; and (iv) any other
adjustments that the Committee determines to be equitable or
appropriate.
16. Amendment and Termination of Plan. The Board may
amend the Plan from time to time or terminate the Plan at
any time, but no such action, without the participant's
consent, shall adversely affect the rights of a participant
under any option or Stock Appreciation Right granted.
EXHIBIT 10.2
------------
UNITED EMPLOYEES PERFORMANCE INCENTIVE PLAN
I. PURPOSE
A. General. 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 the financial interests of the Company and its
Subsidiaries, including its growth, by attracting and retaining
certain highly qualified employees possessing outstanding
ability, motivating such employees by means of performance
related incentives, and providing incentive compensation
opportunities which are competitive with those of major
corporations. The United Employees Performance Incentive Plan
(the "Plan") hereinafter described is designed to assist the
Company in attaining these objectives.
B. Performance-Based Compensation. With respect to Covered
Awards, the Plan is intended to constitute a qualified
performance-based compensation plan under Section 162(m)(4)(C) of
the Code and shall be construed and administered so as to ensure
such compliance.
C. Deferred Awards. With respect to the Plan as it relates to
the payment of Incentive Awards on a deferred basis pursuant to
Paragraph VI(B), such portion of the Plan is intended to be (and
shall be construed and administered as) an employee pension
benefit plan that is unfunded and is maintained by the Company
for a select group of management or highly compensated employees
within the meaning of ERISA.
D. Cash Bonus Plan. With respect to the Plan as it relates to
the current payment of Incentive Awards pursuant to Paragraph
VI(A), such cash bonus portion of the Plan is not intended to be
(and shall not be construed and administered as) an employee
benefit plan within the meaning of ERISA. Incentive Awards under
this Plan are intended to be discretionary and shall not
constitute a part of an employee's regular rate of pay.
II. PLAN ADMINISTRATION
A. Plan Administration. The Company or its delegate has the
authority and responsibility to manage and control the general
administration of the Plan, except as to matters expressly
reserved in this Plan to either the Compensation Committee or the
Compensation Administration Committee of the Board of Directors
of the Company (as applicable, the "Committee"). This Plan is
not intended to modify or limit the powers, duties or
responsibilities of either the Board or the Committees as set
forth under the UAL Corporation Restated Certificate of
Incorporation. Determinations, decisions and actions of the
Company or, if applicable, the Committee, in connection with the
construction, interpretation, administration, or application of
the Plan will be final, conclusive, and binding upon any
Participant and any person claiming under or through the
Participant. No employee of an Employer, any member of the
Board, any delegate of the Board, or any member of the Committee
will be liable for any determination, decision, or action made in
good faith with respect to the Plan or any Incentive Award made
under the Plan.
B. Compensation Committee. The Compensation Committee shall
have the sole authority and responsibility to review annually
management's recommendations for the Selected Performance
Objectives and Selected Performance Factors under the Plan, to
select the Selected Performance Objectives and Selected
Performance Factors for an Award Year; and to otherwise
administer Incentive Awards (other than Covered Awards) payable
to Officers.
C. Compensation Administration Committee. The Compensation
Administration Committee shall have the sole authority and
responsibility under the Plan to establish and administer any
Covered Award under the Plan, including establishment of the
Selected Performance Objectives and Selected Performance Factors
for an Award Year.
D. Non-Assignability. A Participant's rights and interests in
and to payment of any Incentive Award under the Plan may not be
assigned, transferred, encumbered or pledged other than by will
or the laws of descent and distribution; and are not subject to
attachment, garnishment, execution or other creditor's processes.
E. Amendment or Termination. Subject to the UAL Corporation
Restated Certificate of Incorporation, the Plan may at any time
be amended, modified, or terminated, as the Board in its
discretion determines. Such amendment, modification, or
termination of the Plan will not require the consent,
ratification, or approval of any party, including any
Participant. The Board or the Compensation Committee (and the
Compensation Administration Committee in the case of a Covered
Award) may amend the Selected Performance Objectives and/or the
Selected Performance Factors as well as any Incentive Award
(including increasing, decreasing or eliminating any or all
Incentive Awards for an Award Year) prior to the payment of the
Award (or the date payment would have been made but for a
Participant's election to defer receipt) to the extent it deems
appropriate for any reason, including compliance with applicable
securities laws, local laws outside the U.S. if and to the extent
international employees are Participants, the requirements of
Section 162(m) of the Code and the pooling of interests
requirements in connection with a merger. Notwithstanding the
foregoing, to the extent the Compensation Administration
Committee has expressly designated an Incentive Award as a
Covered Award, the Compensation Administration Committee will not
have any authority to amend or modify the terms of any Covered
Award in any manner which would impair its deductibility under
Section 162(m) of the Code.
F. No Contract of Employment. Neither the Plan, nor any
Incentive Award, constitutes 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 any Subsidiary or
continue in any position or at any level of compensation.
G. Controlling Law. This Plan and all determinations made and
actions taken pursuant hereto to the extent not preempted by
ERISA or other federal laws, will be governed and construed by
the internal laws of the State of Illinois, except its laws with
respect to choice of law.
H. Beneficiary Upon Death. An Incentive Award which has been
deferred pursuant to the provisions of Paragraph VI(B) shall be
transferable at the Participant's death to the beneficiary
designated by the Participant on forms prescribed by and filed
with the Company. If no designation of a beneficiary has been
made or is in effect, an Incentive Award payable to a Participant
following his or her death shall be paid to the Participant's
legal representative and shall be transferable by will or
pursuant to the laws of descent and distribution.
I. Compliance with Section 162(m) of the Code. To the extent
any provision of the Plan or an Incentive Award or any action of
the Compensation Committee or the Company as it relates to a
Covered Award, may result in the application of Section 162(m)(1)
of the Code to compensation payable to a Covered Employee, such
provision or action shall be deemed null and void to the extent
permitted by law and deemed advisable to the Compensation
Administration Committee.
J. Unfunded, Unsecured Obligation. A Participant's only
interest under the Plan shall be the right to receive either a
cash or Stock payment for an Incentive Award pursuant to the
terms of the Incentive Award and the Plan. No portion of the
amount payable to a Participant under this Plan shall be held by
the Company or any Subsidiary in trust or escrow or any other
form of asset segregation. To the extent that a Participant
acquires a right to receive a cash or Stock payment under the
Plan, such right shall be no greater than the right of any
unsecured, general creditor of the Company, and no trust in favor
of any Participant will be implied.
K. International Employees. The Company may in its sole
discretion extend participation in the Plan to international
employees who do not satisfy the definition of Administrative
Employee or Management Employee under this Plan. The terms of
the Plan as applied to such employees shall be as set forth in an
Exhibit to this Plan.
III. DEFINITIONS
Unless the context requires otherwise, the following terms when
used with initial capitalization have the following meanings:
A. Account -- A bookkeeping account maintained by the Company
in the name of each Participant, which account shall consist of
two subaccounts, one known as the "Cash Subaccount" and the other
as the "Company Stock Subaccount."
B. Administrative Employee -- An individual (i) who is
classified by an Employer (without regard to any retroactive
judicial or administrative reclassification of such individual)
as an Administrative Employee (on other than a temporary
reclassification basis), (ii) whose employment is for an
indefinite period, (iii) who is employed in an Employer
established job classification not covered by a collective
bargaining agreement, and (iv) who is on the Employer's U.S.
payroll and working regularly in the U.S.
C. Award Year -- The calendar year for which Incentive Awards,
if any, are calculated under the Plan.
D. Board -- The Board of Directors of the Company.
E. Code -- The Internal Revenue Code of 1986, as from time to
time amended including any related regulations.
F. Committee - Committee means separately or collectively as
applicable the Compensation Administration Committee and the
Compensation Committee.
G. Company -- UAL Corporation.
H. Compensation -- Compensation means:
1. With respect to a Participant who is not a Key and Senior
Management Employee, the amount of a Participant's taxable wages
for the Award Year, increased by the amount of his or her pre-tax
elective contributions under any qualified Code Section 401(k)
plan or Code Section 125 cafeteria plan (including any HMO
premium deductions) for the Award Year, and decreased by any
Incentive Award received under the Plan or comparable incentive
compensation plan and the amount of any extraordinary payments
such as moving expense reimbursements, Pride Awards and Code
Section 125 cafeteria plan taxable reimbursements for the Award
Year.
2. With respect to a Key and Senior Management Employee, such
Participant's annual base salary actually received for the Award
Year, increased by the amount of his or her pre-tax elective
contributions under any qualified Code Section 401(k) Plan or
Code Section 125 cafeteria plan (including any HMO premium
deductions), prorated for a partial year's participation.
I. Compensation Administration Committee -- The Compensation
Administration Committee is the Compensation Administration
Committee of the Board as set forth in the UAL Corporation
Restated Certificate of Incorporation, or such other committee
appointed by the Board, in accordance with the requirements of
the UAL Corporation Restated Certificate of Incorporation, to
exercise the powers and perform the duties assigned to the
Compensation Administration Committee under this Plan.
J. Compensation Committee - The Compensation Committee is the
Compensation Committee of the Board as set forth in the UAL
Corporation Restated Certificate of Incorporation, or such other
committee appointed by the Board, in accordance with the
requirements of the UAL Corporation Restated Certificate of
Incorporation, to exercise the powers and perform the duties
assigned to the Compensation Committee under this Plan.
K. Covered Award -- An Incentive Award (i) which will be paid
to a Covered Employee, (ii) which the Compensation Administration
Committee expressly designates as performance-based compensation
intends to be fully deductible under Section 162(m) of the Code,
and (iii) which will be paid following the shareholder approval
required by Section 162(m)(4)(C)(ii) of the Code.
L. Covered Employee -- An individual who is a "covered
employee" within the meaning of Section 162(m)(3) of the Code.
M. Employer -- The Company, United Air Lines, Inc., and any
other Subsidiary which, with the approval of the Chief Executive
Officer of the Company, has adopted this Plan.
N. ERISA -- The Employee Retirement Income Security Act of
1974, as from time to time amended, including any related
regulations.
O. Fair Market Value. The Fair Market Value of a share of
Stock on any date shall be equal to the five-day average of 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,
and the four previous dates for which trades were reported.
P. Incentive Award -- The dollar value of an award made to a
Participant as determined under the Plan.
Q. Incentive Opportunity -- The amount, stated as a percentage
of a Participant's Compensation, determined with respect to an
Award Year (or partial Award Year in the case of participation
for a partial year), that will be included in a Participant's
Incentive Award formula under Paragraph V(A) of the Plan. If a
Participant held more than one eligible position during the Award
Year, his or her Incentive Opportunity will be separately
determined based on each corresponding period of participation.
The Incentive Opportunity for Participants who are Officers will
be determined by the Compensation Committee, subject to the
requirement under Paragraph IX(A) that the Compensation
Administration Committee establish the Incentive Opportunity upon
which a Covered Award is based.
R. Individual Performance Goal -- The performance criteria or
objectives established for a Participant for an Award Year for
purposes of assisting the Company or the Compensation Committee
in determining whether and to what extent an Incentive Award has
been earned by such Participant for such Award Year.
S. Individual Performance Modifier -- The numerical modifier
(expressed as a percentage) determined for a Participant with
respect to an Award Year, as follows:
1. In the case of a Participant other than a Key and Senior
Management Employee, the Individual Performance Modifier shall be
100%, provided the Company may reduce such Individual Performance
Modifier based upon an evaluation of the Participant's
performance during the Award Year.
2. In the case of a Participant who is a Key and Senior
Management Employee other than an Officer, the Individual
Performance Modifier shall be determined by the Company and may
be based, in whole or in part, upon an evaluation of the extent
to which such Participant achieved his or her Individual
Performance Goals established for that Award Year.
3. In the case of a Participant who is an Officer other than an
Officer who is to receive a Covered Award, the Individual
Performance Modifier shall be determined by the Compensation
Committee and may be based, in whole or in part, upon an
evaluation of the extent to which such Participant achieved his
or her Individual Performance Goals established for that Award
Year.
4. In the case of a Participant who is to receive a Covered
Award, the Individual Performance Modifier shall in all cases be
120%, subject to the Compensation Administration Committee's
discretionary authority under Paragraph IX(C) to reduce the
amount of a Covered Award.
A Participant's evaluation under Paragraphs III(S)(l),
III(S)(2) and III(S)(3) above is wholly discretionary
and subjective on the part of the Company or the
Compensation Committee as applicable.
T. Key and Senior Management Employee - Each Covered Employee,
each Officer and each Management Employee who is designated by
the Company as a Key and Senior Management Employee with respect
to the Plan for an Award Year. Designation as a Key and Senior
Management Employee will apply only for the Award Year for which
the designation is made.
U. Management Employee -- An individual (i) who is classified
by the Employer (without regard to any retroactive judicial or
administrative reclassification of such individual) as a
Management Employee (on other than a temporary reclassification
basis), (ii) whose employment is for an indefinite period, (iii)
who is employed in an Employer established job classification not
covered by a collective bargaining agreement, and (iv) who is on
the Employer's U.S. payroll and working regularly in the U.S.
V. Officer - Each officer of the Company, each officer of
United Airlines Inc. reporting directly to the Chairman and Chief
Executive Officer of the Company, and each senior officer of the
Company's Subsidiaries designated by the Board.
W. Participant -- Each Administrative Employee, Management
Employee or other international employee of an Employer who is
designated as a Participant for an Award Year by the Company or
the Committee.
X. Performance Objectives - One or more objectively
determinable measures established at the beginning of an Award
Year related to specified levels of growth in, or peer company
performance in, or relating to, customer satisfaction as measured
by a Company sponsored customer survey; employee engagement or
employee relations as measured by a Company sponsored employee
survey; employee safety; employee diversity; financial
performance as measured by sales, net income, profits (pre- and
after-tax), adjusted pre-tax margin, earnings before interest and
taxes, cash flow, earnings per share, reduction of fixed costs,
economic value added, return on assets, return on capital, return
on equity, shareholder return, cost of capital, debt reduction,
productivity improvements; and operational performance as
measured by load factor, passenger yield management, lost time
incidents, baggage handling performance, or on-time performance.
Performance Objectives may be described in terms of Company,
Subsidiary, major business segments, division or departmental
performance. Performance Objectives shall be stated in terms of
Threshold, Target and Maximum levels. For other than Covered
Awards, the Company may add other Performance Objectives not
specifically listed above.
Y. Plan -- The United Employees Performance Incentive Plan, as
evidenced by this written instrument as may be amended from time
to time.
Z. Pre-Tax Earnings -- UAL Corporation's pre-tax earnings as
determined under generally accepted accounting principles
adjusted to exclude any items (whether gains or losses) otherwise
included therein relating to (i) the UAL Corporation Employee
Stock Ownership Plan, the UAL Corporation Supplemental ESOP, or
the trusts relating thereto, (ii) the Company's 1988 and 1998
Restricted Stock Plans, (iii) for those Award Years in which the
Company enters into labor contracts with ALPA or the IAM to
replace contracts becoming amendable in 2000, any differential
between the projected labor costs to the Company attributable to
such contract(s) as determined by the Company prior to such Award
Year and the actual labor costs to the Company attributable to
such labor contract(s) and (iv) 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, but only to the extent such
determination would not cause a Covered Award to not be
deductible under Code Section 162(m).
AA. Pre-Tax Profit Margin -- Pre-Tax Earnings divided by UAL
Corporation's gross revenues as determined under generally
accepted accounting principles adjusted to exclude any items
otherwise included therein relating to 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, but only to the extent such
determination would not cause a Covered Award to not be
deductible under Code Section 162(m).
BB. Selected Performance Factors -- The numerical factors
(expressed as a percentage) established by the Company relating
to the Plan's Selected Performance Objectives for the Award Year
and which correspond to the actual achievement of the Threshold,
Target and Maximum Selected Performance Objectives for such Award
Year. Subject to the provisions of Article IX with respect to a
Covered Award, the Selected Performance Factors as they relate to
Officers shall be established by the Compensation Committee. If
the actual achievement of the Selected Performance Objective for
an Award Year, as determined by the Company (or by the
Compensation Administration Committee in the case of a Covered
Award and the Compensation Committee as it relates to the
Incentive Awards for Officers other than with respect to a
Covered Award) shortly after the Award Year, is between the
Threshold and Target or Target and Maximum Objectives, the
Selected Performance Factor will be the amount determined by
linear interpolation between the two corresponding Threshold,
Target or Maximum Selected Performance Factors.
CC. Selected Performance Objectives - One or more Performance
Objectives selected for an Award Year. Subject to the provisions
of Article IX with respect to a Covered Award, the Compensation
Committee shall establish at the beginning of an Award Year the
Selected Performance Objectives, including the Threshold, Target
and Maximum levels for Officers, other than with respect to a
Covered Award.
DD. Stock -- Shares of Common Stock of the Company par value
$.01 per share, or any shares into which such shares are changed
as contemplated in Paragraph VI(E)(2)(b).
EE. Subsidiary -- Any entity, corporate or otherwise, in which
the Company, directly or indirectly, owns or controls a greater
than 50% interest.
IV. PARTICIPATION
A. Participants. Participants will be determined annually by
the Company or the Committee from among the Management Employees,
Administrative Employees, and other international employees of an
Employer. Designation as a Participant will apply only for the
Award Year for which the designation is made and may include a
partial year.
B. Termination of Employment. In order to be entitled to
receive an Incentive Award for an Award Year, a Participant must
be actively employed at the time the Incentive Award is paid or,
in the case of a deferred Incentive Award, at the time such Award
would have been paid but for the Participant's election to defer
receipt of the Award; however, the Company (or the Committee, if
applicable) may in its sole discretion pay an Incentive Award to
a Participant who has terminated employment.
V. COMPUTATION OF INCENTIVE AWARDS
A. Formula. Subject to Paragraph B, a Participant's Incentive
Award for an Award Year will be an amount equal to the Base
Incentive Award under (1) and, if applicable, the Match Incentive
Award under (2):
1. Base Incentive Award. The Participant's Base Incentive
Award is equal to the product of the following:
(a) The Participant's Incentive Opportunity;
(b) The Participant's Compensation;
(c) The sum of the Selected Performance Factors for the
Award Year; and
(d) The Participant's Individual Performance Modifier.
2. Match Incentive Award. For any portion of an Incentive
Award, the receipt of which has been deferred pursuant to
Paragraph VI(B) for a period of at least five years following
the Award Year and which is payable in the form of Stock, the
Participant's Incentive Award will include a Match Incentive
Award equal to 20% of such portion of the Participant's Base
Incentive Award determined under (1) above.
B. Covered Awards. A Covered Award shall be the greater of the
Incentive Award determined under Paragraph A or an Incentive
Award determined solely on the basis of a formula and one or more
financial Performance Objectives as established by the
Compensation Administration Committee prior to the Award Year (or
at such later date as may be permissible under Code Section
162(m)), subject to the Compensation Administration Committee's
discretionary authority under Paragraph IX(C) to reduce the
amount of a Covered Award.
C. Classification Changes. Appropriate adjustments and
computations, including computations for a partial Award Year,
may be made to reflect changes in a Participant's job
classification, Individual Performance Modifier, or Selected
Performance Factors during an Award Year. Subject to the
provisions of Article IX with respect to Covered Awards, the
Compensation Committee shall determine all such adjustments and
computations relating to Incentive Awards for Officers.
D. Threshold Limit. With respect to each Award Year, the
Compensation Committee will determine before such Award Year a
threshold level of Pre-Tax Profit Margin which must be obtained
before any Incentive Award (other than a Covered Award) may be
made to any Participant for such Award Year. The Compensation
Administration Committee will establish such threshold level of
Pre-Tax Profit Margin which must be obtained before any Covered
Award may be made to a Covered Employee for such Award Year.
VI. PAYMENT OF INCENTIVE AWARDS
A. Cash Payment. Subject to Paragraph B below, payment of
Incentive Awards will be made in cash as soon as practicable
following the end of the Award Year, without interest.
B. Election to Defer. A Participant who is a Key and Senior
Management Employee and who is determined by the Company to be
member of a select group of management or highly compensated
employees ("top-hat group") as such group is determined under
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA may make an
irrevocable election, on or before the earlier of a date
established by the Company or June 30 of the Award Year, to defer
receipt of all or any portion of his or her Incentive Award to a
subsequent calendar year. A Participant's deferred Incentive
Award will be credited to his or her Account as of the date it
would otherwise have been paid in cash and will be adjusted as
provided in Paragraph E below. A Participant's election to defer
will include an election to receive payment of all or a portion
of such deferred Incentive Award in the form of cash or shares of
Stock. If the Company reasonably determines that a Participant
no longer qualifies as a member of a "top-hat group," the Company
shall have the right, in its sole discretion, to (i) terminate
any future deferrals by such Participant under this Plan, and/or
(ii) immediately distribute the Participant's Account balance
under the Plan.
C. Time for Payment of Deferred Incentive Award. A
Participant who has made an election to defer his or her
Incentive Award will receive payment of his or her entire Account
balance (except as limited by (3) below) on the earliest of the
following:
1. In the calendar year selected by the Participant in his or
her irrevocable written election.
2. As soon as practicable in the calendar year after the
Participant's termination of employment with the Company and its
Subsidiaries for any reason or no reason, provided that a
transfer of employment among the Company or its Subsidiaries will
not be considered a termination of employment.
3. At the Participant's request and upon the occurrence of an
"Unforeseeable Emergency", provided that a distribution pursuant
to this clause shall not exceed the amount reasonably needed to
satisfy the emergency need. For purposes of this paragraph,
"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 his or her dependent (as
defined in Section 152(a) of the Code), 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 no case will payment 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.
4. Any other time elected by the Participant, provided that
upon making such an election, the Participant shall be entitled
to receive only 90% of the amounts then credited to his or her
Account under the Plan and shall forfeit the remaining 10% of
such amount.
D. Modification of Time and Manner of Payment.
Notwithstanding anything herein to the contrary and subject to
the provisions of Article IX with respect to a Covered Award, the
Compensation Committee shall have the right, in its discretion,
to vary the manner (including payment in cash in lieu of shares
of Stock) and time for making the distributions provided in
Paragraph C above (but not defer any amount otherwise due), and
may make such distributions in a lump sum or other payment method
as it may deem appropriate, taking into account the Participant's
or any beneficiary's age, health, physical or mental condition,
dependents or lack of dependents, other sources of income or lack
of same, and any other factors deemed relevant, provided,
however, that such accelerated payment is not detrimental to the
Participant. Nothing herein shall be construed to grant the
Participant or any beneficiary the right to elect a modification
of the time for receiving payments hereunder.
E. Crediting and Adjustment of Account Balance. The amount of
any Incentive Award a Participant has elected to defer and has
elected to receive in shares of Stock shall be credited to his or
her Company Stock Subaccount by crediting a number of stock units
equal to such amount of the Incentive Award divided by the Fair
Market Value of a share of Stock on the date the Incentive Award
would otherwise have been paid in cash. The balance of the
amount of the deferred Incentive Award shall be credited to his
or her Cash Subaccount. A Participant's Account shall be
adjusted as follows:
1. As of the last day of each calendar quarter (each such date
referred to herein as an "Accounting Date"), the Participant's
Cash Subaccount shall be adjusted as follows:
(a) 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;
(b) next, the balance of the Cash Subaccount after adjustment in
accordance with subparagraph (a) 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 in effect at the end of each calendar
quarter during the deferral period ending on the current
Accounting Date, or if such date is not a business day, for
the next preceding business day, except that, any credit which
occurs after the Accounting Date shall be credited with
interest for only the period following the credit.
2. The Participant's Company Stock Subaccount shall be adjusted
as follows:
(a) as of the date on which shares of Stock are distributed to
the Participant, the Company Stock Subaccount shall be charged
with an equal number of stock units; and
(b) as of the payment 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 credited
to the Company Stock Subaccount on the dividend record date
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,
recapitalization, liquidation, reclassification, divestiture
(including spinoff), stock split, reverse stock split,
combination of shares, rights offering, exchange, or any
other similar change in the corporate structure or
capitalization of the Company affecting the Stock, each
Participant's Company Stock Subaccount shall be equitably
adjusted in such manner as the Committee shall determine
in its sole judgment. In determining what adjustment, if any,
is appropriate the Committee may rely on the advice of such
experts as it deems appropriate, including counsel, investment
bankers and the accountants of the Company.
3. A Participant entitled to a Match Incentive Award under
Paragraph V(A)(2) will receive a credit to his or her Company
Stock Subaccount equal to such Match Incentive Award, but only if
actual receipt of the related Base Incentive Award is deferred
for a period of at least five years following the Award Year.
Such credit will be effective as of the date the related Base
Incentive Award is credited to the Participant's Company Stock
Subaccount and will be paid to the Participant in the manner and
at the time provided under Paragraph F below.
F. Payment of Account Balance. Except as otherwise provided in
Paragraphs II(D) or VI(D), and subject to Article VIII, the
Participant's Account shall be payable to the Participant, as
follows:
1. The cash portion of the Participant's payment shall be equal
to the balance of the Cash Subaccount.
2. The Stock portion of the Participant's payment shall be a
number of shares of Stock equal to the number of Stock units then
credited to the Participant's Company Stock Subaccount, provided
that the Fair Market Value of any fractional share of Stock shall
be paid to the Participant in cash.
G. Claim Procedure. For deferred Incentive Awards payable
under the Plan, the Compensation Committee shall establish a
claims procedure consistent with the requirements of ERISA.
H. Limitation on Actions. Unless ERISA specifically provides
otherwise, no civil action arising out of or relating to the
payment of Incentive Awards under this Plan may be commenced by a
Participant or beneficiary after three years from the occurrence
of the facts or circumstances that give rise to, or form the
basis for, such action.
VII. PAYMENT IN SHARES OF STOCK
A. Source of Shares of Stock. The shares of Stock which shall
be available for payment to Participants pursuant to the Plan
shall be treasury shares (including, in the discretion of the
Company, shares purchased in the open market).
B. 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, and,
in such event, payment shall be made in the form of cash. Prior
to the delivery of any shares of Stock under the Plan, the
Company may require, among other things, a written statement that
the recipient is acquiring the shares for investment and not for
the purpose of, or with the intention of, distributing the
shares. If the redistribution of shares of Stock is restricted
pursuant to this Paragraph B, the certificates representing such
shares may bear a legend referring to such restrictions.
C. No Shareholder Rights. The election to defer receipt of an
Incentive Award and to receive payment in the form of shares of
Stock does not entitle a Participant to any rights (including,
without limitation, voting, transfer and rights to distributions)
of an owner of shares of Stock which relate to the stock units
credited to the Participant's Company Stock Subaccount.
VIII. WITHHOLDING TAXES
Notwithstanding any of the foregoing provisions hereof, an
Employer shall withhold from any payment to be made
hereunder such amounts as it reasonably determines it may be
required to withhold under any applicable federal, state or
other law, and transmit such withheld amounts to the
appropriate authorities. If cash payments under this Plan
are not available to meet the withholding requirement, the
Participant shall make available sufficient funds to meet
the requirements of such withholding, and the Employer shall
be entitled and authorized to take such steps as it may deem
advisable, including but not limited to, withholding out of
any funds or property due or to become due to the
Participant, in order to have such funds made available to
the Employer.
IX. SPECIAL RULES FOR COVERED AWARDS
Notwithstanding any other provision of this Plan to the
contrary, the following provisions shall control with
respect to any Covered Award:
A. Preestablished Incentive Opportunity and Performance
Objectives. The Selected Performance Factors, Selected
Performance Objectives, Incentive Opportunity, and the Threshold
Limit under Paragraph V(D) upon which a Covered Award is based or
subject shall be established by the Compensation Administration
Committee in writing not later than 90 days after the
commencement of the Award Year (or period of service as the case
may be), provided that the outcome is substantially uncertain at
the time the Compensation Administration Committee actually
establishes such factors and the objectives upon which they are
based (or at such earlier time as may be required or such later
time as may be permissible under Section 162(m) of the Code).
The Compensation Administration Committee shall not make Covered
Awards based on Selected Performance Objectives not specifically
provided under this Plan if it determines that use of such
Performance Objectives would cause a Covered Award to not be
deductible under Code Section 162(m).
B. Certification of Performance Objectives. The Compensation
Administration Committee shall determine and certify in writing
prior to the payment or deferral of a Covered Award whether and
to what extent the Selected Performance Objectives referred to in
Paragraph A have been satisfied.
C. Discretionary Reduction of Covered Award. Notwithstanding
the foregoing, the Compensation Administration Committee may, in
its sole discretion, reduce a Covered Award otherwise determined
pursuant to the Plan.
D. Limited Adjustments of Selected Performance Objectives. In
the event of (a) any merger, consolidation, reorganization,
recapitalization, liquidation, reclassification, stock dividend,
stock split, reverse stock split, combination of shares, rights
offering, extraordinary dividend or divestiture (including a spin-
off), exchange, or any other similar change in the corporate
structure or capitalization of the Company affecting the Stock,
or (b) any purchase, acquisition, sale or disposition of a
significant amount of assets or a significant business, in each
case with respect to the Company or any other entity whose
performance is relevant to the achievement of any Selected
Performance Objective included in a Covered Award, the
Compensation Administration Committee (or, if the Company is not
the surviving corporation in any such transaction, a committee of
the board of directors of the surviving corporation consisting
solely of two or more "outside directors" within the meaning of
Section 162(m)(4)(C)(i) of the Code) may, without the consent of
any affected Participant, amend or modify the terms of any
outstanding Award that includes any Selected Performance
Objectives based in whole or in part on the financial performance
of the Company (or any Subsidiary or division thereof) or such
other entity so as equitably to reflect such event, such that the
criteria for evaluating such financial performance of the Company
or such other entity (and the achievement of the corresponding
Selected Performance Objectives) will be substantially the same
(as determined by the Compensation Administration Committee or
such committee of the board of directors of the surviving
corporation) following such event as prior to such event;
provided, however, that any such change to any outstanding
Covered Award pursuant to this Paragraph D must be made in such a
manner that it is independently determinable by a hypothetical
third party having knowledge of the relevant facts, and the
Compensation Administration Committee shall take no action
pursuant to this Paragraph D which would constitute an
impermissible exercise of discretion within the meaning of
Section 162(m) of the Code, or would otherwise cause the Covered
Award to not be deductible under Section 162(m) of the Code.
E. Changes Affecting Timing. No change shall be made to
accelerate the payment of a Covered Award unless the amount of
the Covered Award is discounted to reasonably reflect the time
value of money. Further, no change shall be made to defer the
payment of a Covered Award unless an increase in the amount paid
with respect to such award is based on a reasonable rate of
interest or on the actual returns on one or more predetermined
actual investments (whether or not assets associated with the
amount originally owed are actually invested therein).
F. Maximum Amount. The maximum amount of any Covered Award,
including the Match Incentive Award under Paragraph (V)(A)(2),
payable to any Covered Employee with respect to an Award Year
determined as of the time the Covered Award is paid or would have
been paid absent an election to defer receipt, shall not exceed
$3,000,000.
Exhibit 10.3
------------
TENTH AMENDMENT
UAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
(Effective as of July 12, 1994)
By virtue and in exercise of the amending power
reserved to UAL Corporation (the "Company") under Section 13.1(a)
of the UAL Corporation Employee Stock Ownership Plan (effective
as of July 12, 1994) (the "Plan"), which amending power
thereunder is subject to the approval of the Air Line Pilots
Association International ("ALPA") and the International
Association of Machinists and Aerospace Workers (the "IAM"), the
Company hereby amends the Plan, subject to the approval of ALPA
and the IAM, as follows, effective April 1, 2000. The following
amendments have been requested by the Internal Revenue Service as
a condition of granting a favorable determination letter
concerning the Plan.
1. The portion of Section 1(s) preceding clause (i) is
amended to read as follows:
"(s) "Eligible Employee" means any Employee of an
Employer (other than any employee who is not a member
of an Employer Group and any "leased employee" (as defined
in clause (v), below)), subject to the following:"
2. The following new clause (v) is added to Section 1(s):
"(v) A "leased employee" means any person who is not an
employee of recipient and who provides services to the
recipient if (x) such services are provided pursuant to an
agreement between the recipient and any other person, (y)
such person has performed such services for the recipient
(or for the recipient and related persons) on a
substantially full-time basis for a period of at least
one year, and (z) such services are performed under
primary direction or control by recipient."
3. Section 4.3 is amended to read as follows:
"4.3 Acquisition Loans.
(a) The Trustee may incur the Initial Acquisition Loan
and the Additional Acquisition Loans. In addition, the Trustee,
with the consent of the Company, may incur other Acquisition
Loans from time to time to finance the acquisition of
Company Stock for the Trust or to repay a prior
Acquisition Loan.
(b) The terms of any Acquisition Loan shall comply
with each of the following requirements:
(1) the terms shall be as favorable to the Plan
as the terms of a comparable loan negotiated at arm's length by
independent parties;
(2) the interest rate, spread or formula shall be
no more than a reasonable interest rate considering all relevant
factors including the amount and duration of the Acquisition Loan;
the security and guarantee involved, if any; the credit standing of
the Plan and the guarantor of the Acquisition Loan, if any; and the
interest rate prevailing for comparable loans;
(3) the Acquisition Loan shall be without recourse
against the Plan;
(4) the Acquisition Loan must be for a specific
term, and may not be payable at the demand of any person except in the
case of default;
(5) the only assets of the Plan that may be given
as collateral on the Acquisition Loan are shares of Company Stock acquired
with the proceeds of the same Acquisition Loan or Company Stock used as
collateral for a prior Acquisition Loan, which prior loan is repaid with the
proceeds of the same Acquisition Loan;
(6) no person entitled to payment under the
Acquisition Loan shall have any right to assets of the Plan other than
collateral given for that Acquisition Loan, contributions made to the Plan
(other than contributions of employer securities) to enable it to meet its
obligations under that Acquisition Loan and earnings attributable to such
collateral and such contributions, including dividends on allocated Company
Stock to the extent permitted by the law ("Eligible Earnings");
(7) the value of Plan assets transferred in
satisfaction of the Acquisition Loan upon an event of default shall not
exceed the amount of the default, and if the lender is a "disqualified
person" (as such term is defined in section 4975(e) of the Code), or a
"party in interest" (as such term is defined in Section 3(14) of ERISA),
Plan assets may only be transferred upon default and only upon and to the
extent of the failure of the Plan to meet the payment schedule of the
Acquisition Loan;
(8) payments made from the Trust Fund with
respect to the Acquisition Loan during a Plan Year shall not exceed an
amount equal to the sum of amounts contributed to the Plan to pay off an
Acquisition Loan and Eligible Earnings (as defined in paragraph 6 above),
less any such payments made in prior Plan Years; and
(9) except for a put option described in Code section
409(h), or as otherwise required by applicable law, no Company Stock
acquired with the proceeds of an Acquisition Loan may be subject to a put,
call, or other option or buy-sell or similar arrangement while held by and
when distributed from the Plan.
(c) Any Acquisition Loan must be primarily for the
benefit of Participants and their Beneficiaries, and the
interest rate and price of the securities acquired should
not be such that Plan assets might be drained off.
(d) Notwithstanding any other provision of the Plan or
the Trust, all proceeds of an Acquisition Loan shall be used,
within a reasonable time after receipt by the Trust, only for
any or all of the following purposes:
(1) to acquire Company Stock;
(2) to repay the same Acquisition Loan; or
(3) to repay any previous Acquisition Loan.
(e) Financed Shares shall initially be credited to the
Loan Suspense Account and shall be released for allocation to
the ESOP Stock Accounts of Participants only as payments of
principal and interest, or principal, on the Acquisition Loan are
made by the Trustee. The number of Financed Shares to be released
from the Loan Suspense Account (or subaccount attributable to
that Acquisition Loan) for allocation to Participants' ESOP Stock
Accounts for each Plan Year, shall be based upon either: (x) the
ratio that the payments of principal made on the Acquisition Loan
for that Plan Year , plus the projected payments of principal
during the remainder of the Acquisition Loan repayment period,
provided that the special conditions set forth under Treasury
Regulation section 54.4975-7(b)(8)(ii) are satisfied,
or (y) the ratio that the payments of principal and
interest on the Acquisition Loan for that Plan Year,
bear to the sum of principal and interest payments
during that Plan Year, plus the projected payments of
principal and interest during the remainder of the
Acquisition Loan repayment period. A separate ratio
will be calculated for each Acquisition Loan. The
applicable loan documents will specify whether clause
(x) and/or clause (y) shall apply. Shares released
from the Loan Suspense Account in connection with the
Initial Acquisition Loan and the Additional Acquisition
Loans shall be released in accordance with clause (x)
above."
4. Section 5.4(b)(ii) is hereby deleted.
5. Section 8.1(a) is amended by deleting the proviso
(concerning voting by former employees who were members
of the ALPA Employee Group and beneficiaries of members
of the ALPA Employee Group) from the end of the section.
IN WITNESS WHEREOF, the Company has caused this Tenth
Amendment to be executed on April 28, 2000.
UAL CORPORATION
/s/ Douglas A. Hacker
---------------------
DOUGLAS A. HACKER
Executive Vice President and
Chief Financial Officer
APPROVED BY:
AIR LINE PILOTS ASSOCIATION,
INTERNATIONAL
/s/ Frederic C. Dubinsky
------------------------
INTERNATIONAL ASSOCIATION
OF MACHINISTS AND
AEROSPACE WORKERS
/s/ S.R. Canale
---------------
IN WITNESS WHEREOF, the Company has caused this Tenth
Amendment to be executed on April 28, 2000.
UAL CORPORATION
APPROVED BY:
AIR LINE PILOTS ASSOCIATION,
INTERNATIONAL
/s/ Frederic C. Dubinsky
------------------------
INTERNATIONAL ASSOCIATION
OF MACHINISTS AND
AEROSPACE WORKERS
/s/ S.R. Canale
---------------
Exhibit 12
UAL Corporation and Subsidiary Companies
Computation of Ratio of Earnings to Fixed Charges
Exhibit 12.1
UAL Corporation and Subsidiary Companies
Computation of Ratio of Earnings to Fixed Charges
and Preferred Stock Dividend Requirements