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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1996 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________ to ______________
Commission File No. 1-6033
UAL CORPORATION
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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 (IRS Employer
incorporation or organization) Identification No.)
Location: 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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Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, $.01 par value New York, Chicago and
Pacific Stock Exchanges
Depositary Shares each representing
1/1,000 of a share of Series B
Preferred Stock, without par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
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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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [X]
The number of shares of common stock outstanding as of February 28,
1997 was 58,933,372. The aggregate market value of voting stock held by
non-affiliates of the Registrant was $3,324,159,618 as of February 28,
1997.
Documents Incorporated by Reference
Part III of this Form 10-K incorporates by reference certain
information from the Registrant's definitive Proxy Statement for its
Annual Meeting of Stockholders to be held on May 21, 1997.
PART I
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ITEM 1. BUSINESS.
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UAL Corporation ("UAL" or the "Company") was incorporated under
the laws of the State of Delaware on December 30, 1968. The world
headquarters of the Company are located at 1200 East Algonquin Road,
Elk Grove Township, Illinois 60007. The Company's mailing address
is P.O. Box 66919, Chicago, Illinois 60666. The telephone number for
the Company is (847) 700-4000.
The Company is a holding company and its principal subsidiary is
United Air Lines, Inc., a Delaware corporation ("United"), which is
wholly-owned. United accounted for virtually all of the Company's
revenues and expenses in 1996. United is a major commercial air
transportation company.
Airline Operations
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United has been engaged in the air transportation of persons,
property and mail since 1934, and certain of its predecessors began
operations as early as 1926. United, which serves the United States,
29 foreign countries and two territories, is the world's largest
airline as measured by revenue passenger miles flown. At the end of
1996, United served 139 airports. During 1996, United averaged 2,198
departures daily, flew a total of 117 billion revenue passenger
miles, and carried an average of 224,000 passengers per day.
United provides its domestic and international service
principally through a system of hub airports at major cities. Each
hub provides United flights to a network of spoke destinations as
well as flights to the other United hubs. This arrangement permits
travelers to fly from point of origin to more destinations without
changing carriers. United has a global network of hubs primarily
designed to fly travelers between North America and the Pacific,
Latin America and Europe. North American hubs include Chicago,
Denver, Washington, D.C., San Francisco and Los Angeles. United also
operates a major hub operation at Tokyo.
During the last several years, United has strengthened the
revenue generating capability of its hub airports by (1) adding new
spokes (routes to new cities), (2) adding frequencies on existing
segments, and (3) entering into marketing agreements with smaller
U.S. air carriers which serve less populated destinations, and with
foreign carriers to better serve existing markets as well as provide
service to destinations that United could not serve itself for
economic or regulatory reasons. See "Alliances and Marketing
Arrangements."
Since October 1994, United has operated a service, "Shuttle by
United", designed to compete with low cost carriers on routes under
750 miles. While Shuttle by United is concentrated on the West
Coast, it has expanded to cover service between Denver and Las Vegas
and between Denver and Phoenix in February 1997. As of February
1997, Shuttle by United was operating daily 452 flights on 23 routes
between 20 cities in the western U.S. Shuttle by United is
strategically important to United by providing critical feed traffic
and market presence in the western U.S.
Pacific. Asian traffic is currently served from six U.S. cities
via United's Tokyo hub to Bangkok, Beijing, Hong Kong, Seoul,
Shanghai and Singapore. In addition, United provides nonstop flights
from San Francisco to Hong Kong, Osaka, Seoul and Taipei; from Los
Angeles to Hong Kong and Osaka; and from Honolulu and Guam to Osaka.
Additionally, United provides service from Osaka to Seoul. United
holds significant traffic rights "beyond" Japan and as capacity at
Japan's two major airports, Narita and Kansai, increases, United
hopes to add service from Japan to other Asian points. During 1996
United began new service from Kansai to Seoul.
South Pacific traffic to Sydney is served from Los Angeles and
San Francisco, while traffic to Auckland and Melbourne is served from
Los Angeles. Based on reports filed with the Department of
Transportation, in 1996, United was the leading U.S. carrier in the
Pacific in revenue passenger miles and available seat miles. During
1996, United's Pacific division accounted for 21% of United's
revenues.
Europe. Service between the U.S. and Europe is provided by:
flights from six U.S. cities to London with connecting service at
London to Amsterdam and New Delhi; flights from three U.S. cities to
Paris; nonstop service from Washington Dulles to Amsterdam, Brussels,
Frankfurt, Milan and Zurich; and nonstop service from Chicago to
Dusseldorf and Frankfurt. United plans to initiate a second nonstop
flight between Chicago and London Heathrow in April 1997 operating
from April to the end of October.
Latin America. Service between the U.S. and Latin America is
provided by flights to twelve Latin American cities in ten countries
from a number of cities in the U.S. Seven Latin American cities are
served nonstop from Miami, three nonstop flights from Los Angeles,
three from New York-Kennedy, and one each from Chicago-O'Hare and
Washington Dulles. United plans to initiate nonstop service from
Chicago to Sao Paulo, Brazil in November 1997.
Operating revenues attributed to United's foreign operations,
including service between the U.S. and foreign destinations, were
approximately $5.6 billion in 1996, $5.3 billion in 1995 and $4.9
billion in 1994.
Alliances and Marketing Arrangements. United, in cooperation
with other airlines, has formed alliances that seek to increase the
customer's choice of destinations and simplify the travel experience.
Alliances include "code share" flights which are operated by one
airline, but are listed with special flight code numbers as a flight
of each airline. Alliances with international carriers have allowed
United to participate in markets that it is unable to serve on-line
for commercial or governmental reasons and to add new on-line United
destinations and frequencies. Through joint frequent flyer
participation, code sharing of operations, reservations, baggage
handling, flight schedules and other enhanced customer service
coordination, the alliance carriers' goal is to provide each of their
customers a seamless global travel network.
United's principal global alliance partner is Germany's flag
carrier, Lufthansa. Through Lufthansa, United has dramatically
increased its trans-Atlantic operations to Europe and beyond,
including Eastern Europe and states of the former Soviet Union.
United and Lufthansa received antitrust immunity on May 20, 1996 from
the U.S. Department of Transportation, allowing the carriers to
expand and enhance their level of cooperation.
United also implemented a code-share alliance in 1996 with the
Scandinavian flag carrier, SAS. United, Lufthansa and SAS received
integrated antitrust immunity for their three-way alliance on
November 1, 1996. Other major alliance partners include Air Canada,
Ansett (which operates in both Australia and New Zealand) and British
Midland. After the U.S. and Thailand entered into a new bilateral
agreement, United and Thai Airways International began planning for
the implementation of the code-sharing provisions of their
comprehensive marketing arrangement; that agreement has been approved
in part; final approval is pending before the U.S. Department of
Transportation. Also, United has entered into similar alliance
arrangements with Air New Zealand and Mexicana which are expected to
be implemented in 1997. United's other alliance partners include
Aloha Airlines, Gulfstream International Airlines, Inc., TW Express,
ALM Antillean Airlines, Emirates, Saudi Arabian Airlines, Cayman
Airways, Aeromar and Aeromexico.
In addition, United has a marketing program in North America,
known as the United Express program, under which six independent
regional carriers, utilizing mainly turboprop equipment, feed United
hubs and international gateways. Currently, the carriers in the
United Express program provide service on United to 179 airports.
Cargo Service. United's cargo operations accounted for
approximately 5% of the Company's operating revenues in 1996. In
1997, United entered the Asian and trans-Pacific cargo markets by
introducing all cargo service between the U.S. and Asia operating
DC-10-30F aircraft. United began operating two DC-10-30F aircraft
in March 1997 serving Chicago, Los Angeles, Anchorage, Osaka, Manila
and Taipei; and in September 1997 United plans to operate another
two aircraft which will expand service to New York, San Francisco
and Tokyo.
Mileage Plus Program. United established the Mileage Plus
frequent flyer program to retain and develop passenger loyalty by
offering awards to frequent travelers for their business. Mileage
Plus members earn mileage credit for flights on United, Shuttle by
United, United Express and certain other participating airlines, or
by utilizing services of other program participants, including
hotels, car rental companies and bank credit card issuers. United
sells mileage credits to the other companies participating in the
program. Mileage credits can be redeemed for free, discounted or
upgraded travel on United and other participating airlines, or for
other travel industry awards. The program contains certain
restrictive provisions including expiration dates and blackout dates
and capacity controlled bookings, which substantially limit the use
of the awards on certain flights.
Under the Mileage Plus program, award travel is priced at two
levels, Saver Awards which have restrictions and Standard Awards
which, for a higher mileage redemption level, carry no restrictions.
Saver Awards and Standard Awards require 25,000 and 40,000 miles,
respectively, for economy class travel within the continental United
States. Effective for travel January 1998 and beyond, United
announced a requirement of a Saturday night stay and 14 day advance
purchase for Saver Award travel. In addition, flight miles earned on
paid Air Canada, Lufthansa, SAS and Thai Airways International
flights will be credited toward Mileage Plus Premier status starting
in 1997.
When an award level is attained, a liability is recorded for the
incremental costs of accrued credits under the Mileage Plus program
based on the expected redemptions. United's incremental costs
include the costs of providing service for an otherwise vacant seat
including fuel, meals, certain incremental personnel and ticketing
costs. The incremental costs do not include any contribution to
overhead or profit.
At December 31, 1996 and 1995, it was estimated that the total
number of outstanding awards was approximately 6.1 million and 6.0
million, respectively. United estimated that 4.7 million and 4.6
million, respectively, of such awards could be expected to be
redeemed and, accordingly, had recorded a liability amounting to $195
million and $195 million, respectively, at December 31, 1996 and
1995. The difference between the awards expected to be redeemed and
the total awards outstanding is the estimate, based on historical
data, of awards (1) which will never be redeemed, (2) which will be
redeemed for other than free trips, or (3) which will be redeemed on
partner carriers.
The number of awards used on United were 1.5 million, 1.8
million and 1.9 million for the years 1996, 1995 and 1994,
respectively. Such awards represented 7%, 8.2% and 9.1% of United's
total revenue passenger miles for each period, respectively. With
these percentages, seat availability and restrictions on the use of
free travel awards, the displacement, if any, of revenue passengers
by users of Mileage Plus awards is minimal.
Selected Operating Statistics
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The following table sets forth certain selected operating data
for United:
Year Ended December 31
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1996 1995 1994 1993 1992
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Revenue Aircraft Miles
(millions) (a) 839 817 776 756 695
Revenue Aircraft
Departures 785,820 780,864 731,284 746,665 721,504
Available Seat Miles
(millions) (b) 162,843 158,569 152,193 150,728 137,491
Revenue Passenger Miles
(millions) (c) 116,697 111,811 108,299 101,258 92,690
Revenue Passengers
(thousands) 81,945 78,808 74,241 69,814 66,692
Average Passenger Jourey
(miles) 1,424 1,419 1,459 1,450 1,390
Average Flight Length
(miles) 1,068 1,046 1,062 1,013 964
Passenger Load Factor (d) 71.7% 70.5% 71.2% 67.2% 67.4%
Break-even Load Factor (e) 66.0% 66.1% 68.2% 65.5% 70.6%
Average Yield Per Revenue
Passenger Mile
(in cents) (f) 12.4 11.8 11.3 11.6 11.3
Cost Per Available Seat
Mile Excluding ESOP
Charges (in cents) (g) 8.91 8.55 8.64 -- --
Cost Per Available Seat
Mile (in cents) (h) 9.3 8.9 8.8 8.5 8.9
Average Fare Per Revenue
Passenger $176.52 $167.84 $165.61 $169.00 $153.17
Average Daily Utilization
of each Aircraft
(hours:minutes) (i) 8:47 8:42 8:28 8:30 8:19
(a) "Revenue aircraft miles" means the number of miles flown in
revenue producing service.
(b) "Available seat miles" represents the number of seats available
for passengers multiplied by the number of miles those seats are
flown.
(c) "Revenue passenger miles" represents the number of miles flown
by revenue passengers.
(d) "Passenger load factor" represents revenue passenger miles divided
by available seat miles.
(e) "Break-even load factor" represents the number of revenue
passenger miles at which operating earnings would have been zero
(based on the actual average yield) divided by available seat miles.
(f) "Average yield per revenue passenger mile" represents the
average revenue received for each mile a revenue passenger is
carried.
(g) "Cost per available seat mile excluding ESOP charges" represents
operating expenses less ESOP compensation expense and one-time
expenses relating to the recapitalization (1994 only) divided by
available seat miles.
(h) "Cost per available seat mile" represents operating expenses
divided by available seat miles.
(i) "Average daily utilization of each aircraft" means the average
air hours flown in service per day per aircraft for the total fleet
of aircraft.
Industry Conditions
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Seasonal and Other Factors. The Company's results of operations
for interim periods are not necessarily indicative of those for an
entire year, because the air travel business is subject to seasonal
fluctuations. United's first and fourth quarter results normally are
affected by reduced travel demand in the fall and winter, and
United's operations are often affected adversely by winter weather.
In the past, these fluctuations have generally resulted in better
operating results for United and, thus, the Company, in the second
and third quarters.
The results of operations in the air travel business
historically fluctuate in response to general economic conditions.
In addition, the airline business is characterized by a high degree
of operating leverage. As a result, the economic environment and
small fluctuations in United's yield (passenger revenue per revenue
passenger mile) and cost per available seat mile can have a
significant impact on operating results. The Company anticipates
that seasonal factors and general economic conditions, in addition to
industrywide fare levels, capacity growth, labor and fuel costs,
competition from other airlines, taxes, U.S. and international
government policies and other factors, will continue to impact its
operating results.
Competition and Fares. The airline industry is highly
competitive. In domestic markets, new and existing carriers are free
to initiate service on any route. United faces competition from
other carriers on virtually every route it serves. In United's
domestic markets, these competitors include all of the other major
U.S. airlines as well as smaller carriers, some of which have lower
cost structures than United. United's response in some markets to
these lower cost structures has been the consummation of the employee
stock ownership transaction which took place on July 12, 1994 and
allowed United to lower its labor costs and introduce Shuttle by
United, a short-haul, high frequency operation.
United's marketing strategy is driven by four principal factors:
schedule convenience, customer satisfaction, frequent flyer program
and price. United seeks to attract travelers through convenient
scheduling, high quality service, a frequent flyer program designed
to reward and recognize customer loyalty and competitive pricing.
From time to time, excess aircraft capacity and other factors such as
the cash needs of financially distressed carriers induce airlines to
engage in "fare wars." Such factors can have a material adverse
impact on the Company's revenues. The Company maintains yield and
inventory management programs designed to manage the number of seats
offered in various fare categories in order to enhance the
effectiveness of fare promotions and maximize revenue production on
each flight.
In its international service, United competes not only with U.S.
carriers but also with national flag carriers of foreign countries,
which in certain instances enjoy forms of governmental support which
are not available to U.S. carriers. Competition on certain
international routes is subject to varying degrees of governmental
regulations (see "Government Regulation"). United has advantages
over foreign air carriers in its ability to generate U.S.-origin-
destination traffic from its integrated domestic route systems, and
because foreign carriers are prohibited by law from carrying local
passengers between two points in the United States. On the other
hand, U.S. carriers in many cases are constrained from carrying
passengers to points beyond designated international gateway cities
due to limitations in air service agreements or restrictions imposed
unilaterally by foreign governments. To compensate for these
structural limitations, U.S. and foreign carriers have entered into
alliances and marketing arrangements which allow the carriers to
provide feed to each other's flights. (See "Alliances and Marketing
Arrangements").
Computer Reservations Systems. Travel agents account for a
substantial percentage of United's sales. The use of electronic
distribution systems has been a key factor in the marketing and
distribution of airlines' products.
United, through a wholly-owned subsidiary, owns 38% of Galileo
International Partnership ("Galileo"), formerly known as Covia, and
77% of Apollo Travel Services Partnership ("ATS"). These two general
partnerships own and market computer reservation system ("CRS")
products and services. Galileo owns the Apollo and Galileo CRSs and
markets CRS services worldwide through a system of national
distribution companies. ATS markets Apollo CRS products and services
to travel agencies in the United States, Mexico and the Caribbean.
Competition among CRS vendors is intense, and services similar
to those offered by ATS and Galileo are marketed by several air
carriers and other concerns, both in the United States and worldwide.
In the European and Pacific CRS market, various consortia of foreign
carriers have formed CRSs to be marketed in countries in which the
owning carriers have a substantial presence.
Government Regulation
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General. All carriers engaged in air transportation in the
United States are subject to regulation by the Department of
Transportation ("DOT") and the Federal Aviation Administration
("FAA") under federal aviation laws. The DOT has authority to
regulate certain economic and consumer protection aspects of air
transportation. It is empowered to issue certificates of public
convenience and necessity for domestic air transportation upon a
carrier's showing of fitness; to authorize the provision of foreign
air transportation by U.S. carriers; to prohibit unjust
discrimination; to prescribe forms of accounts and require reports
from air carriers; to regulate methods of competition, including the
provision and use of computerized reservation systems; and to
administer regulations providing for consumer protection, including
regulations governing the accessibility of air transportation
facilities for handicapped individuals. United's operations require
certificates of public convenience and necessity issued by the DOT
(or specific exemptions therefrom), and an air carrier operating
certificate and related operations specifications issued by the FAA.
United's operations also require licenses issued by the aviation
authorities of the foreign countries United serves. Foreign aviation
authorities may from time to time impose a greater degree of economic
regulation than exists with respect to United's domestic operations.
In connection with its international services, United is
required to file with the DOT and observe tariffs establishing the
fares charged and the rules governing the transportation provided.
In certain cases, fares and schedules require the approval of the
relevant foreign governments. In addition, United's operating
authorities in international markets are governed by the aviation
agreements between the United States and foreign countries. United's
ability to serve some foreign markets and its expansion in many
foreign markets is presently restricted by lack of aviation
agreements allowing such service or, in some cases, by the
restrictive terms of such agreements.
Shifts in United States or foreign government aviation policies
can lead to the alteration or termination of existing air service
agreements that the U.S. has with other governments, which could
diminish the value of United's international route authority. While
such events are generally the subject of inter-governmental
negotiations, there are no assurances that United's operating rights
under the bilateral aviation agreements and DOT-issued certificates
of public convenience and necessity can be preserved in such cases.
Airport Access. United's operations at Chicago-O'Hare
International Airport, JFK International, New York LaGuardia and
Washington National, are limited by the "high density traffic rule"
administered by the FAA. Under this rule, take-off and landing
rights ("slots") required for the conduct of domestic flight
operations may be bought, sold or traded. Under the high density
rule, carriers are required to relinquish slots to the FAA for
reallocation if they fail to meet certain minimum use standards.
United currently holds a sufficient number and distribution of
slots at airports subject to the high density rule to support its
operations, although its ability to expand could be constrained if
sufficient additional slots were not available on satisfactory terms.
If an alternative to the current system were to be proposed and
adopted, no assurance can be given that such an alternative would
preserve United's investment in slots already acquired or that slots
adequate for future operations would be available.
United currently has a sufficient number of leased gates and
other airport facilities at the cities it serves to meet its and near
term needs. From time to time, expansion by United at certain
airports may be constrained by insufficient availability of gates on
attractive terms. United's ability to expand its international
operations in the Pacific, Europe and Latin America is subject to
restrictions at many of the airports in these regions, including
noise curfews, slot controls and absence of adequate airport
facilities.
Safety. The FAA has regulatory jurisdiction over flight
operations generally, including equipment, ground facilities,
maintenance, communications and other matters. In order to ensure
compliance with its operational and safety standards, the FAA
requires air carriers to obtain operating, airworthiness and other
certificates. United's aircraft and engines are maintained in
accordance with the standards and procedures recommended and approved
by the manufacturers and the FAA.
From time to time, the FAA issues airworthiness directives
("ADs") which require air carriers to undertake inspections and to
make unscheduled modifications and improvements on aircraft, engines
and related components and parts. The ADs sometimes cause United to
incur substantial, unplanned expense and occasionally aircraft or
engines must be removed from service prematurely in order to undergo
mandated inspections or modifications on an accelerated basis. The
issuance of any particular AD may have a greater or lesser impact on
United compared to its competitors depending upon the equipment
covered by the directive.
Both the DOT and the FAA have authority to institute
administrative and judicial proceedings to enforce federal aviation
laws and their own regulations, rules and orders. Both civil and
criminal sanctions may be assessed for violations.
Environmental Regulations. The Airport Noise and Capacity Act
of 1990 ("ANCA") requires the phase-out by December 31, 1999 of
Stage 2 aircraft operations, subject to certain waivers. The FAA
has issued final regulations which require carriers to modify or
reduce the number of Stage 2 aircraft operated by 25% by December
31, 1994, 50% by December 31, 1996, 75% by December 31, 1998 and
100% by December 31, 1999. Alternatively, a carrier could satisfy
compliance requirements by operating a fleet that is at least 55%
Stage 3 by December 31, 1994, 65% Stage 3 by December 31, 1996, 75%
Stage 3 by December 31, 1998 and 100% Stage 3 by December 31, 1999.
At December 31, 1996, United operated 427 Stage 3 aircraft
representing 72% of United's total operating fleet, and thus is in
compliance with these regulations.
The ANCA generally recognizes the rights of operators of
airports with noise problems to implement local noise abatement
procedures so long as such procedures do not interfere unreasonably
with interstate or foreign commerce or the national air
transportation system. ANCA generally requires FAA approval of local
noise restrictions on Stage 3 aircraft first effective after October
1990, and establishes a regulatory notice and review process for
local restrictions on Stage 2 aircraft first proposed after October
1990. While United has had sufficient scheduling flexibility to
accommodate local noise restrictions imposed to the present, United's
operations could be adversely affected if locally-imposed regulations
become more restrictive or widespread.
The Environmental Protection Agency regulates operations,
including air carrier operations, which affect the quality of air in
the United States. United has made all necessary modifications to
its operating fleet to meet emission standards issued by the
Environmental Protection Agency ("EPA").
Federal and state environmental laws require that underground
storage tanks (USTs) be upgraded to new construction standards and
equipped with leak detection by December 22, 1998. These
requirements are phased into effect based on the age, construction
and use of existing tanks. United operates a number of underground
and above ground storage tanks throughout its system, primarily used
for the storage of fuels and deicing fluids. A program for the
removal or upgrading of USTs and remediation of any related
contamination has been ongoing since 1987. Compliance with these
federal and state UST regulations is not expected to have a material
adverse effect on United's financial condition.
United has been identified by the EPA as a potentially
responsible party with respect to Superfund and Resource Conservation
and Recovery Act sites involving soil and groundwater contamination at
the Bay Area Drum Site in San Francisco, California, the Chemsol, Inc.
Site in Piscataway, New Jersey, the Petrochem/Ekotek Site in Salt Lake
City, Utah, the Monterey Park Site at Monterey Park, California, the
West Contra Costa Sanitary Landfill Site in Richmond, California, and
the Douglasville Site in Berks County, Pennsylvania. Because of the
limited nature of the volume of pollutants allegedly contributed by
United to the above sites, the outcome of these matters is not
expected to have a material adverse effect on United's financial
condition. In addition, United is aware of soil and groundwater
contamination present on its leaseholds at several U.S. airports.
United is investigating these sites, assessing its obligations under
applicable environmental regulations and lease agreements and, where
appropriate, remediating these sites. Remediation of these sites, for
which United may be responsible, is not expected to have a material
adverse effect on United's financial condition.
Other Government Matters. Besides the DOT and the FAA, other
federal agencies with jurisdiction over certain aspects of United's
operations are the Department of Justice (Antitrust Division and
Immigration and Naturalization Service), the Equal Employment
Opportunity Commission, the Occupational Safety and Health
Administration, the Department of Labor (Office of Federal Contract
Compliance Programs of the Employment Standards Administration), the
National Mediation Board, the National Transportation Safety Board,
the Treasury Department (U.S. Customs Service), the Federal
Communications Commission (use of radio facilities by aircraft), and
the United States Postal Service (carriage of domestic and
international mail). In connection with its service to cities in
other countries, United is subject to varying degrees of regulation
by foreign governments.
In time of war or during an unlimited national emergency or
civil defense emergency declared by the President or the Congress of
the United States, or in a situation short of this if approved by the
Director of the Office of Emergency Preparedness, the Commander in
Chief, the Department of the Air Force Air Mobility Command ("AMC")
or any official designated by the President to coordinate all civil
and defense mobilization activities, United may be required to
provide airlift services to the AMC under the Civil Reserve Air Fleet
Program. As of February 1, 1997, up to 26 B747 and 13 DC-10 aircraft
in United's fleet could be subject to these requirements.
Fuel
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United's results of operations are significantly affected by the
price and availability of jet fuel. Based on 1996 fuel consumption,
every $.01 change in the average annual price-per-gallon of jet fuel
caused a change of approximately $29 million in United's annual fuel
costs. The table below shows United's fuel expenses, fuel
consumption, average price per gallon and fuel as a percent of total
operating expenses for annual periods from 1992 through 1996:
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Fuel expense,
including tax
(in millions) $2,082 $1,680 $1,585 $1,718 $1,679
Gallons consumed
(in millions) 2,883 2,822 2,697 2,699 2,529
Average cost per
gallon (in cents) 72.2 59.5 58.8 63.6 66.4
% of total
operating expenses 14% 12% 12% 13% 14%
United's average fuel cost per gallon in 1996 was 21.3% higher
than in 1995. Changes in fuel prices are industry-wide occurrences
that benefit or harm United's competitors as well as United although
fuel hedging activities may affect the degree to which fuel price
changes affect individual companies. Lower fuel prices may be offset
by increased price competition and lower revenues for all air carriers,
including United. There can be no assurance that United will be able
to increase its fares in response to any increases in fuel prices in
the future.
United purchases its fuel under supply contracts with U.S. and
international oil companies. To assure adequate supplies of fuel and
provide a measure of control over fuel costs, United ships fuel on
major pipelines and stores fuel close to its major hub locations.
Although United has not experienced any problem with fuel
availability in the past few years and does not anticipate any in the
near future, it is impossible to predict the future availability of
jet fuel. If there were major reductions in the availability of jet
fuel, United's business would be adversely affected.
Insurance
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United carries liability insurance of a type customary in the
air transportation industry, in amounts which it deems adequate,
covering passenger liability, public liability and property damage
liability. The amount recoverable by United under aircraft hull
insurance covering all damage to its aircraft is not subject to any
deductible amount in the event of a total loss.
Employees - Labor Matters
- -------------------------
UAL is the world's largest majority employee-owned company. At
December 31, 1996, the Company and its subsidiaries had approximately
87,628 employees, of which approximately 85,921 were employed by
United (approximately twelve percent of whom are part-time employees)
and 1,707 were employed by United's subsidiaries. Approximately 60%
of United's employees were represented by various labor
organizations.
The employee groups, number of employees, labor organization and
current contract status for each of United's major collective
bargaining groups as of December 31, 1996 are as follows:
Number of Contract Open
Employee Group Employees Union For Amendment
-------------- --------- ----- -------------
Mechanics, ramp
servicemen & other
ground employees 23,933 IAM July 12, 2000 *
Flight attendants 19,419 AFA March 1, 1996
Pilots 8,432 ALPA April 12, 2000 *
___________________________
* However, certain provisions become amendable at a later date.
United's relations with these labor organizations are governed
by the Railway Labor Act. Under this Act, collective bargaining
agreements between United and these organizations become amendable
upon the expiration of their stated term. If either party wishes to
modify the terms of any such agreement, it must notify the other
party before the contract becomes amendable. After receipt of such
notice, the parties must meet for direct negotiations and, if no
agreement is reached, either party may request that a mediator be
appointed. If no agreement is reached, the National Mediation Board
(the "NMB") may determine, at any time, that an impasse exists and
may proffer arbitration.
Either party may decline to submit to arbitration. If
arbitration is rejected, a 30-day "cooling off" period commences,
following which the labor organization may strike and the airline may
resort to "self-help," including the imposition of its proposed
amendments and the hiring of replacement workers. However, if the
NMB determines that a dispute threatens substantially to interrupt
interstate commerce and notifies the President, the President can
delay a strike for a limited time by creating an emergency board to
investigate the dispute and report to the President.
For information regarding the status of the mid-term wage
adjustment and other labor agreement negotiations, see "Other
Information - Labor Agreements and Wage Adjustments" of Item 7,
"Management's Discussion and Analysis of Financial Condition and
Results of Operations."
ITEM 2. PROPERTIES.
- ------ ----------
Flight Equipment
- ----------------
As of December 31, 1996, United's operating aircraft fleet
totaled 564 jet aircraft, of which 266 were owned and 298 were
leased. These aircraft are listed below:
Average Average
Aircraft Type No. of Seats Owned Leased* Total Age (Years)
------------- ------------ ----- ------- ----- -----------
A320-200 144 4 32 36 2
B727-222A 147 59 16 75 18
B737-200 109 38 0 38 28
B737-200A 109 24 0 24 17
B737-300 126 10 91 101 8
B737-500 108 27 30 57 5
B747-100 434 14 0 14 25
B747-200 346 2 7 9 18
B747-400 387 5 21 26 5
B757-200 188 37 55 92 5
B767-200 168 19 0 19 14
B767-300ER 206 3 20 23 4
B777-200 292 3 13 16 1
DC10-10 287 18 8 26 21
DC10-30 298 3 5 8 17
TOTAL OPERATING
FLEET 266 298 564 11
=== === === ==
* United's aircraft leases have initial terms of 4 to 26 years,
and expiration dates range from 1998 through 2020. Under the
terms of leases for 289 of the aircraft in the operating fleet,
United has the right to purchase the aircraft at the end of the
lease term, in some cases at fair market value and in others at
fair market value or a percentage of cost.
As of December 31, 1996, 61 of the 266 aircraft owned by United
were encumbered under debt agreements.
In 1996 United took delivery of 21 new aircraft, seven A320-
200s, two B747-400s, four B757-200s and eight B777-200s. United also
retired fifteen aircraft, seven B737-200s, three B747-100s and five
DC10-10s.
As of December 31, 1996, United had 24 A319-100s, 14 A320-200s,
20 B777-200s, 21 B747-400s and six B757-200s on order which are
scheduled to be delivered between 1997 and 2002. The following table
sets forth United's firm aircraft orders and expected delivery
schedules as of December 31, 1996:
Aircraft Type Number To Be Delivered Delivery Rate
------------- ------ --------------- -------------
A319-100 24 1997-1999 0-3 per month
A320-200 14 1997-1998 0-2 per month
B747-400 21 1997-2002 0-2 per month
B757-200 6 1997-1999 0-1 per month
B777-200 20 1997-1999 0-3 per month
--
Total 85
For further information regarding United's leases and
commitments, see Notes (9) and (18), respectively, to Consolidated
Financial Statements included in Item 8, "Financial Statements and
Supplementary Data" and "Liquidity and Capital Resources - Capital
Commitments" of Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Ground Facilities
- -----------------
In the vicinity of O'Hare, United owns a 106 acre complex
consisting of over one million square feet of office space for its
world headquarters, a computer facility and a training center.
United's Maintenance Operation Center ("MOC") at San Francisco
International Airport occupies 129 acres of land, three million
square feet of floor space and 12 aircraft hangar docks under lease
expiring in 2003, with an option to extend for ten years. Heavy
maintenance of aircraft and component maintenance for most of
United's fleet occurs at the MOC. United has a major facility at the
Oakland, California airport which is dedicated to airframe
maintenance. United also has line aircraft maintenance facilities at
64 domestic and international locations.
United's Indianapolis Maintenance Center ("IMC") operates under
a lease with the Indianapolis Airport Authority which expires in
2031. IMC is a major aircraft maintenance and overhaul facility and
is being used for maintenance of Boeing 737 and 757 aircraft. United
is expanding its operations at IMC to maintain its fleets of Boeing
767 aircraft at the facility in the future.
United operates under a lease and use agreement expiring in 2025
at Denver International Airport and occupies 44 gates and over one
million square feet of exclusive or preferential use terminal
building space. United's flight training center located at the
former Stapleton International Airport was purchased by United from
the City and County of Denver in January, 1997. This flight training
center presently consists of four buildings with a total of more than
300,000 square feet located on 22 acres of land. An additional
building is currently under construction by United and, when
completed, the training center will accommodate 36 flight simulators
and over 90 computer-based training stations, as well as cockpit
procedures trainers, autoflight system trainers and emergency
evacuation trainers.
United has entered into various leases relating to its use of
airport landing areas, gates, hangar sites, terminal buildings and
other airport facilities in most of the municipalities it serves.
Major leases expire at Chicago O'Hare in 2018, San Francisco in 2011,
Washington Dulles in 2014 and Los Angeles in 2021. In many cases
United has constructed, at its expense, the buildings it occupies on
its leased properties. In general, buildings and fixtures
constructed by United on leased land are the property of the lessor
upon the expiration of such leases. United also has leased and
improved ticketing, sales and general office space in the downtown
and outlying areas of most of the larger cities in its system.
ITEM 3. LEGAL PROCEEDINGS.
-----------------
The Company is involved from time to time in legal proceedings
incidental to the ordinary course of its business. Such proceedings
include claims brought by and against the Company or its subsidiaries
including claims seeking substantial compensatory and punitive
damages. Such claims arise from routine commercial disputes as well
as incidents resulting in bodily injury and damage to property. The
Company believes that the potential liabilities in all of the bodily
injury and property damage actions are adequately insured and none of
the other actions are expected to have any material adverse effect on
the Company or its subsidiaries.
1. Travel Agency Commission Litigation -- United and six other
airlines were sued in various courts around the nation by travel
agents and the American Society of Travel Agents claiming as a class
action that the carriers acted collusively in violation of federal
antitrust laws when they imposed a cap on ticket sales commissions
payable to travel agencies by the carriers. The cases were
consolidated before the federal court in Minneapolis. As relief, the
plaintiffs sought an order declaring the carriers' commission cap
action to be illegal and the recovery of damages (trebled) to the
agencies resulting from that action. On September 3, 1996, the
remaining parties (one defendant had settled earlier in the case)
agreed to settle the case by defendants' payment of money in return
for the plaintiffs' dismissal with prejudice of this lawsuit and a
full release. United's share of the settlement is $19.5 million.
The caps on ticket sales commissions were unaffected by this
settlement. The court approved the final settlement on January 28,
1997.
2. Summers et al. v. State Street Bank and Trust Company et al. --
On April 14, 1995, plaintiffs filed a class action complaint against
State Street Bank and Trust Company ("State Street"), the UAL
Corporation Employee Stock Ownership Plan and the UAL Corporation
Supplemental ESOP (together, the "Plans") in the United States
District Court for the Northern District of Illinois. The complaint
was brought on behalf of a putative class of all persons who are, or
were as of July 12, 1994, participants or beneficiaries of the Plans.
Plaintiffs alleged that State Street breached various fiduciary
duties under the Employee Retirement Income Security Act of 1974
("ERISA") in connection with the 1994 purchase of UAL preferred stock
by the Plans. The Plans were nominal defendants; no relief was
sought from them. The complaint sought a declaration that State
Street violated ERISA, restoration to the Plans by State Street of
the amount of an alleged "overpayment" for stock, and other relief.
United is obligated, subject to certain exceptions, to indemnify
State Street for part or all of an adverse judgment and State
Street's defense costs. The defendants filed a motion to dismiss the
complaint in its entirety on July 12, 1995. On March 29, 1996 the
judge granted defendants' motion to dismiss in its entirety. On
April 15, 1996 the defendants filed with the court a motion for
attorneys' fees and costs under ERISA. Thereafter, plaintiffs filed
a notice of appeal of the judge's decision in favor of State Street
and an opposition to defendants' motion for attorneys' fees and
costs. The United States Court of Appeals for the Seventh Circuit
upheld the judge's decision in favor of State Street. State Street's
motion to recover its attorneys' fees is pending before the district
court.
3. GEC-Marconi Claim -- On April 4, 1996 United filed suit in the
Circuit Court of Cook County, Illinois, Law Division, against GEC-
Marconi Inflight Systems Overseas, Ltd. ("GMIS"), its Boeing 777
inseat video vendor, claiming breach of contract for GMIS's failure
to deliver the contracted product in the specified time frame, and
seeking monetary and injunctive relief. United also named in the
suit GEC-Marconi Inflight Systems, Inc. ("GMIS, Inc."), its 777 video
maintenance provider, seeking declaratory relief on the maintenance
contract. On July 19, 1996 GMIS and GMIS, Inc. filed a counterclaim
against United seeking in excess of $240 million for various alleged
breaches of contract by United, plus consequential damages and
attorney's fees and costs, relating to the same product purchase
agreement (which, in addition, included a Boeing 747 and 767 retrofit
order that United terminated on April 4, 1996) and maintenance
service agreement which form the basis of United's complaint, as well
as an alleged June 1996 "agreement" that had been the subject of
negotiations between the parties but was never signed by United
regarding interim arrangements between the parties. GMIS and GMIS,
Inc. also seek injunctive relief to enforce the alleged "agreement"
and prevent United from obtaining substitute goods from other
vendors. On August 1, GMIS and GMIS, Inc. filed an emergency motion
on the claims for injunctive relief. On August 28, the judge denied
GMIS' and GMIS, Inc.'s motion for a preliminary injunction. On
October 28, 1996 GMIS filed a Petition for Replevin seeking to
recover certain spare parts and consigned inventory currently in
United's possession. On November 26, 1996, the court denied GMIS's
petition upon United's motion. On December 23, 1996, United filed an
amended complaint, and GMIS filed an amended counterclaim on December
31, 1996. The parties have exchanged preliminary discovery
documents.
4. Fry v. UAL Corp. -- On February 21, 1990, a purported class
action complaint was filed in the U.S. District Court for the
Northern District of Illinois, Eastern Division. This complaint was
brought by several UAL stockholders, purportedly on behalf of all of
UAL stockholders who sold puts or common stock from October 29, 1987
through December 8, 1987. The complaint alleged that UAL committed
common law fraud and violated Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and the
Illinois Deceptive Trade Practices Act by falsely announcing that it
intended to distribute proceeds of sales of non-core businesses as a
special dividend, when in fact it was negotiating a cash tender offer
for the buyback of shares. Plaintiffs claimed $160 million in
damages, plus attorneys' fees, fees and costs of plaintiff's
accountants and experts and other costs and disbursements. UAL's
motion for summary judgment was granted on August 11, 1995, and that
decision was affirmed by the Seventh Circuit on May 23, 1996. On
October 9, 1996, plaintiffs filed a petition for certiorari with the
U.S. Supreme Court. The Court denied the petition on November 12,
1996.
United may be affected by legal proceedings brought by owners of
property located near certain airports. Plaintiffs generally seek to
enjoin certain aircraft operations and/or to obtain damages against
airport operators and air carriers as a result of alleged aircraft
noise or air pollution. Any liability or injunctive relief imposed
against airport operations or air carriers could result in higher
costs to United and other air carriers.
The ultimate disposition of the matters discussed in this Item
3, and other claims affecting the Company, are not expected to have a
material adverse effect on the Company's financial condition or
results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- ------ ---------------------------------------------------
No matter was submitted to a vote of security holders of the
Company during the fourth quarter of 1996.
EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------
Information regarding the executive officers of the Company is
as follows:
GERALD GREENWALD. Age 61. Mr. Greenwald has been Chairman and
Chief Executive Officer of the Company and United since July 12,
1994. Prior to joining the Company, he served as Chairman of Tatra
Truck Company, Czech Republic (a truck manufacturer) from March 1993
until July 1994. Mr. Greenwald previously served as President of
Olympia & York Developments Limited (a real estate development
company that was in the process of a financial restructuring at the
time Mr. Greenwald agreed to serve as president and certain
subsidiaries of which filed for protection under federal bankruptcy
laws in connection with such restructuring) from April 1992 until
March 1993, and as Managing Director of Dillon Read & Co. Inc. (an
investment banking firm) in 1991-1992.
JOHN A. EDWARDSON. Age 47. Mr. Edwardson has been President
since July 12, 1994 and Chief Operating Officer since March 30, 1995
of the Company and United and a member of the board of directors of
the Company since July 12, 1994. Prior to joining the Company, he
served as Executive Vice President and Chief Financial Officer of
Ameritech Corporation (a telecommunications company) from 1991 to
July 1994.
JOSEPH R. O'GORMAN, JR. Age 53. Mr. O'Gorman has been
Executive Vice President of the Company since February 18, 1991 and
Executive Vice President - Fleet Operations and Administration of
United since April 1, 1995. He served as Executive Vice President -
Operations of United from April 30, 1992 to March 31, 1995. He had
served as Executive Vice President - Flight Services of United since
February 25, 1991.
STUART I. ORAN. Age 46. Mr. Oran has been Executive Vice
President - Corporate Affairs and General Counsel of the Company and
United since July 12, 1994. Prior to joining the Company, he was a
corporate partner with Paul, Weiss, Rifkind, Wharton and Garrison, a
law firm he joined in 1974.
DOUGLAS A. HACKER. Age 41. Mr. Hacker has been Senior Vice
President and Chief Financial Officer of the Company and United since
July 12, 1994 and had been Senior Vice President - Finance of United
beginning March 8, 1993. Prior to joining United, Mr. Hacker served
as Vice President - Corporate and Fleet Planning at American
Airlines, Inc. (an air carrier) since 1991.
CHRISTOPHER D. BOWERS. Age 49. Mr. Bowers has been Senior Vice
President - International of United since April 1, 1995. Prior to
assuming his current position, he was Vice President and General
Sales Manager of the Sales Division since April 1, 1988.
DAVID COLTMAN. Age 54. Mr. Coltman has been Senior Vice
President - Marketing of United since April 1, 1995. Previously, Mr.
Coltman served as Vice President - Atlantic Division in London since
January 25, 1989.
RONO DUTTA. Age 45. Mr. Dutta has been Senior Vice President -
Planning of United since November 7, 1994 and became an executive
officer of United on April 1, 1995. His prior positions with United
include Vice President - Cargo from September to November of 1994,
Vice President - U2 Development from April to September of 1994, Vice
President - Management Information Systems from July 1993 to April
1994, Senior Vice President - Maintenance Operation from May 1992 to
July 1993, and Vice President - Base Maintenance Operations from June
1991 to May 1992.
JAMES E. GOODWIN. Age 52. Mr. Goodwin has been Senior Vice
President - North America of United since April 1, 1995. He had
served as Senior Vice President - International of United since May
1992. Prior thereto, he was Senior Vice President - Maintenance
Operations since January 1991.
WILLIAM P. HOBGOOD. Age 58. Mr. Hobgood has been Senior Vice
President - People of United since March 1, 1997. Prior to joining
United, he was in private practice as an attorney specializing in
mediation and arbitration since 1981, including labor-management issues.
There are no family relationships among the executive officers
of the Company. The executive officers of the Company serve at the
discretion of the board of directors.
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
- ------ -------------------------------------------------
STOCKHOLDER MATTERS.
-------------------
The Company's Common Stock, $.01 par value (the "Common Stock"),
is traded principally on the New York Stock Exchange (the "NYSE")
under the symbol UAL, and is also listed on the Chicago Stock
Exchange and the Pacific Stock Exchange. The following sets forth
for the periods indicated the high and low sales prices per share of
the Company's Common Stock on the NYSE Composite Tape.
COMMON STOCK:
High Low
---- ---
1996:
1st quarter $53 11/16 $38 9/16
2nd quarter 60 1/8 50 1/4
3rd quarter 56 5/8 41 1/2
4th quarter 64 3/4 43 1/4
1995:
1st quarter 26 13/16 21 29/32
2nd quarter 35 3/4 26
3rd quarter 43 34 3/8
4th quarter 52 31/32 41 1/2
On May 6, 1996 UAL's Common Stock split four-for-one in the form
of a 300% stock dividend to holders of record at the close of
business on that date. The per share prices above have been adjusted
for the stock split.
No dividends have been declared on the Company's common stock
during the past five years. The payment of any future dividends on
the Common Stock and the amount thereof will be determined by the
Board of Directors of the Company in light of earnings, the financial
condition of the Company and other relevant factors. At March 1,
1997, based on reports by the Company's transfer agent for the Common
Stock, there were 12,976 common stockholders of record. In addition,
there were 3,878 holders of record of the Company's old common stock,
$5 par value, who have not tendered their stock certificates as a result
of the employee stock ownership transaction.
Item 6. Selected Financial Data
- ---------------------------------
Exhibit 3.1
As Amended
May 6, 1996
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
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
2.6 "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).
_______________________________
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 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.
2.11 "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 Divident 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" shall mean the penultimate
Business Day in each year, commencing on such penultimate
Business Day in 1994; provided that, with respect to the Dividend
Period beginning on January 1, 2000 and ending on March 31, 2000,
the Dividend Payment Date shall be the penultimate Business Day
in the calendar quarter ending March 31, 2000.
2.19 "Dividend Periods" shall mean annual dividend periods
commencing on the last Business Day of each year and ending on
and including the penultimate Business Day of the next succeeding
year (other than the initial Dividend Period, which shall
commence on the Issue Date and end on and include the penultimate
Business Day in 1994, the Dividend Period commencing on the last
Business Day of 1999, which shall commence on such date and end
on the penultimate Business Day in the calendar quarter ending
March 31, 2000 and the Dividend Period commencing on the last
Business Day of the calendar quarter ending on March 31, 2000,
which shall commence on such date and end on the penultimate
Business Day in the year 2000).
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 latest
to occur of the Issue Date or the most recent Dividend Payment
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.
2.23 "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 annum of (i)
an amount per share of Class 1 ESOP Preferred Stock with respect
to any Dividend Period ending on or before March 31, 2000 equal
to seven percent of the result of dividing (x) 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 (y) the number of shares of Class 1
ESOP Preferred Stock purchased pursuant to Section 1 of the
Agreement and (ii) zero thereafter (the "Fixed Dividend"). Such
Fixed Dividends shall be cumulative from the Issue Date until the
penultimate Business Day in the calendar quarter ending 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 Fixed Dividends and whether or not the Board of
Directors shall have declared such Fixed Dividends, and shall be
payable annually (except as otherwise provided herein) when, as
and if declared by the Board of Directors, in arrears on Dividend
Payment Dates, commencing on the penultimate Business Day of
1994. Each such Fixed 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 Fixed Dividends for any past
Dividend Periods ending on or prior to the penultimate Business
Day in the calendar quarter ending March 31, 2000 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 Fixed Dividend provided in this
Section 3.1 and the additional cumulative dividends provided in
Section 3.5 and shall not be entitled to any other dividends in
excess thereof.
3.2 The amount of Fixed Dividends payable for the initial
Dividend Period, or any other period shorter or longer than a
full Dividend Period, on the Class 1 ESOP Preferred Stock shall
be computed on the basis of twelve 30-day months and a 360-day
year. Except as provided in Section 3.5, 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 Fixed 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 Fixed 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 Fixed 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 Fixed 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 Fixed Dividends accumulated and unpaid on
the Class 1 ESOP Preferred Stock and dividends accumulated and
unpaid on such parity stock. Notwithstanding the foregoing to
the contrary, cumulated Fixed Dividends that remain unpaid on
April 1, 2000 shall not prevent the payment of a dividend on any
other security on or after April 1, 2000 to the extent that, on
the Dividend Payment Date occurring on or prior to April 1, 2000
with respect to the Class 1 ESOP Preferred Stock that immediately
followed the last payment of a dividend on the Series A Preferred
Stock or the Series B Preferred Stock, (a) the unpaid current and
cumulated dividends on the Class 1 ESOP Preferred Stock as of
such Dividend Payment Date exceeds (b) the surplus of the
Corporation available on such Dividend Payment Date to pay Fixed
Dividends on the Class 1 ESOP Preferred Stock after (I) the
payment in full of all unpaid current and cumulated dividends in
respect of all other classes or series of stock of the
Corporation ranking senior to the Class 1 ESOP Preferred Stock as
to the payment of dividends and (II) the payment on a pro rata
basis of all unpaid current and cumulated dividends in respect of
all other classes or series of stock of the Corporation ranking
on a parity with the Class 1 ESOP Preferred Stock as to the
payment of dividends, provided that an amount equal to the lesser
of the amounts described in clause (a) and clause (b) must be
paid as a dividend in respect of the Class 1 ESOP Preferred Stock
before any amount may be paid as a dividend in respect of any
class or series of stock of the Corporation that ranks junior to
the Class 1 ESOP Preferred Stock as to the payment of dividends
(the amount of such excess, the "Designated Amount"), provided
further that the Designated Amount plus all unpaid Fixed
Dividends on the Class 1 ESOP Preferred Stock that accrue in
respect of Dividend Payment Dates that occurred after such
Dividend Payment Date shall remain part of the accrued and unpaid
dividends on the Class 1 ESOP Preferred Stock for the purpose of
Section 4.
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 or indirectly (except by conversion into or exchange for
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
and as to distributions upon liquidation, dissolution or winding
up of the Corporation), unless in each case the full cumulative
Fixed 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. Notwithstanding the
foregoing to the contrary, cumulated Fixed Dividends that remain
unpaid on April 1, 2000 shall not prevent the payment of a
dividend on any other security on or after April 1, 2000 to the
extent that, on the Dividend Payment Date occurring on or prior
to April 1, 2000 with respect to the Class 1 ESOP Preferred Stock
that immediately followed the last payment of a dividend on the
Series A Preferred Stock or the Series B Preferred Stock, (a) the
unpaid current and cumulated dividends on the Class 1 ESOP
Preferred Stock as of such Dividend Payment Date exceeds (b) the
surplus of the Corporation available on such Dividend Payment
Date to pay Fixed Dividends on the Class 1 ESOP Preferred Stock
after (I) the payment in full of all unpaid current and cumulated
dividends in respect of all other classes or series of stock of
the Corporation ranking senior to the Class 1 ESOP Preferred
Stock as to the payment of dividends and (II) the payment on a
pro rata basis of all unpaid current and cumulated dividends in
respect of all other classes or series of stock of the
Corporation ranking on a parity with the Class 1 ESOP Preferred
Stock as to the payment of dividends, provided that an amount
equal to the lesser of the amounts described in clause (a) and
clause (b) must be paid as a dividend in respect of the Class 1
ESOP Preferred Stock before any amount may be paid as a dividend
in respect of any class or series of stock of the Corporation
that ranks junior to the Class 1 ESOP Preferred Stock as to the
payment of dividends, provided further that the Designated Amount
plus all unpaid Fixed Dividends on the Class 1 ESOP Preferred
Stock that accrue in respect of Dividend Payment Dates that
occurred after such Dividend Payment Date shall remain part of
the accrued and unpaid dividends on the Class 1 ESOP Preferred
Stock for the purpose of Section 4.
3.5 If, during the period ending upon the most recent
Dividend Payment Date and beginning on the immediately prior
Dividend Payment Date or, if none, the Issue Date, cash dividends
have been paid to the holders of Common Stock which, if paid at
the same rate (per outstanding share of Common Stock) with
respect to the shares of Common Stock into which the Class 1 ESOP
Preferred Stock is convertible, would be in excess of the sum of
the amounts of the Fixed Dividends which have been or will have
been paid during such period ending on such Dividend Payment
Date, the holders of shares of Class 1 ESOP Preferred Stock shall
be entitled to receive on such Dividend Payment Date, in addition
to the Fixed Dividends payable on such Dividend Payment Date, an
additional dividend equal to the excess of (a) the dividends
which would have been received during such 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), over
(b) the sum of the amount of (i) the Fixed Dividends which have
been or will have been paid during such period and (ii) the
amount previously paid pursuant to this Section 3.5 during such
period, which additional dividends (hereinafter referred to as
"Participating Dividends") shall be paid in cash, pro-rata to
each holder of Class 1 ESOP Preferred Stock. 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 period referred to above, 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 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.
3.6 In respect of any Dividend Payment Date on which both
Fixed Dividends and Participating Dividends are due, or at any
time that both Fixed Dividends and Participating Dividends are
unpaid, dividend payments made on the Class 1 ESOP Preferred
Stock shall be applied first to unpaid Participating Dividends
and, after all Participating Dividends are paid in full, then to
unpaid Fixed Dividends.
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 by 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 cash dividends and distributions
made to holders of Common Stock during the period from the
latest to occur of the Issue Date or the most recent
Dividend Payment 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 later of the
Issue Date or the most recent Dividend Payment 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 3.5 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 Participating
Dividends and as to amounts distributable upon liquidation,
dissolution or winding up and the Class 2 ESOP Preferred Stock
shall be deemed to rank junior to the Class 1 ESOP Preferred
Stock as to the payment of Fixed Dividends on the Class 1
Preferred Stock. 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" shall mean the penultimate
Business Day in each year, commencing on such penultimate
Business Day in 1994; provided that, with respect to the Dividend
Period beginning on January 1, 2000 and ending on March 31, 2000,
the Dividend Payment Date shall be the penultimate Business Day
in the calendar quarter ending March 31, 2000.
2.19 "Dividend Periods" shall mean annual dividend periods
commencing on the last Business Day of each year and ending on
and including the penultimate Business Day of the next succeeding
year (other than the initial Dividend Period, which shall
commence on the Issue Date and end on and include the penultimate
Business Day in 1994).
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 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 latest
to occur of the Issue Date or the most recent Dividend Payment
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.
2.23 "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 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 Participating Dividends
and whether or not the Board of Directors shall have declared
such Participating Dividends, and shall be payable annually
(except as otherwise provided herein) when, as and if declared by
the Board of Directors, in arrears on Dividend Payment Dates,
commencing on the penultimate Business Day of 1994. 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
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 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 or indirectly (except by conversion into or exchange for
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
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
latest to occur of the Issue Date or the most recent
Dividend Payment 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
dividends and distributions made on or before the date of
such conversion with a record date after the later of the
Issue Date or the most recent Dividend Payment 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 Participating
Dividends and as to amounts distributable upon liquidation,
dissolution or winding up and the Class 1 ESOP Preferred Stock
shall be deemed to rank prior to the Class 2 ESOP Preferred Stock
with respect to the payment of Fixed Dividends (as such term is
defined in Article FOURTH, Part II of this Restated Certificate)
on the Class 1 ESOP Preferred Stock. 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 4.2
---------------------------------------------
---------------------------------------------
UAL CORPORATION, Issuer
to
THE FIRST NATIONAL BANK OF CHICAGO, Trustee
------------------
INDENTURE
Dated as of December 20, 1996
------------------
Providing for Issuance of
Junior Subordinated Debt Securities in Series
---------------------------------------------
---------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE 1 - DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION 1
1.1. DEFINITIONS 1
1.2. COMPLIANCE CERTIFICATES AND OPINIONS 14
1.3. FORM OF DOCUMENTS DELIVERED TO TRUSTEE 14
1.4. ACTS OF HOLDERS 15
1.5. NOTICES, ETC., TO TRUSTEE AND COMPANY 17
1.6. NOTICE TO HOLDERS; WAIVER 17
1.7. HEADINGS AND TABLE OF CONTENTS 18
1.8. SUCCESSORS AND ASSIGNS 18
1.9. SEPARABILITY 18
1.10. BENEFITS OF INDENTURE 19
1.11. GOVERNING LAW 19
1.12. LEGAL HOLIDAYS 19
1.13. TRUSTEE TO ESTABLISH RECORD DATES 19
1.14. NO RECOURSE AGAINST OTHERS 19
ARTICLE 2 - SECURITY FORMS 20
2.1. FORMS GENERALLY 20
2.2. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION 21
2.3. SECURITIES IN GLOBAL FORM 21
2.4. FORM OF LEGEND FOR SECURITIES IN GLOBAL FORM 22
ARTICLE 3 - THE SECURITIES 22
3.1. AMOUNT UNLIMITED; ISSUABLE IN SERIES 22
3.2. DENOMINATIONS 27
3.3. EXECUTION, AUTHENTICATION, DELIVERY AND DATING 27
3.4. TEMPORARY SECURITIES 31
3.5. REGISTRATION, REGISTRATION OF TRANSFER AND
EXCHANGE 32
3.6. REPLACEMENT SECURITIES 36
3.7. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED 37
3.8. PERSONS DEEMED OWNERS 39
3.9. CANCELLATION 40
3.10. COMPUTATION OF INTEREST 40
3.11. CURRENCY AND MANNER OF PAYMENT IN RESPECT OF
SECURITIES 40
3.12. APPOINTMENT AND RESIGNATION OF EXCHANGE
RATE AGENT 45
3.13. CUSIP NUMBERS 46
ARTICLE 4 - SATISFACTION, DISCHARGE AND DEFEASANCE 46
4.1. TERMINATION OF COMPANY'S OBLIGATIONS UNDER THE
INDENTURE 46
4.2. APPLICATION OF TRUST FUNDS 48
4.3. APPLICABILITY OF DEFEASANCE PROVISIONS;
COMPANY'S OPTION TO EFFECT DEFEASANCE OR
COVENANT DEFEASANCE 48
4.4. DEFEASANCE AND DISCHARGE 49
4.5. COVENANT DEFEASANCE 49
4.6. CONDITIONS TO DEFEASANCE OR COVENANT
DEFEASANCE 50
4.7. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS
TO BE HELD IN TRUST 52
4.8. TRANSFERS AND DISTRIBUTION AT COMPANY REQUEST 53
ARTICLE 5 - DEFAULTS AND REMEDIES 54
5.1. EVENTS OF DEFAULT 54
5.2. ACCELERATION; RESCISSION AND ANNULMENT 55
5.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE 56
5.4. TRUSTEE MAY FILE PROOFS OF CLAIM 56
5.5. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION
OF SECURITIES 56
5.6. DELAY OR OMISSION NOT WAIVER 56
5.7. WAIVER OF PAST DEFAULTS 57
5.8. CONTROL BY MAJORITY 57
5.9. LIMITATION ON SUITS BY HOLDERS 57
5.10. RIGHTS OF HOLDERS TO RECEIVE PAYMENT 58
5.11. APPLICATION OF MONEY COLLECTED 58
5.12. RESTORATION OF RIGHTS AND REMEDIES 59
5.13. RIGHTS AND REMEDIES CUMULATIVE 59
5.14. UNDERTAKING FOR COSTS 59
5.15. ACTION RESPECTING SECURITIES HELD IN
UAL CORPORATION CAPITAL TRUST 60
ARTICLE 6 - THE TRUSTEE 60
6.1. CERTAIN DUTIES AND RESPONSIBILITIES 60
6.2. RIGHTS OF TRUSTEE 61
6.3. TRUSTEE MAY HOLD SECURITIES 63
6.4. MONEY HELD IN TRUST 63
6.5. TRUSTEE'S DISCLAIMER 63
6.6. NOTICE OF DEFAULTS 63
6.7. REPORTS BY TRUSTEE TO HOLDERS 63
6.8. SECURITYHOLDER LISTS 64
6.9. COMPENSATION AND INDEMNITY 64
6.10. REPLACEMENT OF TRUSTEE 65
6.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR 67
6.12. ELIGIBILITY; DISQUALIFICATION 68
6.13. MERGER, CONVERSION, CONSOLIDATION OR
SUCCESSION TO BUSINESS 68
6.14. APPOINTMENT OF AUTHENTICATING AGENT 69
6.15. TRUSTEE'S APPLICATION FOR INSTRUCTIONS
FROM THE COMPANY 70
ARTICLE 7 - CONSOLIDATION, MERGER OR SALE BY THE COMPANY 71
ARTICLE 8 - SUPPLEMENTAL INDENTURES 72
8.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT
OF HOLDERS 72
8.2. SUPPLEMENTAL INDENTURES WITH CONSENT
OF HOLDERS 73
8.3. COMPLIANCE WITH TRUST INDENTURE ACT 75
8.4. EXECUTION OF SUPPLEMENTAL INDENTURES 75
8.5. EFFECT OF SUPPLEMENTAL INDENTURES 75
8.6. REFERENCE IN SECURITIES TO SUPPLEMENTAL
INDENTURES 75
ARTICLE 9 - COVENANTS 76
9.1. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY,
AND INTEREST 76
9.2. MAINTENANCE OF OFFICE OR AGENCY 76
9.3. MONEY FOR SECURITIES TO BE HELD IN TRUST;
UNCLAIMED MONEY 78
9.4. CORPORATE EXISTENCE 79
9.5. INSURANCE 79
9.6. REPORTS BY THE COMPANY 79
9.7. ANNUAL REVIEW CERTIFICATE 80
9.8. LIMITATION ON DIVIDENDS AND CAPITAL STOCK
ACQUISITIONS 80
9.9. NOTICE OF DEFAULT 81
ARTICLE 10 - REDEMPTION 81
10.1. APPLICABILITY OF ARTICLE 81
10.2. ELECTION TO REDEEM; NOTICE TO TRUSTEE 81
10.3. SELECTION OF SECURITIES TO BE REDEEMED 82
10.4. NOTICE OF REDEMPTION 82
10.5. DEPOSIT OF REDEMPTION PRICE 83
10.6. SECURITIES PAYABLE ON REDEMPTION DATE 84
10.7. SECURITIES REDEEMED IN PART 85
ARTICLE 11 - SINKING FUNDS 85
11.1. APPLICABILITY OF ARTICLE 85
11.2. SATISFACTION OF SINKING FUND PAYMENTS
WITH SECURITIES 85
11.3. REDEMPTION OF SECURITIES FOR SINKING FUND 86
ARTICLE 12 - SUBORDINATION OF SECURITIES 86
12.1. SECURITIES SUBORDINATED TO SENIOR
INDEBTEDNESS 86
12.2. COMPANY NOT TO MAKE PAYMENTS WITH
RESPECT TO SECURITIES IN CERTAIN
CIRCUMSTANCES; LIMITATIONS ON
ACCELERATION OF SECURITIES 87
12.3. SECURITIES SUBORDINATED TO PRIOR
PAYMENT OF ALL SENIOR INDEBTEDNESS
ON DISSOLUTION, LIQUIDATION OR
REORGANIZATION OF THE COMPANY 89
12.4. HOLDERS TO BE SUBROGATED TO RIGHTS
OF HOLDERS OF SENIOR INDEBTEDNESS 91
12.5. OBLIGATION OF THE COMPANY UNCONDITIONAL 91
12.6. KNOWLEDGE OF TRUSTEE 92
12.7. APPLICATION BY TRUSTEE OF MONEYS
DEPOSITED WITH IT 93
12.8. SUBORDINATION RIGHTS NOT IMPAIRED
BY ACTS OR OMISSIONS OF COMPANY OR
HOLDERS OF SENIOR INDEBTEDNESS 93
12.9. HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE
SUBORDINATION OF SECURITIES 94
12.10. RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS 94
12.11. ARTICLE 12 NOT TO PREVENT EVENTS OF DEFAULT 94
12.12. PAYING AGENTS OTHER THAN THE TRUSTEE 94
12.13. TRUSTEE'S COMPENSATION NOT PREJUDICED 95
12.14. TRUST MONEYS NOT SUBORDINATED 95
12.15. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE
OF LIQUIDATING AGENT 95
12.16. TRUSTEE NOT FIDUCIARY FOR HOLDERS OR
SENIOR INDEBTEDNESS OF THE COMPANY 95
Reconciliation and tie between Indenture dated as of December 20,
1996 and the Trust Indenture Act of 1939, as amended.
Trust Indenture Act Indenture
of 1939 Section Section
- --------------- -------
310 (a)(1) 6.12
(a)(2) 6.12
(a)(3) TIA
(a)(4) Not applicable
(a)(5) TIA
(b) 6.10; 6.12;
TIA
311 (a) TIA
(b) TIA
312 (a) 6.8
(b) TIA
(c) TIA
313 (a) 6.7; TIA
(b) TIA
(c) TIA
(d) TIA
314 (a) 9.6; 9.7; TIA
(b) Not Applicable
(c)(1) 1.2
(c)(2) 1.2
(c)(3) Not Applicable
(d) Not Applicable
(e) TIA
(f) TIA
315 (a) TIA
(b) 6.6
(c) TIA
(d)(1) TIA
(d)(2) TIA
(d)(3) TIA
(e) TIA
316 (a)(last sentence) 1.1
(a)(1)(A) 5.2; 5.8
(a)(1)(B) 5.7
(b) 5.9; 5.10
(c) TIA
317 (a)(1) 5.3
(a)(2) 5.4
(b) 9.3
318 (a) 1.11
(b) TIA
(c) 1.11; TIA
This reconciliation and tie section does not constitute part of
the Indenture.
INDENTURE, dated as of December 20, 1996, among UAL
CORPORATION, a Delaware corporation (the "Company"), as issuer, and
THE FIRST NATIONAL BANK OF CHICAGO, a national banking association, as
Trustee (the "Trustee").
Recitals
--------
The Company has duly authorized the execution and delivery
of this Indenture to provide for the issuance from time to time of its
unsecured junior subordinated debentures, notes or other evidences of
indebtedness ("Securities") to be issued in one or more series as
herein provided.
All things necessary to make this Indenture a valid
agreement of the Company, in accordance with its terms, have been
done.
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and
agreed as follows for the equal and ratable benefit of the Holders of
the Securities:
ARTICLE 1
Definitions and Other Provisions
--------------------------------
of General Application
----------------------
Section 1.1. Definitions. (a) For all purposes of this
Indenture, except as otherwise expressly provided or unless the
context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well
as the singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein,
have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally
accepted accounting principles; and
(4) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision.
"Affiliate" of any specified Person means any Person
directly or indirectly controlling or controlled by, or under direct
or indirect common control with, such specified Person.
For purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Paying Agent or Registrar.
"Authenticating Agent" means any authenticating agent
appointed by the Trustee pursuant to Section 6.14.
"Authorized Newspaper" means a newspaper of general
circulation, in the official language of the country of publication or
in the English language, customarily published on each Business Day
whether or not published on Saturdays, Sundays or holidays, and of
general circulation in the place in connection with which the term is
used or in the financial community of such place. Whenever successive
publications in an Authorized Newspaper are required hereunder they
may be made (unless otherwise expressly provided herein) on any
Business Day and in the same or different Authorized Newspapers.
"Bearer Security" means any Security in the form (to the
extent applicable thereto) established pursuant to Section 2.1 which
is payable to bearer.
"Board" or "Board of Directors" means the Board of Directors
of the Company, the Executive Committee or any other duly authorized
committee thereof.
"Board Resolution" means a copy of a resolution of the Board
of Directors, certified by the Corporate Secretary or an Assistant
Secretary of the Company, to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of
Payment or any other particular location referred to in this Indenture
or in the Securities, means, unless otherwise specified with respect
to any Securities pursuant to Section 3.1, each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking
institutions in that Place of Payment or particular location are
authorized or obligated by law or executive order to close.
"Capital Lease" means any lease obligation of a person
incurred with respect to real property or equipment acquired or leased
by such person and used in its business that is required to be
recorded on its balance sheet as a capitalized lease in
accordance with generally accepted accounting principles consistently
applied as in effect on the date hereof.
"Commission" means the Securities and Exchange Commission,
as from time to time constituted, created under the Securities
Exchange Act of 1934, or, if at any time after the execution of this
Indenture such Commission is not existing and performing the duties
now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Securities" shall mean the common undivided
beneficial interests in the assets of the applicable UAL Corporation
Capital Trust.
"Company" means the Person named as the Company in the first
paragraph of this Indenture until one or more successor corporations
shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter means such successors.
"Company Order" and "Company Request" mean, respectively, a
written order or request signed in the name of the Company by the
Chairman of the Board, the President, any Executive Vice President or
any Senior Vice President, signing alone, by any Vice President
signing together with the Treasurer, any Assistant Treasurer, the
Corporate Secretary or any Assistant Secretary of the Company, or,
with respect to Sections 3.3, 3.4, 3.5 and 6.1, any other employee of
the Company named in an Officers' Certificate delivered to the
Trustee.
"Conversion Event" means the cessation of use of (i) a
Foreign Currency both by the government of the country which issued
such currency and for the settlement of transactions by a central bank
or other public institutions of or within the international banking
community, (ii) the ECU both within the European Monetary System and
for the settlement of transactions by public institutions of or within
the European Communities or (iii) any currency unit other than the ECU
for the purposes for which it was established.
"Corporate Trust Office" means the principal office of the
Trustee at which at any particular time its corporate trust business
shall be administered, which office at the date of original execution
of this Indenture is located at One First National Plaza, Suite 0126,
Chicago, Illinois 60670, Attention: Corporate trust Administration,
except that, with respect to presentation of the Securities for
payment or registration of transfers or exchanges and the location of
the register, such term means the office or agency of the Trustee at
which at any particular time its corporate agency business shall be
conducted, which at the date of original execution of this Indenture
is located as c/o First Chicago Trust Company of New York, 14 Wall
Street-8th Floor-Window 2, New York, New York 10005.
"corporation" includes corporations, associations, companies
and business trusts.
"coupon" means any interest coupon appertaining to a Bearer
Security.
"Declaration of Trust" shall mean the Declaration of Trust
of the UAL Corporation Capital Trust, if any, specified in the
applicable Board Resolution or supplemental indenture establishing a
particular series of Securities pursuant to Section 3.01 hereof.
"Default" means any event which is, or after notice or
passage of time, or both, would be, an Event of Default.
"Depositary", when used with respect to the Securities of or
within any series issuable or issued in whole or in part in global
form, means the Person designated as Depositary by the Company
pursuant to Section 3.1 until a successor Depositary shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter shall mean or include each Person which is then a
Depositary hereunder, and if at any time there is more than one such
Person, shall be a collective reference to such Persons.
"Dollar" means the coin or currency of the United States as
at the time of payment is legal tender for the payment of public and
private debts.
"ECU" means the European Currency Unit as defined and
revised from time to time by the Council of the European Communities.
"European Communities" means the European Economic
Community, the European Coal and Steel Community and the European
Atomic Energy Community.
"European Monetary System" means the European Monetary
System established by the Resolution of December 5, 1978 of the
Council of the European Communities.
"Exchange Rate Agent", when used with respect to Securities
of or within any series, means, unless otherwise specified with
respect to any Securities pursuant to Section 3.1, a New York Clearing
House bank designated pursuant to Section 3.1 or Section 3.12.
"Exchange Rate Officer's Certificate" means a certificate
setting forth (i) the applicable Market Exchange Rate or the
applicable bid quotation and (ii) the Dollar or Foreign Currency
amounts of principal (and premium, if any) and interest, if any (on an
aggregate basis and on the basis of a Security having the lowest
denomination principal amount in the relevant currency or currency
unit), payable with respect to a Security of any series on the basis
of such Market Exchange Rate or the applicable bid quotation, signed
by the Treasurer, any Vice President or any Assistant Treasurer of the
Company.
"Flight Equipment" means:
(a) aircraft of all types and classes used in
transportation and incidental services, together with all
aircraft instruments, appurtenances parts and fixtures
comprising such aircraft;
(b) aircraft engines of all types and classes used in
transportation and incidental services, together with all
accessories, appurtenances, parts and fixtures comprising
such aircraft engines;
(c) aircraft communication equipment of all types and
classes used in transportation and incidental services,
including radio, radar, radiophone and other aircraft
communication apparatus, together with all accessories,
appurtenances, parts and fixtures comprising such aircraft
communication equipment;
(d) miscellaneous flight equipment of all types and
classes (including miscellaneous crew flight equipment) used
in transportation and incidental services; and
(e) spare parts, accessories and assemblies held for
use in or repair of the items described in (a) through (d)
above.
"Foreign Currency" means any currency issued by the
government of one or more countries other than the United States or by
any recognized confederation or association of such governments.
"Government Obligations" means securities which are (i)
direct obligations of the United States or, if specified as
contemplated by Section 3.1, the government which issued the currency
in which the Securities of a particular series are payable, for the
payment of which its full faith and credit is pledged or (ii)
obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States or, if specified as
contemplated by Section 3.1, such government which issued the foreign
currency in which the Securities of such series are payable, the payment
of which is unconditionally guaranteed as a full faith and credit
obligation by the United States or such other government, which, in
either case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depositary receipt issued by a bank or
trust company as custodian with respect to any such Government Obligation
or a specific payment of interest on or principal of any such Government
Obligation held by such custodian for the account of the holder of a
depositary receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount
payable to the holder of such depositary receipt from any amount
received by the custodian in respect of the Government Obligation
evidenced by such depositary receipt.
"Holder" means, with respect to a Bearer Security or coupon,
a bearer thereof and, with respect to a Registered Security, a person
in whose name a Security is registered on the Register.
"Indebtedness" of any Person means, without duplication, the
principal of, and premium, if any, and accrued and unpaid interest
(including post-petition interest) on any obligation, whether
outstanding on the date hereof or thereafter created, incurred or
assumed, which is (i) indebtedness of such Person for money borrowed,
(ii) Indebtedness Guarantees by such Person of indebtedness for money
borrowed by any other Person, (iii) indebtedness evidenced by notes,
debentures, bonds or other instruments of indebtedness for payment of
which such Person is responsible or liable, (iv) obligations for the
reimbursement of any obligor on any letter of credit, bankers'
acceptance or similar credit transaction, (v) obligations of such
Person under Capital Leases and Flight Equipment leases (the amount of
the Company's obligation under such Flight Equipment leases to be
computed in accordance with Statement of Financial Accounting
Standards No. 13 as if such Flight Equipment leases were Capital
Leases), (vi) obligations (net of counterparty payments) under
interest rate and currency swaps, caps, collars, options, forward or
spot contracts or similar arrangements or with respect to foreign
currency hedges, and (vii) commitment and other bank financing fees
under contractual obligations associated with bank debt; provided,
however, that Indebtedness shall not include amounts owed to trade
creditors in the ordinary course of business.
"Indebtedness Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Indebtedness or other obligation of any other Person
and, without limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such Person (i) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment or performance thereof (or payment of
damages in the event of nonperformance) or to protect such obligee
against loss in respect thereof (in whole or in part); provided,
however, that the terms Indebtedness Guarantee shall not include
endorsements for collection or deposit in the ordinary course of
business. The term "Indebtedness Guarantee" used as a verb has a
corresponding meaning.
"Indenture" means this Indenture as originally executed or
as amended or supplemented from time to time and shall include the
forms and terms (but not defined terms established in an Officers'
Certificate or a Board Resolution) of particular series of Securities
established as contemplated by Section 2.1 and Section 3.1.
"Indexed Security" means a Security the terms of which
provide that the principal amount thereof payable at Stated Maturity
may be more or less than the principal face amount thereof at original
issuance.
"interest", when used with respect to an Original Issue
Discount Security which by its terms bears interest only after
maturity, means interest payable after maturity.
"Interest Payment Date", when used with respect to any
Security, means the Stated Maturity of an installment of interest on
such Security.
"Market Exchange Rate" means, unless otherwise specified
with respect to any Securities pursuant to Section 3.1, (i) for any
conversion involving a currency unit on the one hand and Dollars or
any Foreign Currency on the other, the exchange rate between the
relevant currency unit and Dollars or such Foreign Currency calculated
by the method specified pursuant to Section 3.1 for the Securities of
the relevant series, (ii) for any conversion of Dollars into any
Foreign Currency, the noon buying rate for such Foreign Currency for
cable transfers quoted in New York City as certified for customs
purposes by the Federal Reserve Bank of New York and (iii) for any
conversion of one Foreign Currency into Dollars or another Foreign
Currency, the spot rate at noon local time in the relevant market at
which, in accordance with normal banking procedures, the Dollars or
Foreign Currency into which conversion is being made could be purchased
with the Foreign Currency from which conversion is being made from
major banks located in New York City, London or any other principal
market for Dollars or such purchased Foreign Currency, in each case
determined by the Exchange Rate Agent. Unless otherwise specified
with respect to any Securities pursuant to Section 3.1, in the event
of the unavailability of any of the exchange rates provided for in the
foregoing clauses (i), (ii) and (iii), the Exchange Rate Agent shall
use, in its sole discretion and without liability on its part, such
quotation of the Federal Reserve Bank of New York as of the most
recent available date, or quotations from one or more major banks in
New York City, London or other principal market for such currency or
currency unit in question (which may include any such bank acting as
Trustee under this Indenture), or such other quotations as the
Exchange Rate Agent shall deem appropriate. Unless otherwise
specified by the Exchange Rate Agent, if there is more than one market
for dealing in any currency or currency unit by reason of foreign
exchange regulations or otherwise, the market to be used in respect of
such currency or currency unit shall be that upon which a nonresident
issuer of securities designated in such currency or currency unit
would purchase such currency or currency unit in order to make
payments in respect of such securities.
"Maturity", when used with respect to any Security means the
date on which the principal of such Security or an installment of
principal becomes due and payable as therein or herein provided,
whether at the stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"Officer" means the Chairman of the Board of Directors, the
President, any Executive Vice President, any Senior Vice President,
any Vice President or the Corporate Secretary of the Company.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President, any Executive Vice President or
any Senior Vice President of the Company, signing alone, or by any
Vice President signing together with the Corporate Secretary, any
Assistant Secretary, the Treasurer, or any Assistant Treasurer of the
Company.
"Opinion of Counsel" means a written opinion of legal
counsel, who may be (a) the senior attorney employed by the Company,
(b) any other Officer who is an attorney, (c) Mayer, Brown & Platt or
(d) other counsel designated by the Company and who shall be
acceptable to the Trustee.
"Original Issue Discount Security" means any Security which
provides for an amount less than the stated principal
amount thereof to be due and payable upon declaration of acceleration
of the Maturity thereof pursuant to Section 5.2.
"Outstanding", when used with respect to Securities, means,
as of the date of determination, all Securities theretofore
authenticated and delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for
the Holders of such Securities and any coupons appertaining
thereto provided that, if such Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provisions therefor satisfactory to the Trustee have
been made;
(iii) Securities, except to the extent provided in Sections
4.4 and 4.5, with respect to which the Company has effected
defeasance and/or covenant defeasance as provided in Article 4;
and
(iv) Securities which have been paid pursuant to
Section 3.6 or in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of which
there shall have been presented to the Trustee proof satisfactory
to it that such Securities are held by a bona fide purchaser in
whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given
any request, demand, authorization, direction, notice, consent or
waiver hereunder, or whether sufficient funds are available for
redemption or for any other purpose, and for the purpose of making the
calculations required by section 313 of the Trust Indenture Act, (w)
the principal amount of any Original Issue Discount Securities that
may be counted in making such determination or calculation and that
shall be deemed to be Outstanding for such purpose shall be equal to
the amount of principal thereof that would be (or shall have been
declared to be) due and payable, at the time of such determination,
upon a declaration of acceleration of the maturity thereof pursuant to
Section 5.2, (x) the principal amount of any Security denominated in a
Foreign Currency that may be counted in making such determination
or calculation and that shall be deemed Outstanding for such purpose
shall be equal to the Dollar equivalent, determined as of
the date such Security is originally issued by the Company as set
forth in an Exchange Rate Officer's Certificate delivered to the
Trustee, of the principal amount (or, in the case of an Original Issue
Discount Security, the Dollar equivalent as of such date of original
issuance of the amount determined as provided in clause (w) above) of
such Security, (y) the principal amount of any Indexed Security that
may be counted in making such determination or calculation and that
shall be deemed outstanding for such purpose shall be equal to the
principal face amount of such Indexed Security at original issuance,
unless otherwise provided with respect to such Security pursuant to
Section 3.1, and (z) Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such
other obligor shall be disregarded and deemed not to be outstanding,
except that, in determining whether the Trustee shall be protected in
making such calculation or in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities
which the Trustee knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction
of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other
obligor upon the Securities or any Affiliate of the Company or such
other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of, premium, if any, or interest, if any, on any
Securities on behalf of the Company.
"Periodic Offering" means an offering of Securities of a
series from time to time the specific terms of which Securities,
including, without limitation, the rate or rates of interest or
formula for determining the rate or rates of interest thereon, if any,
the Stated Maturity or Stated Maturities thereof, the original issue
date or dates thereof, the redemption provisions, if any, with
respect thereto, and any other terms specified as contemplated by
Section 3.1 with respect thereto, are to be determined by the Company
upon the issuance of such Securities.
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision
thereof.
"Place of Payment", when used with respect to the Securities
of or within any series, means the place or places where, subject to
the provisions of Section 9.2, the principal of, premium, if any, and
interest, if any, on such Securities are payable as specified as
contemplated by Section 3.1.
"Predecessor Security" of any particular Security means
every previous Security evidencing all or a portion of the same debt
as that evidenced by such particular Security; and, for the purposes
of this definition, any Security authenticated and delivered under
Section 3.6 in exchange for or in lieu of a mutilated, destroyed, lost
or stolen Security shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Security.
"Preferred Securities" means the preferred undivided
beneficial interests in the assets of the applicable UAL Corporation
Capital Trust.
"Redeemable Stock" means, with respect to any person, any
equity security of such person that by its terms or otherwise (i) is
required to be redeemed prior to the maturity of any of the
Securities, or is redeemable at the option of the holder thereof at
any time prior to the maturity of any of the Securities, and (ii)
creates a financial obligation on such person if any required or
optional redemption obligation is not timely satisfied.
"Redemption Date", when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or pursuant
to this Indenture.
"Redemption Price", when used with respect to any Security
to be redeemed, in whole or in part, means the price at which it is to
be redeemed pursuant to this Indenture.
"Registered Security" means any Security in the form (to the
extent applicable thereto) established pursuant to Section 2.1 which
is registered as to principal and interest in the Register.
"Regular Record Date" for the interest payable on any
Interest Payment Date on the Registered Securities of or within any
series means the date specified for that purpose as contemplated by
Section 3.1.
"Responsible Officer", when used with respect to the
Trustee, shall mean the chairman or any vice chairman of the board of
directors, the chairman or any vice chairman of the executive
committee of the board of directors, the chairman of the trust
committee, the president, any senior vice president, any vice
president, any assistant vice president, the secretary, the treasurer,
any assistant treasurer, the cashier, any assistant cashier, any
senior trust officer, any trust officer, the controller, any assistant
controller, or any other officer of the Trustee customarily performing
functions similar to those performed by the persons who at the time
shall be such officers, respectively, and also means, with respect to
a particular corporate trust matter, any other officer to whom such
corporate trust matter is referred because of his knowledge of and
familiarity with the particular subject.
"Security" or "Securities" has the meaning stated in the
first recital of this Indenture and more particularly means any
Security or Securities of the Company issued, authenticated and
delivered under this Indenture.
"Security Exchange," when used with respect to the
Securities of any series which are held as trust assets of a UAL
Corporation Capital Trust pursuant to the Declaration of Trust of such
UAL Corporation Capital Trust, shall mean the distribution of the
Securities of such series by such UAL Corporation Capital Trust in
exchange for the Preferred Securities and Common Securities of such
UAL Corporation Capital Trust in dissolution of such UAL Corporation
Capital Trust pursuant to the Declaration of Trust of such UAL
Corporation Capital Trust.
"Senior Indebtedness of the Company" means all Indebtedness
of the Company (other than the Securities), unless such Indebtedness,
by its terms or the terms of the instrument creating or evidencing it,
is subordinate in right of payment to or pari passu with the
Securities, and, in particular, the Securities shall rank pari passu
with all other debt securities and guarantees in respect of those debt
securities issued to any other UAL Corporation Capital Trust or any
indebtedness of the Company to a Subsidiary.
"Special Record Date" for the payment of any Defaulted
Interest on the Registered Securities of any issue means a date fixed
by the Trustee pursuant to Section 3.7.
"Stated Maturity", when used with respect to any Security or
any installment of principal thereof or interest, if any, thereon,
means the date specified in such Security or in a coupon representing
such installment of interest as the fixed date on which the principal
of such Security or such installment of principal or interest, if any,
is due and payable.
"Subsidiary" means any corporation of which the Company at
the time owns or controls, directly or indirectly, more than 50% of
the shares of outstanding stock having general voting power under
ordinary circumstances to elect a majority of the Board of Directors
of such corporation (irrespective of whether or not at the time stock
of any other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency).
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, as in effect on the date of this Indenture, except as
provided in Section 8.3.
"Trustee" means the party named as such in the first
paragraph of this Indenture until a successor Trustee replaces it
pursuant to the applicable provisions of this Indenture, and
thereafter means such successor Trustee and if, at any time, there is
more than one Trustee, "Trustee" as used with respect to the
Securities of any series shall mean the Trustee with respect to the
Securities of that series.
"UAL Corporation Capital Trust" shall mean any statutory
business trust created under the laws of the State of Delaware
specified in or pursuant to the applicable Board Resolution or
supplemental indenture establishing a particular series of Securities
pursuant to Section 3.1 hereof.
"United States" means, unless otherwise specified with
respect to the Securities of any series as contemplated by
Section 3.1, the United States of America (including the States and
the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.
"U.S. Person" means, unless otherwise specified with respect
to the Securities of any series as contemplated by Section 3.1, a
citizen, national or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws
of the United States or any political subdivision thereof, or an
estate or trust the income of which is subject to United States
federal income taxation regardless of its source.
"Yield to Maturity" means the yield to maturity, calculated
by the Company at the time of issuance of a series of Securities or,
if applicable, at the most recent determination of interest on such
series, in accordance with accepted financial practice.
(b) The following terms shall have the meanings specified
in the Sections referred to opposite such term below:
Term Section
"Act" 1.4(a)
"Bankruptcy Law" 5.1
"Component Currency" 3.11(d)
"Conversion Date" 3.11(d)
"Custodian" 5.1
"Defaulted Interest" 3.7(b)
"Election Date" 3.11(h)
"Event of Default" 5.1
"Register" 3.5
"Registrar" 3.5
"Valuation Date" 3.7(c)
Section 1.2. Compliance Certificates and Opinions. Upon
any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in
the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this
Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture (other than
pursuant to Sections 2.3, 3.3 and 9.7) shall include:
(1) a statement that each individual signing such
certificate or opinion has read such condition or covenant and
the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such
individual, he or she has made such examination or investigation
as is necessary to enable him to express an informed opinion as
to whether or not such condition or covenant has been complied
with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3. Form of Documents Delivered to Trustee. In
any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary
that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only
one document, but one such Person may certify or give an opinion with
respect to some matters and one or more other such Persons as to other
matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an Officer of the Company may
be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such Officer
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters
upon which his or her certificate or opinion is based are erroneous.
Any such certificate or Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or
representations by, an Officer or Officers of the Company stating that
the information with respect to such factual matters is in the
possession of the Company unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or
opinion or representations as to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but need
not, be consolidated and form one instrument.
Section 1.4. Acts of Holders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by agent duly
appointed in writing. Except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose
of this Indenture and conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness
of such execution or by a certificate of a notary public or other
officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to
him or her the execution thereof. Where such execution is by a signer
acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument
or writing, or the authority of the Person executing the same, may also be
proved in any other reasonable manner which the Trustee deems
sufficient.
(c) The ownership of Bearer Securities may be proved by the
production of such Bearer Securities or by a certificate executed by
any trust company, bank, broker or other depositary, wherever
situated, if such certificate shall be deemed by the Trustee to be
satisfactory, showing that at the date therein mentioned such Person
had on deposit with such depositary, or exhibited to it, the Bearer
Securities therein described; or such facts may be proved by the
certificate or affidavit of the Person holding such Bearer Securities,
if such certificate or affidavit is deemed by the Trustee to be
satisfactory. The Trustee and the Company may assume that such
ownership of any Bearer Security continues until (i) another such
certificate or affidavit bearing a later date issued in respect of the
same Bearer Security is produced, (ii) such Bearer Security is
produced to the Trustee by some other Person, (iii) such Bearer
Security is surrendered in exchange for a Registered Security or (iv)
such Bearer Security is no longer outstanding. The ownership of
Bearer Securities may also be proved in any other reasonable manner
which the Trustee deems sufficient.
(d) The ownership of Registered Securities shall be proved
by the Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind
every future Holder of the same Security and the holder of every
Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon
such Security.
(f) If the Company shall solicit from the Holders any
request, demand, authorization, direction, notice, consent, waiver or
other Act, the Company may, at its option, by or pursuant to an
Officers' Certificate delivered to the Trustee, fix in advance a
record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or
other Act, but the Company shall have no obligation to do so. If such
a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or
after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or
other Act, and for that purpose the Outstanding Securities shall be
computed as of such record date; provided that no such authorization,
agreement or consent by the Holders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions
of clause (a) of this Section 1.4 not later than six months after the
record date.
Section 1.5. Notices, etc., to Trustee and Company. Any
request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished
or filed in writing to or with the Trustee at its Corporate Trust
Office, Attention: Corporate Trust Trustee Administration, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at UAL Corporation, P.O.
Box 66100, Chicago, Illinois 60666, Attention: Treasurer or at
any other address previously furnished in writing to the Trustee
by the Company.
Section 1.6. Notice to Holders; Waiver. Where this
Indenture provides for notice to Holders of any event, (i) if any of
the Securities affected by such event are Registered Securities, such
notice to the Holders thereof shall be sufficiently given (unless
otherwise herein expressly provided or otherwise agreed to by a
Holder) if in writing and mailed, first-class postage prepaid, to each
such Holder affected by such event, at his address as it appears in
the Register, within the time prescribed for the giving of such notice
and (ii) if any of the Securities affected by such event are Bearer
Securities, notice to the Holders thereof shall be sufficiently given
(unless otherwise herein or in the terms of such Bearer Securities
expressly provided) if published once in an Authorized Newspaper in
New York, New York, and in such other city or cities, if any, as may
be specified as contemplated by Section 3.1(5).
In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder shall affect the sufficiency of
such notice with respect to other Holders of Registered Securities or
the sufficiency of any notice to Holders of Bearer Securities given as
provided herein. In any case where notice is given to Holders by
publication, neither the failure to publish such notice, nor any
defect in any notice so published, shall affect the sufficiency of
such notice with respect to other Holders of Bearer Securities or the
sufficiency of any notice to Holders of Registered Securities given
as provided herein. Any notice mailed to a Holder in the manner herein
prescribed shall be conclusively deemed to have been received by such
Holder, whether or not such Holder actually receives such notice.
If by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such
notice as provided above, then such notification as shall be made with
the approval of the Trustee shall constitute a sufficient notification
for every purpose hereunder. If it is impossible or, in the opinion
of the Trustee, impracticable to give any notice by publication in the
manner herein required, then such publication in lieu thereof as shall
be made with the approval of the Trustee shall constitute a sufficient
publication of such notice.
Any request, demand, authorization, direction, notice,
consent or waiver required or permitted under this Indenture shall be
in the English language, except that any published notice may be in an
official language of the country of publication.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be
equivalent of such notice. Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent
to the validity of any action taken in reliance upon such waiver.
Section 1.7. Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 1.8. Successors and Assigns. All covenants and
agreements in this Indenture by the Company shall bind its successors
and assigns, whether so expressed or not.
Any act or proceeding that is required or permitted by any
provision of this Indenture and that is authorized or required to be
done or performed by any board, committee or officer of the Company
shall and may be done and performed with like force and effect by the
like board, committee or officer of any corporation that shall at the
time be the successor or assign of the Company.
Section 1.9. Separability. In case any provision of this
Indenture or the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby.
Section 1.10. Benefits of Indenture. Nothing in this
Indenture or in the Securities, expressed or implied, shall give to
any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Indebtedness of the Company, and the
Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
Section 1.11. Governing Law. THIS INDENTURE, THE
SECURITIES AND ANY COUPONS APPERTAINING THERETO SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. This Indenture is
subject to the Trust Indenture Act and if any provision hereof limits,
qualifies or conflicts with the Trust Indenture Act, the Trust
Indenture Act shall control.
Section 1.12. Legal Holidays. In any case where any
Interest Payment Date, Redemption Date, sinking fund payment date,
Stated Maturity or Maturity of any Security shall not be a Business
Day at any Place of Payment, then (notwithstanding any other provision
of this Indenture or any Security or coupon other than a provision in
the Securities of any series which specifically states that such
provision shall apply in lieu of this Section) payment of principal,
premium, if any, or interest, if any, need not be made at such Place
of Payment on such date, but may be made on the next succeeding
Business Day at such Place of Payment with the same force and effect
as if made on such date; provided that no interest shall accrue on the
amount so payable for the period from and after such Interest Payment
Date, Redemption Date, sinking fund payment date, Stated Maturity or
Maturity, as the case may be.
Section 1.13. Trustee to Establish Record Dates. The
Trustee shall fix a record date for the purpose of determining the
Holders entitled to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action
provided in this Indenture to be made, given or taken by Holders. If
such a record date is fixed, the Holders on such record date, and only
such Holders, shall be entitled to make, give or take such request,
demand, authorization, direction, notice, consent, waiver or other
action, whether or not such Holders remain Holders after such record
date. No such request, demand, authorization, direction, notice,
consent, waiver or other action shall be valid or effective if made,
given or taken more than 90 days after such record date.
Section 1.14. No Recourse Against Others. No recourse for
the payment of the principal of, premium, if any, or interest, if any,
on the Securities, or for any claim based on the Securities or this
Indenture, and no recourse under or upon any obligation, covenant or
agreement of the Company in this Indenture or any indenture supplemental
thereto or in any Security or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder,
officer or director, as such, past, present or future, of the Company or
of any successor corporation, either directly or through the Company or
any successor corporation, whether by virtue of any constitution, statute
or rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance of a Security
by each Holder and as part of the consideration for the issue of such
Security, expressly waived and released.
ARTICLE 2
Security Forms
--------------
Section 2.1. Forms Generally. The Securities of each
series and the coupons, if any, to be attached thereto shall be in
substantially such form (including global form) as shall be
established by delivery to the Trustee of an Officers' Certificate or
in one or more indentures supplemental hereto, in each case with such
appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the
rules of any securities exchange or as may, consistent herewith, be
determined by the Officers executing such Securities and coupons, if
any, as evidenced by their execution of the Securities and coupons, if
any. If temporary Securities of any series are issued as permitted by
Section 3.4, the form thereof also shall be established as provided in
the preceding sentence. If the forms of Securities and coupons, if
any, of any series are established by an Officers' Certificate, such
Officers' Certificate shall be delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 3.3 for the
authentication and delivery of such Securities.
Unless otherwise specified as contemplated by Section 3.1,
Bearer Securities shall have interest coupons attached.
The permanent Securities and coupons, if any, shall be
printed, lithographed or engraved or produced by any combination of
these methods or may be produced in any other manner, all as
determined by the officers executing such Securities and coupons, if
any, as evidenced by their execution of such Securities and coupons,
if any.
Section 2.2. Form of Trustee's Certificate of
Authentication. The Trustee's certificate of authentication shall be
in substantially the following form:
This is one of the Securities of a series issued under the
within-mentioned Indenture.
Dated: The First National Bank of Chicago,
as Trustee
By: ________________________
Authorized Signatory
Section 2.3. Securities in Global Form. If securities of
or within a series are issuable in whole or in part in temporary or
permanent global form, as specified as contemplated by Section 3.1,
then, notwithstanding clause (8) of Section 3.1(b) and the provisions
of Section 3.2, any such Security shall represent such of the
outstanding securities of such series as shall be specified therein
and may provide that it shall represent the aggregate amount of
Outstanding Securities from time to time endorsed thereon and that the
aggregate amount of Outstanding Securities represented thereby may
from time to time be reduced to reflect exchanges. Any endorsement of
a Security in global form to reflect the amount, or any increase or
decrease in the amount, or changes in the rights of Holders, of
Outstanding Securities represented thereby, shall be made by the
Trustee in such manner and upon instructions given by such Person or
Persons as shall be specified therein or in the Company Order to be
delivered to the Trustee pursuant to Section 3.3 or 3.4. Subject to
the provisions of Section 3.3 and, if applicable, Section 3.4, the
Trustee shall deliver and redeliver any Security in global form in the
manner and upon instructions given by the Person or Persons specified
therein or in the applicable Company Order. Any instructions by the
Company with respect to endorsement or delivery or redelivery of a
Security in global form shall be in writing but need not comply with
Section 1.2 hereof and need not be accompanied by an Opinion of
Counsel.
The provisions of the last paragraph of Section 3.3 shall
apply to any Security in global form if such Security was never issued
and sold by the Company and the Company delivers to the Trustee the
Security in global form together with written instructions (which need
not comply with Section 1.2 and need not be accompanied by an Opinion
of Counsel) with regard to the reduction in the principal amount of
Securities represented thereby, together with the written statement
contemplated by the last paragraph of Section 3.3.
Notwithstanding the provisions of Sections 2.1 and 3.7,
unless otherwise specified as contemplated by Section 3.1, payment of
principal of, premium, if any, and interest, if any, on any Security
in permanent global form shall be made to the Person or Persons
specified therein.
Section 2.4. Form of Legend for Securities in Global Form.
Any Security in global form authenticated and delivered hereunder
shall bear a legend in substantially the following form, or such other
form as deemed necessary or desirable by the Company and specified in
a Company Order delivered to the Trustee:
This Security is in global form within the meaning of the
Indenture hereinafter referred to and is registered in the name
of a Depositary or a nominee of a Depositary. Unless and until
it is exchanged in whole or in part for Securities in
certificated form, this Security may not be transferred except as
a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of
the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
ARTICLE 3
The Securities
--------------
Section 3.1. Amount Unlimited; Issuable in Series. (a)
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited. The
Securities may be issued from time to time in one or more series.
(b) The following matters shall be established and (subject
to Section 3.3) set forth, or determined in the manner provided, in an
Officers' Certificate and a Board Resolution of the Company, or one or
more indentures supplemental hereto:
(1) the title of the Securities of the series (which title
shall distinguish the Securities of the series from all other
Securities);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered
under this Indenture (which limit shall not pertain to (i)
Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 3.4, 3.5, 3.6, 8.6, or 10.7 and (ii)
any Securities which, pursuant to the last paragraph of Section
3.3, are deemed never to have been authenticated and delivered
hereunder);
(3) the date or dates on which the principal of the
Securities of the series is payable or the method of
determination thereof;
(4) the rate or rates at which the Securities of the series
shall bear interest, if any, or the method of calculating such
rate or rates of interest, the date or dates from which such
interest shall accrue or the method by which such date or dates
shall be determined, the Interest Payment Dates on which any such
interest shall be payable and any provision for the extension or
deferral thereof and, with respect to Registered Securities, the
Regular Record Date, if any, for the interest payable on any
Registered Security on any Interest Payment Date;
(5) the place or places where, subject to the provisions of
Section 9.2, the principal of, premium, if any, and interest, if
any, on Securities of the series shall be payable;
(6) the period or periods within which, the price or prices
at which, the currency or currencies (including currency units)
in which, and the other terms and conditions upon which,
Securities of the series may be redeemed, in whole or in part, at
the option of the Company and, if other than as provided in
Section 10.3, the manner in which the particular Securities of
such series (if less than all Securities of such series are to be
redeemed) are to be selected for redemption;
(7) the obligation, if any, of the Company to redeem or
purchase Securities of the series pursuant to any sinking fund or
analogous provisions or upon the happening of a specified event
or at the option of a Holder thereof and the period or periods
within which, the price or prices at which, and the other terms
and conditions upon which, Securities of the series shall be
redeemed or purchased, in whole or in part, pursuant to such
obligation;
(8) if other than denominations of $1,000 and any integral
multiple thereof, if Registered Securities, and if other than
denominations of $5,000 and $100,000, if Bearer Securities, the
denominations in which Securities of the series shall be
issuable;
(9) if other than Dollars, the currency or currencies
(including currency units) in which the principal of, premium, if
any, and interest, if any, on the Securities of the series shall
be payable, or in which the Securities of the series shall be
denominated, the particular provisions applicable thereto in
accordance with, in addition to, or in lieu of the provisions of
Section 3.11, and whether the Securities of the series may be
satisfied and discharged other than as provided in Article 4;
(10) if the payments of principal of, premium, if any, or
interest, if any, on the Securities of the series are to be made,
at the election of the Company or a Holder, in a currency or
currencies (including currency units) other than that in which
such Securities are denominated or designated to be payable, the
currency or currencies (including currency units) in which such
payments are to be made, the terms and conditions of such
payments and the manner in which the exchange rate with respect
to such payments shall be determined, the particular provisions
applicable thereto in accordance with, in addition to, or in lieu
of the provisions of Section 3.11, and whether the Securities of
the series may be satisfied and discharged other than as provided
in Article 4;
(11) if the amount of payments of principal of, premium, if
any, and interest, if any, on the Securities of the series shall
be determined with reference to an index, formula or other method
(which index, formula or method may be based, without limitation,
on a currency or currencies (including currency units) other than
that in which the Securities of the series are denominated or
designated to be payable), the index, formula or other method by
which such amounts shall be determined;
(12) if other than the principal amount thereof, the portion
of the principal amount of such Securities of the series which
shall be payable upon declaration of acceleration thereof
pursuant to Section 5.2 or the method by which such portion shall
be determined;
(13) if other than as provided in Section 3.7, the Person to
whom any interest on any Registered Security of the series shall
be payable, the manner in which, or the Person to whom, any
interest on any Bearer Securities of the series shall be payable,
and the extent to which, or the manner in which (including any
certification requirement and other terms and conditions under
which), any interest payable on a temporary or permanent global
Security on an Interest Payment Date will be paid if other than
in the manner provided in Section 2.3 and Section 3.4, as
applicable;
(14) provisions, if any, granting special rights to the
Holders of Securities of the series upon the occurrence of such
events as may be specified;
(15) any deletions from, modifications of or additions to
the Events of Default set forth in Section 5.1 or covenants of
the Company set forth in Article 9 pertaining to the Securities
of the series;
(16) under what circumstances, if any, the Company will pay
additional amounts on the Securities of that series held by a
Person who is not a U.S. Person in respect of taxes or similar
charges withheld or deducted and, if so, whether the Company will
have the option to redeem such Securities rather than pay such
additional amounts (and the terms of any such option);
(17) whether Securities of the series shall be issuable as
Registered Securities or Bearer Securities (with or without
interest coupons), or both, and any restrictions applicable to
the offering, sale or delivery of Bearer Securities and, if other
than as provided in Section 3.5, the terms upon which Bearer
Securities of a series may be exchanged for Registered Securities
of the same series and vice versa;
(18) the date as of which any Bearer Securities of the
series and any temporary global Security representing outstanding
Securities of the series shall be dated if other than the date of
original issuance of the first Security of the series to be
issued;
(19) the applicability, if any, to the Securities of or
within the series of Sections 4.4 and 4.5, or such other means of
defeasance or covenant defeasance as may be specified for the
Securities and coupons, if any, of such series, and whether, for
the purpose of such defeasance or covenant defeasance, the term
"Government Obligations" shall include obligations referred to in
the definition of such term which are not obligations of the
United States or an agency or instrumentality of the United
States;
(20) if other than the Trustee, the identity of the
Registrar and any Paying Agent;
(21) any terms which may be related to warrants issued by
the Company in connection with, or for the purchase of,
Securities of such series, including whether and under what
circumstances the Securities of any series may be used
toward the exercise price of any such warrants;
(22) the designation of the initial Exchange Rate Agent, if
any;
(23) whether Securities of the series shall be issued in
whole or in part in temporary or permanent global form and, if
so, (i) the initial Depositary for such global Securities and
(ii) if other than as provided in Section 3.4 or 3.5, as
applicable, whether and the circumstance under which beneficial
owners of interests in any Securities of the series in temporary
or permanent global form may exchange such interests for
Securities of such series and of like tenor of any authorized
form and denomination;
(24) whether Securities of the Series shall be convertible
into shares of common stock of the Company and the terms and
conditions upon which the Securities will be convertible,
including the conversion price, the conversion period and other
conversion provisions;
(25) if other than as provided in Article 12, the terms and
conditions under which the Securities will be subordinated to the
Senior Indebtedness of the Company; and
(26) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture), including
any terms which may be required by or advisable under United
States laws or regulations or advisable in connection with the
marketing of Securities of the series.
(c) All Securities of any one series and coupons, if any,
appertaining to any Bearer Securities of such series shall be
substantially identical except as to denomination and the rate or
rates of interest, if any, and Stated Maturity, and the date from
which interest, if any, shall accrue and except as may otherwise be
provided in or pursuant to an Officers' Certificate pursuant to this
Section 3.1 or in an indenture supplemental hereto. All Securities of
any one series need not be issued at the same time and, unless
otherwise provided, a series may be reopened, without the consent of
the Holders, for issuances of additional Securities of such series or
for the establishment of additional terms with respect to the
Securities of such series.
(d) If any of the terms of the Securities of any series are
established by action taken pursuant to a Board Resolution, a copy of
such Board Resolution shall be certified by the Corporate Secretary or
an Assistant Secretary of the Company and delivered to the Trustee at
or prior to the delivery of the Officers' Certificate of the Company,
setting forth, or providing the manner for determining, the terms of
the Securities of such series, and an appropriate record of any action
taken pursuant thereto in connection with the issuance of any Securities
of such series shall be delivered to the Trustee prior to the
authentication and delivery thereof. With respect to Securities of a
series subject to a Periodic Offering, such Board Resolutions or Officers'
Certificates may provide general terms for Securities of such series
and provide either that the specific terms of particular Securities of
such series shall be specified in a Company Order, or that such terms
shall be determined by the Company, or one or more of its agents
designated in the Officers' Certificate, in accordance with the
Company Order, as contemplated by the first proviso of the third
paragraph of Section 3.3.
(e) Each Security issued hereunder shall provide that the
Company and, by its acceptance of a Security or a beneficial interest
therein, the Holder of, and any Person that acquires a beneficial
interest in, such Security agree that for United States federal, state
and local tax purposes it is intended that such Security constitute
indebtedness.
Section 3.2. Denominations. Unless otherwise provided as
contemplated by Section 3.1, any Registered Securities of a series
shall be issuable in denominations of $1,000 and any integral multiple
thereof and any Bearer Securities of a series shall be issuable in
denominations of $5,000 and $100,000.
Section 3.3. Execution, Authentication, Delivery and
Dating. Securities shall be executed on behalf of the Company by its
Chairman or President and Chief Executive Officer and attested to by
the Secretary of the Company. The Company's seal shall be affixed to
the Securities or a facsimile of such seal shall be engraved, printed,
or otherwise reproduced on the Securities. The signatures of such
officers on the Securities may be manual or facsimile. The coupons,
if any, of Bearer Securities shall bear the facsimile signature of the
Chairman or President and Chief Executive Officer and shall be
attested by the Secretary of the Company.
Securities and coupons bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of
the Company shall bind the Company notwithstanding that such
individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Securities or did not hold
such offices at the date of such Securities.
At any time and from time to time, the Company may deliver
Securities and any coupons appertaining thereto of any series executed
by the Company to the Trustee for authentication,
together with a Company Order for the authentication and make
available for delivery such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities;
provided, however, that in the case of Securities offered in a
Periodic Offering, the Trustee shall authenticate and deliver such
Securities from time to time in accordance with such other procedures
(including, without limitation, the receipt by the Trustee of oral or
electronic instructions from the Company or its duly authorized
agents, promptly confirmed in writing) acceptable to the Trustee as
may be specified by or pursuant to a Company Order delivered to the
Trustee prior to the time of the first authentication of Securities of
such series, as such form of Company Order may be revised from time to
time.
If the form or terms of the Securities of a series have been
established by or pursuant to one or more Officers' Certificates as
permitted by Sections 2.1 and 3.1, in authenticating such Securities
and accepting the additional responsibilities under this Indenture in
relation to such Securities, the Trustee shall be entitled to receive,
and (subject to section 315(a) through (d) of the Trust Indenture Act)
shall be fully protected in relying upon, an Opinion of Counsel
stating,
(1) that the forms and terms of such Securities and any
coupons have been established in conformity with the provisions
of this Indenture; and
(2) that such Securities together with any coupons
appertaining thereto, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to
any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to customary
exceptions;
provided, however, that, with respect to Securities of a series
subject to a Periodic Offering, the Trustee shall be entitled to
receive such Opinion of Counsel only once at or prior to the time
of the first authentication of Securities of such series and that
the Opinion of Counsel above may state:
(x) that the forms of such Securities have been,
and the terms of such Securities (when established in
accordance with such procedures as may be specified from
time to time in a Company Order, all as contemplated by and
in accordance with a Board Resolution or an Officers'
Certificate pursuant to Section 3.1, as the case may be)
will have been, established in conformity with the provisions
of this Indenture; and
(y) that such Securities together with the
coupons, if any, appertaining thereto, when (1) executed by
the Company, (2) completed, authenticated and delivered by
the Trustee in accordance with this Indenture, and (3)
issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject
to customary exceptions.
With respect to Securities of a series subject to a Periodic
Offering, the Trustee may conclusively rely, as to the
authorization by the Company of any of such Securities, the form
and terms thereof and the legality, validity, binding effect and
enforceability thereof, upon the Opinion of Counsel and other
documents delivered pursuant to Sections 2.1 and 3.1 of this
Section, as applicable, at or prior to the time of the first
authentication of Securities of such series unless and until it
has received written notification that such opinion or other
documents have been superseded or revoked. In connection with
the authentication and delivery of Securities of a series subject
to a Periodic Offering, the Trustee shall be entitled to assume
that the Company's instructions to authenticate and deliver such
Securities do not violate any rules, regulations or orders of any
governmental agency or commission having jurisdiction over the
Company.
If the form or terms of the Securities of a series have been
established by or pursuant to one or more Officers' Certificates as
permitted by Sections 2.1 and 3.1, the Trustee shall have the right to
decline to authenticate such Securities if the issue of such
Securities pursuant to this Indenture will adversely affect the
Trustee's own rights, duties or immunities under this Indenture or
otherwise in a manner which is not reasonably acceptable to the
Trustee. Notwithstanding the generality of the foregoing, the Trustee
will not be required to authenticate Securities denominated in a
Foreign Currency if the Trustee reasonably believes that it would be
unable to perform its duties with respect to such Securities.
Notwithstanding the provisions of Section 3.1 and of the two
preceding paragraphs, if all of the Securities of any series are not
to be issued at one time, it shall not be necessary to deliver the
Officers' Certificate otherwise required pursuant to Section 3.1 at or
prior to the time of the authentication of each Security of such
series if such Officers' Certificate is delivered at or prior to the
authentication upon original issuance of the first Security of such
series to be issued.
If the Company shall establish pursuant to Section 3.1 that
the Securities of a series are to be issued in whole or in part in
global form, then the Company shall execute and the Trustee shall, in
accordance with this Section and the Company Order with respect to
such series, authenticate and deliver one or more Securities in global
form that (i) shall represent and shall be denominated in an amount
equal to the aggregate principal amount of the Outstanding Securities
of such series to be represented by such Security or Securities in
global form, (ii) shall be registered, if a Registered Security, in
the name of the Depositary for such Security or Securities in global
form or the nominee of such Depositary and (iii) shall be delivered by
the Trustee to such Depositary or pursuant to such Depositary's
instruction.
Each Depositary designated pursuant to Section 3.1 for a
Registered Security in global form must, at the time of its
designation and at all times while it serves as Depositary, be a
clearing agency registered under the Securities Exchange Act of 1934
and any other applicable statute or regulation. The Trustee shall
have no responsibility to determine if the Depositary is so
registered. Each Depositary shall enter into an agreement with the
Trustee governing the respective duties and rights of such Depositary
and the Trustee with regard to Securities issued in global form.
Each Registered Security shall be dated the date of its
authentication and each Bearer Security (including a Bearer Security
represented by a temporary global Security) shall be dated as of the
date specified as contemplated by Section 3.1.
No Security or coupon appertaining thereto shall be entitled
to any benefits under this Indenture or be valid or obligatory for any
purpose until such Security is authenticated by the manual signature
of one of the authorized signatories of the Trustee or an
Authenticating Agent. Such signature upon any Security shall be
conclusive evidence, and the only evidence, that such Security has
been duly authenticated and delivered under this Indenture and is
entitled to the benefits of this Indenture. Except as permitted by
Section 3.6 or 3.7, the Trustee shall not authenticate and deliver any
Bearer Security unless all appurtenant coupons for interest then
matured have been detached and canceled.
Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold
by the Company, and the Company shall deliver such
Security to the Trustee for cancellation as provided in Section 3.9
together with a written statement (which need not comply with
Section 1.2 and need not be accompanied by an Opinion of Counsel)
stating that such Security has never been issued and sold by the
Company, for all purposes of this Indenture such Security shall be
deemed never to have been authenticated and delivered hereunder and
shall not be entitled to the benefits of this Indenture.
Section 3.4. Temporary Securities. Pending the
preparation of definitive Securities of any series, the Company may
execute and, upon Company Order, the Trustee shall authenticate and
deliver temporary Securities of such series which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor and form, with or
without coupons, of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such
Securities may determine, as conclusively evidenced by their execution
of such Securities and coupons, if any. In the case of Securities of
any series, such temporary Securities may be in global form.
Except in the case of temporary Securities in global form,
each of which shall be exchanged in accordance with the provisions
thereof, if temporary Securities of any series are issued, the Company
will cause permanent Securities of such series to be prepared without
unreasonable delay. After preparation of such permanent Securities,
the temporary Securities shall be exchangeable for such permanent
Securities of like tenor upon surrender of the temporary Securities of
such series at the office or agency of the Company pursuant to
Section 9.2 in a Place of Payment for such series, without charge to
the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series (accompanied by any unmatured
coupons appertaining thereto), the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like
principal amount of permanent Securities of the same series of
authorized denominations and of like tenor; provided, however, that no
permanent Bearer Security shall be delivered in exchange for a
temporary Registered Security; and provided further that no permanent
Bearer Security shall be delivered in exchange for a temporary Bearer
Security unless the Trustee shall have received from the person
entitled to receive the definitive Bearer Security a certificate
substantially in the form approved in the Officers' Certificate
relating thereto and such delivery shall occur only outside the United
States. Until so exchanged, the temporary Securities of any series
shall in all respects be entitled to the same benefits under this
Indenture as permanent Securities of such series except as otherwise
specified as contemplated by Section 3.1.
Section 3.5. Registration, Registration of Transfer and
Exchange. The Company shall cause to be kept at the Corporate Trust
Office of the Trustee or in any office or agency to be maintained by
the Company in accordance with Section 9.2 in a Place of Payment a
register (the "Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the
registration of Registered Securities and the registration of
transfers of Registered Securities. The Register shall be in written
form or any other form capable of being converted into written form
within a reasonable time. The Trustee is hereby appointed "Registrar"
for the purpose of registering Registered Securities and transfers of
Registered Securities as herein provided.
Upon surrender for registration of transfer of any
Registered Security of any series at the office or agency maintained
pursuant to Section 9.2 in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more
new Registered Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor.
Bearer Securities or any coupons appertaining thereto shall
be transferable by delivery.
At the option of the Holder, Registered Securities of any
series (except a Registered Security in global form) may be exchanged
for other Registered Securities of the same series, of any authorized
denominations and of a like aggregate principal amount containing
identical terms and provisions, upon surrender of the Registered
Securities to be exchanged at such office or agency. Whenever any
Registered Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the
Registered Securities which the Holder making the exchange is entitled
to receive. Unless otherwise specified as contemplated by
Section 3.1, Bearer Securities may not be issued in exchange for
Registered Securities.
Unless otherwise specified as contemplated by Section 3.1,
at the option of the Holder, Bearer Securities of such series may be
exchanged for Registered Securities (if the Securities of such series
are issuable in registered form) or Bearer Securities (if Bearer
Securities of such series are issuable in more than one denomination
and such exchanges are permitted by such series) of the same series,
of any authorized denominations and of like tenor and aggregate
principal amount, upon surrender of the Bearer Securities to be
exchanged at any such office or agency, with all unmatured coupons and
all matured coupons in default thereto appertaining. If the Holder of a
Bearer Security is unable to produce any such unmatured coupon or
coupons or matured coupon or coupons in default, such exchange may be
effected if the Bearer Securities are accompanied by payment in funds
acceptable to the Company and the Trustee in an amount equal to the
face amount of such missing coupon or coupons, or the surrender of
such missing coupon or coupons may be waived by the Company and the
Trustee if there be furnished to them such security or indemnity as
they may require to save each of them and any Paying Agent harmless.
If thereafter the Holder of such Security shall surrender to any
Paying Agent any such missing coupon in respect of which such a
payment shall have been made, such Holder shall be entitled to receive
the amount of such payment; provided, however, that, except as
otherwise provided in Section 9.2, interest represented by coupons
shall be payable only upon presentation and surrender of those coupons
at an office or agency located outside the United States.
Notwithstanding the foregoing, in case any Bearer Security of any
series is surrendered at any such office or agency in exchange for a
Registered Security of the same series after the close of business at
such office or agency on (i) any Regular Record Date and before the
opening of business at such office or agency on the relevant Interest
Payment Date, or (ii) any Special Record Date and before the opening
of business at such office or agency on the related date for payment
of Defaulted Interest, such Bearer Security shall be surrendered
without the coupon relating to such Interest Payment Date or proposed
date of payment, as the case may be (or, if such coupon is so
surrendered with such Bearer Security, such coupon shall be returned
to the person so surrendering the Bearer Security), and interest or
Defaulted Interest, as the case may be, will not be payable on such
Interest Payment Date or proposed date for payment, as the case may
be, in respect of the Registered Security issued in exchange for such
Bearer Security, but will be payable only to the Holder of such
coupon, when due in accordance with the provisions of this Indenture.
Notwithstanding any other provision (other than the
provisions set forth in the seventh and eighth paragraphs of this
Section) of this Section, unless and until it is exchanged in whole or
in part for Securities in certificated form, a Security in global form
representing all or a portion of the Securities of a series may not be
transferred except as a whole by the Depositary for such series to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary
or any such nominee to a successor Depositary for such series or a
nominee of such successor Depositary.
If at any time the Depositary for the Securities of a series
notifies the Company that it is unwilling or unable to continue as
Depositary for the Securities of such series or if at
any time the Depositary for the Securities of such series shall no
longer be eligible under Section 3.3, the Company shall appoint a
successor Depositary with respect to the Securities of such series.
If a successor Depositary for the Securities of such series is not
appointed by the Company within 90 days after the issuer receives such
notice or becomes aware of such ineligibility, the Company's election
pursuant to Section 3.1 shall no longer be effective with respect to
the Securities of such series and the Company shall execute, and the
Trustee, upon receipt of a Company Order for the authentication and
delivery of certificated Securities of such series of like tenor,
shall authenticate and deliver Securities of such series of like tenor
in certificated form, in authorized denominations and in an aggregate
principal amount equal to the principal amount of the Security or
Securities of such series of like tenor in global form in exchange for
such Security or Securities in global form.
The Company may at any time in its sole discretion determine
that Securities of a series issued in global form shall no longer be
represented by such a Security or Securities in global form. In such
event the Company shall execute, and the Trustee, upon receipt of a
Company Order for the authentication and delivery of certificated
Securities of such series of like tenor, shall authenticate and
deliver, Securities of such series of like tenor in certificated form,
in authorized denominations and in an aggregate principal amount equal
to the principal amount of the Security or Securities of such series
of like tenor in global form in exchange for such Security or
Securities in global form.
If specified by the Company pursuant to Section 3.1 with
respect to a series of Securities, the Depositary for such series may
surrender a Security in global form of such series in exchange in
whole or in part for Securities of such series in certificated form on
such terms as are acceptable to the Company and such Depositary.
Thereupon, the Company shall execute, and the Trustee shall
authenticate and deliver, without service charge,
(i) to each Person specified by such Depositary a new
certificated Security or Securities of the same series of like
tenor, of any authorized denomination as requested by such Person
in aggregate principal amount equal to and in exchange for such
Person's beneficial interest in the Security in global form; and
(ii) to such Depositary a new Security in global form of
like tenor in a denomination equal to the difference, if any,
between the principal amount of the surrendered Security in
global form and the aggregate principal amount of certificated
Securities delivered to Holders thereof.
Upon the exchange of a Security in global form for
Securities in certificated form, such Security in global form shall be
canceled by the Trustee. Unless expressly provided with respect to
the Securities of any series that such Security may be exchanged for
Bearer Securities, Securities in certificated form issued in exchange
for a Security in global form pursuant to this Section shall be
registered in such names and in such authorized denominations as the
Depositary for such Security in global form, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct
the Trustee. The Trustee shall deliver such Securities to the Persons
in whose names such Securities are so registered.
Whenever any Securities are surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver,
the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or
upon any exchange of Securities shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same benefits
under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.
Every Registered Security presented or surrendered for
registration of transfer or for exchange shall (if so required by the
Company, the Registrar or the Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory
to those of the Company, the Registrar and the Trustee requiring such
written instrument of transfer duly executed, by the Holder thereof or
his attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or for any exchange of Securities, but the Company may
require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
registration or transfer or exchange of Securities, other than
exchanges pursuant to Section 3.4 or 10.7 not involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of, or exchange any Securities for a period beginning at the
opening of business 15 days before any selection for redemption of
Securities of like tenor and of the series of which such Security is a
part and ending at the close of business on the earliest date on which
the relevant notice of redemption is deemed to have been given to all
Holders of Securities of like tenor and of such series to be redeemed;
(ii) to register the transfer of or exchange any Registered Security
so selected for redemption, in whole or in part, except the unredeemed
portion of any Security being redeemed in part; or (iii) to exchange any
Bearer Security so selected for redemption, except that such a Bearer
Security may be exchanged for a Registered Security of that series and
like tenor; provided that such Registered Security shall be
simultaneously surrendered for redemption.
Section 3.6. Replacement Securities. If a mutilated
Security or a Security with a mutilated coupon appertaining to it is
surrendered to the Trustee, together with, in proper cases, such
security or indemnity as may be required by the Company or the Trustee
to save each of them harmless, the Company shall execute and the
Trustee shall authenticate and deliver a replacement Registered
Security, if such surrendered Security was a Registered Security, or a
replacement Bearer Security with coupons corresponding to the coupons
appertaining to the surrendered Security, if such surrendered Security
was a Bearer Security, of the same series and date of maturity, if the
Trustee's requirements are met.
If there shall be delivered to the Company and the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft
of any Security or Security with a destroyed, lost or stolen coupon
and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security or
coupon has been acquired by a bona fide purchaser, the Company shall
execute and the Trustee shall authenticate and deliver in lieu of any
such destroyed, lost or stolen Security or in exchange for the
Security to which a destroyed, lost or stolen coupon appertains (with
all appurtenant coupons not destroyed, lost or stolen), a replacement
Registered Security, if such Holder's claim appertains to a Registered
Security, or a replacement Bearer Security with coupons corresponding
to the coupons appertaining to the destroyed, lost or stolen Bearer
Security or the Bearer Security to which such lost, destroyed or
stolen coupon appertains, if such Holder's claim appertains to a
Bearer Security, of the same series and principal amount, containing
identical terms and provisions and bearing a number not
contemporaneously outstanding with coupons corresponding to the
coupons, if any, appertaining to the destroyed, lost or stolen
Security.
In case any such mutilated, destroyed, lost or stolen
Security or coupon has become or is about to become due and payable,
the Company in its discretion may, instead of issuing a new Security
or coupon, pay such Security or coupon; provided, however, that
payment of principal of and any premium or interest on Bearer
Securities shall, except as otherwise provided in Section 9.2, be
payable only at an office or agency located outside the United States
and, unless otherwise specified as contemplated by Section 3.1, any
interest on Bearer Securities shall be payable only upon presentation
and surrender of the coupons appertaining thereto.
Upon the issuance of any new Security under this Section,
the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith.
Every new Security of any series with its coupons, if any,
issued pursuant to this Section in lieu of any destroyed, lost or
stolen Security, or in exchange for a Security to which a destroyed,
lost or stolen coupon appertains, shall constitute an original
additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security and its coupon, if any, or the
destroyed, lost or stolen coupon, shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Securities of that
series and their coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or
stolen Securities or coupons.
Section 3.7. Payment of Interest; Interest Rights
Preserved. (a) Unless otherwise provided as contemplated by
Section 3.1, interest, if any, on any Registered Security which is
payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest at the office or
agency maintained for such purpose pursuant to Section 9.2; provided,
however, that, at the option of the Company, interest on any series of
Registered Securities that bear interest may be paid (i) by check
mailed to the address of the Person entitled thereto as it shall
appear on the Register of Holders of Securities of such series or (ii)
to the extent specified as contemplated by Section 3.1, by wire
transfer to an account maintained by the Person entitled thereto as
specified in the Register of Holders of Securities of such series.
Unless otherwise provided as contemplated by Section 3.1,
(i) interest, if any, on Bearer Securities shall be paid only against
presentation and surrender of the coupons for such interest
installments as are evidenced thereby as they mature and (ii) original
issue discount, if any, on Bearer Securities shall be paid only
against presentation and surrender of such Securities; in either case
at the office of a Paying Agent located outside the United States,
unless the Company shall have otherwise instructed the Trustee in writing
provided that any such instruction for payment in the United States does
not cause any Bearer Security to be treated as a "registration-required
obligation" under the United States law and regulations. The interest,
if any, on any temporary Bearer Security shall be paid, as to any
installment of interest evidenced by a coupon attached thereto only upon
presentation and surrender of such coupon and, as to other installments of
interest, only upon presentation of such Security for notation thereon
of the payment of such interest. If at the time a payment of
principal of or interest, if any, on a Bearer Security or coupon shall
become due, the payment of the full amount so payable at the office or
offices of all the Paying Agents outside the United States is illegal
or effectively precluded because of the imposition of exchange
controls or other similar restrictions on the payment of such amount
in Dollars, then the Company may instruct the Trustee to make such
payments at a Paying Agent located in the United States, provided that
provision for such payment in the United States would not cause such
Bearer Security to be treated as a "registration-required obligation"
under the United States law and regulations.
(b) Unless otherwise provided as contemplated by
Section 3.1, any interest on any Registered Security of any series
which is payable, but is not punctually paid or duly provided for, on
any interest payment date (herein called "Defaulted Interest") shall
forthwith cease to be payable to the Holder on the relevant Regular
Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Registered Securities
of such series (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior
to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause (1) provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and
not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each
Holder of Registered Securities of such series at his address as
it appears in the Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having
been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be
payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest
to the Persons in whose names the Registered Securities of such
series (or their respective Predecessor Securities) are
registered at the close of business on a specified date in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which such Securities may be listed, and
upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed
payment pursuant to this clause (2), such manner of payment shall
be deemed practicable by the Trustee.
(c) Subject to the foregoing provisions of this Section and
Section 3.5, each Security delivered under this Indenture upon
registration of transfer of or in exchange for or in lieu of any other
Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
Section 3.8. Persons Deemed Owners. Prior to due
presentment of any Registered Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Registered Security is
registered as the owner of such Registered Security for the purpose of
receiving payment of principal of, premium, if any, and (subject to
Section 3.7) interest, if any, on such Registered Security and for all
other purposes whatsoever, whether or not such Registered Security be
overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the bearer of any Bearer Security and the bearer of
any coupon as the absolute owner of such Bearer Security or coupon for
the purpose of receiving payment thereof or on account thereof and for
all other purposes whatsoever, whether or not such Bearer Security or
coupon be overdue, and neither the Company, the Trustee nor any agent
of the Company or the Trustee shall be affected by notice to the contrary.
None of the Company, the Trustee or any agent of the Company
or the Trustee shall have any responsibility or liability for any
aspect of the records relating to or payments made on account of
beneficial ownership interests of a Security in global form, or for
maintaining, supervising or reviewing any records relating to such
beneficial ownership interests. Notwithstanding the foregoing, with
respect to any Security in global form, nothing herein shall prevent
the Company or the Trustee, or any agent of the Company or the
Trustee, from giving effect to any written certification, proxy or
other authorization furnished by any Depositary (or its nominee), as a
Holder, with respect to such Security in global form or impair, as
between such Depositary and owners of beneficial interests in such
Security in global form, the operation of customary practices
governing the exercise of the rights of such Depositary (or its
nominee) as Holder of such Security in global form.
Section 3.9. Cancellation. The Company at any time may
deliver Securities and coupons to the Trustee for cancellation. The
Registrar and any Paying Agent shall forward to the Trustee any
Securities and coupons surrendered to them for replacement, for
registration of transfer, or for exchange or payment. The Trustee
shall cancel all Securities and coupons surrendered for replacement,
for registration of transfer, or for exchange, payment, redemption or
cancellation and shall return all such canceled Securities to the
Company. The Company may not issue new Securities to replace
Securities that it has paid or delivered to the Trustee for
cancellation, except as expressly permitted in the terms of Securities
for any particular series or as permitted pursuant to the terms of
this Indenture.
Section 3.10. Computation of Interest. Except as otherwise
specified as contemplated by Section 3.1, (i) interest on any
Securities that bear interest at a fixed rate shall be computed on the
basis of a 360-day year of twelve 30-day months and, for any period
shorter than a full quarterly period for which interest is computed,
on the basis of the actual number of days elapsed in such period, and
(ii) interest on any Securities that bear interest at a variable rate
shall be computed on the basis of the actual number of days in an
interest period divided by 360.
Section 3.11. Currency and Manner of Payment in Respect of
Securities. (a) Unless otherwise specified with respect to any
Securities pursuant to Section 3.1, with respect to Registered
Securities of any series not permitting the election provided for in
paragraph (b) below or the Holders of which have not made the election
provided for in paragraph (b) below, and with respect to Bearer Securities
of any series, except as provided in paragraph (d) below, payment of
the principal of, premium, if any, and interest, if any, on any Registered
or Bearer Security of such series will be made in the currency or currencies
or currency unit or units in which such Registered Security or Bearer
Security, as the case may be, is payable. The provisions of this
Section 3.11 may be modified or superseded pursuant to Section 3.1 with
respect to any Securities. For all purposes of this Indenture, currency
units shall include any composite currency.
(b) It may be provided pursuant to Section 3.1, with
respect to Registered Securities of any series, that Holders shall
have the option, subject to paragraphs (d) and (e) below, to receive
payments of principal of, premium, if any, or interest, if any, on
such Registered Securities in any of the currencies or currency units
which may be designated for such election by delivering to the Trustee
(or the applicable Paying Agent) a written election with signature
guarantees and in the applicable form established pursuant to
Section 3.1, not later than the close of business on the Election Date
immediately preceding the applicable payment date. If a Holder so
elects to receive such payments in any such currency or currency unit,
such election will remain in effect for such Holder or any transferee
of such Holder until changed by such Holder or such transferee by
written notice to the Trustee (or any applicable Paying Agent) for
such series of Registered Securities (but any such change must be made
not later than the close of business on the Election Date immediately
preceding the next payment date to be effective for the payment to be
made on such payment date, and no such change of election may be made
with respect to payments to be made on any Registered Security of such
series with respect to which an Event of Default has occurred or with
respect to which the Company has deposited funds pursuant to Article 4
or with respect to which a notice of redemption has been given by the
Company). Any Holder of any such Registered Security who shall not
have delivered any such election to the Trustee (or any applicable
Paying Agent) not later than the close of business on the applicable
Election Date will be paid the amount due on the applicable payment
date in the relevant currency or currency unit as provided in
Section 3.11(a). The Trustee (or the applicable Paying Agent) shall
notify the Exchange Rate Agent as soon as practicable after the
Election Date of the aggregate principal amount of Registered
Securities for which Holders have made such written election.
(c) If the election referred to in paragraph (b) above has
been provided for with respect to any Registered Securities of a
series pursuant to Section 3.1, then, unless otherwise specified
pursuant to Section 3.1 with respect to any such Registered
Securities, not later than the fourth Business Day
after the Election Date for each payment date for such
Registered Securities, the Exchange Rate Agent will deliver to the
Company a written notice specifying, in the currency or currencies or
currency unit or units in which Registered Securities of such series
are payable, the respective aggregate amounts of principal of,
premium, if any, and interest, if any, on such Registered Securities
to be paid on such payment date, and specifying the amounts in such
currency or currencies or currency unit or units so payable in respect
of such Registered Securities as to which the Holders of Registered
Securities denominated in any currency or currencies or currency unit
or units shall have elected to be paid in another currency or currency
unit as provided in paragraph (b) above. If the election referred to
in paragraph (b) above has been provided for with respect to any
Registered Securities of a series pursuant to Section 3.1, and if at
least one Holder has made such election, then, unless otherwise
specified pursuant to Section 3.1, on the second Business Day
preceding such payment date the Company will deliver to the Trustee
(or the applicable Paying Agent) an Exchange Rate Officers'
Certificate in respect of the Dollar, Foreign Currency or Currencies,
ECU or other currency unit payments to be made on such payment date.
Unless otherwise specified pursuant to Section 3.1, the Dollar,
Foreign Currency or Currencies, ECU or other currency unit amount
receivable by Holders of Registered Securities who have elected
payment in a currency or currency unit as provided in paragraph (b)
above shall be determined by the Company on the basis of the
applicable Market Exchange Rate in effect on the second Business Day
(the "Valuation Date") immediately preceding each payment date, and
such determination shall be conclusive and binding for all purposes,
absent manifest error.
(d) If a Conversion Event occurs with respect to a Foreign
Currency, ECU or any other currency unit in which any of the
Securities are denominated or payable otherwise than pursuant to an
election provided for pursuant to paragraph (b) above, then, with
respect to each date for the payment of principal of, premium, if any,
and interest, if any, on the applicable Securities denominated or
payable in such Foreign Currency, ECU or such other currency unit
occurring after the last date on which such Foreign Currency, ECU or
such other currency unit was used (the "Conversion Date"), the Dollar
shall be the currency of payment for use on each such payment date
(but such Foreign Currency, ECU or such other currency unit that was
previously the currency of payment shall, at the Company's election,
resume being the currency of payment on the first such payment date
preceded by 15 Business Days during which the circumstances which gave
rise to the Dollar becoming such currency no longer prevail). Unless
otherwise specified pursuant to Section 3.1, the Dollar amount to be
paid by the Company to the Trustee or any applicable Paying Agent and
by the Trustee or any applicable Paying Agent to the Holders of such
Securities with respect to such payment date shall be, in the case of
a Foreign Currency other than a currency unit, the Dollar Equivalent
of the Foreign Currency or, in the case of a Foreign Currency that is
a currency unit, the Dollar Equivalent of the Currency Unit, in each
case as determined by the Exchange Rate Agent in the manner provided
in paragraph (f) or (g) below.
(e) Unless otherwise specified pursuant to Section 3.1, if
the Holder of a Registered Security denominated in any currency or
currency unit shall have elected to be paid in another currency or
currency unit or in other currencies as provided in paragraph (b)
above, and (i) a Conversion Event occurs with respect to any such
elected currency or currency unit, such Holder shall receive payment
in the currency or currency unit in which payment would have been made
in the absence of such election and (ii) if a Conversion Event occurs
with respect to the currency or currency unit in which payment would
have been made in the absence of such election, such Holder shall
receive payment in Dollars as provided in paragraph (d) of this
Section 3.11 (but, subject to any contravening valid election pursuant
to paragraph (b) above, the elected payment currency or currency unit,
in the case of the circumstances described in clause (i) above, or the
payment currency or currency unit in the absence of such election, in
the case of the circumstances described in clause (ii) above, shall,
at the Company's election, resume being the currency or currency unit
of payment with respect to Holders who have so elected, but only with
respect to payments on payment dates preceded by 15 Business Days
during which the circumstances which gave rise to such currency or
currency unit, in the case of the circumstances described in clause
(i) above, or the Dollar, in the case of the circumstances described
in clause (ii) above, becoming the currency or currency unit, as
applicable, of payment, no longer prevail).
(f) The "Dollar Equivalent of the Foreign Currency" shall
be determined by the Exchange Rate Agent and shall be obtained for
each subsequent payment date by the Exchange Rate Agent by converting
the specified Foreign Currency into Dollars at the Market Exchange
Rate on the Conversion Date.
(g) The "Dollar Equivalent of the Currency Unit" shall be
determined by the Exchange Rate Agent and, subject to the provisions
of paragraph (h) below, shall be the sum of each amount obtained by
converting the Specified Amount of each Component Currency (as each
such term is defined in paragraph (h) below) into Dollars at the
Market Exchange Rate for such Component Currency on the Valuation Date
with respect to each payment.
(h) For purposes of this Section 3.11 the following terms
shall have the following meanings:
A "Component Currency" shall mean any currency which, on the
Conversion Date, was a component currency of the relevant currency
unit, including, but not limited to, ECU.
"Election Date" shall mean the Regular Record Date for the
applicable series of Registered Securities as specified pursuant to
Section 3.1 by which the written election referred to in
Section 3.11(b) may be made.
A "Specified Amount" of a Component Currency shall mean the
number of units of such Component Currency or fractions thereof which
such Component Currency represented in the relevant currency unit,
including, but not limited to, ECU, on the Conversion Date. If after
the Conversion Date the official unit of any Component Currency is
altered by way of combination or subdivision, the Specified Amount of
such Component Currency shall be divided or multiplied in the same
proportion. If after the Conversion Date two or more Component
Currencies are consolidated into a single currency, the respective
Specified Amounts of such Component Currencies shall be replaced by an
amount in such single currency equal to the sum of the respective
Specified Amounts of such consolidated Component Currencies expressed
in such single currency, and such amount shall thereafter be a
Specified Amount and such single currency shall thereafter be a
Component Currency. If after the Conversion Date any Component
Currency shall be divided into two or more currencies, the Specified
Amount of such Component Currency shall be replaced by specified
amounts of such two or more currencies, the sum of which, at the
Market Exchange Rate of such two or more currencies on the date of
such replacement, shall be equal to the Specified Amount of such
former Component Currency and such amounts shall thereafter be
Specified Amounts and such currencies shall thereafter be Component
Currencies. If, after the Conversion Date of the relevant currency
unit, including, but not limited to, ECU, a Conversion Event (other
than any event referred to above in this definition of "Specified
Amount") occurs with respect to any Component Currency of such
currency unit and is continuing on the applicable Valuation Date, the
Specified Amount of such Component Currency shall, for purposes of
calculating the Dollar Equivalent of the Currency Unit, be converted
into Dollars at the Market Exchange Rate in effect on the Conversion
Date of such Component Currency.
All decisions and determinations of the Exchange Rate Agent
regarding the Dollar Equivalent of the Foreign Currency, the Dollar
Equivalent of the Currency Unit, the Market Exchange Rate and changes
in the Specified Amounts as specified above shall be in its sole
discretion and shall, in the absence of manifest error, be conclusive
for all purposes and irrevocably binding upon the Company, the Trustee
(and any applicable Paying Agent) and all Holders of Securities denominated
or payable in the relevant currency, currencies or currency units. The
Exchange Rate Agent shall promptly give written notice to the Company and
the Trustee of any such decision or determination.
In the event that the Company determines in good faith that
a Conversion Event has occurred with respect to a Foreign Currency,
the Company will promptly give written notice thereof to the Trustee
(or any applicable Paying Agent) and to the Exchange Rate Agent (and
the Trustee (or such Paying Agent) will promptly thereafter give
notice in the manner provided in Section 1.6 to the affected Holders)
specifying the Conversion Date. In the event the Company so
determines that a Conversion Event has occurred with respect to ECU or
any other currency unit in which Securities are denominated or
payable, the Company will promptly give written notice thereof to the
Trustee (or any applicable Paying Agent) and to the Exchange Rate
Agent (and the Trustee (or such Paying Agent) will promptly thereafter
give notice in the manner provided in Section 1.6 to the affected
Holders) specifying the Conversion Date and the Specified Amount of
each Component Currency on the Conversion Date. In the event the
Company determines in good faith that any subsequent change in any
Component Currency as set forth in the definition of Specified Amount
above has occurred, the Company will similarly give written notice to
the Trustee (or any applicable Paying Agent) and to the Exchange Rate
Agent.
The Trustee of the appropriate series of Securities shall be
fully justified and protected in relying and acting upon information
received by it from the Company and the Exchange Rate Agent and shall
not otherwise have any duty or obligation to determine the accuracy or
validity of such information independent of the Company or the
Exchange Rate Agent.
Section 3.12. Appointment and Resignation of Exchange Rate
Agent. (a) Unless otherwise specified pursuant to Section 3.1, if
and so long as the Securities of any series (i) are denominated in a
currency other than Dollars or (ii) may be payable in a currency other
than Dollars, or so long as it is required under any other provision
of this Indenture, then the Company will maintain with respect to each
such series of Securities, or as so required, at least one Exchange
Rate Agent. The Company will cause the Exchange Rate Agent to make the
necessary foreign exchange determinations at the time and in the
manner specified pursuant to Section 3.11 for the purpose of
determining the applicable rate of exchange and, if applicable, for
the purpose of converting the issued currency or currencies or
currency unit or units into the applicable payment currency or
currency unit for the payment of principal, premium, if any, and
interest, if any, pursuant to Section 3.11.
(b) No resignation of the Exchange Rate Agent and no
appointment of a successor Exchange Rate Agent pursuant to this
Section shall become effective until the acceptance of appointment by
the successor Exchange Rate Agent as evidenced by a written instrument
delivered to the Company and the Trustee of the appropriate series of
Securities accepting such appointment executed by the successor
Exchange Rate Agent.
(c) If the Exchange Rate Agent shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office
of the Exchange Rate Agent for any cause, with respect to the
Securities of one or more series, the Company, by or pursuant to a
Board Resolution, shall promptly appoint a successor Exchange Rate
Agent or Exchange Rate Agents with respect to the Securities of that
or those series (it being understood that any such successor Exchange
Rate Agent may be appointed with respect to the Securities of one or
more or all of such series and that, unless otherwise specified
pursuant to Section 3.1, at any time there shall only be one Exchange
Rate Agent with respect to the Securities of any particular series
that are originally issued by the Company on the same date and that
are initially denominated and/or payable in the same currency or
currencies or currency unit or units).
Section 3.13. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use), and, if
so, the Trustee shall use "CUSIP" numbers (in addition to the other
identification numbers printed on the Securities) in notices of
redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any
notice of a redemption and that reliance may be placed only on the
other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such
numbers.
ARTICLE 4
Satisfaction, Discharge and Defeasance
--------------------------------------
Section 4.1. Termination of Company's Obligations Under
the Indenture. Except as otherwise provided as contemplated by
Section 3.1, this Indenture shall upon Company Request cease to be of
further effect with respect to Securities of or within any series and
any coupons appertaining thereto (except as to any surviving rights of
registration of transfer or exchange of such Securities and
replacement of such Securities which may have been lost, stolen or
mutilated as herein expressly provided for) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to such
Securities and any coupons appertaining thereto when:
(1) either
(A) all such Securities previously authenticated and
delivered and all coupons appertaining thereto (other than
(i) such coupons appertaining to Bearer Securities
surrendered in exchange for Registered Securities and
maturing after such exchange, surrender of which is not
required or has been waived as provided in Section 3.5, (ii)
such Securities and coupons which have been destroyed, lost
or stolen and which have been replaced or paid as provided
in Section 3.6, (iii) such coupons appertaining to Bearer
Securities called for redemption and maturing after the
relevant Redemption Date, surrender of which has been waived
as provided in Section 10.6 and (iv) such Securities and
coupons for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 9.3) have been
delivered to the Trustee for cancellation; or
(B) all Securities of such series and, in the case of
(i) or (ii) below, any coupons appertaining thereto not
theretofore delivered to the Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at
their Stated Maturity within one year, or
(iii) if redeemable at the option of the
Company, are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in
the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or
(iii) above, has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the
purpose an amount in the currency or currencies or currency
unit or units in which the Securities of such series are
payable, sufficient to pay and discharge the entire
indebtedness on such Securities and such coupons not
theretofore delivered to the Trustee for cancellation, for
principal, premium, if any, and interest, if any, with respect
thereto, to the date of such deposit (in the case of Securities
which have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture as to such series
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligation of the Company to the Trustee and any predecessor Trustee
under Section 6.9, the obligations of the Company to any
Authenticating Agent under Section 6.14 and, if money shall have been
deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 4.2 and the
last paragraph of Section 9.3 shall survive.
Section 4.2. Application of Trust Funds. Subject to the
provisions of the last paragraph of Section 9.3, all money deposited
with the Trustee pursuant to Section 4.1 shall be held in trust and
applied by it, in accordance with the provisions of the Securities,
the coupons and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled
thereto, of the principal, premium, if any, and any interest for whose
payment such money has been deposited with or received by the Trustee,
but such money need not be segregated from other funds except to the
extent required by law.
Section 4.3. Applicability of Defeasance Provisions;
Company's Option to Effect Defeasance or Covenant Defeasance. If
pursuant to Section 3.1 provision is made for either or both of (i)
defeasance of the Securities of or within a series under Section 4.4
or (ii) covenant defeasance of the Securities of or within a series
under Section 4.5, then the provisions of such Section or Sections, as
the case may be, together with the provisions of Sections 4.6 through
4.9 inclusive, with such modifications thereto as may be specified
pursuant to Section 3.1 with respect to any Securities, shall be
applicable to such Securities and any coupons appertaining thereto,
and the Company may at its option by Board Resolution, at any time,
with respect to such Securities and any coupons appertaining thereto,
elect to have Section 4.4 (if applicable) or Section 4.5 (if applicable)
be applied to such Outstanding Securities and any coupons appertaining
thereto upon compliance with the conditions set forth below in this
Article.
Section 4.4. Defeasance and Discharge. Upon the Company's
exercise of the option specified in Section 4.3 applicable to this
Section with respect to the Securities of or within a series, the
Company shall be deemed to have been discharged from its obligations
with respect to such Securities and any coupons appertaining thereto
on the date the conditions set forth in Section 4.6 are satisfied
(hereinafter "defeasance"). For this purpose, such defeasance means
that the Company shall be deemed to have paid and discharged the
entire indebtedness represented by such Securities and any coupons
appertaining thereto which shall thereafter be deemed to be
"Outstanding" only for the purposes of Section 4.7 and the other
Sections of this Indenture referred to in clause (ii) of this Section,
and to have satisfied all its other obligations under such Securities
and any coupons appertaining thereto and this Indenture insofar as
such Securities and any coupons appertaining thereto are concerned
(and the Trustee, at the expense of the Company, shall on Company
Order execute proper instruments acknowledging the same), except the
following which shall survive until otherwise terminated or discharged
hereunder: (i) the rights of Holders of such Securities and any
coupons appertaining thereto to receive, solely from the trust funds
described in Section 4.6(a) and as more fully set forth in such
Section, payments in respect of the principal of, premium if any, and
interest, if any, on such Securities or any coupons appertaining
thereto when such payments are due; (ii) the Company's obligations
with respect to such Securities under Sections 3.5, 3.6, 9.2 and 9.3
and with respect to the payment of additional amounts, if any, payable
with respect to such Securities as specified pursuant to Section
3.l(b)(16); (iii) the rights, powers, trusts, duties and immunities of
the Trustee hereunder; and (iv) this Article 4. Subject to compliance
with this Article 4, the Company may exercise its option under this
Section notwithstanding the prior exercise of its option under Section
4.5 with respect to such Securities and any coupons appertaining
thereto. Following a defeasance, payment of such Securities may not
be accelerated because of an Event of Default.
Section 4.5. Covenant Defeasance. Upon the Company's
exercise of the option specified in Section 4.3 applicable to this
Section with respect to any Securities of or within a series, the
Company shall be released from its obligations under Article 7 and
Sections 9.4 and 9.5, and, if specified pursuant to Section 3.1, its
obligations under any other covenant, with respect to such Securities
and any coupons appertaining thereto on and after the date the
conditions set forth in Section 4.6 are satisfied (hereinafter,
"covenant defeasance"), and such Securities and any coupons
appertaining thereto shall thereafter be deemed to be not "Outstanding"
for the purposes of any direction, waiver, consent or declaration or Act
of Holders (and the consequences of any thereof) in connection with
Article 7 and Sections 9.4 and 9.5, or such other covenant, but shall
continue to be deemed "Outstanding" for all other purposes hereunder.
For this purpose, such covenant defeasance means that, with respect to
such Securities and any coupons appertaining thereto, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such Section or such other
covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such Section or such other covenant or by reason
of reference in any such Section or such other covenant to any other
provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 5.1(3)
or 5.1(5) or otherwise, as the case may be, but, except as specified above,
the remainder of this Indenture and such Securities and any coupons
appertaining thereto shall be unaffected thereby.
Section 4.6. Conditions to Defeasance or Covenant
Defeasance. The following shall be the conditions to application of
Section 4.4 or Section 4.5 to any Securities of or within a series and
any coupons appertaining thereto:
(a) The Company shall have deposited or caused to be
deposited irrevocably with the Trustee (or another trustee
satisfying the requirements of Section 6.11 who shall agree to
comply with, and shall be entitled to the benefits of, the
provisions of Sections 4.3 through 4.9 inclusive and the last
paragraph of Section 9.3 applicable to the Trustee, for purposes
of such Sections also a "Trustee") as trust funds in trust for
the purpose of making the payments referred to in clauses (x) and
(y) of this Section 4.6(a), specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of such
Securities and any coupons appertaining thereto, with
instructions to the Trustee as to the application thereof, (A)
money in an amount (in such currency, currencies or currency unit
in which such Securities and any coupons appertaining thereto are
then specified as payable at Maturity), or (B) if Securities of
such series are not subject to repayment at the option of
Holders, Government Obligations which through the payment of
interest and principal in respect thereof in accordance with
their terms will provide, not later than one day before the due
date of any payment referred to in clause (x) or (y) of this
Section 4.6(a), money in an amount or (C) a combination thereof
in an amount, sufficient, in the opinion of a nationally
recognized firm of independent certified public accountants
expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which
shall be applied by the Trustee to pay and discharge, (x)
the principal of, premium, if any, and interest, if any, on such
Securities and any coupons appertaining thereto on the Maturity
of such principal or installment of principal or interest and (y)
any mandatory sinking fund payments applicable to such Securities
on the day on which such payments are due and payable in
accordance with the terms of this Indenture and such Securities
and any coupons appertaining thereto. Before such a deposit the
Company may make arrangements satisfactory to the Trustee for the
redemption of Securities at a future date or dates in accordance
with Article 10, which shall be given effect in applying the
foregoing.
(b) Such defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a Default or Event of
Default under, this Indenture or result in a breach or violation
of, or constitute a default under, any other material agreement
or instrument to which the Company is a party or by which it is
bound.
(c) No Default or Event of Default under Section 5.1(4) or
5.1(5) with respect to such Securities and any coupons
appertaining thereto shall have occurred and be continuing during
the period commencing on the date of such deposit and ending on
the 91st day after such date (it being understood that this
condition shall not be deemed satisfied until the expiration of
such period).
(d) In the case of an election under Section 4.4, the
Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel to the effect that (i) the
Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of
execution of this Indenture, there has been a change in the
applicable Federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the
Holders of such Securities and any coupons appertaining thereto
will not recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance and will be subject to
Federal income tax on the same amount and in the same manner and
at the same times, as would have been the case if such deposit,
defeasance and discharge had not occurred.
(e) In the case of an election under Section 4.5, the
Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that the Holders of such Securities and any coupons
appertaining thereto will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant
defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred.
(f) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent to the defeasance under Section 4.4
or the covenant defeasance under Section 4.5 (as the case may be)
have been complied with and an Opinion of Counsel to the effect
that either (i) as a result of a deposit pursuant to subsection
(a) above and the related exercise of the Company's option under
Section 4.4 or Section 4.5 (as the case may be), registration is
not required under the Investment Company Act of 1940, as
amended, by the Company, with respect to the trust funds
representing such deposit or by the trustee for such trust funds
or (ii) all necessary registrations under said act have been
effected.
(g) Such defeasance or covenant defeasance shall be
effected in compliance with any additional or substitute terms,
conditions or limitations which may be imposed on the Company in
connection therewith as contemplated by Section 3.1.
Section 4.7. Deposited Money and Government Obligations to
Be Held in Trust. Subject to the provisions of the last paragraph of
Section 9.3, all money and Government Obligations (or other property
as may be provided pursuant to Section 3.1) (including the proceeds thereof)
deposited with the Trustee pursuant to Section 4.6 in respect of any
Securities of any series and any coupons appertaining thereto shall be
held in trust and applied by the Trustee, in accordance with the
provisions of such Securities and any coupons appertaining thereto and
this Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Holders of such Securities and any
coupons appertaining thereto of all sums due and to become due thereon
in respect of principal, premium, if any, and interest, if any, but
such money need not be segregated from other funds except to the
extent required by law.
Unless otherwise specified with respect to any Security
pursuant to Section 3.1, if, after a deposit referred to in Section
4.6(a) has been made, (i) the Holder of a Security in respect of which
such deposit was made is entitled to, and does, elect pursuant to
Section 3.11(b) or the terms of such Security to receive payment in a
currency or currency unit other than that in which the deposit
pursuant to Section 4.6(a) has been made in respect of such Security,
or (ii) a Conversion Event occurs as contemplated in Section 3.11(d)
or 3.11(e) or by the terms of any Security in respect of which the
deposit pursuant to Section 4.6(a) has been made, the indebtedness
represented by such Security and any coupons appertaining thereto
shall be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of, premium, if any,
and interest, if any, on such Security as the same becomes due out
of the proceeds yielded by converting (from time to time as specified
below in the case of any such election) the amount or other property
deposited in respect of such Security into the currency or currency
unit in which such Security becomes payable as a result of such election
or Conversion Event based on the applicable Market Exchange Rate for
such currency or currency unit in effect on the second Business Day
prior to each payment date, except in the case of a Conversion Event
with respect to such currency or currency unit which is in effect
(as nearly as feasible) at the time of the Conversion Event.
Section 4.8. Transfers and Distribution at Company
Request. To the extent permitted by the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 76, as
amended or interpreted by the Financial Accounting Standards Board
from time to time, or any successor thereto ("Standard No. 76"), or to
the extent permitted by the Commission, the Trustee shall, from time
to time, take one or more of the following actions as specified in a
Company Request:
(a) Retransfer, reassign and deliver to the Company any
securities deposited with the Trustee pursuant to Section 4.6(a),
provided that the Company shall, in substitution therefor,
simultaneously transfer, assign and deliver to the Trustee other
Government Obligations appropriate to satisfy the Company's
obligations in respect of the relevant Securities; and
(b) The Trustee (and any Paying Agent) shall promptly pay
to the Company, upon Company Request, any excess money or
securities held by them at any time, including, without
limitation, any assets deposited with the Trustee pursuant to
Section 4.6(a) exceeding those necessary for the purposes of
Section 4.6(a).
The Trustee shall not take the actions described in subsections (a)
and (b) of this Section 4.8 unless it shall have first received a
written report of Arthur Andersen LLP, or another nationally
recognized independent public accounting firm, (i) expressing their
opinion that the contemplated action is permitted by Standard No. 76
or the Commission, for transactions accounted for as extinguishment of
debt under the circumstances described in paragraph 3.c of Standard
No. 76 or any successor provision, and (ii) verifying the accuracy,
after giving effect to such action or actions, of the computations
which demonstrate that the amounts remaining to be earned on the
Government Obligations deposited with the Trustee pursuant to Section
4.6(a) will be sufficient for purposes of Section 4.6(a).
ARTICLE 5
Defaults and Remedies
---------------------
Section 5.1. Events of Default. An "Event of Default"
occurs with respect to the Securities of any series if (whatever the
reason for such Event of Default and whether it shall be occasioned by
the provisions of Article 12 or be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) the Company defaults in the payment of interest on any
Security of that series or any coupon appertaining thereto or any
additional amount payable with respect to any Security of that
series as specified pursuant to Section 3.1(b)(16) when the same
becomes due and payable and such default continues for a period
of 30 days;
(2) the Company defaults in the payment of the principal of
or any premium on any Security of that series when the same
becomes due and payable at its Maturity or on redemption or
otherwise, or in the payment of a mandatory sinking fund payment
when and as due by the terms of the Securities of that series,
and in each case such default continues for a period of ten days;
(3) the Company defaults in the performance of, or
breaches, any covenant or warranty of the Company in this
Indenture, with respect to any Security of that series (other
than a covenant or warranty a default in whose performance or
whose breach is elsewhere in this Section specifically dealt
with), and such default or breach continues for a period of 60
days after there has been given, by registered or certified mail,
to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series, a written notice
specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder;
(4) the Company pursuant to or within the meaning of any
Bankruptcy Law (A) commences a voluntary case, (B) consents to
the entry of an order for relief against it in an involuntary
case, (C) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or (D) makes a general
assignment for the benefit of its creditors;
(5) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (A) is for relief against
the Company in an involuntary case, (B) appoints a Custodian of
the Company for all or substantially all of its property, or (C)
orders the liquidation of the Company; and the order or decree
remains unstayed and in effect for 90 days; or
(6) any other Event of Default provided as contemplated by
Section 3.1 with respect to Securities of that series.
The term "Bankruptcy Law" means Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
Section 5.2. Acceleration; Rescission and Annulment. If an
Event of Default with respect to the Securities of any series at the
time Outstanding occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount of all of the
outstanding Securities of that series, by written notice to the
Company (and, if given by the Holders, to the Trustee), may declare
the principal (or, if the Securities of that series are Original Issue
Discount Securities or Indexed Securities, such portion of the
principal amount as may be specified in the terms of that series) of
all the Securities of that series to be due and payable and upon any
such declaration such principal (or, in the case of original Issue
Discount Securities or Indexed Securities, such specified amount)
shall be immediately due and payable.
At any time after such a declaration of acceleration with
respect to Securities of any series has been made and before a
judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a
majority in aggregate principal amount of the outstanding Securities
of that series, by written notice to the Trustee, may rescind and
annul such declaration and its consequences if all existing Defaults
and Events of Default with respect to Securities of that series, other
than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 5.7. No such rescission
shall affect any subsequent default or impair any right consequent
thereon.
Section 5.3. Collection of Indebtedness and Suits for
Enforcement by Trustee. The Company covenants that if
(1) default is made in the payment of any interest on any
Security or coupon, if any, when such interest becomes due and
payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof and
such default continues for a period of 10 days,
the Company will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities or coupons, if any, the
whole amount then due and payable on such Securities for principal,
premium, if any, and interest, if any, and, to the extent that payment
of any such interest shall be legally enforceable, interest on any
overdue principal or premium, if any, and on any overdue interest, at
the rate or rates prescribed therefor in such Securities or coupons,
if any, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its discretion
proceed to protect and enforce its rights and the rights of the
Holders of Securities of such series by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of
any power granted herein, or to enforce any other proper remedy.
Section 5.4. Trustee May File Proofs of Claim. The
Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the
Trustee and the Holders of Securities allowed in any judicial
proceedings relating to the Company, its creditors or its property.
Section 5.5. Trustee May Enforce Claims Without Possession
of Securities. All rights of action and claims under this Indenture
or the Securities may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or the production
thereof in any proceeding relating thereto.
Section 5.6. Delay or Omission Not Waiver. No delay or
omission by the Trustee or any Holder of any Securities to exercise
any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a waiver of or
acquiescence in any such Event of Default.
Section 5.7. Waiver of Past Defaults. The Holders of a
majority in aggregate principal amount of Outstanding Securities of
any series by notice to the Trustee may waive on behalf of the Holders
of all Securities of such series a past Default or Event of Default
with respect to that series and its consequences except (i) a Default
or Event of Default in the payment of the principal of, premium, if
any, or interest, if any, on any Security of such series or any coupon
appertaining thereto or (ii) in respect of a covenant or provision
hereof which pursuant to Section 8.2 cannot be amended or modified
without the consent of the Holder of each outstanding Security of such
series adversely affected. Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Indenture.
Section 5.8. Control by Majority. The Holders of a
majority in aggregate principal amount of the Outstanding Securities
of each series affected (with each such series voting as a class)
shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it with respect to
Securities of that series; provided, however, that (i) the Trustee may
refuse to follow any direction that conflicts with law or this
Indenture, (ii) the Trustee may refuse to follow any direction that is
unduly prejudicial to the rights of the Holders of Securities of such
series not consenting, or that would in the good faith judgment of the
Trustee have a substantial likelihood of involving the Trustee in
personal liability and (iii) the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such
direction.
Section 5.9. Limitation on Suits by Holders. No Holder of
any Security of any series or any related coupons shall have any right
to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless:
(1) the Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the
Securities of that series;
(2) the Holders of at least 25% in aggregate principal
amount of the Outstanding Securities of that series have made a
written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee
hereunder;
(3) such Holder or Holders have offered to the Trustee
indemnity satisfactory to the Trustee against any loss, liability
or expense to be, or which may be, incurred by the Trustee in
pursuing the remedy;
(4) the Trustee for 60 days after its receipt of such
notice, request and the offer of indemnity has failed to
institute any such proceedings; and
(5) during such 60-day period, the Holders of a majority in
aggregate principal amount of the Outstanding Securities of that
series have not given to the Trustee a direction inconsistent
with such written request.
No one or more Holders shall have any right in any manner
whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference
over any other of such Holders or to e