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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 enforce any right under this
Indenture, except in the manner herein provided and for the equal and
ratable benefit of all of such Holders.
Section 5.10. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, but subject to
Section 9.2, the right of any Holder of a Security or coupon to
receive payment of principal of, premium, if any, and, subject to
Sections 3.5 and 3.7, interest, if any, on the Security, on or after
the respective due dates expressed in the Security (or, in case of
redemption, on the redemption dates) and the right of any Holder of a
coupon to receive payment of interest due as provided in such coupon,
or, subject to Section 5.9, to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired
or affected without the consent of such Holder.
Section 5.11. Application of Money Collected. Subject to
Article 12, if the Trustee collects any money pursuant to this
Article, it shall pay out the money in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of
such money on account of principal, premium, if any, or interest, if
any, upon presentation of the Securities and any coupons appertaining
thereto and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
First: to the Trustee for amounts due under Section 6.9;
Second: to Holders of Securities and coupons in respect of
which or for the benefit of which such money has been collected
for amounts due and unpaid on such Securities for principal of,
premium, if any, and interest, if any, ratably, without
preference or priority of any kind, according to the amounts due
and payable on such Securities for principal, premium, if any,
and interest, if any, respectively; and
Third: to the Person or Persons entitled thereto.
Section 5.12. Restoration of Rights and Remedies. If the
Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company,
the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all
rights and remedies of the Trustee and the Holders shall continue as
though no such proceeding had been instituted.
Section 5.13. Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 3.6, no right or remedy herein conferred upon or reserved
to the Trustee or the Holders is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.14. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken, suffered or omitted by
it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess
costs against any such party litigant, in the manner and to the extent
provided in the Trust Indenture Act; provided that neither this
Section nor the Trust Indenture Act shall be deemed to authorize any
court to require such an undertaking or to make such an assessment in
any suit instituted by the Company, and any provision of the Trust
Indenture Act to such effect is hereby expressly excluded from this
Indenture, as permitted by the Trust Indenture Act.
Section 5.15. Action Respecting Securities Held in UAL
Corporation Capital Trust. With respect to any series of Securities
held as trust assets of a UAL Corporation Capital Trust and with
respect to which a Security Exchange has not theretofore occurred, any
authorization, approval, consent, request, notice, waiver or other
action of Holders required or permitted to be taken under this
Indenture or pursuant to the terms of any Security, in addition to any
other authorization, approval, consent, request, notice, waiver or
other action required hereunder, will require such authorization,
approval, consent, request, notice, waiver or other action of holders
of the Preferred Securities and the Common Securities of such UAL
Corporation Capital Trust as may be required under the Declaration of
Trust of such UAL Corporation Capital Trust.
ARTICLE 6
The Trustee
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Section 6.1. Certain Duties and Responsibilities. (a)
Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and
no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is
continuing with respect to the Securities of any series, the Trustee
shall exercise such of the rights and powers vested in it by this
Indenture with respect to the Securities of such series, and use the
same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or
her own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except
that:
(1) this subsection shall not be construed to limit the
effect of subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it
shall be proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(3) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a majority in
principal amount of the Outstanding Securities of any series
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this
Indenture with respect to the Securities of such series.
(d) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(e) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject
to the provisions of this Section.
Section 6.2. Rights of Trustee. Subject to the provisions
of the Trust Indenture Act:
(a) The Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note or other paper
or document believed by it to be genuine and to have been signed
or presented by the proper party or parties.
(b) Any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or
Company Order (other than delivery of any Security, and any
coupons appertaining thereto, to the Trustee for authentication
and delivery pursuant to Section 3.3, which shall be sufficiently
evidenced as provided therein), and any resolution of the Board
of Directors may be sufficiently evidenced by a Board Resolution.
(c) Whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate.
(d) The Trustee may consult with counsel of its selection
and the written advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(e) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders pursuant to this
Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction.
(f) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note or
other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled
to examine the books, records and premises of the Company,
personally or by agent or attorney.
(g) The Trustee may act through agents or attorneys and
shall not be responsible for the misconduct or negligence of any
agent or attorney appointed with due care.
(h) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized
or within its rights or powers.
(i) The Trustee shall not be required to expend or risk its
own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of
its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
Section 6.3. Trustee May Hold Securities. The Trustee,
any Paying Agent, any Registrar or any other agent of the Company, in
its individual or any other capacity, may become the owner or pledgee
of Securities and coupons and, subject to Sections 310(b) and 311 of
the Trust Indenture Act, may otherwise deal with the Company, an
Affiliate or Subsidiary with the same rights it would have if it were
not Trustee, Paying Agent, Registrar or such other agent.
Section 6.4. Money Held in Trust. Money held by the
Trustee in trust hereunder need not be segregated from other funds
except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as
otherwise agreed to in writing with the Company.
Section 6.5. Trustee's Disclaimer. The recitals contained
herein and in the Securities, except the Trustee's certificate of
authentication, shall be taken as the statements of the Company, and
the Trustee assumes no responsibility for their correctness. The
Trustee makes no representation as to the validity or adequacy of this
Indenture, the Securities or any coupon. The Trustee shall not be
accountable for the Company's use of the proceeds from the Securities
or for monies paid over to the Company pursuant to the Indenture.
Section 6.6. Notice of Defaults. If a Default occurs and
is continuing with respect to the Securities of any series and if it
is known to the Trustee, the Trustee shall, within 90 days after it
occurs, transmit, in the manner and to the extent provided in Section
313(c) of the Trust Indenture Act, notice of all uncured Defaults
known to it; provided, however, that, in the case of a Default in
payment on the Securities of any series, the Trustee may withhold the
notice if and so long as the board of directors, the executive
committee or a committee of its Responsible Officers in good faith
determines that withholding such notice is in the interests of Holders
of Securities of that series; provided further that, in the case of
any default or breach of the character specified in Section 5.1(3)
with respect to the Securities and coupons of such series, no such
notice to Holders shall be given until at least 60 days after the
occurrence thereof. For the purpose of this Section, the term
"default" means any event which is, or after notice or lapse of time
or both would become, an Event of Default with respect to Securities
of such series.
Section 6.7. Reports by Trustee to Holders. (a) Within
60 days after each May 15 of each year commencing with the first
May 15 after the first issuance of Securities pursuant to this
Indenture, the Trustee shall transmit by mail to all Holders of
Securities as provided in Section 313(c) of the Trust
Indenture Act a brief report dated as of such May 15 if required by
Section 313(a) of the Trust Indenture Act. The Trustee also shall
comply with Section 313(b) and (d) of the Trust Indenture Act.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock
exchange, if any, upon which the Securities are listed, with the
Commission and with the Company. The Company will promptly notify the
Trustee when the Securities are listed on any stock exchange.
Section 6.8. Securityholder Lists. The Trustee shall
preserve in as current a form as is reasonably practicable the most
recent list available to it of the names and addresses of Holders of
Securities of each series. If the Trustee is not the Registrar, the
Company shall furnish to the Trustee semiannually on or before the
last day of June and December in each year, and at such other times as
the Trustee may request in writing, a list, in such form and as of
such date as the Trustee may reasonably require, containing all the
information in the possession of the Registrar, the Company or any of
its Paying Agents other than the Trustee as to the names and addresses
of Holders of Securities of each such series. If there are Bearer
Securities of any series outstanding, even if the Trustee is the
Registrar, the Company shall furnish to the Trustee such a list
containing such information with respect to Holders of such Bearer
Securities only.
Section 6.9. Compensation and Indemnity. (a) The Company
shall pay to the Trustee from time to time such compensation as shall
be agreed to in writing between the Company and the Trustee for all
services rendered by it hereunder. The Trustee's compensation shall
not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred by it in connection with
the performance of its duties under this Indenture, except any such
expense as may be attributable to its negligence or bad faith.
(b) The Company shall indemnify the Trustee and any
predecessor Trustee for, and hold it harmless against, any loss,
liability or expense, including taxes (other than taxes based upon,
measured by or determined by the income of the Trustee), incurred by
it without negligence or bad faith on its part arising out of or in
connection with its acceptance or administration of the trust or
trusts hereunder. The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity. The Company shall defend
the claim and the Trustee shall cooperate in the defense. The Trustee
may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for
any settlement made without its consent.
(c) The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through
negligence or bad faith.
(d) To secure the payment obligations of the Company
pursuant to this Section, the Trustee shall have a lien prior to the
Securities of any series on all money or property held or collected by
the Trustee, except that held in trust to pay principal, premium, if
any, and interest, if any, on particular Securities.
(e) When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.1(4) or
Section 5.1(5), the expenses (including the reasonable charges and
expenses of its counsel) and the compensation for the services are
intended to constitute expenses of administration under any applicable
Federal or state bankruptcy, insolvency or other similar law.
(f) The provisions of this Section shall survive the
termination of this Indenture.
Section 6.10. Replacement of Trustee. (a) The resignation
or removal of the Trustee and the appointment of a successor Trustee
shall become effective only upon the successor Trustee's acceptance of
appointment as provided in Section 6.11.
(b) The Trustee may resign at any time with respect to the
Securities of any series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee
required by Section 6.11 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities
of such series.
(c) The Holders of a majority in aggregate principal amount
of the Outstanding Securities of any series may remove the Trustee
with respect to that series by so notifying the Trustee and the
Company and may appoint a successor Trustee for such series with the
Company's consent.
(d) If at any time:
(1) the Trustee fails to comply with Section 310(b) of the
Trust Indenture Act after written request therefor by the Company
or by any Holder who has been a bona fide Holder of a Security
for at least six months;
(2) the Trustee shall cease to be eligible under Section
310(a) of the Trust Indenture Act and shall fail to resign after
written request therefor by the Company or by any Holder of a
Security who has been a bona fide Holder of a Security for at
least six months; or
(3) the Trustee becomes incapable of acting, is adjudged a
bankrupt or an insolvent or a receiver or public officer takes
charge of the Trustee or its property or affairs for the purpose
of rehabilitation, conservation or liquidation;
then, in any such case, (i) the Company by or pursuant to a Board
Resolution may remove the Trustee with respect to all Securities, or
(ii) subject to Section 315(e) of the Trust Indenture Act, any Holder
who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all other persons similarly situated,
petition any court of competent jurisdiction for the removal of the
Trustee with respect to all Securities and the appointment of a
successor Trustee or Trustees.
(e) If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, with respect to
Securities of one or more series, the Company, by or pursuant to Board
Resolution, shall promptly appoint a successor Trustee with respect to
the Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the Securities
of one or more or all of such series and that at any time there shall
be only one Trustee with respect to the Securities of any particular
series) and shall comply with the applicable requirements of Section
6.11. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act
of the Holders of a majority in principal amount of the Outstanding
Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable
requirements of Section 6.11, become the successor Trustee with
respect to the Securities of such series and to that extent supersede
the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities of any series shall have been
so appointed by the Company or the Holders and accepted appointment in
the manner required by Section 6.11, any Holder who has been a bona
fide Holder of a Security of such series for at least six months may,
on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
Section 6.11. Acceptance of Appointment by Successor. (a)
In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the
successor Trustee, without further act, deed or conveyance, shall
become vested with all the rights, powers and duties of the retiring
Trustee; but, on the request of the Company or the successor Trustee,
such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not all)
series, the Company, the retiring Trustee and such successor Trustee
shall execute and deliver an indenture supplemental hereto wherein
such successor Trustee shall accept such appointment and which (i)
shall contain such provisions as shall be necessary or desirable to
transfer and confirm to, and to vest in, such successor Trustee all
the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (ii) if the retiring
Trustee is not retiring with respect to all Securities, shall contain
such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series as to which the
retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (iii) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of
the same trust and that each such Trustee shall be trustee of a trust
or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee and upon the
execution and delivery of such supplemental indenture the resignation
or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of
such successor Trustee relates; but, on request of the Company or any
successor Trustee, such retiring Trustee shall duly assign, transfer
and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of
that or those series to which the appointment of such successor
Trustee relates.
(c) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights,
powers and trusts referred to in paragraph (a) or (b) of this Section,
as the case may be.
(d) No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee shall be
qualified and eligible under the Trust Indenture Act.
(e) The Company shall give notice of each resignation and
each removal of the Trustee with respect to the Securities of any
series and each appointment of a successor Trustee with respect to the
Securities of any series in the manner provided for notices to the
Holders of Securities in Section 1.6. Each notice shall include the
name of the successor Trustee with respect to the securities of such
series and the address of its Corporate Trust office.
Section 6.12. Eligibility; Disqualification. There shall
at all times be a Trustee hereunder which shall be eligible to act as
Trustee under Section 310(a)(1) of the Trust Indenture Act and shall
have a combined capital and surplus of at least $75,000,000. If such
corporation publishes reports of condition at least annually, pursuant
to law or the requirements of Federal, State, Territorial or District
of Columbia supervising or examining authority, then, for the purposes
of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions
of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
Section 6.13. Merger, Conversion, Consolidation or
Succession to Business. Any corporation into which the Trustee may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to
which the Trustee shall be a party, or any corporation succeeding to
all or substantially all the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further
act on the part of any of the parties hereto. In case any Securities
shall have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and deliver
the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
Section 6.14. Appointment of Authenticating Agent. The
Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on
behalf of the Trustee to authenticate Securities of such series issued
upon original issue, exchange, registration of transfer or partial
redemption thereof, and Securities so authenticated shall be entitled
to the benefits of this Indenture and shall be valid and obligatory
for all purposes as if authenticated by the Trustee hereunder. Any
such appointment shall be evidenced by an instrument in writing signed
by a Responsible Officer of the Trustee, a copy of which instrument
shall be promptly furnished to the Company. Wherever reference is
made in this Indenture to the authentication and delivery of
Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on
behalf of the Trustee by an Authenticating Agent. Each Authenticating
Agent shall be acceptable to the Company and, except as may otherwise
be provided pursuant to Section 3.1, shall at all times be a bank or
trust company or corporation organized and doing business and in good
standing under the laws of the United States of America or of any
State or the District of Columbia, authorized under such laws to act
as Authenticating Agent, having a combined capital and surplus of not
less than $1,500,000 and subject to supervision or examination by
Federal or State authorities. If such Authenticating Agent publishes
reports of condition at least annually, pursuant to law or the
requirements of the aforesaid supervising or examining authority,
then, for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this
Section, such Authenticating Agent shall resign immediately in the
manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to
which such Authenticating Agent shall be a party, or any corporation
succeeding to the corporate agency or corporate trust business of an
Authenticating Agent, shall continue to be an Authenticating Agent,
provided such corporation shall be otherwise eligible under this
Section, without the execution or filing of any paper or further act
on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent for any series of Securities may at
any time resign by giving written notice of resignation to the Trustee
for such series and to the Company. The Trustee for any series of
Securities may at any time terminate the agency of an Authenticating
Agent by giving written notice of termination to such Authenticating
Agent and to the Company. Upon receiving such a notice of resignation
or upon such a termination, or in case at any time such Authenticating
Agent shall cease to be eligible in accordance with the provisions of
this Section, the Trustee for such series may appoint a successor
Authenticating Agent which shall be acceptable to the Company and
shall give notice of such appointment to all Holders of Securities of
the series with respect to which such Authenticating Agent will serve
in the manner set forth in Section 1.6. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested
with all the rights, powers and duties of its predecessor hereunder,
with like effect as if originally named as an Authenticating Agent
herein. No successor Authenticating Agent shall be appointed unless
eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation including reimbursement of its
reasonable expenses for its services under this Section.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have
endorsed thereon, in addition to or in lieu of the Trustee's
certificate of authentication, an alternate certificate of
authentication substantially in 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________________________
as Authenticating Agent
By________________________
Authorized Signatory
Sections 6.2, 6.3, 6.5 and 6.9 shall be applicable to any
Authenticating Agent.
Section 6.15. Trustee's Application for Instructions from
the Company. Any application by the Trustee for written instructions
from the Company may, at the option of the Trustee, set forth in
writing any action proposed to be taken or omitted
by the Trustee under this Indenture and the date on and/or after which
such action shall be taken or such omission shall be effective. The
Trustee shall not be liable for any action taken by, or omission of,
the Trustee in accordance with a proposal included in such application
on or after the date specified in such application (which date shall
not be less than fifteen Business Days after the date any officer of
the Company actually receives such application, unless any such
officer shall have consented in writing to any earlier date) unless
prior to taking any such action (or the effective date in the case of
an omission), the Trustee shall have received written instructions in
response to such application specifying the action to be taken or
omitted.
ARTICLE 7
Consolidation, Merger or Sale by the Company
--------------------------------------------
The Company may merge or consolidate with or into any other
corporation or sell, convey, transfer or otherwise dispose of all or
substantially all of its assets to any person, firm or corporation, if
(i)(A) in the case of a merger or consolidation, the Company is the
surviving corporation or (B) in the case of a merger or consolidation
where the Company is not the surviving corporation and in the case of
any such sale, conveyance or other disposition, the successor or
acquiring corporation is a corporation organized and existing under
the laws of the United States or a State thereof and such corporation
expressly assumes by supplemental indenture all the obligations of the
Company under the Securities and any coupons appertaining thereto and
under this Indenture, (ii) immediately thereafter, giving effect to
such merger or consolidation, or such sale, conveyance, transfer or
other disposition, no Default or Event of Default shall have occurred
and be continuing, and (iii) the Company has delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel each stating that
such merger or consolidation, or such sale, conveyance, transfer or
other disposition complies with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with. In the event of the assumption by a successor
corporation of the obligations of the Company as provided in clause
(i)(B) of the immediately preceding sentence, such successor
corporation shall succeed to and be substituted for the Company
hereunder and under the Securities and any coupons appertaining
thereto and all such obligations of the Company shall terminate.
ARTICLE 8
Supplemental Indentures
------------------------
Section 8.1. Supplemental Indentures Without Consent of
Holders. Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and
from time to time, may enter into indentures supplemental hereto, in
form reasonably satisfactory to the Trustee, for any of the following
purposes:
(1) to evidence the succession of another corporation to
the Company and the assumption by any such successor of the
covenants of the Company herein and in the Securities;
(2) to add to the covenants of the Company for the benefit
of the Holders of all or any series of Securities (and if such
covenants are to be for the benefit of less than all series of
Securities, stating that such covenants are expressly being
included solely for the benefit of such series) or to surrender
any right or power herein conferred upon the Company;
(3) to add any additional Events of Default with respect to
all or any series of Securities;
(4) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to facilitate the
issuance of Bearer Securities (including, without limitation, to
provide that Bearer Securities may be registrable as to principal
only) or to facilitate the issuance of Securities in global form;
(5) to add to, change or eliminate any of the provisions of
this Indenture, provided that any such addition, change or
elimination shall become effective only when there is no Security
Outstanding of any series created prior to the execution of such
supplemental indenture which is entitled to the benefit of such
provision;
(6) to secure the Securities;
(7) to establish the form or terms of Securities of any
series as permitted by Sections 2.1 and 3.1;
(8) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities of one or more series and to add to or change any of
the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to
the requirements of Section 6.10;
(9) if allowed without penalty under applicable laws and
regulations, to permit payment in the United States (including
any of the states and the District of Columbia), its territories,
its possessions and other areas subject to its jurisdiction of
principal, premium, if any, or interest, if any, on Bearer
Securities or coupons, if any;
(10) to correct or supplement any provision herein or in any
supplemental indenture which may be defective or inconsistent
with any other provision herein or in any supplemental indenture,
to cure any ambiguity or correct any mistake or to make any other
provisions with respect to matters or questions arising under
this Indenture, provided such action shall not adversely affect
the interests of the Holders of Securities of any series; or
(11) to comply with any requirement of the Commission in
connection with the qualification of this Indenture under the
Trust Indenture Act.
Section 8.2. Supplemental Indentures With Consent of
Holders. With the written consent of the Holders of a majority of the
aggregate principal amount of the Outstanding Securities of each
series adversely affected by such supplemental indenture, the Company
and the Trustee may enter into an indenture or indentures supplemental
hereto to add any provisions to or to change or eliminate any
provisions of this Indenture or of any other indenture supplemental
hereto or to modify the rights of the Holders of Securities of each
such series; provided, however, that without the consent of the Holder
of each Outstanding Security affected thereby, an amendment under this
Section may not:
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security (except
that a valid extension of an interest payment period by the
Company, in accordance with the terms of any indenture
supplemental hereto, shall not constitute a change for this
purpose) or reduce the principal amount thereof or the rate of
interest thereon or any premium payable upon the redemption
thereof, or reduce the amount of the principal of an Original
Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to
Section 5.2, or change the coin or currency in which, any
Securities or any premium or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof (or, in the
case of redemption, on or after the Redemption Date), or modify the
provisions of this indenture with respect to the subordination of
the Securities, or adversely affect the right to convert any
Security as may be provided pursuant to Section 3.1 herein;
(2) reduce the percentage of principal amount of the
Outstanding Securities of any series, the consent of whose
Holders is required for any such supplemental indenture, or the
consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this
Indenture;
(3) change any obligation of the Company to maintain an
office or agency in the places and for the purposes specified in
Section 9.2;
(4) adversely affect the right to convert the Securities of
any series as provided in Article 12 hereof; or
(5) make any change in Section 5.7 or this Section 8.2
except to increase any percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived
with the consent of the Holders of each Outstanding Security
affected thereby.
For the purposes of this Section 8.2, if the Securities of
any series are issuable upon the exercise of warrants, any holder of
an unexercised and unexpired warrant with respect to such series shall
not be deemed to be a Holder of Outstanding Securities of such series
in the amount issuable upon the exercise of such warrants.
A supplemental indenture that changes or eliminates any
covenant or other provision of this Indenture, which has expressly
been included solely for the benefit of one or more particular series
of Securities, or that modifies the rights of the Holders of
Securities of such series with respect to such covenant or other
provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It is not necessary under this Section 8.2 for the Holders
to consent to the particular form of any proposed supplemental
indenture, but it is sufficient if they consent to the substance
thereof.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Persons entitled
to consent to any indenture supplemental hereto. If a record date is
fixed, the Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to consent to such
supplemental indenture, whether or not such Holders remain Holders
after such record date; provided, that unless such consent shall have
become effective by virtue of the requisite percentage having been
obtained prior to the date which is 90 days after such record date,
any such consent previously given shall automatically and without
further action by any Holder be canceled and of no further effect.
Section 8.3. Compliance with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article shall comply
with the requirements of the Trust Indenture Act as then in effect.
Section 8.4. Execution of Supplemental Indentures. In
executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modification
thereby of the trusts created by this Indenture, the Trustee shall be
entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee
may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise.
Section 8.5. Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this article, this
Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all
purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder and of any coupon appertaining
thereto shall be bound thereby.
Section 8.6. Reference in Securities to Supplemental
Indentures. Securities, including any coupons, of any series
authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the
Trustee, bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company
shall so determine, new Securities including any coupons of any series
so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee
in exchange for Outstanding Securities including any coupons of such
series.
ARTICLE 9
Covenants
---------
Section 9.1. Payment of Principal, Premium, If Any, and
Interest. The Company covenants and agrees for the benefit of the
Holders of each series of Securities that it will duly and punctually
pay the principal of, premium, if any, and interest, if any, on the
Securities of that series in accordance with the terms of the
Securities of such series, any coupons appertaining thereto and this
Indenture. An installment of principal or interest shall be
considered paid on the date it is due if the Trustee or Paying Agent
holds on that date money designated for and sufficient to pay the
installment.
If at any time while the Trustee is the Holder of any
Securities, any UAL Corporation Capital Trust or the Trustee is
required to pay any taxes, duties, assessments or governmental charges
of whatever nature (other than withholding taxes) imposed by the
United States, or any other taxing authority, then, in any such case,
the Company will pay as additional interest ("Additional Interest") on
the Securities held by the Trustee, such amounts as shall be required
so that the net amounts received and retained by such UAL Corporation
Capital Trust and the Trustee after paying any such taxes, duties,
assessments or other governmental charges will be not less than the
amounts such UAL Corporation Capital Trust and the Trustee would have
received had no such taxes, duties, assessments or other governmental
charges been imposed.
Section 9.2. Maintenance of Office or Agency. If
Securities of a series are issued as Registered Securities, the
Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be
presented or surrendered for payment, where Securities of that series
may be surrendered for registration of transfer or exchange, where
Securities may be surrendered for conversion and where notices and
demands to or upon the Company in respect of the Securities of that
series and this Indenture may be served. If Securities of a series
are issuable as Bearer Securities, the Company will maintain, (i)
subject to any laws or regulations applicable thereto, an office or
agency in a Place of Payment for that series which is located outside
the United States, where Securities of that series and related coupons
may be presented and surrendered for payment; provided, however, that
if the Securities of that series are listed on The International Stock
Exchange of the United Kingdom and the Republic of Ireland Limited,
the Luxembourg Stock Exchange or any other stock exchange located
outside the United States and such stock exchange shall so require,
the Company will maintain a Paying Agent for the Securities of that
series in London, Luxembourg or any other required city located
outside the United States, as the case may be, so long as the
Securities of that series are listed on such exchange, and (ii)
subject to any laws or regulations applicable thereto, in a Place
of Payment for that series located outside the United States,
where Securities of that series may be surrendered for
exchange and where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be
served. The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of any such office or
agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to
receive all such presentations, surrenders, notices and demands.
Unless otherwise specified as contemplated by Section 3.1,
no payment of principal, premium or interest on Bearer Securities
shall be made at any office or agency of the Company in the United
States, by check mailed to any address in the United States, by
transfer to an account located in the United States or upon
presentation or surrender in the United States of a Bearer Security or
coupon for payment, even if the payment would be credited to an
account located outside the United States; provided, however, that, if
the Securities of a series are denominated and payable in Dollars,
payment of principal of and any premium or interest on any such Bearer
Security shall be made at the office of the Company's Paying Agent in
the Borough of Manhattan, The City of New York, if (but only if)
payment in Dollars of the full amount of such principal, premium or
interest, as the case may be, at all offices or agencies outside the
United States maintained for the purpose by the Company in accordance
with this Indenture is illegal or effectively precluded by exchange
controls or other similar restrictions.
The Company may also from time to time designate one or more
other offices or agencies where the Securities (including any coupons,
if any) of one or more series may be presented or surrendered for any
or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation
to maintain an office or agency in each Place of Payment for
Securities (including any coupons, if any) of any series for such
purposes. The Company will give prompt written notice to the Trustee
of any such designation or rescission and of any change in the
location of any such other office or agency.
Unless otherwise specified as contemplated by Section 3.1,
the Trustee shall initially serve as Paying Agent.
Section 9.3. Money for Securities to Be Held in Trust;
Unclaimed Money. If the Company shall at any time act as its own
Paying Agent with respect to any series of Securities, it will, on or
before each due date of the principal of, premium, if any, or
interest, if any, on any of the Securities of that series, segregate
and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal, premium, if any, or interest, if
any, so becoming due until such sums shall be paid to such persons or
otherwise disposed of as herein provided and will promptly notify the
Trustee in writing of its action or failure so to act.
The Company will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(1) hold all sums held by it for the payment of the
principal of, premium, if any, or interest, if any, on Securities
of that series in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company
(or any other obligor upon the Securities of that series) in the
making of any payment of principal, premium, if any, or interest,
if any, on the Securities; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other
purpose, pay, or by Company Order direct any Paying Agent to pay, to
the Trustee all sums held in trust by the Company or such Paying
Agent, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect
to such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of any principal,
premium or interest on any Security of any series and remaining
unclaimed for two years after such principal, premium, if any, or
interest, if any, has become due and payable shall be paid to the
Company on Company Request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security and coupon,
if any, shall thereafter, as an unsecured general creditor, look only
to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation
in The City of New York, or cause to be mailed to such Holder, notice
that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will
be repaid to the Company.
Section 9.4. Corporate Existence. Subject to Article 7,
the Company will at all times do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate
existence; provided that nothing in this Section 9.4 shall prevent the
abandonment or termination of any right or franchise of the Company,
if, in the opinion of the Company, such abandonment or termination is
in the best interests of the Company and does not materially adversely
affect the ability of the Company to operate its business or to
fulfill its obligations hereunder.
Section 9.5. Insurance. The Company covenants and agrees
that it will maintain, and cause each of its Subsidiaries to maintain,
insurance with responsible and reputable insurance companies or
associations or through a program of self-insurance in such amounts
and covering such risks as are consistent with sound business practice
for corporations engaged in the same or a similar business similarly
situated.
Section 9.6. Reports by the Company. The Company
covenants:
(a) to file with the Trustee, within 30 days after the
Company is required to file the same with the Commission, copies
of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations
prescribe) which it may be required to file with the Commission
pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934, as amended; or, if it is not required to
file information, documents or reports pursuant to either of such
sections, then to file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and
periodic information, documents and reports which may be
required pursuant to section 13 of the Securities Exchange Act of
1934, as amended, in respect of a security listed and registered
on a national securities exchange as may be prescribed from time
to time in such rules and regulations;
(b) to file with the Trustee and the Commission, in
accordance with the rules and regulations prescribed from time to
time by the Commission, such additional information, documents
and reports with respect to compliance by it with the conditions
and covenants provided for in this Indenture, as may be required
from time to time by such rules and regulations; and
(c) to transmit to all Holders of Securities, within 30
days after the filing thereof with the Trustee, in the manner and
to the extent provided in section 313(c) of the Trust Indenture
Act, such summaries of any information, documents and reports
required to be filed by it pursuant to subsections (a) and (b) of
this Section 9.6, as may be required by rules and regulations
prescribed from time to time by the Commission.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's
receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information
contained therein, including the Company's compliance with any of
its covenants hereunder (as to which the Trustee is entitled to
rely exclusively on Officers' Certificates).
Section 9.7. Annual Review Certificate. The Company
covenants and agrees to deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company, a brief certificate from
the principal executive officer, principal financial officer, or
principal accounting officer as to his or her knowledge of the
Company's compliance with all conditions and covenants under this
Indenture. For purposes of this Section 9.7, such compliance shall be
determined without regard to any period of grace or requirement of
notice provided under this Indenture.
Section 9.8. Limitation on Dividends and Capital Stock
Acquisitions. The Company covenants and agrees that, if at any time
it has failed to make any payment of interest, principal or premium on
the Securities when due (after giving effect to any grace period for
payment thereof as provided in Section 5.1), the Company will not,
until all defaulted interest on the Securities and all principal and
premium, if any, then due and payable on the Securities shall have
been paid in full, (i) declare, set aside or pay any dividend or
distribution on any capital stock of the Company (except for dividends
or distributions in shares of its capital stock or rights to acquire
shares of its capital stock), or (ii) repurchase, redeem or otherwise
acquire, or make any sinking fund payment for the purchase or redemption
of, any shares of its capital stock (except by conversion into or exchange
for shares of its capital stock and except for a redemption, purchase or
other acquisition of shares of its capital stock made for the purpose of
an employee incentive plan or benefit plan of the Company or any of its
subsidiaries); provided, however, that any moneys theretofore
deposited in any sinking fund with respect to any preferred stock of
the Company in compliance with this Section 9.8 and the provisions of
such sinking fund may thereafter be applied to the purchase or
redemption of such preferred stock in accordance with the terms of
such sinking fund without regard to the restrictions in this Section
9.8.
Section 9.9. Notice of Default. The Company shall file
with the Trustee written notice of the occurrence of any Default or
Event of Default within 30 Business Days of its becoming aware of any
such Default or Event of Default.
ARTICLE 10
Redemption
----------
Section 10.1. Applicability of Article. Securities
(including coupons, if any) of any series which are redeemable before
their Stated Maturity shall be redeemable in accordance with their
terms and (except as otherwise specified as contemplated by Section
3.1 for Securities of any series) in accordance with this Article.
Section 10.2. Election to Redeem; Notice to Trustee. The
election of the Company to redeem any Securities, including coupons,
if any, shall be evidenced by or pursuant to a Board Resolution or an
Officers' Certificate. In the case of any redemption at the election
of the Company of less than all the Securities or coupons, if any, of
any series, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption
Date, of the principal amount of Securities of such series to be
redeemed and, if applicable, of the tenor of the Securities to be
redeemed. In the case of any redemption of Securities (i) prior to
the expiration of any restriction on such redemption provided in the
terms of such Securities or elsewhere in this Indenture or (ii)
pursuant to an election of the Company which is subject to a condition
specified in the terms of such Securities, the Company
shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction or condition.
Section 10.3. Selection of Securities to Be Redeemed.
Unless otherwise specified as contemplated by Section 3.1, if less
than all the Securities (including coupons, if any) of a series with
the same original issue date, interest rate and Stated Maturity are to
be redeemed, the Trustee, not more than 45 days prior to the
redemption date, shall select the Securities of the series to be
redeemed in such manner as the Trustee shall deem fair and
appropriate. The Trustee shall make the selection from Securities of
the series that are Outstanding and that have not previously been
called for redemption and may provide for the selection for redemption
of portions (equal to the minimum authorized denomination for
Securities, including coupons, if any, of that series or any integral
multiple thereof) of the principal amount of Securities, including
coupons, if any, of such series of a denomination larger than the
minimum authorized denomination for Securities of that series. The
Trustee shall promptly notify the Company in writing of the Securities
selected by the Trustee for redemption and, in the case of any
Securities selected for partial redemption, the principal amount
thereof to be redeemed.
For purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities
(including coupons, if any) shall relate, in the case of any
Securities (including coupons, if any) redeemed or to be redeemed only
in part, to the portion of the principal amount of such Securities
(including coupons, if any) which has been or is to be redeemed.
Section 10.4. Notice of Redemption. Unless otherwise
specified as contemplated by Section 3.1, notice of redemption shall
be given in the manner provided in Section 1.6 not less than 30 days
nor more than 60 days prior to the Redemption Date to the Holders of
the Securities to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if fewer than all the Outstanding Securities of a
series are to be redeemed, the identification (and, in the case
of partial redemption, the principal amounts) of the particular
Security or Securities to be redeemed;
(4) in case any Security is to be redeemed in part only,
the notice which relates to such Security shall state
that on and after the Redemption Date, upon surrender of
such Security, the holder will receive, without a charge, a new
Security or Securities of authorized denominations for the
principal amount thereof remaining unredeemed;
(5) the Place or Places of Payment where such Securities,
together in the case of Bearer Securities with all coupons
appertaining thereto, if any, maturing after the Redemption Date,
are to be surrendered for payment for the Redemption Price;
(6) that Securities of the series called for redemption and
all unmatured coupons, if any, appertaining thereto must be
surrendered to the Paying Agent to collect the Redemption Price;
(7) that, on the Redemption Date, the Redemption Price will
become due and payable upon each such Security, or the portion
thereof, to be redeemed and, if applicable, that interest thereon
will cease to accrue on and after said date;
(8) that the redemption is for a sinking fund, if such is
the case;
(9) that, unless otherwise specified in such notice, Bearer
Securities of any series, if any, surrendered for redemption must
be accompanied by all coupons maturing subsequent to the
Redemption Date or the amount of any such missing coupon or
coupons will be deducted from the Redemption Price, unless
security or indemnity satisfactory to the Company, the Trustee
and any Paying Agent is furnished; and
(10) CUSIP number.
Notice of redemption of Securities to be redeemed shall be
given by the Company or, at the Company s request, by the Trustee in
the name and at the expense of the Company.
Section 10.5. Deposit of Redemption Price. On or prior to
12:00 noon New York City time on any Redemption Date, the Company
shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust
as provided in Section 9.3) an amount of money in the currency or
currencies (including currency units or composite currencies) in which
the Securities of such series are payable (except as otherwise
specified pursuant to Section 3.1 for the Securities of such series)
sufficient to pay on the Redemption Date the Redemption Price of, and
(unless the Redemption Date shall be an Interest Payment Date)
interest accrued to the Redemption Date on, all Securities or portions
thereof which are to be redeemed on that date.
Unless any Security by its terms prohibits any sinking fund
payment obligation from being satisfied by delivering and crediting
Securities (including Securities redeemed otherwise than through a
sinking fund), the Company may deliver such Securities to the Trustee
for crediting against such payment obligation in accordance with the
terms of such Securities and this Indenture.
Section 10.6. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable
at the Redemption Price therein specified, and from and after such
date (unless the Company shall default in the payment of the
Redemption Price and accrued interest) such Securities shall cease to
bear interest and the coupons for any such interest appertaining to
any Bearer Security so to be redeemed, except to the extent provided
below, shall be void. Except as provided in the next succeeding
paragraph, upon surrender of any such Security, including coupons, if
any, for redemption in accordance with said notice, such Security
shall be paid by the Company at the Redemption Price, together with
accrued interest to the Redemption Date; provided, however, that
installments of interest on Bearer Securities whose Stated Maturity is
prior to the Redemption Date shall be payable only at an office or
agency located outside the United States and its possessions (except
as otherwise provided in Section 9.2) and, unless otherwise specified
as contemplated by Section 3.1, only upon presentation and surrender
of coupons for such interest; and provided further that, unless
otherwise specified as contemplated by Section 3.1, installments of
interest on Registered Securities whose Stated Maturity is prior to
the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such
at the close of business on the relevant Record Dates according to
their terms and the provisions of Section 3.7.
If any Bearer Security surrendered for redemption shall not
be accompanied by all appurtenant coupons maturing after the
Redemption Date, such Bearer Security may be paid after deducting from
the Redemption Price an amount equal to the face amount of all such
missing 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
Bearer Security shall surrender to the Trustee or any Paying Agent any
such missing coupon in respect of which a deduction shall have been
made from the Redemption Price, such Holder shall be entitled to
receive the amount so deducted; provided, however, that interest
represented by coupons shall be payable only at an office or agency
located outside of the United States (except as otherwise provided
pursuant to Section 9.2) and, unless otherwise specified as contemplated
by Section 3.1, only upon presentation and surrender of those coupons.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal (and premium, if
any) shall, until paid, bear interest from the Redemption Date at the
rate prescribed therefor in the Security.
Section 10.7. Securities Redeemed in Part. Upon surrender
of a Security that is redeemed in part at any Place of Payment
therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), the
Company shall execute and the Trustee shall authenticate and deliver
to the Holder of that Security, without service charge, a new Security
or Securities of the same series, the same form and the same Maturity
in any authorized denomination equal in aggregate principal amount to
the unredeemed portion of the principal of the Security surrendered.
ARTICLE 11
Sinking Funds
-------------
Section 11.1. Applicability of Article. The provisions of
this Article shall be applicable to any sinking fund for the
retirement of Securities of a series except as otherwise specified as
contemplated by Section 3.1 for Securities of such series.
The minimum amount of any sinking fund payment provided for
by the terms of Securities of any series is herein referred to as a
"mandatory sinking fund payment," and any payment in excess of such
minimum amount provided for by the terms of Securities of any series
is herein referred to as an "optional sinking fund payment." If
provided for by the terms of Securities of any series, the cash amount
of any sinking fund payment may be subject to reduction as provided in
Section 11.2. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
Section 11.2. Satisfaction of Sinking Fund Payments with
Securities. The Company (i) may deliver Outstanding Securities of a
series (other than any previously called for redemption) together,
in the case of Bearer Securities of such series, with all unmatured
coupons appertaining thereto and (ii) may apply as a credit Securities
of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the
application of permitted optional sinking fund payments
pursuant to the terms of such Securities, in each case in satisfaction
of all or any part of any sinking fund payment with respect to the
Securities of such series required to be made pursuant to the terms of
such Securities as provided for by the terms of such series; provided
that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the
Trustee at the Redemption Price specified in such Securities for
redemption through operation of the sinking fund and the amount of
such sinking fund payment shall be reduced accordingly.
Section 11.3. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an
Officers' Certificate specifying the amount of the next ensuing
sinking fund payment for that series pursuant to the terms of that
series, the portion thereof, if any, which is to be satisfied by
payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities of that series
pursuant to Section 11.2 and will also deliver to the Trustee any
Securities to be so delivered. Not less than 30 days before each such
sinking fund payment date, the Trustee shall select the Securities to
be redeemed upon such sinking fund payment date in the manner
specified in Section 10.3 and cause notice of the redemption thereof
to be given in the name of and at the expense of the Company in the
manner provided in Section 10.4. Such notice having been duly given,
the redemption of such Securities shall be made upon the terms and in
the manner stated in Sections 10.6 and 10.7.
ARTICLE 12
Subordination of Securities
---------------------------
Section 12.1. Securities Subordinated to Senior
Indebtedness. (a) The Company agrees, and each Holder of the
Securities by acceptance thereof likewise agrees, that the payment of
the principal of, premium, if any, and interest, if any, on the
Securities is subordinated, to the extent and in the manner provided
in this Article 12, to the prior payment in full of all Senior
Indebtedness of the Company.
(b) All provisions of this Article 12 shall be subject to
Section 12.14.
Section 12.2. Company Not to Make Payments with Respect to
Securities in Certain Circumstances; Limitations on Acceleration of
Securities. (a) Upon the maturity of any Senior Indebtedness of the
Company by lapse of time, acceleration or otherwise, all obligations
with respect thereto shall first be paid in full, or such payment duly
provided for in cash or in a manner satisfactory to the holders of
such Senior Indebtedness, before any payment is made on account of the
principal of, premium, if any, or interest, if any, on the Securities
or to redeem, retire, purchase, deposit moneys for the defeasance of
or acquire any of the Securities.
(b) Upon the happening of (i) any default in payment of any
Senior Indebtedness of the Company or (ii) any other default on Senior
Indebtedness of the Company and the maturity of such Senior
Indebtedness is accelerated in accordance with its terms, then, unless
(w) such default relates to Senior Indebtedness of the Company in an
aggregate amount equal to or less than $20 million, (x) such default
shall have been cured or waived or shall have ceased to exist, (y) any
such acceleration has been rescinded, or (z) such Senior Indebtedness
has been paid in full, no direct or indirect payment in cash, property
or securities, by set-off or otherwise (except payment of the
Securities from funds previously deposited in accordance with Section
4.1 at any time such deposit was not prohibited by this Indenture),
shall be made or agreed to be made by the Company on account of the
principal of, premium, if any, or interest, if any, on the Securities,
or in respect of any redemption, retirement, purchase, deposit of
moneys for the defeasance or other acquisition of any of the
Securities in the case of such a default in Senior Indebtedness of the
Company, the Company shall not deposit money for any such payment or
distribution with the Trustee or any Paying Agent nor shall the
Company (if the Company is acting as its own Paying Agent) segregate
and hold in trust money for any such payment or distribution.
(c) Upon the happening of an event of default (other than
under circumstances when the terms of paragraph (b) of this Section
12.2 are applicable) with respect to any Senior Indebtedness of the
Company pursuant to which the holders thereof are entitled under the
terms of such Senior Indebtedness to immediately accelerate the
maturity thereof (without further notice or expiration of any
applicable grace periods), upon written notice thereof given to each
of the Company and the Trustee by the trustee for or other
representative of the holders of at least $25 million of Senior
Indebtedness of the Company (a "Payment Notice"), then, unless and
until such event of default shall have been cured or waived or shall
have ceased to exist, no direct or indirect payment in cash, property
or securities, by set-off or otherwise (except payment of the
Securities from funds previously deposited in accordance with Section
4.1 at any time such deposit was not prohibited by this Indenture),
shall be made or agreed to be made by the Company on account of the
principal of or premium, if any, or interest, if any, on the Securities,
or in respect of any redemption, retirement, purchase, deposit of moneys
for the defeasance or other acquisition of any of the Securities, and
the Company shall not deposit money for any such payment or distribution
with the Trustee or any Paying Agent nor shall the Company or a
Subsidiary (if the Company or such Subsidiary is acting as Paying
Agent) segregate and hold in trust money for any such payment or
distribution (a "Payment Block"); provided, however, that this Section
12.2(c) shall not prevent the making of any payment for more than 120
days after a Payment Notice shall have been given unless the Senior
Indebtedness in respect of which such event of default exists has been
declared due and payable in its entirety, in which case no such
payment shall be made until such acceleration has been rescinded or
annulled or such Senior Indebtedness has been paid in full in
accordance with its terms. Notwithstanding the foregoing, (i) not
more than one Payment Notice shall be given with respect to a
particular event of default (which shall not bar subsequent Payment
Notices for other such events of default), (ii) all events of default
under Senior Indebtedness occurring within any 30-day period shall be
treated as one event of default to the extent that one or more Payment
Notices are issued in connection therewith and (iii) no more than two
Payment Blocks shall be permitted within any period of 12 consecutive
months. Any payment made in contravention of the provisions of this
Section 12.2(c) shall be returned to the Company.
(d) In the event that, notwithstanding the provisions of
Section 12.2(a) or 12.2(b), the Trustee or the Holder of any Security
shall have received any payment on account of the principal of or
premium, if any, or interest, if any, on the Securities in
contravention of Section 12.2(a) or 12.2(b) or after the happening of
a default in payment of any Senior Indebtedness of the Company, or any
acceleration of the maturity of any Senior Indebtedness of the
Company, then, in either such case, except in the case of any such
default which shall have been cured or waived or shall have ceased to
exist, such payment (subject to the provisions of Sections 12.6 and
12.7) shall be held for the benefit of, and shall be paid over and
delivered to, the holders of such Senior Indebtedness of the Company
(pro rata as to each of such holders on the basis of the respective
amounts of Senior Indebtedness of the Company held by them) or their
representative or the trustee under the indenture or other agreement
(if any) pursuant to which Senior Indebtedness of the Company may have
been issued, as their respective interests may appear, for application
to the payment of all Senior Indebtedness of the Company remaining
unpaid to the extent necessary to pay all Senior Indebtedness of the
Company in full in accordance with its terms, after giving effect to
any concurrent payment or
distribution to or for the holders of Senior Indebtedness of
the Company.
(e) (1) Upon the occurrence of an Event of Default under
Section 5.1(1) through (3) and (6), the Trustee or holders of 25% of
the outstanding principal amount of the Securities of any series must
give notice of such Event of Default and the intention to accelerate
to the Company and any holders of Senior Indebtedness which have
theretofore requested of the Trustee such notice, and no acceleration
of the Securities of any series shall be effective unless and until
such Event of Default is continuing on the sixtieth day after the date
of delivery of such notice. The Company may pay the holders of the
Securities of any series any defaulted payment and all other amounts
due following any such acceleration of the maturity of the Securities
if Section 12.2(a) would not prohibit such payment to be made at that
time.
(2) Nothing in this Article 12 shall prevent or delay the
Trustee or the holders of the Securities from taking any action in
connection with the acceleration of the maturity of the Securities
pursuant to Section 5.2 upon the occurrence of an Event of Default
under either of Section 5.1(4) or 5.1(5).
(3) Except as provided in Section 12.2(e)(1), a failure to
make any payment with respect to the Securities as a result of the
rights of holders of Senior Indebtedness of the Company described in
Section 12.2(b) or 12.2(c) will not have any effect on the right of
holders of the Securities to accelerate the maturities thereof as a
result of such payment default. The Company shall give prompt written
notice to the Trustee of any default in the payment of principal of or
interest on any Senior Indebtedness of the Company, and in the event
of any such default, shall provide to the Trustee, in the form of an
Officers' Certificate, the names, addresses and respective amounts due
holders of such Senior Indebtedness or the name and address of the
trustee acting on their behalf, if any. The Trustee shall be entitled
to rely conclusively on such Officers' Certificate without independent
verification.
Section 12.3. Securities Subordinated to Prior Payment of
All Senior Indebtedness on Dissolution, Liquidation or Reorganization
of the Company. Upon the distribution of assets of the Company in any
Dissolution, winding up, liquidation (total or partial) or similar
proceeding relating to the Company (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise):
(1) the holders of all Senior Indebtedness of the Company
shall first be entitled to receive payment in full of all Senior
Indebtedness (or to have such payment duly provided for in a
manner satisfactory to them) in cash or in a manner satisfactory
to the holders of Senior Indebtedness of the Company before the
Holders of the Securities, in the case of Senior Indebtedness
of the Company, are entitled to receive any payment on account
of the principal of, premium, if any, or interest, if any, on
the Securities;
(2) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities
(other than securities of the Company as reorganized or
readjusted or securities of the Company or any other company,
trust or corporation provided for by a plan of reorganization or
readjustment, the payment of which is junior or otherwise
subordinate, at least to the extent provided in this Article 12
with respect to the Securities, to the payment of all Senior
Indebtedness of the Company at the time outstanding and to the
payment of all securities issued in exchange therefor to the
holders of the Senior Indebtedness of the Company at the time
outstanding), to which the Holders of the Securities or the
Trustee on behalf of the Holders of the Securities would be
entitled except for the provisions of this Article 12, shall be
paid by the liquidating trustee or agent or other person making
such payment or distribution directly to the holders of the
Senior Indebtedness of the Company or their representatives or to
the trustee under any indenture under which such Senior
Indebtedness may have been issued (pro rata) as to each such
holder, representative or trustee on the basis of respective
amounts of unpaid Senior Indebtedness held or represented by
each), to the extent necessary to make payment in full of all
Senior Indebtedness of the Company remaining unpaid, after giving
effect to any concurrent payment or distribution or provision
therefor to the holders of such Senior Indebtedness; and
(3) in the event that notwithstanding the foregoing
provisions of this Section 12.3, any payment or distribution of
assets of the Company of any kind or character, whether in cash,
property or securities (other than securities of the Company as
reorganized or readjusted or securities of the Company or any
other company, trust or corporation provided for by a plan of
reorganization or readjustment, the payment of which is junior or
otherwise subordinate, at least to the extent provided in this
Article 12 with respect to the Securities, to the payment of all
Senior Indebtedness of the Company at the time outstanding and to
the payment of all securities issued in exchange therefor to the
holders of the Senior Indebtedness of the Company at the time
outstanding), shall be received by the Trustee or the Holders of
the Securities on account of principal of, premium, if any, or
interest, if any, on the Securities before all Senior
Indebtedness of the Company is paid in full in cash or in a manner
satisfactory to the holders of such Senior Indebtedness in
accordance with its terms, or effective provision made for its
payment, such payment or distribution (subject to the provisions
of Sections 12.6 and 12.7) shall be received and held for the
benefit of and paid over to the holders of the Senior Indebtedness
of the Company remaining unpaid or unprovided for or their
representative, or to the trustee under any indenture under which
such Senior Indebtedness of the Company may have been issued
(pro rata as provided in paragraph (2) above), for application
to the payment of such Senior Indebtedness of the Company to the
extent necessary to pay all such Senior Indebtedness of the Company
in full in cash or in a manner satisfactory to the holders of Senior
Indebtedness of the Company, in accordance with its terms, after
giving effect to any concurrent payment or distribution or
provision therefor to the holders of such Senior Indebtedness of
the Company.
The Company shall give prompt written notice to the Trustee
of any dissolution, winding up, liquidation or reorganization of the
Company or any assignment for the benefit of the Company's creditors
tending toward the liquidation of the business and assets of the
Company.
Section 12.4. Holders to Be Subrogated to Rights of Holders
of Senior Indebtedness. Upon the payment in full of all Senior
Indebtedness of the Company in cash or in a manner satisfactory to the
holders of such Senior Indebtedness, the Holders of the Securities
shall be subrogated equally and ratably to the rights of the holders
of Senior Indebtedness of the Company to receive payments or
distributions of assets of the Company applicable to the Senior
Indebtedness of the Company until all amounts owing on the Securities
shall be paid in full, and for the purpose of such subrogation no
payments or distributions to the holders of Senior Indebtedness of the
Company by or on behalf of the Company or by or on behalf of Holders
of the Securities by virtue of this Article 12 which otherwise would
have been made to the Holders of the Securities shall, as between the
Company and the Holders of the Securities, be deemed to be payment by
the Company to or on account of Senior Indebtedness of the Company, it
being understood that the provisions of this Article 12 are intended
solely for the purpose of defining the relative rights of the Holders
of the Securities, on the one hand, and the holders of Senior
Indebtedness of the Company, on the other hand.
Section 12.5. Obligation of the Company Unconditional.
Nothing contained in this Article 12 or elsewhere in this Indenture or
in any Security is intended to or shall impair, as between the Company
and the Holders of the Securities, the obligations of the Company, which
are absolute and unconditional, to pay to the Holders of the Securities
the principal of (and premium, if any) and interest, if any, on the
Securities as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of
the Holders of the Securities and creditors of the Company other than the
holders of Senior Indebtedness of the Company, nor, except as expressly
provided in this Article 12, shall anything herein or in the Securities
prevent the Trustee or the Holder of any Security from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article 12 of the
holders of Senior Indebtedness of the Company in respect of cash,
property or securities of the Company upon the exercise of any such
remedy. Upon any distribution of assets of the Company referred to in
this Article 12, the Trustee, subject to the provisions of Section
6.1, and the Holders of the Securities shall be entitled to rely upon
any order or decree by any court of competent jurisdiction in which
such dissolution, winding up, liquidation or reorganization
proceedings are pending, or a certificate of the liquidating trustee
or agent or other person making any distribution to the Trustee or the
Holders of the securities, for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of Senior
Indebtedness of the Company and other indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this
Article 12.
Nothing contained in this Article 12 or elsewhere in this
Indenture or in any Security is intended to or shall affect the
obligations of the Company to make, or prevent the Company from
making, at any time except during the pendency of any dissolution,
winding up, liquidation (total or partial) or similar proceeding, and
except during the continuance of any event specified in Section 12.2
(not cured or waived), payments at any time of the principal of (or
premium, if any) or interest, if any, on the Securities.
Section 12.6. Knowledge of Trustee. Notwithstanding any
provision of this Indenture, the Trustee shall not at any time be
charged with knowledge of the existence of any facts which would
prohibit the making of any payment of monies to or by the Trustee
until three Business Days after a Responsible Officer of the Trustee
on behalf of the Trustee shall have received at the Corporate Trust
Office of the Trustee written notice thereof from the Company, any
Holder, or the holder or representative of any class of Senior
Indebtedness of the Company identifying the specific sections of this
Indenture involved and describing in detail the facts that would
obligate the Trustee to withhold payments to Holders of Securities,
and prior to such time, the Trustee, subject to the provisions of
Section 6.1, shall be entitled in all respects conclusively to assume
that no such facts exist. The Trustee shall be entitled to rely on the
delivery to it of a written notice by an individual representing himself
to be a holder of Senior Indebtedness of the Company (or a trustee on
behalf of such holder) to establish that such notice has been given
by a holder of any such Senior Indebtedness or a trustee on behalf
of any such holder.
In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any person
as a holder of Senior Indebtedness of the Company to participate in
any payment or distribution pursuant to this Article, the Trustee may
request such person to furnish evidence to the reasonable satisfaction
of the Trustee as to the amount of Senior Indebtedness of the Company
held by such person, the extent to which such person is entitled to
participate in such payment or distribution and any other facts
pertinent to the rights of such person under this Article, and if such
evidence is not furnished, the Trustee may defer any payment to such
person pending judicial determination as to the right of such person
to receive such payment.
Section 12.7. Application by Trustee of Moneys Deposited
with It. If two Business Days prior to the date on which by the terms
of this Indenture any moneys deposited with the Trustee or any Paying
Agent (other than the Company or a Subsidiary) may become payable for
any purpose (including, without limitation, the payment of the
principal of, premium, if any, or interest, if any, on any Security)
the Trustee shall not have received with respect to such moneys the
notice provided for in Section 12.6, then the Trustee shall have full
power and authority to receive such monies and to apply the same to
the purpose for which they were received and shall not be affected by
any notice to the contrary which may be received by it on or after
such date. This Section 12.7 shall be construed solely for the
benefit of the Trustee and Paying Agent and shall not otherwise affect
the rights of holders of such Senior Indebtedness.
Section 12.8. Subordination Rights Not Impaired by Acts or
Omissions of Company or Holders of Senior Indebtedness. No right of
any present or future holders of any Senior Indebtedness of the
Company to enforce subordination as provided herein shall at any time
in any way be prejudiced or impaired by any act or failure to act on
the part of the Company or by any act or failure to act by any such
holder, or by any noncompliance by the Company with the terms of this
Indenture, regardless of any knowledge thereof which any such holder
may have or be otherwise charged with.
Section 12.9. Holders Authorize Trustee to Effectuate
Subordination of Securities. Each Holder of the Securities by his
acceptance thereof authorizes and expressly directs the Trustee on
such Holder's behalf to take such action as may be necessary or
appropriate in the discretion of the Trustee to effectuate the
subordination provided in this Article 12 and appoints the Trustee
such Holder's attorney in-fact for such purpose, including, without
limitation, in the event of any dissolution, winding up, liquidation
or reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the business
and assets of the Company, the timely filing of a claim for the unpaid
balance of such Holder's Securities in the form required in said
proceedings. If the Trustee does not file a proper claim or proof of
debt in the form required in such proceedings before the expiration of
the time to file such claim or claims, then the holders of Senior
Indebtedness of the Company are hereby authorized to have the right to
file and are hereby authorized to file an appropriate claim for and on
behalf of the Holders of said Securities.
Section 12.10. Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article 12 in respect of any Senior Indebtedness of the Company at any
time held by it to the same extent as any other holder of such Senior
Indebtedness of the Company, and nothing in this Indenture shall be
construed to deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the Company, the
Trustee undertakes to perform or to observe only such of its covenants
and obligations as are specifically set forth in this Article 12, and
no implied covenants or obligations with respect to the holders of
Senior Indebtedness of the Company shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of the Company,
and the Trustee shall not be liable to any holder of Senior
Indebtedness of the Company if it shall mistakenly pay over or deliver
to Holders of Securities, the Company or any other Person moneys or
assets to which any holder of such Senior Indebtedness shall be
entitled by virtue of this Article 12 or otherwise.
Section 12.11. Article 12 Not to Prevent Events of Default.
The failure to make a payment on account of principal or interest by
reason of any provision in this Article 12 shall not be construed as
preventing the occurrence of an Event of Default under Section 5.1.
Section 12.12. Paying Agents Other Than the Trustee. In
case at any time any Paying Agent (including, without
limitation, the Company or any Subsidiary) other than the Trustee
shall have been appointed by the Company and be then acting hereunder,
the term "Trustee" as used in this Article 12 shall in such case
(unless the context shall otherwise require) be construed as extending
to and including such Paying Agent (except the Company and its
subsidiaries in the case of Sections 12.6 and 12.7) within its meaning
as fully for all intents and purposes as if such Paying Agent were
named in this Article 12 in addition to or in place of the Trustee.
Section 12.13. Trustee's Compensation Not Prejudiced.
Nothing in this Article 12 shall apply to amounts due to the Trustee
pursuant to Section 6.9.
Section 12.14. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments
from money held in trust under Article 4 by the Trustee for the
payment of principal of, premium if any, and interest, if any, on the
Securities shall not be subordinated to the prior payment of any
Senior Indebtedness of the Company or subject to the restrictions set
forth in this Article 12 and none of the Holders shall be obligated to
pay over any such amount to the Company or any holder of Senior
Indebtedness of the Company or any other creditor of the Company.
Section 12.15. Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of the
Company referred to in this Article Twelve, the Trustee and the
Holders of the Securities shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, liquidating trustee,
custodian, receiver, assignee for the benefit of creditors, agent or
other person making such payment or distribution, delivered to the
Trustee or to the Holders of Securities, for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article Twelve.
Section 12.16. Trustee Not Fiduciary for Holders or Senior
Indebtedness of the Company. The Trustee shall not be deemed to owe
any fiduciary duty to the Holders of any Senior Indebtedness and shall
not be liable to any such holders if the Trustee shall in good faith
mistakenly pay over or distribute to Holders of Securities or to the
Company or to any other person cash, property or securities to which
any holders of Senior Indebtedness of the Company shall be entitled by
virtue of this Article Twelve or otherwise. The Trustee shall not be
charged with knowledge of the existence of Senior Indebtedness of the
Company or of any facts that would prohibit any payment hereunder unless
a Responsible Officer of the Trustee shall have received notice to that
effect at the address of the Trustee, provided that the Trustee shall
be deemed to have knowledge of the existence of any Senior
Indebtedness to which it acts as Trustee. With respect to the holders
of Senior Indebtedness of the Company, the Trustee undertakes to
perform or to observe only such of its covenants or obligations as are
specifically set forth in this Article Twelve and no implied covenants
or obligations with respect to holders of Senior Indebtedness of the
Company shall be read into this Indenture against the Trustee.
_______________________
This Indenture may be executed in any number of
counterparts, each of which shall be an original, but such
counterparts shall together constitute but one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to
be hereunto affixed and attested, all as of the day and year first
above written.
UAL CORPORATION
By:/s/ Douglas A. Hacker
---------------------
Title: Senior Vice President
and Chief Financial Officer
Attest:
/s/ Francesca M. Maher
- ----------------------
Title: Corporate Secretary
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
By:/s/ Richard D. Manella
----------------------
Title: Vice President
Attest:
/s/ Leland Hansen
- -----------------
Title: Assistant Vice President
Exhibit 4.3
UAL CORPORATION
Officer's Certificate
________________________
Pursuant to Sections 2.1 and 3.1 of the Indenture, dated as
of December 20, 1996 (the "Indenture"), between UAL Corporation,
a Delaware corporation (the "Company"), and The First National
Bank of Chicago, a national banking association, as trustee (the
"Trustee"), the undersigned officer of the Company hereby
certifies on behalf of the Company as follows:
1. Authorization. The establishment of a series of
Securities of the Company has been approved and authorized in
accordance with the provisions of the Indenture pursuant to
resolutions of the Board of Directors of the Company adopted on
June 27, 1996 and September 26, 1996 and the resolutions of the
Series B Committee of the Company adopted on November 20, 1996.
2. Compliance with Covenants and Conditions Precedent.
All conditions precedent, if any, provided for in the Indenture
relating to the establishment of a series of Securities have been
complied with.
3. Terms. The terms of the series of Securities
established pursuant to this Officer's Certificate will be as
follows:
(i) Title. The title of the Securities is "13-1/4%
Junior Subordinated Debentures due 2026" (the
"Junior Subordinated Debentures").
(ii) Aggregate Principal Amount. The Junior
Subordinated Debentures shall be limited in
aggregate principal amount to $77,301,649.50
(except for Junior Subordinated Debentures
authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of,
other Debentures pursuant to Sections 3.4, 3.5,
3.6, 8.6 or 10.7 of the Indenture and except for
any Junior Subordinated Debentures that, pursuant
to the last paragraph of Section 3.3 of the
Indenture, are deemed never to have been
authenticated and delivered under the Indenture).
(iii) Stated Maturity. The date on which the
principal of the Junior Subordinated Debentures is
payable is December 15, 2026.
(iv) Rate of Interest; Interest Payment Dates;
Regular Record Dates. Each Junior Subordinated
Debenture will bear interest from December 21, 1996
or from the most recent Interest Payment Date to
which interest has been paid or duly provided for,
quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each, an
"Interest Payment Date") (subject to extension as
provided in the form of Junior Subordinated
Debenture attached hereto as Exhibit A), commencing
on December 31, 1996, at the rate of 13-1/4% per
annum until the principal thereof is paid or made
available for payment, and (to the extent that the
payment of such interest shall be legally
enforceable) at the rate of 13-1/4% per annum,
compounded quarterly, on any overdue principal and
premium and on any overdue installment of interest.
Except as set forth below, the interest so payable
shall be paid to the person in whose name such
Junior Subordinated Debenture (or one or more
Predecessor Securities) is registered at the close
of business on the Regular Record Date for such
interest, which, except as set forth below, shall
be the close of business 15 calendar days prior to
such Interest Payment Date, except that the record
date for the payment to be made on December 31,
1996 shall be the date of exchange of the Preferred
Securities for the Depositary Shares. In addition,
each Junior Subordinated Debenture will bear
interest from November 1, 1996 through December 20,
1996 at the rate of 12-1/4% per annum (the
"Pre-Issuance Accrued Distribution"), payable on
December 31, 1996 to the person in whose name such
Junior Subordinated Debenture is registered at the
close of business on the Regular Record Date for
such Interest Payment Date. With the exception of
the interest payment described in the immediately
preceding sentence, any such interest not so
punctually paid or duly provided for shall
forthwith cease to be payable to the registered
holder on such Regular Record Date and may either
be paid to the person in whose name such Junior
Subordinated Debenture (or one or more Predecessor
Securities) is registered at the close of business
on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee,
notice whereof shall be given to the registered
holder of such Junior Subordinated Debenture not
less than 10 days prior to such Special Record
Date, or may be paid at any time in any other
lawful manner not inconsistent with the
requirements of any securities exchange on which
the Junior Subordinated Debentures may be listed,
and upon such notice as may be required by such
exchange, all as more fully provided in the
Indenture.
The amount of interest payable for any period
will be computed on the basis of a 360-day year of
twelve 30-day months and, for any period shorter
than a full quarterly interest period for which
interest is computed, the amount of interest
payable will be computed on the basis of the actual
number of days elapsed in such a 30-day month. In
the event that any Interest Payment Date is not a
business day, then payment of interest payable on
such date will be made on the next succeeding
business day (and without any interest or other
payment in respect of any such delay), except that,
if such Business Day is in the next succeeding
calendar year, such payment shall be made on the
immediately preceding Business Day (notwithstanding
Section 1.12 of the Indenture), in each case with
the same force and effect as if made on such date.
(v) Place of Payment. Principal and interest on
the Junior Subordinated Debentures will be payable,
the transfer of such Junior Subordinated Debentures
will be registrable and such Junior Subordinated
Debentures will be exchangeable for Junior
Subordinated Debentures bearing identical terms and
provisions at the office or agency of the Company
maintained for that purpose in the Borough of
Manhattan, the City and State of New York;
provided, however, that, at the option of the
Company, payments of interest may be made by check
mailed to the registered holder at such address as
shall appear in the Security Register and that the
payment of principal with respect to any Junior
Subordinated Debenture will only be made upon
surrender of such Junior Subordinated Debenture to
the Trustee.
(vi) Optional Redemption. Junior Subordinated
Debentures may be redeemed at the option of the
Company as set forth in the form of Junior
Subordinated Debenture attached hereto as
Exhibit A.
(vii) Mandatory Redemption. The Junior
Subordinated Debentures will contain no provision
for mandatory redemption, a sinking fund or any
analogous provisions.
(viii) Denominations. The Junior Subordinated
Debentures will be issuable in denominations of $25
and integral multiples thereof.
(ix) Currency. The Junior Subordinated Debentures
will be denominated in Dollars and the principal of
and interest on the Junior Subordinated Debentures
will be payable in Dollars. The Junior
Subordinated Debentures will be satisfied and
discharged as provided in Article 4 of the
Indenture.
(x) Payment Currency. The principal of and
interest on the Junior Subordinated Debentures will
not be payable in a currency other than Dollars.
(xi) Formula. The amount of payments of principal
of and interest on the Junior Subordinated
Debentures will not be determined with reference to
an index, formula or other method.
(xii) Amount Payable Upon Acceleration. The
principal amount of the Junior Subordinated
Debentures will be payable upon declaration of
acceleration pursuant to Section 5.2 of the
Indenture.
(xiii) Payment of Interest. The payment of
interest on the Junior Subordinated Debentures will
be governed by Section 3.7 of the Indenture.
(xiv) Special Rights. There are no provisions
granting special rights to the Holders upon the
occurrence of specified events.
(xv) Covenants; Events of Default. There shall be
no deletions from, modifications or additions to
the Events of Default set forth in Section 5.1 of
the Indenture or covenants of the Company set forth
in Article 9 with respect to the Junior
Subordinated Debentures.
(xvi) Additional Amounts. The Company will
not pay additional amounts on the Junior
Subordinated Debentures held by a Person that is
not a U.S. Person in respect of taxes or similar
charges withheld or deducted.
(xvii) Registered Securities. The Junior
Subordinated Debentures will be issuable in
definitive form as Registered Securities, without
interest coupons. Section 3.5 of the Indenture
will govern the Junior Subordinated Debentures.
(xviii) Bearer Securities; Temporary Global
Security. The Junior Subordinated Debentures will
not be Bearer Securities or represented by a
temporary global Security.
(xix) Defeasance and Covenant Defeasance.
Sections 4.4 and 4.5 of the Indenture will apply to
the Junior Subordinated Debentures and the term
"Government Obligations" shall not include
obligations referred to in the Definition of such
term in the Indenture which are not obligations of
the United States or an agency or instrumentality
of the United States.
(xx) Registrar; Paying Agent. The Trustee will be
the Registrar and the Paying Agent for the Junior
Subordinated Debentures.
(xxi) Warrants. No warrants will be issued in
connection with the Junior Subordinated Debentures.
(xxii) Exchange Rate Agent. There will be no
Exchange Rate Agent with respect to the Junior
Subordinated Debentures.
(xxiii) Global Form. The Junior Subordinated
Debentures will not be issued in temporary or
permanent global form.
(xxiv) Conversion. The Junior Subordinated
Debentures will not be convertible into any other
security of the Company.
(xxv) Subordination. Article 12 of the
Indenture will govern the terms and conditions
under which the Junior Subordinated Debentures are
subordinate to the Senior Indebtedness of the
Company.
(xxvi) Other Terms. The Junior Subordinated
Debentures will have the other terms and will be
substantially in the form set forth in the form of
Junior Subordinated Debenture attached hereto as
Exhibit A. In case of any conflict between this
certificate and the Junior Subordinated Debentures
in the form attached hereto as Exhibit A, or
between the Resolutions and the Junior Subordinated
Debentures in such form, the Junior Subordinated
Debentures will control.
Capitalized terms used but not otherwise defined herein
shall have the meanings assigned to those terms in the Indenture.
The undersigned, for himself, states that he has read and is
familiar with the provisions of Article 2 of the Indenture
relating to the establishment of the form of Security
representing a series of Securities thereunder and Article 3 of
the Indenture relating to the establishment of a series of
Securities thereunder, and in each case, the definitions therein
relating thereto; that he is generally familiar with the other
provisions of the Indenture and with the affairs of the Company
and its acts and proceedings and that the statements and opinions
made by him in this Certificate are based upon such familiarity;
that, in his opinion, he has made such examination or
investigation as is necessary to enable him to express an
informed opinion as to whether or not the covenants and
conditions referred to above have been complied with; and, that
in his opinion, the covenants and conditions referred to above
have been complied with.
Insofar as this Certificate relates to legal matters, it is
based, as provided for in Section 1.3 of the Indenture, upon the
opinion of Counsel delivered to the Trustee contemporaneously
herewith pursuant to Section 3.3 of the Indenture and relating to
the Junior Subordinated Debentures.
IN WITNESS WHEREOF, the undersigned has hereunto signed this
Certificate on behalf of the Company this 30th day of December
1996.
UAL CORPORATION
By: /s/ Douglas A. Hacker
---------------------
Name: Douglas A. Hacker
Title: Senior Vice President and
Chief Financial Officer
EXHIBIT A
---------
No. R-1 CUSIP NO.
$77,301,649.50 902549 AC 8
UAL CORPORATION
13-1/4% JUNIOR SUBORDINATED DEBENTURE DUE 2026
UAL CORPORATION, a corporation duly organized and
existing under the laws of the State of Delaware (herein called
the "Company," which term includes any successor under the
Indenture hereinafter referred to), hereby promises to pay to The
First National Bank of Chicago as Institutional Trustee for UAL
Corporation Capital Trust I (the "Trust") or registered assigns,
the principal sum of Seventy-Seven Million Three Hundred One
Thousand Six Hundred Forty-Nine and 50/100 Dollars, on
December 15, 2026.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if
fully set forth at this place.
Unless the Certificate of Authentication hereon has
been executed by the Trustee referred to on the reverse side
hereof by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Company has caused this
Security to be duly executed in its corporate name by the manual
or facsimile signature of its Chairman of the Board or its
President and Chief Executive Officer and impressed or imprinted
with its corporate seal or facsimile thereof, attested by the
manual or facsimile signature of its Secretary on this 30th day
of December.
UAL CORPORATION
By_____________________
Title:
Attest:
___________________________
Secretary
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
(REVERSE OF SECURITY)
(1) Indenture. This Security is one of a duly authorized
issue of securities of the Company (herein called the
"Securities") issued and to be issued in one or more series under
an indenture (the "Indenture"), dated as of December 20, 1996,
between the Company and The First National Bank of Chicago, a
national banking association, as Trustee (herein called the
"Trustee", which term includes any successor trustee under the
Indenture with respect to the series of which this Security is a
part), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities
and, to the extent specifically set forth in the Indenture, the
holders of Senior Indebtedness and Preferred Securities, and of
the terms upon which the Securities are, and are to be,
authenticated and delivered. The terms of the Securities include
those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. Sections 77aaa-77bbbb) as in effect on the date upon which
the Securities are first issued under the Indenture (the "Issue
Date"). The Securities are unsecured general obligations of the
Company. This Security is one of the series designated on the
face hereof, limited in aggregate principal amount to
$77,301,649.50. All capitalized terms used in this Security and
not defined herein will have the meanings assigned to them in the
Indenture.
(2) Interest. The Company promises to pay interest on said
principal amount in cash from December 21, 1996 or from the most
recent Interest Payment Date to which interest has been paid or
duly provided for, quarterly in arrears (subject to deferral for
up to 20 consecutive quarters as described in Section 3 hereof)
on March 31, June 30, September 30 and December 31 of each year,
commencing December 31, 1996, at the rate of 13-1/4% per annum of
the principal amount at stated maturity plus Compounded Interest
and Additional Interest (as defined below), if any, until the
principal hereof is paid or made available for payment, and (to
the extent that the payment of such interest shall be legally
enforceable) at the rate of 13-1/4% per annum, compounded
quarterly, on any overdue principal and on any overdue
installment of interest. In addition, the Company promises to
pay to the Holder or registered assigns interest from November 1,
1996 through December 20, 1996 at the rate of 12-1/4% per annum
(the "Pre-Issuance Accrued Distribution"), payable on December
31, 1996. The amount of interest payable on any Interest Payment
Date 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
interest period for which interest is computed, the amount of
interest payable will be computed on the basis of the actual
number of days elapsed in such a 30-day month. In the event that
any Interest Payment Date is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day
(notwithstanding Section 1.12 of the Indenture), in each case
with the same force and effect as if made on such date. The
interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture, be
paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest installment, which
shall be the close of business 15 calendar days prior to the such
Interest Payment Date, except that the record date for the
payment to be made on December 31, 1996 shall be the date of
exchange of the Preferred Securities for the Depositary Shares.
With the exception of the Pre-Issuance Accrued Distribution, any
such interest not so punctually paid or duly provided for shall
bear interest at a rate equal to 13-1/4% per annum (to the extent
lawful) and will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities
not less than 10 days prior to such Special Record Date, or may
be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture.
The Company shall pay as additional interest on the Securities
such amounts as shall be required so that the net amounts
received and retained by the Trust after paying any taxes,
duties, assessment or other governmental charges of whatever
nature (other than withholding taxes) imposed on the Trust by the
United States or any other taxing authority ("Additional
Interest") will be not less than the amounts the Trust would have
received had no such taxes, duties, assessment or governmental
charges been imposed.
(3) Extension of Interest Payment Period. So long as the
Company is not in default in the payment of interest on the
Securities of this series, the Company shall have the right, at
any time during the term of the Securities of this series, from
time to time to extend the interest payment period of such
Securities (other than with respect to the Pre-Issuance Accrued
Distribution) for up to 20 consecutive quarterly interest periods
(the "Extended Interest Payment Period"); provided, no Extended
Interest Payment Period may extend beyond the maturity date of
the Securities. At the end of each such period the Company shall
pay all interest then accrued and unpaid (together with interest
thereon at the rate of 13-1/4% per annum compounded quarterly to
the extent permitted by applicable law ("Compounded Interest")).
During such Extended Interest Payment Period, the Company shall
not declare or pay any dividends on, or redeem, purchase, acquire
or make a distribution or liquidation payment with respect to,
any of its common stock or preferred stock or any other
securities similar to the Preferred Securities or the Securities,
or make any guarantee payments with respect thereto; provided,
however, that the Company may pay cash in lieu of fractional
shares upon the conversion of any of its preferred stock in
accordance with the terms of such stock. Prior to the
termination of any such Extended Interest Payment Period, the
Company may pay all or any portion of the interest accrued on the
Securities on any Interest Payment Date to holders of record on
the Regular Record Date for such Interest Payment Date or from
time to time further extend such Extended Interest Payment
Period, provided that such Extended Interest Payment Period,
together with all previous and further extensions thereof, shall
not exceed 20 consecutive quarterly interest periods and shall
not extend beyond the maturity of the Securities. At the
termination of any such Extended Interest Payment Period and upon
the payment of all accrued and unpaid interest then due, together
with Compounded Interest, the Company may commence a new Extended
Interest Payment Period, subject to the foregoing requirements.
No interest on this Security shall be due and payable during an
Extended Interest Payment Period, except at the end thereof. At
the end of the Extended Interest Payment Period, the Company
shall pay all interest accrued and unpaid on the Securities
including any Compounded Interest which shall be payable to the
holders of the Securities in whose names the Securities are
registered in the Security Register on the Regular Record Date
for the first Interest Payment Date occurring on or after the end
of the Extended Interest Payment Period.
If the Trust is the sole holder of the Securities at
the time the Company selects an Extension Period, the Company
shall give notice to the Indenture Trustee and the Institutional
Trustee of its selection of such Extension Period at least ten
Business Days prior to the earlier of (i) the date the
distributions on the Preferred Securities are payable or (ii) if
the Preferred Securities are listed on the New York Stock
Exchange or other stock exchange or quotation system, the date
the Trust is required to give notice to the New York Stock
Exchange or other applicable self-regulatory organization or to
the holders of the Preferred Securities on the record date or the
date such distributions are payable, but in any event not less
than one Business Day prior to such record date. The Company
shall cause the Trust to give notice of the Company's selection
of such Extension Period to the holders of the Preferred
Securities.
If the Trust is not the sole holder of the Securities
at the time the Company selects an Extension Period, the Company
shall give the Holders of these Securities notice of its
selection of an Extension Period at least ten Business Days prior
to the earlier of (i) the next succeeding Interest Payment Date
or (ii) if the Preferred Securities are listed on the New York
Stock Exchange or other stock exchange or quotation system, the
date the Company is required to give notice to the New York Stock
Exchange or other applicable self-regulatory organization or to
holders of the Securities on the record or payment date of such
related interest payment, but in any event not less than two
Business Days prior to such record date.
The quarter in which such notice is given pursuant to
the second and third paragraphs of this section shall be counted
as one of the 20 quarters permitted in the maximum Extension
Period permitted under the first paragraph of this section.
(4) Method of Payment. Payment of the principal of and any
such interest on this Security will be made at the office or
agency of the Company maintained for that purpose in the Borough
of Manhattan, the City and State of New York, in such coin or
currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts;
provided, however, that at the option of the Company, payment of
interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security
Register and, provided further, that the payment of principal
will only be made upon the surrender of this Security to the
Trustee. Notwithstanding the foregoing, so long as the owner and
record holder of this Security is the Trust, the payment of the
principal of and interest (including Compounded Interest, if any)
on this Security will be made at such place and to such account
of the Trust as may be designated by the institutional trustee of
the Trust.
(5) Redemption. Except as provided in the next paragraph, the
Securities of this series may not be redeemed by the Company
prior to July 12, 2004. The Securities of this series are
subject to redemption upon not less than 10 nor more than 60
days' notice by mail, at any time on or after July 12, 2004, as a
whole or in part, at the election of the Company (an "Optional
Redemption"), at a Redemption Price equal to 100% of the
principal amount together with any accrued but unpaid interest,
including Compounded Interest, if any, to the Redemption Date
(the "Optional Redemption Price").
If, at any time, a Tax Event (as defined below) shall
occur and be continuing and (i) the regular trustees (the
"Regular Trustees") of the Trust shall have received an opinion
(a "Redemption Tax Opinion") of a nationally recognized
independent tax counsel experienced in such matters that, as a
result of a Tax Event, there is more than an insubstantial risk
that the Company would be precluded from deducting the interest
on the Securities of this series for United States federal income
tax purposes even if the Securities were distributed to the
holders of Preferred Securities and Common Securities in
liquidation of such holder's interest in the Trust as set forth
in the Declaration of Trust or (ii) the Regular Trustees shall
have been informed by such tax counsel that a No Recognition
Opinion (as defined below) cannot be delivered to the Trust, the
Company shall have the right at any time, upon not less than 10
nor more than 60 days' notice, to redeem the Securities in whole
or in part for cash at the Optional Redemption Price within 90
days following the occurrence of such Tax Event; provided,
however, that, if at the time there is available to the Company
or the Regular Trustees on behalf of the Trust the opportunity to
eliminate, within such 90 day period, the Tax Event by taking
some ministerial action ("Ministerial Action"), such as filing a
form or making an election, or pursuing some other similar
reasonable measure, which has no adverse effect on the Trust, the
Company or the holders of the Preferred Securities, the Company
or the Regular Trustees on behalf of the Trust will pursue such
measure in lieu of redemption and, provided further, that the
Company shall have no right to redeem the Securities while the
Regular Trustees on behalf of the Trust are pursuing any such
Ministerial Action.
"Tax Event" means that the Regular Trustees shall have
obtained an opinion (a "Dissolution Tax Opinion") of nationally
recognized independent tax counsel experienced in such matters
to the effect that on or after December 20, 1996, as a result of
(a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing
authority thereof or therein, (b) any amendment to, or change in,
an interpretation or application of any such laws or regulations
by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory
determination), (c) any interpretation or pronouncement that
provides for a position with respect to such laws or regulations
that differs from the theretofore generally accepted position or
(d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated,
issued or announced or which interpretation or pronouncement is
issued or announced or which action is taken, in each case on or
after December 20, 1996, there is more than an insubstantial risk
that (i) the Trust is, or will be within 90 days of the date
thereof, subject to United States federal income tax with respect
to income accrued or received on the Securities, (ii) the Trust
is, or will be within 90 days of the date thereof, subject to
more than a de minimis amount of taxes, duties or other
governmental charges or (iii) interest payable by the Company to
the Trust on the Securities is not, or within 90 days of the date
thereof will not be, deductible by the Company for United States
federal income tax purposes.
"No Recognition Opinion" means an opinion of a
nationally recognized independent tax counsel experienced in such
matters, which opinion may rely on any then applicable published
revenue ruling of the Internal Revenue Service, to the effect
that the holders of the Preferred Securities will not recognize
any gain or loss for United States federal income tax purposes as
a result of a dissolution of the Trust and distribution of the
Securities as provided in the Declaration of Trust.
If the Securities of this Series are only partially
redeemed by the Company pursuant to an Optional Redemption or as
a result of a Tax Event as described above, the Securities of
this series will be redeemed pro rata or by lot or by any other
method as the Trustee shall deem fair and appropriate.
Notwithstanding the foregoing, if a partial redemption of the
Securities of this series would result in the delisting of the
Preferred Securities by any national securities exchange or other
organization on which the Preferred Securities are then listed,
the Company shall not be permitted to effect such partial
redemption and will only redeem the Securities of this series as
a whole.
In the event of redemption of this Security in part
only, a new Security or Securities of this series for the
unredeemed portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
(6) Defeasance. The Securities are subject to the defeasance
and covenant defeasance provisions set forth in Article Four of
the Indenture.
(7) Denominations, Transfer, Exchange. The Securities are
issuable only as registered Securities without coupons in the
denominations of $25 and any integral multiple thereof. As
provided in the Indenture, and subject to certain limitations
therein set forth, Securities are exchangeable for a like
aggregate principal amount of Securities of different authorized
denominations as requested by the Holder surrendering the same
and upon surrender of the Security for registration of transfer
at the office or agency of the Company in the City of New York,
the Company will execute, and the Trustee will authenticate and
deliver, in the name of the designated transferee or transferees,
one or more new Securities, of authorized denominations and of a
like aggregate principal amount and tenor. Every Security
surrendered for registration of transfer or exchange will, if
required by the Company, the Registrar or the Trustee, be duly
endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company, the Registrar and the
Trustee duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing. No service charge will be
made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection
therewith.
(8) Persons Deemed Owners. Prior to due presentment for
registration of transfer of this Security, the Company, the
Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner
hereof for the purpose of receiving payment as herein provided
and for all other purposes whatsoever, whether or not this
Security is overdue, and neither the Company, the Trustee nor any
such agent will be affected by notice to the contrary.
(9) Defaults and Remedies. If an Event of Default as defined
in the Indenture shall occur, the principal of all Securities may
be declared due and payable in the manner and with the effect
provided in the Indenture.
(10) Subordination. The Company and each Holder, by acceptance
hereof, agrees that the payment of the principal of and interest
on the Securities is subordinated, to the extent and in the
manner provided in the Indenture, to the prior payment in full of
the Senior Indebtedness of the Company as defined in the
Indenture and this Security is issued subject to the provisions
of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, authorizes and expressly directs
the Trustee on his behalf to take such action as may be necessary
or appropriate in the discretion of the Trustee to effectuate the
subordination so provided and appoints the Trustee his attorney-
in-fact for such purpose.
(11) Indebtedness. The Company and, by its acceptance of this
Security or a beneficial interest herein, the Holder of, and any
Person that acquires a beneficial interest in, this Security
agree that for United States federal, state and local tax
purposes it is intended that this Security constitute
indebtedness.
(12) Amendments and Waivers. The Indenture permits, with
certain exceptions as therein provided, the Company and the
Trustee, with the consent of the Holders of not less than a
majority in aggregate principal amount of the Securities of all
series affected at the time outstanding, as defined in the
Indenture (and, in the case of any series of Securities held as
trust assets of a UAL Corporation Capital Trust and with respect
to which a Security Exchange has not theretofore occurred, such
consent of holders of the Preferred Securities and the Common
Securities of such UAL Corporation Capital Trust as may be
required under the Declaration of Trust of such UAL Corporation
Capital Trust), to execute supplemental indentures for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying in any manner the rights
of the Holders of the Securities; provided, however, that no such
supplemental indenture shall, without the consent of the holder
of each Security so affected, (i) change the time for payment of
principal, premium, if any, or interest on any Security; (ii)
reduce the principal of, or any installment of principal of, or
interest on any Security; (iii) reduce the amount of premium, if
any, payable upon the redemption of any Security; (iv) reduce the
amount of principal payable upon acceleration of the maturity of
an Original Issue Discount Security (as defined in the
Indenture); (v) change the coin or currency in which any Security
or any premium or interest thereon is payable; (vi) impair the
right to institute suit for the enforcement of any payment on or
with respect to any Security; (vii) reduce the percentage in
principal amount of the outstanding Securities the consent of
whose holders is required for modification or amendment of the
Indenture or for waiver of compliance with certain provisions of
the Indenture or for waiver of certain defaults; (viii) change
the obligation of the Company to maintain an office or agency in
the places and for the purposes specified in the Indenture; (ix)
modify the provisions relating to waiver of certain defaults or
any of the foregoing provisions; (x) adversely affect the right
to convert the Securities or (xi) modify the provisions with
respect to the subordination of the Securities. The Indenture
also contains provisions permitting the Holders of a majority in
aggregate principal amount of the securities of all series at the
time outstanding affected thereby (subject, in the case of any
series of Securities held as trust assets of a UAL Corporation
Capital Trust and with respect to which a Security Exchange has
not theretofore occurred, to such consent of holders of Preferred
Securities and Common Securities of such UAL Corporation Capital
Trust as may be required under the Declaration of Trust of such
UAL Corporation Capital Trust), on behalf of the Holders of the
Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security (unless revoked
as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and
of any Security issued upon the registration of transfer hereof
or in exchange or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
(13) Obligation Absolute. No reference herein to the Indenture
and no provision of this Security or of the Indenture shall alter
or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of and interest on this
Security at the times, place and rate, and in the coin or
currency, hereto prescribed.
(14) No Recourse Against Others. No recourse for the payment
of the principal of or interest on this Security, or for any
claim based hereon or on the Indenture and no recourse under or
upon any obligation, covenant or agreement of the Company in the
Indenture or any indenture supplemental thereto or in any
Security, or because of the creation of any indebtedness
represented hereby, 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 hereof and as part of the
consideration for the issue hereof, expressly waived and
released.
(15) Governing Law. THIS SECURITY WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
____________________
The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture. Requests may
be made to: UAL Corporation, P.O. Box 66100, Chicago, Illinois
60666, Attention: Treasurer.
Exhibit 4.4
No. R-1 CUSIP NO.
$77,301,649.50 902549 AC 8
UAL CORPORATION
13-1/4% JUNIOR SUBORDINATED DEBENTURE DUE 2026
UAL CORPORATION, a corporation duly organized and
existing under the laws of the State of Delaware (herein called
the "Company," which term includes any successor under the
Indenture hereinafter referred to), hereby promises to pay to The
First National Bank of Chicago as Institutional Trustee for UAL
Corporation Capital Trust I (the "Trust") or registered assigns,
the principal sum of Seventy-Seven Million Three Hundred One
Thousand Six Hundred Forty-Nine and 50/100 Dollars, on
December 15, 2026.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if
fully set forth at this place.
Unless the Certificate of Authentication hereon has
been executed by the Trustee referred to on the reverse side
hereof by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Company has caused this
Security to be duly executed in its corporate name by the manual
or facsimile signature of its Chairman of the Board or its
President and Chief Executive Officer and impressed or imprinted
with its corporate seal or facsimile thereof, attested by the
manual or facsimile signature of its Secretary on this 30th day
of December, 1996.
UAL CORPORATION
By___________________
Title:
Attest:
__________________
Secretary
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
(REVERSE OF SECURITY)
(1) Indenture. This Security is one of a duly
authorized issue of securities of the Company (herein called the
"Securities") issued and to be issued in one or more series under
an indenture (the "Indenture"), dated as of December 20, 1996,
between the Company and The First National Bank of Chicago, a
national banking association, as Trustee (herein called the
"Trustee", which term includes any successor trustee under the
Indenture with respect to the series of which this Security is a
part), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities
and, to the extent specifically set forth in the Indenture, the
holders of Senior Indebtedness and Preferred Securities, and of
the terms upon which the Securities are, and are to be,
authenticated and delivered. The terms of the Securities include
those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. Sections 77aaa-77bbbb) as in effect on the date upon which
the Securities are first issued under the Indenture (the "Issue
Date"). The Securities are unsecured general obligations of the
Company. This Security is one of the series designated on the
face hereof, limited in aggregate principal amount to
$77,301,649.50. All capitalized terms used in this Security and
not defined herein will have the meanings assigned to them in the
Indenture.
(2) Interest. The Company promises to pay interest on
said principal amount in cash from December 21, 1996 or from the
most recent Interest Payment Date to which interest has been paid
or duly provided for, quarterly in arrears (subject to deferral
for up to 20 consecutive quarters as described in Section 3
hereof) on March 31, June 30, September 30 and December 31 of
each year, commencing December 31, 1996, at the rate of 13-1/4%
per annum of the principal amount at stated maturity plus
Compounded Interest and Additional Interest (as defined below),
if any, until the principal hereof is paid or made available for
payment, and (to the extent that the payment of such interest
shall be legally enforceable) at the rate of 13-1/4% per annum,
compounded quarterly, on any overdue principal and on any overdue
installment of interest. In addition, the Company promises to
pay to the Holder or registered assigns interest from November 1,
1996 through December 20, 1996 at the rate of 12-1/4% per annum
(the "Pre-Issuance Accrued Distribution"), payable on December
31, 1996. The amount of interest payable on any Interest Payment
Date 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
interest period for which interest is computed, the amount of
interest payable will be computed on the basis of the actual
number of days elapsed in such a 30-day month. In the event that
any Interest Payment Date is not a business day, then payment of
interest payable on such date will be made on the next succeeding
day which is a business day (and without any interest or other
payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on such
date. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
the Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest
installment, which shall be the close of business 15 calendar
days prior to the such Interest Payment Date. With the exception
of the Pre-Issuance Accrued Distribution, any such interest not
so punctually paid or duly provided for shall bear interest at a
rate equal to 13-1/4% per annum (to the extent lawful) and will
forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities
not less than 10 days prior to such Special Record Date, or may
be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture.
The Company shall pay as additional interest on the Securities
such amounts as shall be required so that the net amounts
received and retained by the Trust after paying any taxes,
duties, assessment or other governmental charges of whatever
nature (other than withholding taxes) imposed on the Trust by the
United States or any other taxing authority ("Additional
Interest") will be not less than the amounts the Trust would have
received had no such taxes, duties, assessment or governmental
charges been imposed.
(3) Extension of Interest Payment Period. So long as
the Company is not in default in the payment of interest on the
Securities of this series, the Company shall have the right, at
any time during the term of the Securities of this series, from
time to time to extend the interest payment period of such
Securities (other than with respect to the Pre-Issuance Accrued
Distribution) for up to 20 consecutive quarterly interest periods
(the "Extended Interest Payment Period"); provided, no Extended
Interest Payment Period may extend beyond the maturity date of
the Securities. At the end of each such period the Company shall
pay all interest then accrued and unpaid (together with interest
thereon at the rate of 13-1/4% per annum compounded quarterly to
the extent permitted by applicable law ("Compounded Interest")).
During such Extended Interest Payment Period, the Company shall
not declare or pay any dividends on, or redeem, purchase, acquire
or make a distribution or liquidation payment with respect to,
any of its common stock or preferred stock or any other
securities similar to the Preferred Securities or the Securities,
or make any guarantee payments with respect thereto; provided,
however, that the Company may pay dividends (and cash in lieu of
fractional shares) upon the conversion, other than at the
Company's option, of any of its preferred stock in accordance
with the terms of such stock. Prior to the termination of any
such Extended Interest Payment Period, the Company may pay all or
any portion of the interest accrued on the Securities on any
Interest Payment Date to holders of record on the Regular Record
Date for such Interest Payment Date or from time to time further
extend such Extended Interest Payment Period, provided that such
Extended Interest Payment Period, together with all previous and
further extensions thereof, shall not exceed 20 consecutive
quarterly interest periods and shall not extend beyond the
maturity of the Securities. At the termination of any such
Extended Interest Payment Period and upon the payment of all
accrued and unpaid interest then due, together with Compounded
Interest, the Company may select a new Extended Interest Payment
Period, subject to the foregoing requirements. No interest on
this Security shall be due and payable during an Extended
Interest Payment Period, except at the end thereof. At the end
of the Extended Interest Payment Period, the Company shall pay
all interest accrued and unpaid on the Securities including any
Compounded Interest which shall be payable to the holders of the
Securities in whose names the Securities are registered in the
Security Register on the Regular Record Date for the first
Interest Payment Date occurring on or after the end of the
Extended Interest Payment Period.
If the Trust is the sole holder of the Securities at
the time the Company selects an Extension Period, the Company
shall give notice to the Indenture Trustee and the Institutional
Trustee of its selection of such Extension Period at least ten
Business Days prior to the earlier of (i) the date the
distributions on the Preferred Securities are payable or (ii) if
the Preferred Securities are listed on the New York Stock
Exchange or other stock exchange or quotation system, the date
the Trust is required to give notice to the New York Stock
Exchange or other applicable self-regulatory organization or to
the holders of the Preferred Securities on the record date or the
date such distributions are payable, but in any event not less
than one Business Day prior to such record date. The Company
shall cause the Trust to give notice of the Company's selection
of such Extension Period to the holders of the Preferred
Securities.
If the Trust is not the sole holder of the Securities
at the time the Company selects an Extension Period, the Company
shall give the Holders of these Securities notice of its
selection of an Extension Period at least ten Business Days prior
to the earlier of (i) the next succeeding Interest Payment Date
or (ii) if the Preferred Securities are listed on the New York
Stock Exchange or other stock exchange or quotation system, the
date the Company is required to give notice to the New York Stock
Exchange or other applicable self-regulatory organization or to
holders of the Securities on the record or payment date of such
related interest payment, but in any event not less than two
Business Days prior to such record date.
The quarter in which such notice is given pursuant to
the second and third paragraphs of this section shall be counted
as one of the 20 quarters permitted in the maximum Extension
Period permitted under the first paragraph of this Section.
(4) Method of Payment. Payment of the principal of
and any such interest on this Security will be made at the office
or agency of the Company maintained for that purpose in the
Borough of Manhattan, the City and State of New York, in such
coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company,
payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the
Security Register and, provided further, that the payment of
principal will only be made upon the surrender of this Security
to the Trustee. Notwithstanding the foregoing, so long as the
owner and record holder of this Security is the Trust, the
payment of the principal of and interest (including Compounded
Interest, if any) on this Security will be made at such place and
to such account of the Trust as may be designated by the
institutional trustee of the Trust.
(5) Redemption. Except as provided in the next
paragraph, the Securities of this series may not be redeemed by
the Company prior to July 12, 2004. The Securities of this
series are subject to redemption upon not less than 10 nor more
than 60 days' notice by mail, at any time on or after July 12,
2004, as a whole or in part, at the election of the Company (an
"Optional Redemption"), at a Redemption Price equal to 100% of
the principal amount together with any accrued but unpaid
interest, including Compounded Interest, if any, to the
Redemption Date (the "Optional Redemption Price").
If, at any time, a Tax Event (as defined below) shall
occur and be continuing and (i) the regular trustees (the
"Regular Trustees") of the Trust shall have received an opinion
(a "Redemption Tax Opinion") of a nationally recognized
independent tax counsel experienced in such matters that, as a
result of a Tax Event, there is more than an insubstantial risk
that the Company would be precluded from deducting the interest
on the Securities of this series for United States federal income
tax purposes even if the Securities were distributed to the
holders of Preferred Securities and Common Securities in
liquidation of such holder's interest in the Trust as set forth
in the Declaration of Trust or (ii) the Regular Trustees shall
have been informed by such tax counsel that a No Recognition
Opinion (as defined below) cannot be delivered to the Trust, the
Company shall have the right at any time, upon not less than 10
nor more than 60 days' notice, to redeem the Securities in whole
or in part for cash at the Optional Redemption Price within 90
days following the occurrence of such Tax Event; provided,
however, that, if at the time there is available to the Company
or the Regular Trustees on behalf of the Trust the opportunity to
eliminate, within such 90 day period, the Tax Event by taking
some ministerial action ("Ministerial Action"), such as filing a
form or making an election, or pursuing some other similar
reasonable measure, which has no adverse effect on the Trust, the
Company or the holders of the Preferred Securities, the Company
or the Regular Trustees on behalf of the Trust will pursue such
measure in lieu of redemption and, provided further, that the
Company shall have no right to redeem the Securities while the
Regular Trustees on behalf of the Trust are pursuing any such
Ministerial Action.
"Tax Event" means that the Regular Trustees shall have
obtained an opinion (a "Dissolution Tax Opinion") of nationally
recognized independent tax counsel experienced in such matters
to the effect that on or after December 20, 1996, as a result of
(a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing
authority thereof or therein, (b) any amendment to, or change in,
an interpretation or application of any such laws or regulations
by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory
determination), (c) any interpretation or pronouncement that
provides for a position with respect to such laws or regulations
that differs from the theretofore generally accepted position or
(d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated,
issued or announced or which interpretation or pronouncement is
issued or announced or which action is taken, in each case on or
after December 20, 1996, there is more than an insubstantial risk
that (i) the Trust is, or will be within 90 days of the date
thereof, subject to United States federal income tax with respect
to income accrued or received on the Securities, (ii) the Trust
is, or will be within 90 days of the date thereof, subject to
more than a de minimis amount of taxes, duties or other
governmental charges or (iii) interest payable by the Company to
the Trust on the Securities is not, or within 90 days of the date
thereof will not be, deductible by the Company for United States
federal income tax purposes.
"No Recognition Opinion" means an opinion of a
nationally recognized independent tax counsel experienced in such
matters, which opinion may rely on any then applicable published
revenue ruling of the Internal Revenue Service, to the effect
that the holders of the Preferred Securities will not recognize
any gain or loss for United States federal income tax purposes as
a result of a dissolution of the Trust and distribution of the
Securities as provided in the Declaration of Trust.
If the Securities of this Series are only partially
redeemed by the Company pursuant to an Optional Redemption or as
a result of a Tax Event as described above, the Securities of
this series will be redeemed pro rata or by lot or by any other
method as the Trustee shall deem fair and appropriate.
Notwithstanding the foregoing, if a partial redemption of the
Securities of this series would result in the delisting of the
Preferred Securities by any national securities exchange or other
organization on which the Preferred Securities are then listed,
the Company shall not be permitted to effect such partial
redemption and will only redeem the Securities of this series as
a whole.
In the event of redemption of this Security in part
only, a new Security or Securities of this series for the
unredeemed portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
(6) Defeasance. The Securities are subject to the
defeasance and covenant defeasance provisions set forth in
Article Four of the Indenture.
(7) Denominations, Transfer, Exchange. The Securities
are issuable only as registered Securities without coupons in the
denominations of $25 and any integral multiple thereof. As
provided in the Indenture, and subject to certain limitations
therein set forth, Securities are exchangeable for a like
aggregate principal amount of Securities of different authorized
denominations as requested by the Holder surrendering the same
and upon surrender of the Security for registration of transfer
at the office or agency of the Company in the City of New York,
the Company will execute, and the Trustee will authenticate and
deliver, in the name of the designated transferee or transferees,
one or more new Securities, of authorized denominations and of a
like aggregate principal amount and tenor. Every Security
surrendered for registration of transfer or exchange will, if
required by the Company, the Registrar or the Trustee, be duly
endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company, the Registrar and the
Trustee duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing. No service charge will be
made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection
therewith.
(8) Persons Deemed Owners. Prior to due presentment
for registration of transfer of this Security, the Company, the
Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner
hereof for the purpose of receiving payment as herein provided
and for all other purposes whatsoever, whether or not this
Security is overdue, and neither the Company, the Trustee nor any
such agent will be affected by notice to the contrary.
(9) Defaults and Remedies. If an Event of Default as
defined in the Indenture shall occur, the principal of all
Securities may be declared due and payable in the manner and with
the effect provided in the Indenture.
(10) Subordination. The Company and each Holder, by
acceptance hereof, agrees that the payment of the principal of
and interest on the Securities is subordinated, to the extent and
in the manner provided in the Indenture, to the prior payment in
full of the Senior Indebtedness of the Company as defined in the
Indenture and this Security is issued subject to the provisions
of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, authorizes and expressly directs
the Trustee on his behalf to take such action as may be necessary
or appropriate in the discretion of the Trustee to effectuate the
subordination so provided and appoints the Trustee his attorney-
in-fact for such purpose.
(11) Indebtedness. The Company and, by its acceptance
of this Security or a beneficial interest herein, the Holder of,
and any Person that acquires a beneficial interest in, this
Security agree that for United States federal, state and local
tax purposes it is intended that this Security constitute
indebtedness.
(12) Amendments and Waivers. The Indenture permits,
with certain exceptions as therein provided, the Company and the
Trustee, with the consent of the Holders of not less than a
majority in aggregate principal amount of the Securities of all
series affected at the time outstanding, as defined in the
Indenture (and, in the case of any series of Securities held as
trust assets of a UAL Corporation Capital Trust and with respect
to which a Security Exchange has not theretofore occurred, such
consent of holders of the Preferred Securities and the Common
Securities of such UAL Corporation Capital Trust as may be
required under the Declaration of Trust of such UAL Corporation
Capital Trust), to execute supplemental indentures for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying in any manner the rights
of the Holders of the Securities; provided, however, that no such
supplemental indenture shall, without the consent of the holder
of each Security so affected, (i) change the time for payment of
principal, premium, if any, or interest on any Security; (ii)
reduce the principal of, or any installment of principal of, or
interest on any Security; (iii) reduce the amount of premium, if
any, payable upon the redemption of any Security; (iv) reduce the
amount of principal payable upon acceleration of the maturity of
an Original Issue Discount Security (as defined in the
Indenture); (v) change the coin or currency in which any Security
or any premium or interest thereon is payable; (vi) impair the
right to institute suit for the enforcement of any payment on or
with respect to any Security; (vii) reduce the percentage in
principal amount of the outstanding Securities the consent of
whose holders is required for modification or amendment of the
Indenture or for waiver of compliance with certain provisions of
the Indenture or for waiver of certain defaults; (viii) change
the obligation of the Company to maintain an office or agency in
the places and for the purposes specified in the Indenture; (ix)
modify the provisions relating to waiver of certain defaults or
any of the foregoing provisions; (x) adversely affect the right
to convert the Securities or (xi) modify the provisions with
respect to the subordination of the Securities. The Indenture
also contains provisions permitting the Holders of a majority in
aggregate principal amount of the securities of all series at the
time outstanding affected thereby (subject, in the case of any
series of Securities held as trust assets of a UAL Corporation
Capital Trust and with respect to which a Security Exchange has
not theretofore occurred, to such consent of holders of Preferred
Securities and Common Securities of such UAL Corporation Capital
Trust as may be required under the Declaration of Trust of such
UAL Corporation Capital Trust), on behalf of the Holders of the
Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security (unless revoked
as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and
of any Security issued upon the registration of transfer hereof
or in exchange or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
(13) Obligation Absolute. No reference herein to the
Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest
on this Security at the times, place and rate, and in the coin or
currency, hereto prescribed.
(14) No Recourse Against Others. No recourse for the
payment of the principal of or interest on this Security, or for
any claim based hereon or on the Indenture and no recourse under
or upon any obligation, covenant or agreement of the Company in
the Indenture or any indenture supplemental thereto or in any
Security, or because of the creation of any indebtedness
represented hereby, 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 hereof and as part of the
consideration for the issue hereof, expressly waived and
released.
(15) Governing Law. THIS SECURITY WILL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
____________________
The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture. Requests may
be made to: UAL Corporation, P.O. Box 66100, Chicago, Illinois
60666, Attention: Treasurer.
Exhibit 4.5
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of December 30, 1996, is
executed and delivered by UAL Corporation, a Delaware corporation
(the "Guarantor"), and The First National Bank of Chicago as the
initial Guarantee Trustee (as defined herein) for the benefit of
the Holders (as defined herein) from time to time of the
Preferred Securities (as defined herein) of UAL Corporation
Capital Trust I, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of December 30, 1996 among
the trustees of the Issuer named therein, UAL Corporation, as
Sponsor, and the Holders from time to time of undivided
beneficial interests in the assets of the Issuer, the Issuer is
issuing as of the date hereof in accordance with the Offer (as
defined herein) $74,982,600 aggregate liquidation amount of its
13-1/4% Trust Originated Preferred Securities (the "Preferred
Securities") representing undivided beneficial interests in the
assets of the Issuer and having the terms set forth in Exhibit B
to the Declaration;
WHEREAS, the Preferred Securities will be issued by the
Issuer upon deposit of the Guarantor's Debentures (as defined
herein) with the Issuer as trust assets; and
WHEREAS, as incentive for the Holders to exchange Depositary
Shares ("Depositary Shares") representing 1/1,000 of a share of
the 12-1/4% Series B Preferred Stock of the Guarantor for
Preferred Securities pursuant to the Offer, the Guarantor desires
to irrevocably and unconditionally agree, to the extent set forth
herein, to pay to the Holders of the Preferred Securities the
Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee Agreement")
in substantially identical terms to this Guarantee Agreement for
the benefit of the holders of the Common Securities (as defined
herein), except that if an event of default under the Indenture
has occurred and is continuing, the rights of holders of the
Common Securities to receive Guarantee Payments under the Common
Securities Guarantee Agreement are subordinated to the rights of
Holders to receive Guarantee Payments under this Guarantee
Agreement.
NOW, THEREFORE, in consideration of the exchange of
Depositary Shares for Preferred Securities, which exchange the
Guarantor hereby agrees shall benefit the Guarantor, the
Guarantor executes and delivers this Guarantee Agreement for the
benefit of the Holders from time to time of the Preferred
Securities.
ARTICLE I
SECTION 1.1 Definitions. (a) Capitalized terms used in
this Guarantee Agreement but not defined in the preamble above
have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Guarantee Agreement has
the same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified,
supplemented or amended from time to time;
(d) all references in this Guarantee Agreement to Articles
and Sections are to Articles and Sections of this Guarantee
Agreement unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee Agreement unless otherwise
defined in this Guarantee Agreement or unless the context
otherwise requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term in
Rule 405 of the Securities Act of 1933, as amended, or any
successor rule thereunder.
"Commission" means the United States Securities and Exchange
Commission.
"Common Securities" means the securities representing
undivided beneficial interests in the assets of the Issuer,
having the terms set forth in Exhibit C to the Declaration.
"Covered Person" means any Holder of Preferred Securities.
"Debentures" means the series of Junior Subordinated
Debentures issued by the Guarantor under the Indenture and
entitled the "13-1/4% Junior Subordinated Debentures due 2026".
"Distributions" means the periodic distributions and other
payments payable to Holders of Preferred Securities in accordance
with the terms of the Preferred Securities set forth in Exhibit B
to the Declaration.
"Event of Default" means a default by the Guarantor on any
of its payment or other obligations under this Guarantee
Agreement.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred
Securities, to the extent not paid or made by the Issuer: (i) any
accrued and unpaid Distributions and the redemption price,
including all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price"), with respect to the
Preferred Securities called for redemption by the Issuer but if
and only to the extent that in each case the Guarantor has made a
payment to the Trust of interest or principal on the Debentures
and (ii) upon a voluntary or involuntary dissolution, winding-up
or termination of the Issuer (other than in connection with the
distribution of Debentures to Holders or the redemption of all
the Preferred Securities upon the maturity or redemption of the
Debentures as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Preferred Securities to the date of payment,
to the extent the Issuer has funds available therefor, and (b)
the amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution"). If an event of default
under the Indenture has occurred and is continuing the rights of
holders of the Common Securities to receive payments under the
Common Securities Guarantee Agreement are subordinated to the
rights of Holders to receive Guarantee Payments.
"Guarantee Trustee" means The First National Bank of Chicago
until a Successor Guarantee Trustee has been appointed and
accepted such appointment pursuant to the terms of this Guarantee
Agreement, and thereafter means each such Successor Guarantee
Trustee.
"Holder" shall mean any holder, as registered on the books
and records of the Issuer, of any Preferred Securities; provided,
however, that in determining whether the holders of the requisite
percentage of Preferred Securities have given any request,
notice, consent or waiver hereunder, "Holder" shall not include
the Guarantor or any entity directly or indirectly controlling or
controlled by or under direct or indirect common control with the
Guarantor.
"Indemnified Person" means the Guarantee Trustee, any
Affiliate of the Guarantee Trustee, and any officers, directors,
shareholders, members, partners, employees, representatives or
agents of the Guarantee Trustee.
"Indenture" means the Indenture dated as of December 20,
1996 between the Guarantor and The First National Bank of
Chicago, as trustee, as supplemented by the board resolution or
supplemental indenture pursuant to which the Debentures are to be
issued.
"Majority in liquidation amount of the Preferred Securities"
means, except as otherwise required by the Trust Indenture Act,
Holder(s) of outstanding Preferred Securities voting together as
a single class, who are the record owners of Preferred Securities
whose liquidation amount (including the stated amount that would
be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting
percentages are determined) represents more than 50% of the
liquidation amount of all outstanding Preferred Securities.
"Offer" means the offer by the Issuer to exchange Preferred
Securities for outstanding Depositary Shares in consideration for
the deposit by the Guarantor of Debentures as trust assets of the
Issuer, all as described in a Prospectus dated November 21, 1996.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association,
joint stock company, limited liability company, trust,
unincorporated association, or government or any agency or
political subdivision thereof, or any other entity of whatever
nature.
"Preferred Securities" has the meaning set forth in the
first recital clause above.
"Redemption Price" means the amount payable on redemption of
the Preferred Securities in accordance with the terms of the
Preferred Securities.
"Responsible Officer" means, with respect to the Guarantee
Trustee, the chairman of the board of directors, the president,
any vice-president, any assistant vice-president, the secretary,
any assistant secretary, the treasurer, any assistant treasurer,
any trust officer or assistant trust officer or any other officer
of the Guarantee Trustee customarily performing functions similar
to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular
subject.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as a Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application. (a) This
Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee
Agreement and shall, to the extent applicable, be governed by
such provisions.
(b) If and to the extent that any provision of this
Guarantee Agreement limits, qualifies or conflicts with the
duties imposed by Sections 310 to 317, inclusive, of the Trust
Indenture Act, such imposed duties shall control.
(c) The application of the Trust Indenture Act to this
Guarantee Agreement shall not affect the nature of the Preferred
Securities as equity securities representing undivided beneficial
interests in the assets of the Issuer.
SECTION 2.2 Lists of Holders of Preferred Securities. (a)
The Guarantor shall provide the Guarantee Trustee with such
information as is required under Section 312(a) of the Trust
Indenture Act at the times and in the manner provided in Section
312(a).
(b) the Guarantee Trustee shall comply with its obligations
under Sections 310(b), 311 and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Guarantee Trustee. Within 60
days after May 15 of each year, the Guarantee Trustee shall
provide to the Holders of the Preferred Securities such reports
as are required by Section 313 of the Trust Indenture Act, if
any, in the form, in the manner and at the times provided by
Section 313 of the Trust Indenture Act. The Guarantee Trustee
shall also comply with the requirements of Section 313(d) of the
Trust Indenture Act.
SECTION 2.4 Periodic Reports to Guarantee Trustee. The
Guarantor shall provide to the Guarantee Trustee, the Commission
and the Holders of the Preferred Securities, as applicable, such
documents, reports and information, if any, as required by
Section 314(a)(1)-(3) of the Trust Indenture Act and the
compliance certificates required by Section 314(a)(4) and (c) of
the Trust Indenture Act, any such certificates to be provided in
the form, in the manner and at the times required by Section
314(a)(4) and (c) of the Trust Indenture Act (provided that any
certificate to be provided pursuant to Section 314(a)(4) of the
Trust Indenture Act shall be provided within 120 days of the end
of each fiscal year of the Issuer).
SECTION 2.5 Evidence of Compliance with Conditions
Precedent. The Guarantor shall provide to the Guarantee Trustee
such evidence of compliance with any conditions precedent, if
any, provided for in this Guarantee Agreement which relate to any
of the matters set forth in Section 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given pursuant to
Section 314(c) shall comply with Section 314(e) of the Trust
Indenture Act.
SECTION 2.6 Events of Default; Waiver. (a) Subject to
Section 2.6(b), Holders of Preferred Securities may by vote of at
least a Majority in liquidation amount of the Preferred
Securities, (A) direct the time, method and place of conducting
any proceeding for any remedy available to the Guarantee Trustee,
or exercising any trust or power conferred upon the Guarantee
Trustee or (B) on behalf of the Holders of all Preferred
Securities waive any past Event of Default and its consequences.
Upon such waiver, any 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 Guarantee Agreement, but no such
waiver shall extend to any subsequent or other default or Event
of Default or impair any right consequent thereon.
(b) The right of any Holder of Preferred Securities to
receive payment of the Guarantee Payments in accordance with this
Guarantee Agreement, or to institute suit for the enforcement of
any such payment, shall not be impaired without the consent of
each such Holder.
SECTION 2.7 Disclosure of Information. The disclosure of
information as to the names and addresses of the Holders of the
Preferred Securities in accordance with Section 312 of the Trust
Indenture Act, regardless of the source from which such
information was derived, shall not be deemed to be a violation of
any existing law, or any law hereafter enacted which does not
specifically refer to Section 312 of the Trust Indenture Act, nor
shall the Guarantee Trustee be held accountable by reason of
mailing any material pursuant to a request made under Section
312(b) of the Trust Indenture Act.
SECTION 2.8 Conflicting Interest. The Declaration shall be
deemed to be specifically described in this Guarantee Agreement
for the purposes of clause (i) of the first provision contained
in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee
Trustee in trust for the benefit of the Holders of the Preferred
Securities. The Guarantee Trustee shall not transfer its right,
title and interest in the Guarantee Agreement to any Person
except a Successor Guarantee Trustee on acceptance by such
Successor Guarantee Trustee of its appointment to act as
Guarantee Trustee or to a Holder of Preferred Securities
exercising his or her rights pursuant to Section 5.4. The right,
title and interest of the Guarantee Trustee to the Guarantee
Agreement shall vest automatically in each Person who may
hereafter be appointed as Guarantee Trustee in accordance with
Article IV. Such vesting and cessation of title shall be
effective whether or not conveyancing documents have been
executed and delivered.
(b) If an Event of Default occurs and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the
benefit of the Holders of the Preferred Securities.
(c) This Guarantee Agreement and all moneys received by the
Trust hereunder in respect of the Guarantee Payments will not be
subject to any right, charge, security interest, lien or claim of
any kind in favor of, or for the benefit of, the Guarantee
Trustee or its agents or their creditors.
(d) The Guarantee Trustee shall transmit, after the
occurrence of an Event of Default, by first class mail, postage
prepaid, to the holders of the Preferred Securities, as their
names and addresses appear upon the register, notice of all
Events of Default known to the Guarantee Trustee, unless such
defaults shall have been cured before the giving of such notice;
provided that the Guarantee Trustee shall be protected in
withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors and/or
Responsible Officers of the Guarantee Trustee in good faith
determine that the withholding of such notice is in the interests
of the Holders of the Preferred Securities. The Guarantee
Trustee shall not be deemed to have knowledge of any default
except any default as to which the Guarantee Trustee shall have
received written notice or a Responsible Officer charged with the
administration of this Guarantee Agreement shall have obtained
written notice.
(e) The Guarantee Trustee shall not resign as a Trustee
unless a Successor Guarantee Trustee has been appointed and
accepted that appointment in accordance with Article IV.
SECTION 3.2 Certain Rights and Duties of the Guarantee
Trustee. (a) The Guarantee Trustee, before the occurrence of an
Event of Default and after the curing of all Events of Default
that may have occurred, shall undertake to perform only such
duties as are specifically set forth in this Guarantee Agreement,
and no implied covenants shall be read into this Guarantee
Agreement against the Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant
to Section 2.6(a)), the Guarantee Trustee shall exercise such of
the rights and powers vested in it by this Guarantee Agreement,
and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) No provision of this Guarantee Agreement shall be
construed to relieve the Guarantee Trustee from liability for its
own negligent action, its own negligent failure to act or its own
willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that
may have occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions of
this Guarantee Agreement, and the Guarantee Trustee shall not be
liable except for the performance of such duties and obligations
as are specifically set forth in this Guarantee Agreement, and no
implied covenants or obligations shall be read into this
Guarantee Agreement against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of
the Guarantee Trustee, the Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the case of any
such certificates or opinions that are specifically required to
be furnished to the Guarantee Trustee by any provision hereof,
the Guarantee Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of
this Guarantee Agreement;
(ii) The Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of
the Guarantee Trustee, unless it shall have proved that the
Guarantee Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of
Preferred Securities as provided herein relating to the time,
method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising any trust or
power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and
(iv) no provision of this Guarantee Agreement shall
require the Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance
of any of its duties or in the exercise of any of its rights or
powers if it shall have reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to
it under the terms of this Guarantee Agreement or adequate
indemnity against such risk or liability is not reasonably
assured to it.
(c) Subject to the provisions of Section 3.2(a) and (b):
(i) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a
matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Guarantee Trustee (unless
other evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, request and rely upon a
certificate, which shall comply with the provisions of Section
314(e) of the Trust Indenture Act, signed by any authorized
officer of the Guarantor;
(ii) the Guarantee Trustee (A) may consult with
counsel (which may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees) selected by it
in good faith and with due care and the written advice or opinion
of such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon and in accordance with such advice and opinion
and (B) shall have the right at any time to seek instructions
concerning the administration of this Guarantee Agreement from
any court of competent jurisdiction;
(iii) The Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the Guarantee
Trustee shall not be responsible for any misconduct or negligence
on the part of any agent or attorney appointed by it in good
faith and with due care;
(iv) The Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it
by this Guarantee Agreement at the request or direction of any
Holders of Preferred Securities, unless such Holders shall have
offered to the Guarantee Trustee reasonable security and
indemnity against the costs, expenses (including attorneys' fees
and expenses) and liabilities that might be incurred by it in
complying with such request or direction; provided that nothing
contained in this clause (iv) shall relieve the Guarantee Trustee
of the obligation, upon the occurrence of an Event of Default
(which has not been cured or waived), to exercise such of the
rights and powers vested in it by this Guarantee Agreement, and
to use the same degree of care and skill in this exercise, as a
prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs; and
(v) Any action taken by the Guarantee Trustee or its
agents hereunder shall bind the Holders of the Preferred
Securities and the signature of the Guarantee Trustee or its
agents alone shall be sufficient and effective to perform any
such action; and no third party shall be required to inquire as
to the authority of the Guarantee Trustee to so act, or as to its
compliance with any of the terms and provisions of this Guarantee
Agreement, both of which shall be conclusively evidenced by the
Guarantee Trustee's or its agent's taking such action.
SECTION 3.3 Not Responsible for Recitals or Issuance of
Guarantee. The recitals contained in this Guarantee shall be
taken as the statements of the Guarantor and the Guarantee
Trustee does not assume any responsibility for their correctness.
The Guarantee Trustee makes no representations as to the validity
or sufficiency of this Guarantee Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Qualifications. (a) There shall at all times
be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Commission to act as an
institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000, and subject
to supervision or examination by federal, state, territorial or
District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred
to above, then for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most
recent report of condition so published.
If at any time the Guarantee Trustee shall cease to satisfy
the requirements of clauses (i)-(ii) above, the Guarantee Trustee
shall immediately resign in the manner and with the effect set
out in Section 4.2. If the Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section
310(b) of the Trust Indenture Act, the Guarantee Trustee and the
Guarantor shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of
Guarantee Trustee. (a) Subject to Section 4.2(b), the Guarantee
Trustee may be appointed or removed without cause at any time by
the Guarantor.
(b) The Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee
under Section 4.1(a) has been appointed and has accepted such
appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the
Guarantee Trustee being removed.
(c) The Guarantee Trustee appointed to office shall hold
office until his or her successor shall have been appointed or
until its removal or resignation.
(d) The Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument (a
"Resignation Request") in writing signed by the Guarantee Trustee
and delivered to the Guarantor, which resignation shall take
effect upon such delivery or upon such later date as is specified
therein; provided, however, that no such resignation of the
Guarantee Trustee shall be effective until a Successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee
under Section 4.1(a) has been appointed and has accepted such
appointment by instrument executed by such Successor Guarantee
Trustee and delivered to Guarantor and the resigning Guarantee
Trustee.
(e) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section
4.2 within 60 days after delivery to the Guarantor of a
Resignation Request, the resigning Guarantee Trustee may petition
any court of competent jurisdiction for appointment of a
Successor Guarantee Trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, appoint
a Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee. The Guarantor irrevocably and
unconditionally agrees to pay in full to the Holders the
Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer) regardless of any defense, right of set-off
or counterclaim which the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.
SECTION 5.2 Waiver of Notice. The Guarantor hereby waives
notice of acceptance of this Guarantee Agreement and of any
liability to which it applies or may apply, presentment, demand
for payment, any right to require a proceeding first against the
Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor,
notice of redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected. The obligations,
covenants, agreements and duties of the Guarantor under this
Guarantee Agreement shall in no way be affected or impaired by
reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any
express or implied agreement, covenant, term or condition
relating to the Preferred Securities to be performed or observed
by the Issuer;
(b) the extension of time for the payment by the Issuer of
all or any portion of the Distributions (other than an extension
of time for payment of Distributions that results from the
extension of any interest payment period on the Debentures),
Redemption Price, Liquidation Distribution or any other sums
payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Preferred
Securities;
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to
the terms of the Preferred Securities, or any action on the part
of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other
similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of this Section 5.3 that the
obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances. There shall be no
obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Enforcement of Guarantee. The Guarantor and
the Guarantee Trustee expressly acknowledge that (i) this
Guarantee Agreement will be deposited with the Guarantee Trustee
to be held for the benefit of the Holders; (ii) the Guarantee
Trustee has the right to enforce this Guarantee Agreement on
behalf of the Holders; (iii) Holders representing not less than a
Majority in liquidation amount of the Preferred Securities have
the right to direct the time, method and place of conducting any
proceeding for any remedy available in respect of this Guarantee
Agreement, including the giving of directions to the Guarantee
Trustee, or exercising any trust or other power conferred upon
the Guarantee Trustee under this Guarantee Agreement, and (iv)
any Holder may institute a legal proceeding directly against the
Guarantor to enforce such Holder's rights under this Guarantee
Agreement, without first instituting a legal proceeding against
the Issuer, the Guarantee Trustee, or any other Person and
without prior notice to the Guarantee Trustee.
SECTION 5.5 Guarantee of Payment. This Guarantee Agreement
creates a guarantee of payment and not merely of collection.
This Guarantee Agreement will not be discharged except by payment
of the Guarantee Payments in full (without duplication of amounts
theretofore paid by the Issuer).
SECTION 5.6 Subrogation. The Guarantor shall be subrogated
to all rights of the Holders against the Issuer in respect of any
amounts paid to the Holders by the Guarantor under this Guarantee
Agreement; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights which it may acquire
by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this
Guarantee Agreement, if, at the time of any such payment, any
amounts are due and unpaid under this Guarantee Agreement. If
any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations. The Guarantor
acknowledges that its obligations hereunder are independent of
the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal
and as debtor hereunder to make Guarantee Payments pursuant to
the terms of this Guarantee Agreement notwithstanding the
occurrence of any event referred to in subsections (a) through
(g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions. So long as any
Preferred Securities remain outstanding, the Guarantor will not
declare or pay any dividend on, or redeem, purchase, acquire or
make a distribution or liquidation payment with respect to, any
of its common stock or preferred stock or any other securities
similar to the Preferred Securities or the Debentures, or make
any guarantee payments with respect thereto, if at such time (i)
the Guarantor shall be in default with respect to its Guarantee
Payments or other payment obligations hereunder, (ii) there shall
have occurred and be continuing any event of default under the
Indenture or (iii) the Guarantor shall have given notice of its
selection of an Extension Period (as defined in the Indenture)
and such period, or any extension thereof, is continuing;
provided that the Guarantor will be permitted to pay dividends
(and cash in lieu of fractional shares) upon the mandatory
conversion of any of its preferred stock in accordance with the
terms of such stock. In addition, so long as any Preferred
Securities remain outstanding, the Guarantor (i) will remain the
sole direct or indirect owner of all of the outstanding Common
Securities and shall not cause or permit the Common Securities to
be transferred except to the extent such transfer is permitted
under Section 9.1(c) of the Declaration; provided that any
permitted successor of the Guarantor under the Indenture may
succeed to the Guarantor's ownership of the Common Securities and
(ii) will not take any action which would cause the Issuer to
cease to be treated as a grantor trust for United States federal
income tax purposes except in connection with a distribution of
Debentures as provided in the Declaration.
SECTION 6.2 Subordination. This Guarantee Agreement will
constitute an unsecured obligation of the Guarantor and will rank
(i) subordinate and junior in right of payment to all other
liabilities of the Guarantor, except those made pari passu or
subordinate by their terms, and (ii) senior to all capital stock
now or hereafter issued by the Guarantor and to any guarantee now
or hereafter entered into by the Guarantor in respect of any of
its capital stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. This Guarantee Agreement shall
terminate and be of no further force and effect upon full payment
of the Redemption Price of all Preferred Securities, upon the
distribution of Debentures to Holders of Preferred Securities and
Common Securities in exchange for all of the Preferred Securities
and Common Securities or upon full payment of the amounts payable
in accordance with the Declaration upon liquidation of the
Issuer. Notwithstanding the foregoing, this Guarantee Agreement
will continue to be effective or will be reinstated, as the case
may be, if at any time any Holder must restore payment of any
sums paid with respect to the Preferred Securities or this
Guarantee Agreement.
ARTICLE VIII
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.1 Exculpation. (a) No Indemnified Person shall
be liable, responsible or accountable in damages or otherwise to
the Guarantor or any Covered Person for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by
such Indemnified Person in good faith and in a manner such
Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this
Guarantee Agreement or by law, except that an Indemnified Person
shall be liable for any such loss, damage or claim incurred by
reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Guarantor and upon
such information, opinions, reports or statements presented to
the Guarantor by any Person as to matters the Indemnified Person
reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable
care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which
Distributions to Holders of Preferred Securities might properly
be paid.
SECTION 8.2 Indemnification. (a) To the fullest extent
permitted by applicable law, the Guarantor shall indemnify and
hold harmless each Indemnified Person from and against any loss,
damage or claim incurred by such Indemnified Person by reason of
any act or omission performed or omitted by such Indemnified
Person in good faith and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred
on such Indemnified Person by this Guarantee Agreement, except
that no Indemnified Person shall be entitled to be indemnified in
respect of any loss, damage or claim incurred by such Indemnified
Person by reason of negligence or willful misconduct with respect
to such acts or omissions.
(b) To the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by an Indemnified Person
in defending any claim, demand, action, suit or proceeding shall,
from time to time, be advanced by the Guarantor prior to the
final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of an undertaking by or
on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled
to be indemnified as authorized in Section 8.2(a).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns. All guarantees and
agreements contained in this Guarantee Agreement shall bind the
successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of
the Preferred Securities then outstanding. Except in connection
with a consolidation, merger or sale involving the Guarantor that
is permitted under Article Eight of the Indenture, the Guarantor
shall not assign its obligations hereunder.
SECTION 9.2 Amendments. Except with respect to any changes
which do not adversely affect the rights of Holders (in which
case no consent of Holders will be required), this Guarantee
Agreement may only be amended with the prior approval of the
Holders of not less than a Majority in liquidation amount of the
Preferred Securities. The provisions of Section 12.2 of the
Declaration concerning meetings of Holders shall apply to the
giving of such approval.
SECTION 9.3 Notices. Any notice, request or other
communication required or permitted to be given hereunder shall
be in writing, duly signed by the party giving such notice, and
delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address set forth
below or such other address as the Guarantor may give notice of
to the Holders:
UAL Corporation
1200 East Algonquin Road
Elk Grove Township, Illinois 60007
Facsimile No.: (847) 700-4000
Attention: Corporate Secretary
(b) if given to the Guarantee Trustee, to the address set
forth below or such other address as the Guarantee Trustee may
give notice of to the Holders:
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Administration
(c) if given to any Holder of Preferred Securities, at the
address set forth on the books and records of the Issuer.
All notices hereunder shall be deemed to have been given
when received in person, telecopied with receipt confirmed, or
mailed by first class mail, postage prepaid except that if a
notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.
SECTION 9.4 Genders. The masculine, feminine and neuter
genders used herein shall include the masculine, feminine and
neuter genders.
SECTION 9.5 Benefit. This Guarantee Agreement is solely
for the benefit of the Holders and subject to Section 3.1(a) is
not separately transferable from the Preferred Securities.
SECTION 9.6 Governing Law. THIS GUARANTEE AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.7 Counterparts. This Guarantee Agreement may be
executed in counterparts, each of which shall be an original; but
such counterparts shall together constitute one and the same
instrument.
THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
UAL CORPORATION
By: /s/ Douglas A. Hacker
---------------------
Name: Douglas A. Hacker
Title: Senior Vice President
and Chief Financial
Officer
THE FIRST NATIONAL BANK OF
CHICAGO, as Guarantee Trustee
By: /s/ Richard D. Manella
----------------------
Name: Richard D. Manella
Title: Vice President
Exhibit 4.6
AMENDED AND RESTATED
DECLARATION OF TRUST
of
UAL Corporation Capital Trust I
December 30, 1996
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of December 30, 1996 by the undersigned
trustees (together with all other Persons from time to time duly
appointed and serving as trustees in accordance with the
provisions of this Declaration, the "Trustees"), UAL Corporation,
a Delaware corporation, as trust sponsor ("UAL" or the "Sponsor")
and the holders from time to time of undivided interests in the
assets of the Trust (as hereinafter defined).
WHEREAS, the Sponsor and certain of the Trustees entered
into a Declaration of Trust dated as of October 15, 1996 (the
"Original Declaration") in order to establish a statutory
business trust (the "Trust") under the Business Trust Act (as
hereinafter defined);
WHEREAS, the Certificate of Trust (the "Certificate of
Trust") of the Trust was filed with the office of the Secretary
of State of the State of Delaware on October 15, 1996;
WHEREAS, the Trustees and the Sponsor desire to continue the
Trust pursuant to the Business Trust Act for the purpose of, as
described more fully in Section 3.3 hereof, (i) issuing Preferred
Securities (as hereinafter defined) representing undivided
beneficial interests in the assets of the Trust in exchange for
Depositary Shares ("Depositary Shares") each representing 1/1,000
of a share of 12-1/4% Series B Preferred Stock (as hereinafter
defined) of UAL pursuant to the Offer (as hereinafter defined)
and delivering such Depositary Shares to UAL in consideration for
the deposit by UAL as trust assets of Debentures (as hereinafter
defined) of UAL issued under the Indenture (as hereinafter
defined) and (ii) issuing and selling Common Securities (as
hereinafter defined) representing undivided beneficial interests
in the assets of the Trust to UAL in exchange for cash and
investing the proceeds thereof in additional Debentures (as
hereinafter defined) of UAL issued under the Indenture to be held
as assets of the Trust; and
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business
Trust Act, that the Original Declaration be amended and restated
in its entirety as provided herein and that this Declaration
constitute the governing instrument of such business trust, the
Trustees declare that all assets referred to in clauses (i) and
(ii) of the previous recital clause contributed to or purchased
by the Trust will be held in trust for the benefit of the Holders
(as hereinafter defined) from time to time of the Certificates
(as hereinafter defined) representing undivided beneficial
interests in the assets of the Trust issued hereunder, subject to
the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
___________
(a) Capitalized terms used in this Declaration but not
defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Amended and Restated Declaration of
Trust (including Exhibits A, B and C hereto (the "Exhibits")) as
modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and
Sections and Exhibits are to Articles and Sections of and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in
this Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in
Rule 405 under the Securities Act or any successor rule
thereunder.
"Book Entry Interest" means a beneficial interest in a
Certificate registered in the name of a Clearing Agency or a
nominee thereof, ownership and transfers of which shall be
maintained and made through book entries by such Clearing Agency
as described in Section 9.4.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking
institutions are authorized or obligated by law or executive
order to close in the Place of Payment (as such term is defined
in the Indenture).
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. Sec. 3801 et seq., as it may be amended
from time to time.
"Certificate" means a Common Security Certificate or a
Preferred Security Certificate.
"Certificate of Trust" has the meaning set forth in the
second Whereas clause above.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act
that is acting as a depository for the Preferred Securities and
in whose name or in the name of a nominee of that organization
shall be registered a Certificate and which shall undertake to
effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to
time the Clearing Agency effects book entry transfers and pledges
of securities deposited with the Clearing Agency.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time or any successor legislation. A reference to a
specific section of the Code refers not only to such specific
section but also to any corresponding provision of any federal
tax statute enacted after the date of this Declaration, as such
specific section or corresponding provision is in effect on the
date of application of the provisions of this Declaration
containing such reference.
"Commission" means the U.S. Securities and Exchange
Commission.
"Common Guarantee" means the Common Securities Guarantee
Agreement dated as of December 30, 1996 of UAL in respect of the
Common Securities.
"Common Security" has the meaning specified in Section
7.1(b).
"Common Security Certificate" means a definitive certificate
in fully registered form representing a Common Security
substantially in the form of Annex I to Exhibit C.
"Covered Person" means (i) any officer, director,
shareholder, partner, member, representative, employee or agent
of the Trust or its Affiliates, (ii) any officer, director,
shareholder, employee, representative or agent of UAL or its
Affiliates and (iii) the Holders from time to time of the
Securities.
"Dealer Manager Agreement" means the dealer manager
agreement entered into among UAL, the Trust and Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Smith Barney Inc. with
respect to, among other things, the Offer and the Preferred
Securities.
"Debenture Trustee" means The First National Bank of Chicago
as trustee under the Indenture until a successor is appointed
thereunder and thereafter means any such successor trustee.
"Debentures" means the series of Junior Subordinated
Debentures issued by UAL under the Indenture to the Trust and
entitled the "13 1/4% Junior Subordinated Debentures due 2026".
"Delaware Trustee" has the meaning set forth in Section
5.1(a)(3).
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial
Clearing Agency.
"Event of Default" in respect of the Securities means an
Indenture Event of Default has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Expiration Date" has the meaning set forth in the
Prospectus.
"Fiscal Year" has the meaning specified in Section 11.1.
"Holder" means a Person in whose name a Certificate
representing a Security is registered, such Person being a
beneficial owner within the meaning of the Business Trust Act.
"Indemnified Person" means any Trustee, any Affiliate of any
Trustee, any officers, directors, shareholders, members,
partners, employees, representatives or agents of any Trustee, or
any employee or agent of the Trust or its Affiliates.
"Indenture" means the Indenture dated as of December 20,
1996 between UAL and the Debenture Trustee as supplemented by the
board resolution, supplemental indenture or officers' certificate
pursuant to which the Debentures are to be issued.
"Indenture Event of Default" means any event or condition
defined as an "Event of Default" with respect to the Debentures
under Section 5.1 of the Indenture that has occurred and is
continuing.
"Institutional Trustee" means the Trustee meeting the
eligibility requirements set forth in Section 5.1(c) and having
the duties set forth for the Institutional Trustee herein.
"Investment Company" means an investment company as defined
in the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Legal Action" has the meaning specified in Section 3.6(g).
"Liquidation Distribution" has the meaning set forth in
Exhibits B and C hereto establishing the terms of the Securities.
"Majority in liquidation amount of the Securities" means,
except as otherwise required by the Trust Indenture Act and
except as provided in the penultimate paragraph of paragraph 5 of
Exhibit B hereto, Holder(s) of outstanding Securities voting
together as a single class or, as the context may require,
Holder(s) of outstanding Preferred Securities or Common
Securities each voting separately as a class, who are the record
owners of a relevant class of Securities whose liquidation amount
(including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions
to the date upon which the voting percentages are determined)
represents more than 50% of the liquidation amount of all
outstanding Securities of such class.
"Ministerial Action" has the meaning set forth in the terms
of the Securities as set forth in Exhibits B and C hereto.
"Offer" means the offer by the Trust to exchange Preferred
Securities of the Trust for outstanding Depositary Shares of UAL
in consideration for the deposit to the Trust by UAL, as trust
assets, of Debentures issued under the Indenture, all as
described in the Prospectus.
"Original Declaration" has the meaning set forth in the
first recital clause above.
"Paying Agent" has the meaning specified in Section 3.8(g).
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association,
joint stock company, limited liability company, trust,
unincorporated association, or government or any agency or
political subdivision thereof, or any other entity of whatever
nature.
"Preferred Guarantee" means the Guarantee Agreement dated as
of December 30, 1996 of UAL in respect of the Preferred
Securities.
"Preferred Security" has the meaning specified in Section
7.1(b).
"Preferred Security Beneficial Owner" means, with respect to
a Book Entry Interest, a Person who is the beneficial owner of
such Book Entry Interest, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Preferred Security Certificate" means a definitive
certificate in fully registered form representing a Preferred
Security substantially in the form of Annex I to Exhibit B.
"Prospectus" means the Prospectus dated November 21, 1996
relating to the Offer.
"Quorum" means a majority of the Regular Trustees or, if
there are only two Regular Trustees, both such Regular Trustees.
"Regular Trustee" means any Trustee other than the
Institutional Trustee and the Delaware Trustee.
"Related Party" means any direct or indirect wholly owned
subsidiary of UAL or any Person which owns, directly or
indirectly, 100% of the outstanding voting securities of UAL.
"Resignation Request" has the meaning specified in Section
5.2(d).
"Responsible Officer" means, with respect to the
Institutional Trustee, the chairman of the board of directors,
the president, any vice-president, any assistant vice-president,
the secretary, any assistant secretary, the treasurer, any
assistant treasurer, any trust officer or assistant trust officer
or any other officer of the Institutional Trustee customarily
performing functions similar to those performed by any of the
above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act
or any successor rule thereunder.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, or any successor legislation.
"Series B Preferred Stock" means the 12-1/4% Series B
Preferred Stock of UAL.
"Special Event" has the meaning set forth in the terms of
the Securities as set forth in Exhibits B and C hereto.
"Sponsor" or "UAL" means UAL Corporation, a Delaware
corporation, or any successor entity in a merger or
consolidation, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning specified in
Section 5.2(b)(ii).
"Successor Institutional Trustee" means a successor Trustee
possessing the qualifications to act as Institutional Trustee
under Section 5.1(c).
"10% in liquidation amount of the Securities" means, except
as otherwise required by the Trust Indenture Act and except as
provided in the penultimate paragraph of paragraph 5 of Exhibit B
hereto, Holder(s) of outstanding Securities voting together as a
single class or, as the context may require, Holder(s) of
outstanding Preferred Securities or Common Securities, voting
separately as a class, who are the record owners of a relevant
class of Securities whose liquidation amount (including the
stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) represents 10% or
more of the liquidation amount of all outstanding Securities of
such class.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under
the Code by the United States Treasury, as such regulations may
be amended from time to time (including corresponding provisions
of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed
this Declaration as a trustee, so long as such Person shall
continue in office in accordance with the terms hereof, and all
other Persons who may from time to time be duly appointed,
qualified and serving as trustees in accordance with the
provisions hereof, and references herein to a Trustee or the
Trustees shall refer to such Person or Persons solely in their
capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
"UAL Corporation Capital Trust" shall mean any statutory
business trust created under the laws of the State of Delaware
specified in the applicable board resolution, supplemental
indenture or officers' certificate establishing a particular
series of debt securities pursuant to Section 3.1 of the
Indenture.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
--------------------------------
(a) This Declaration is subject to the provisions of the
Trust Indenture Act that are required to be part of this
Declaration and shall, to the extent applicable, be governed by
such provisions;
(b) if and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties
imposed by Sections 310 to 317, inclusive, of the Trust Indenture
Act, such imposed duties shall control;
(c) the Institutional Trustee, to the extent permitted by
applicable law and/or the rules and regulations of the
Commission, shall be the only Trustee which is a trustee for the
purposes of the Trust Indenture Act; and
(d) the application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as
equity securities representing undivided beneficial interests in
the assets of the Trust.
SECTION 2.2 Lists of Holders of Preferred Securities.
----------------------------------------
(a) Each of the Sponsor and the Regular Trustees on behalf
of the Trust shall provide the Institutional Trustee with such
information as is required under Section 312(a) of the Trust
Indenture Act at the times and in the manner provided in Section
312(a); and
(b) the Institutional Trustee shall comply with its
obligations under Sections 310(b), 311 and 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee.
------------------------------------
Within 60 days after May 15 of each year, the Institutional
Trustee shall provide to the Holders of the Securities such
reports, if any, as are required by Section 313 of the Trust
Indenture Act in the form, in the manner and at the times
provided by Section 313 of the Trust Indenture Act. The
Institutional Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Institutional Trustee.
-----------------------------------------
Each of the Sponsor and the Regular Trustees on behalf of
the Trust shall provide to the Institutional Trustee, the
Commission and the Holders of the Securities, as applicable, such
documents, reports and information, if any, as required by
Section 314(a)(1)-(3) of the Trust Indenture Act and the
compliance certificates required by Section 314(a)(4) and (c) of
the Trust Indenture Act, any such certificates to be provided in
the form, in the manner and at the times required by Section
314(a)(4) and (c) of the Trust Indenture Act (provided that any
certificate to be provided pursuant to Section 314(a)(4) of the
Trust Indenture Act shall be provided within 120 days of the end
of each Fiscal Year).
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
------------------------------------------------
Each of the Sponsor and the Regular Trustees on behalf of
the Trust shall provide to the Institutional Trustee such
evidence of compliance with any conditions precedent, if any,
provided for in this Declaration which relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given pursuant to
Section 314(c) shall comply with Section 314(e) of the Trust
Indenture Act.
SECTION 2.6 Events of Default; Waiver.
-------------------------
(a) Subject to Section 2.6(c), Holders of Preferred
Securities may by vote of at least a Majority in liquidation
amount of the Preferred Securities, voting separately as a class,
(A) in accordance with the terms of the Preferred Securities,
direct the time, method and place of conducting any proceeding
for any remedy available to the Institutional Trustee, or
exercising any trust or power conferred upon the Institutional
Trustee, or (B) on behalf of all Holders of Preferred Securities
waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that if the Event of
Default arises out of an Indenture Event of Default:
(i) which is not waivable under the Indenture, the
Event of Default under this Declaration shall also not be
waivable; or
(ii) which requires the consent or vote of (1) holders
of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures, or (2) each
holder of Debentures, the Event of Default under this Declaration
may only be waived by, in the case of clause (1) above, the vote
of Holders of Preferred Securities representing such specified
percentage of the aggregate liquidation amount of the Preferred
Securities, or, in the case of clause (2) above, each Holder of
Preferred Securities.
Upon such waiver, any such default shall cease to exist, and any
Event of Default with respect to the Preferred Securities arising
therefrom shall be deemed to have been cured, for every purpose
of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to
the Preferred Securities or impair any right consequent thereon.
(b) Subject to Section 2.6(c), Holders of Common Securities
may by vote of at least a Majority in liquidation amount of the
Common Securities, voting separately as a class, (A) in
accordance with the terms of the Common Securities, direct the
time, method and place of conducting any proceeding for any
remedy available to the Institutional Trustee, or exercising any
trust or power conferred upon the Institutional Trustee, or (B)
on behalf of all Holders of Common Securities, waive any past
Event of Default with respect to the Common Securities and its
consequences, provided that, if the Event of Default arises out
of an Indenture Event of Default:
(i) which is not waivable under the Indenture, except
where the Holders of the Common Securities are deemed to have
waived such Event of Default under the Declaration as provided
below, the Event of Default under this Declaration shall also not
be waivable; or
(ii) which requires the consent or vote of (1) holders
of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder
of Debentures, except where the holders of the Common Securities
are deemed to have waived such Event of Default under this
Declaration as provided below, the Event of Default under this
Declaration may only be waived by, in the case of clause (1)
above, the vote of Holders of Common Securities representing such
specified percentage of the aggregate liquidation amount of the
Common Securities, or, in the case of clause (2) above, each
Holder of Common Securities; and provided further that each
Holder of Common Securities will be deemed to have waived any
Event of Default with respect to the Common Securities and its
consequences until all Events of Default with respect to the
Preferred Securities have been cured, waived by the Holders of
Preferred Securities as provided in this Declaration or otherwise
eliminated and, until all Events of Default with respect to the
Preferred Securities have been so cured, waived or otherwise
eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the Holders of the Preferred Securities and
only the Holders of the Preferred Securities will have the right
to direct the Institutional Trustee in accordance with the terms
of this Declaration or the Securities. If any Event of Default
with respect to the Preferred Securities is waived by the Holders
of Preferred Securities as provided in this Declaration, the
Holders of Common Securities agree that such waiver shall also
constitute the waiver of such Event of Default with respect to
the Common Securities for all purposes under this Declaration
without any further act, vote or consent of the Holders of the
Common Securities. Subject to the foregoing provisions of this
Section 2.6(b), upon such waiver, any such default shall cease to
exist and any Event of Default with respect to the Common
Securities arising therefrom shall be deemed to have been cured,
for every purpose of this Declaration, but no such waiver shall
extend to any subsequent or other default or Event of Default
with respect to the Common Securities or impair any right
consequent thereon.
(c) The right of any Holder of Securities to receive
payment of Distributions on the Securities in accordance with
this Declaration and the terms of the Securities set forth in
Exhibits B and C on or after the respective payment dates
therefor, or to institute suit for the enforcement of any such
payment on or after such payment dates, shall not be impaired
without the consent of each such Holder.
(d) As provided in the terms of the Securities set forth in
Exhibits B and C hereto, a waiver of an Indenture Event of
Default by the Institutional Trustee at the written direction of
the Holders of the Preferred Securities constitutes a waiver of
the corresponding Event of Default under this Declaration in
respect of the Securities.
SECTION 2.7 Disclosure of Information.
-------------------------
The disclosure of information as to the names and addresses
of the Holders of the Securities in accordance with Section 312
of the Trust Indenture Act, regardless of the source from which
such information was derived, shall not be deemed to be a
violation of any existing law, or any law hereafter enacted which
does not specifically refer to Section 312 of the Trust Indenture
Act, nor shall the Institutional Trustee be held accountable by
reason of mailing any material pursuant to a request made under
Section 312(b) of the Trust Indenture Act.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
----
The Trust continued by this Declaration is named "UAL
Corporation Capital Trust I" as such name may be modified from
time to time by the Regular Trustees following written notice to
the Holders of Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed
advisable by the Regular Trustees.
SECTION 3.2 Office.
------
The address of the principal office of the Trust is c/o UAL
Corporation, 1200 East Algonquin Road, Elk Grove Township,
Illinois 60007, telephone number (847) 700-4000. Upon ten days'
written notice to the Holders, the Regular Trustees may change
the location of the Trust's principal office.
SECTION 3.3 Purpose.
-------
The exclusive purposes and functions of the Trust are:
(a)(i) to issue Preferred Securities in exchange for Depositary
Shares pursuant to the Offer and to deliver such Depositary
Shares to UAL in consideration for the deposit to the Trust by
UAL, as trust assets, of Debentures issued under the Indenture
having an aggregate principal amount equal to the aggregate
liquidation amount of the Depositary Shares so delivered; (ii) to
enter into such agreements and arrangements as may be necessary
in connection with the Offer and to take all action, and exercise
such discretion, as may be necessary or desirable in connection
with the Offer and to file such registration statements or make
such other filings under the Securities Act, the Exchange Act or
state securities or "Blue Sky" laws as may be necessary or
desirable in connection with the Offer and the issuance of the
Preferred Securities; and (iii) to issue and sell Common
Securities to UAL for cash and use the proceeds of such sale to
purchase as trust assets an equal aggregate principal amount of
Debentures issued under the Indenture; and (b) except as
otherwise limited herein, to engage in only those other
activities necessary or incidental thereto. The Trust shall not
borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets or, at any time while the
Securities are outstanding, otherwise undertake (or permit to be
undertaken) any activity that would result in or cause the Trust
to be treated as anything other than a grantor trust for United
States federal income tax purposes.
SECTION 3.4 Authority.
---------
Subject to the limitations provided in this Declaration and
to the specific duties of the Institutional Trustee, the Regular
Trustees shall have exclusive and complete authority to carry out
the purposes of the Trust. An action taken by the Regular
Trustees in accordance with their powers shall constitute the act
of and serve to bind the Trust and an action taken by the
Institutional Trustee in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing
with the Trustees acting on behalf of the Trust, no Person shall
be required to inquire into the authority of the Trustees to bind
the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set
forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
------------------------------
Unless otherwise provided in this Declaration, legal title
to all assets of the Trust shall be vested in the Trust. The
Holders of Certificates shall not have legal title to any part of
the assets of the Trust, but shall have an individual undivided
beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
-----------------------------------------
The Regular Trustees shall have the exclusive power,
authority and duty to cause the Trust, and shall cause the Trust,
to engage in the following activities:
(a) to issue Preferred Securities and Common Securities, in
each case in accordance with this Declaration; provided, however,
that the Trust may issue no more than one series of Preferred
Securities and no more than one series of Common Securities, and,
provided further, there shall be no interests in the Trust other
than the Securities and the issuance of Securities shall be
limited to a one-time, simultaneous issuance of both Preferred
Securities and Common Securities;
(b) in connection with the Offer and the issuance of the
Preferred Securities, at the direction of the Sponsor, to effect
or cause to be effected the filings, and to execute or cause to
be executed the documents, set forth in Section 3.11;
(c) to acquire as trust assets Debentures upon consummation
of the Offer in connection with the exchange of Preferred
Securities for Depositary Shares pursuant to the Offer and to
acquire as trust assets additional Debentures with the proceeds
of the sale of the Common Securities;
(d) to cause the Trust to enter into the Dealer Manager
Agreement and such other agreements and arrangements as may be
necessary or desirable in connection with the Offer and the
consummation thereof, and to take all action, and exercise all
discretion, as may be necessary or desirable in connection with
the Offer or the consummation thereof;
(e) to give the Sponsor and the Institutional Trustee
prompt written notice of the occurrence of a Special Event,
provided that the Regular Trustees shall consult with the Sponsor
and the Institutional Trustee before taking or refraining from
taking any Ministerial Action in relation to a Special Event;
(f) to establish a record date with respect to all actions
to be taken hereunder that require a record date be established,
including for the purposes of Section 316(c) of the Trust
Indenture Act and with respect to Distributions, voting rights,
redemptions, and exchanges, and to issue relevant notices to
Holders of the Preferred Securities and Common Securities as to
such actions and applicable record dates;
(g) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or
demands of or against the Trust ("Legal Action"), unless,
pursuant to Section 3.8(c), the Institutional Trustee has the
exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers,
contractors, advisors, and consultants and pay reasonable
compensation for such services;
(i) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(j) to give the certificate to the Institutional Trustee
required by Section 314(a)(4) of the Trust Indenture Act, which
certificate may be executed by any Regular Trustee;
(k) to incur expenses which are necessary or incidental to
carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as,
registrar and transfer agent for the Securities, the Regular
Trustees hereby initially appointing The First National Bank of
Chicago for such purposes;
(m) to take all actions and perform such duties as may be
required of the Regular Trustee pursuant to the terms of the
Securities set forth in Exhibits B and C hereto;
(n) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the
Trust in all matters necessary or incidental to the foregoing;
(o) to take all action which may be necessary or
appropriate for the preservation and the continuation of the
Trust's valid existence, rights, franchises and privileges as a
statutory business trust under the laws of the State of Delaware
and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the
Securities or to enable the Trust to effect the purposes for
which the Trust has been created;
(p) to take all action, not inconsistent with this
Declaration or with applicable law, which the Regular Trustees
determine in their discretion to be reasonable and necessary or
desirable in carrying out the activities of the Trust as set out
in this Section 3.6, in order that:
(i) the Trust will not be deemed to be an Investment
Company required to be registered under the Investment Company
Act;
(ii) the Trust will not be classified for United
States federal income tax purposes as an association taxable as a
corporation or a partnership and will be treated as a grantor
trust for United States federal income tax purposes; and
(iii) the Trust will comply with any requirements
imposed by any taxing authority on holders of instruments treated
as indebtedness for United States federal income tax purposes;
provided that such action does not adversely affect the interests
of Holders;
(q) to take all action necessary to cause all applicable
tax returns and tax information reports that are required to be
filed with respect to the Trust to be duly prepared and filed by
the Regular Trustees, on behalf of the Trust; and
(r) subject to the requirements of Rule 3a-5 and Section
317(b) of the Trust Indenture Act, to appoint one or more Paying
Agents in addition to the Institutional Trustee.
The Regular Trustees must exercise the powers set forth in
this Section 3.6 in a manner which is consistent with the
purposes and functions of the Trust set out in Section 3.3 and
the Regular Trustees shall not take any action which is
inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have
none of the powers nor any of the authority of the Institutional
Trustee set forth in Section 3.8.
SECTION 3.7 Prohibition of Actions by Trust and Trustees.
--------------------------------------------
The Trust shall not, and the Trustees (including the
Institutional Trustee) shall cause the Trust not to, engage in
any activity other than as required or authorized by this
Declaration. In particular, the Trust shall not and the Trustees
(including the Institutional Trustee) shall cause the Trust not
to:
(a) invest any proceeds received by the Trust from holding
the Debentures but shall promptly distribute all such proceeds to
Holders of Securities pursuant to the terms of this Declaration
and of the Securities;
(b) acquire any assets other than as expressly provided
herein;
(c) possess Trust property for other than a Trust purpose;
(d) make any investments, other than investments
represented by the Debentures;
(e) possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities in any way
whatsoever;
(f) issue any securities or other evidences of beneficial
ownership of, or beneficial interests in, the Trust other than
the Securities;
(g) incur any indebtedness for borrowed money; or
(h) (i) direct the time, method and place of exercising any
trust or power conferred upon the Debenture Trustee with respect
to the Debentures, (ii) waive any past default that is waivable
under Section 5.7 of the Indenture, (iii) exercise any right to
rescind or annul any declaration that the principal of all of the
Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the
Debentures, in each case where such consent shall be required,
unless in the case of this clause (h) the Institutional Trustee
shall have received an unqualified opinion of nationally
recognized independent tax counsel recognized as expert in such
matters to the effect that such action will not cause the Trust
to be classified for United States federal income tax purposes as
an association taxable as a corporation or partnership and that
the Trust will continue to be classified as a grantor trust for
United States federal income tax purposes.
SECTION 3.8 Powers and Duties of the Institutional Trustee.
----------------------------------------------
(a) The Institutional Trustee shall:
(i) on the receipt of payments of funds made in
respect of the Debentures held by the Trust, without any further
acts of the Institutional Trustee or the Regular Trustees,
promptly make payments to the Holders of the Preferred Securities
and Common Securities in accordance with Section 6.1. Funds held
in the Trust may be held uninvested, and without liability for
interest thereon, until disbursed in accordance with this
Declaration;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect promptly the redemption of the
Preferred Securities and the Common Securities to the extent the
Debentures are redeemed or mature;
(iii) upon notice of distribution issued by the
Regular Trustees in accordance with the terms of the Preferred
Securities and the Common Securities, engage in such ministerial
activities as shall be necessary or appropriate to effect
promptly the distribution pursuant to terms of the Securities of
Debentures to Holders of Securities upon the occurrence of a
Special Event; and
(iv) have the legal power to exercise all of the
rights, powers and privileges of a holder of the Debentures under
the Indenture and, if an Event of Default occurs and is
continuing, the Institutional Trustee, subject to Section 2.6(b),
shall, for the benefit of the Holders of the Securities, enforce
its rights as holder of the Debentures under the Indenture,
subject to the rights of the Holders of the Preferred Securities
pursuant to the terms of this Declaration and the Trust Indenture
Act.
(b) The Institutional Trustee shall take all actions and
perform such duties as may be specifically required of the
Institutional Trustee pursuant to the terms of the Securities set
forth in Exhibits B and C hereto.
(c) The Institutional Trustee shall take any Legal Action
which arises out of or in connection with an Event of Default or
the Institutional Trustee's duties and obligations under this
Declaration or the Trust Indenture Act.
(d) All moneys and all Debentures held by the Trust will
not be subject to any right, charge, security interest, lien or
claim of any kind in favor of, or for the benefit of, the
Institutional Trustee or its agents or their creditors.
(e) The Institutional Trustee shall, within 90 days after
the occurrence of a default with respect to the Securities,
transmit by mail, first class postage prepaid, to the Holders of
the Securities, as their names and addresses appear upon the
register, notice of all defaults with respect to the Securities
known to the Institutional Trustee, unless such defaults shall
have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 3.8(e) being hereby
defined to be an Indenture Event of Default, not including any
periods of grace provided for in the Indenture and irrespective
of the giving of any notice provided therein); provided that,
except in the case of default in the payment of the principal of
or interest on any of the Debentures, the Institutional Trustee
shall be protected in withholding such notice if and so long as
the board of directors, the executive committee, or a trust
committee of directors and/or Responsible Officers, of the
Institutional Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of
the Securities. The Institutional Trustee shall not be deemed to
have knowledge of any default, except (i) a default in the
payment of principal, premium or interest on the Debentures or
(ii) any default as to which the Institutional Trustee shall have
received written notice or a Responsible Officer charged with the
administration of this Declaration shall have obtained written
notice.
(f) The Institutional Trustee shall continue to serve as a
Trustee until:
(i) the Trust has been completely liquidated and the
proceeds thereof distributed to the Holders of Securities
pursuant to the terms of the Securities; or
(ii) a Successor Institutional Trustee has been
appointed and has accepted that appointment in accordance with
Article V.
(g) The Institutional Trustee shall act or appoint another
Person to act as paying agent in respect of the Securities and,
subject to Section 3.6(r), may authorize one or more Persons
(each, a "Paying Agent") to pay Distributions, redemption
payments or liquidation payments on behalf of the Trust with
respect to the Preferred Securities. Any such Paying Agent shall
comply with Section 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Institutional Trustee, after
consultation with the Regular Trustees, at any time and a
successor Paying Agent or additional Paying Agents may be
appointed at any time by the Institutional Trustee, subject to
Section 3.6(r). The Institutional Trustee hereby initially
appoints The First National Bank of Chicago as the Paying Agent.
(h) The Institutional Trustee shall give prompt written
notice to the Holders of the Securities of any notice received by
it from UAL of its election to defer payments of interest on the
Debentures by extending the interest payment period with respect
thereto.
(i) Subject to this Section 3.8, the Institutional Trustee
shall have none of the powers or the authority of the Regular
Trustees set forth in Section 3.6.
(j) The Institutional Trustee shall exercise the powers,
duties and rights set forth in this Section 3.8 and Section 3.10
in a manner which is consistent with the purposes and functions
of the Trust set out in Section 3.3 and the Institutional Trustee
shall not take any action which is inconsistent with the purposes
and functions of the Trust set forth in Section 3.3.
SECTION 3.9 Delaware Trustee.
----------------
Notwithstanding any other provision of this Declaration
other than Section 5.1(a)(3), the Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee
have any of the duties and responsibilities, of the Regular
Trustees and the Institutional Trustee described in this
Declaration or any of the duties or responsibilities of Trustees
generally. Except as set forth in Section 5.1(a)(3), the
Delaware Trustee shall be a Trustee for the sole and limited
purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act. No implied covenants or obligations shall be
read into this Declaration against the Delaware Trustee.
SECTION 3.10 Certain Rights and Duties of the Institutional
----------------------------------------------
Trustee.
- -------
(a) The Institutional Trustee, before the occurrence of an
Event of Default and after the curing of all Events of Default
that may have occurred, shall undertake to perform only such
duties as are specifically set forth in this Declaration, and no
implied covenants shall be read into this Declaration against the
Institutional Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6), the
Institutional Trustee shall exercise such of the rights and
powers vested in it by this Declaration, and use the same degree
of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or
her own affairs.
(b) No provision of this Declaration shall be construed to
relieve the Institutional Trustee from liability for its own
negligent action, its own negligent failure to act or its own
willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that
may have occurred:
(A) the duties and obligations of the
Institutional Trustee shall be determined solely by the express
provisions of this Declaration, and the Institutional Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Declaration,
and no implied covenants or obligations shall be read into this
Declaration against the Institutional Trustee; and
(B) in the absence of bad faith on the part of
the Institutional Trustee, the Institutional Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Institutional Trustee
and conforming to the requirements of this Declaration; but, in
the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the
Institutional Trustee, the Institutional Trustee shall be under a
duty to examine the same to determine whether or not they conform
to the requirements of this Declaration;
(ii) the Institutional Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer
of the Institutional Trustee, unless it shall be proved that the
Institutional Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Institutional Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders as
provided herein relating to the time, method and place of
conducting any proceeding for any remedy available to the
Institutional Trustee hereunder or under the Indenture, or
exercising any trust or power conferred upon the Institutional
Trustee under this Declaration; and
(iv) no provision of this Declaration shall require
the Institutional Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance
of any of its duties or in the exercise of any of its rights or
powers, if it shall have reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to
it under the terms of this Declaration or adequate indemnity
against such risk or liability is not reasonably assured to it.
(c) Subject to the provisions of Section 3.10(a) and (b):
(i) whenever, in the administration of this
Declaration, the Institutional Trustee shall deem it desirable
that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Institutional Trustee
(unless other evidence is herein specifically prescribed) may, in
the absence of bad faith on its part and, if the Trust is
excluded from the definition of Investment Company solely by
means of Rule 3a-5, subject to the requirements of Rule 3a-5,
request and rely upon a certificate, which shall comply with the
provisions of Section 314(e) of the Trust Indenture Act, signed
by any two of the Regular Trustees or by an authorized officer of
the Sponsor, as the case may be;
(ii) The Institutional Trustee (A) may consult with
counsel of its choice (which may be counsel to the Sponsor or any
of its Affiliates and may include any of its employees) selected
by it in good faith and with due care and the written advice or
opinion of such counsel with respect to legal matters shall be
full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon and in accordance with such advice and
opinion and (B) shall have the right at any time to seek
instructions concerning the administration of this Declaration
from any court of competent jurisdiction;
(iii) The Institutional Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the
Institutional Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed by
it in good faith and with due care;
(iv) The Institutional Trustee shall be under no
obligation to exercise any of the rights or powers vested in it
by this Declaration at the request or direction of any Holders,
unless such Holders shall have offered to the Institutional
Trustee reasonable security and indemnity against the costs,
expenses (including attorneys' fees and expenses) and liabilities
that might be incurred by it in complying with such request or
direction; provided that nothing contained in this clause (iv)
shall relieve the Institutional Trustee of the obligation, upon
the occurrence of an Event of Default (which has not been cured
or waived) to exercise such of the rights and powers vested in it
by this Declaration, and to use the same degree of care and skill
in this exercise, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs; and
(v) Any action taken by the Institutional Trustee or
its agents hereunder shall bind the Holders of the Securities and
the signature of the Institutional Trustee or its agents alone
shall be sufficient and effective to perform any such action; and
no third party shall be required to inquire as to the authority
of the Institutional Trustee to so act, or as to its compliance
with any of the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Institutional
Trustee's or its agent's taking such action.
SECTION 3.11 Registration Statement and Related Matters.
------------------------------------------
In accordance with the Original Declaration, UAL and the
Trustees have authorized and directed, and hereby confirm the
authorization of, UAL, as the sponsor of the Trust, (i) to file
with the Commission and execute, in each case on behalf of the
Trust, (a) the Registration Statement on Form S-4 (File No.
333-14245) (the "1933 Act Registration Statement") and any pre-
effective or post-effective amendments to such Registration
Statement, relating to the registration under the Securities Act
of the Preferred Securities of the Trust, (b) a Registration
Statement on Form 8-A or other appropriate form (the "1934 Act
Registration Statement") (including all pre-effective and post-
effective amendments thereto) relating to the registration of the
Preferred Securities of the Trust under Section 12(b) of the
Exchange Act and (c) an Issuer Tender Offer Statement on Schedule
13E-4 and any other tender offer statement required to be filed
by the Trust with the Commission (including, if necessary,
Schedule 14D-1) relating to the Offer (collectively, the "Tender
Offer Schedules") and any amendment or supplement thereto; (ii)
to file with the New York Stock Exchange ("NYSE") and execute on
behalf of the Trust a listing application and all other
applications, statements, certificates, agreements and other
instruments as shall be necessary or desirable to cause the
Preferred Securities to be listed on the NYSE; (iii) to file and
execute on behalf of the Trust such applications, reports, surety
bonds, irrevocable consents, appointments of attorney for service
of process and other papers and documents as shall be necessary
or desirable to register the Preferred Securities under the
securities or "Blue Sky" laws of such jurisdictions as UAL, on
behalf of the Trust, may deem necessary or desirable and (iv) to
execute on behalf of the Trust the Dealer Manager Agreement,
relating to the Offer, substantially in the form included as
Exhibit 1 to the 1933 Act Registration Statement. In the event
that any filing referred to in clauses (i)-(iii) above is
required by the rules and regulations of the Commission, the NYSE
or state securities or "Blue Sky" laws, to be executed on behalf
of the Trust by the Trustees, the Regular Trustees, in their
capacities as Trustees of the Trust, are hereby authorized and
directed to join in any such filing and to execute on behalf of
the Trust any and all of the foregoing, it being understood that
the Institutional Trustee and the Delaware Trustee, in their
capacities as Trustees of the Trust, shall not be required to
join in any such filing or execute on behalf of the Trust any
such document unless required by the rules and regulations of the
Commission, the NYSE or state securities or "Blue Sky" laws. In
connection with all of the foregoing, each Trustee, solely in its
capacity as Trustee of the Trust, has constituted and appointed,
and hereby confirms the appointment of, UAL Corporation as his,
her or its true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for such Trustee or in
such Trustee's name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective
amendments) to the 1933 Act Registration Statement, the 1934 Act
Registration Statement and the Tender Offer Schedules and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Commission, granting unto said
attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in connection therewith, as fully to all intents and
purposes as such Trustee might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and
agent, or its substitute, shall do or cause to be done by virtue
hereof.
SECTION 3.12 Filing of Amendments to Certificate of Trust.
--------------------------------------------
The Certificate of Trust as filed with the Secretary of
State of the State of Delaware on October 15, 1996 is attached
hereto as Exhibit A. On or after the date of execution of this
Declaration, the Trustees shall cause the filing with the
Secretary of State of the State of Delaware of such amendments to
the Certificate of Trust as the Trustees shall deem necessary or
desirable.
SECTION 3.13 Execution of Documents by Regular Trustees.
------------------------------------------
Unless otherwise determined by the Regular Trustees and
except as otherwise required by the Business Trust Act with
respect to the Certificate of Trust or otherwise, a majority of,
or, if there are only two, both of, the Regular Trustees are
authorized to execute and deliver on behalf of the Trust any
documents which the Regular Trustees have the power and authority
to execute or deliver pursuant to this Declaration.
SECTION 3.14 Trustees Not Responsible for Recitals or
----------------------------------------
Issuance of Securities.
- ----------------------
The recitals contained in this Declaration and the
Securities shall be taken as the statements of the Sponsor, and
the Trustees do not assume any responsibility for their
correctness. The Trustees make no representations as to the
value or condition of the property of the Trust or any part
thereof. The Trustees make no representations as to the validity
or sufficiency of this Declaration or the Securities.
SECTION 3.15 Duration of Trust.
-----------------
The Trust, absent termination pursuant to the provisions of
Article VIII hereof, shall have existence until December 15,
2026.
ARTICLE IV
SPONSOR
SECTION 4.1 Purchase of Common Securities by Sponsor.
----------------------------------------
The Sponsor will purchase Common Securities issued by the
Trust at the same time as the Preferred Securities are issued in
exchange for Depositary Shares pursuant to the Offer, such
purchase to be in an amount equal to 3% of the sum of (i) the
aggregate stated liquidation amount of the Preferred Securities
issued in exchange for Depositary Shares pursuant to the Offer
and (ii) the proceeds derived from the sale of the Common
Securities.
SECTION 4.2 Expenses.
--------
(a) The Sponsor shall be responsible for and shall pay for
all debts and obligations (other than with respect to the
Securities) and all costs and expenses of the Trust (including,
but not limited to, costs and expenses relating to the
organization of the Trust, the issuance of the Preferred
Securities pursuant to the Offer, the fees and expenses
(including reasonable counsel fees and expenses) of the Trustees
(including any amounts payable under Article X), the costs and
expenses relating to the operation of the Trust, including,
without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and
engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and
telephone and other telecommunications expenses and costs and
expenses incurred in connection with the disposition of Trust
assets).
(b) The Sponsor will pay any and all taxes (other than
United States withholding taxes attributable to the Trust or its
assets) and all liabilities, costs and expenses with respect to
such taxes of the Trust.
(c) The Sponsor's obligations under this Section 4.2 shall
be for the benefit of, and shall be enforceable by, any Person to
whom any such debts, obligations, costs, expenses and taxes are
owed (a "Creditor") whether or not such Creditor has received
notice hereof. Any such Creditor may enforce the Sponsor's
obligations under this Section 4.2 directly against the Sponsor
and the Sponsor irrevocably waives any right or remedy to require
that any such Creditor take any action against the Trust or any
other Person before proceeding against the Sponsor. The Sponsor
agrees to execute such additional agreements as may be necessary
or desirable in order to give full effect to the provisions of
this Section 4.2.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees; Qualifications.
----------------------------------
(a) The number of Trustees initially shall be five (5). At
any time (i) before the issuance of the Securities, the Sponsor
may, by written instrument, increase or decrease the number of,
and appoint, remove and replace the, Trustees, and (ii) after the
issuance of the Securities, the number of Trustees may be
increased or decreased solely by, and Trustees may be appointed,
removed or replaced solely by, vote of Holders of Common
Securities representing a Majority in liquidation amount of the
Common Securities voting as a class; provided that in any case:
(1) the number of Trustees shall be at least five (5) unless
the Trustee that acts as the Institutional Trustee also acts as
the Delaware Trustee, in which case the number of Trustees shall
be at least three (3);
(2) at least a majority of the Trustees shall at all times
be officers, directors or employees of UAL;
(3) if required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be either a natural person who is a
resident of the State of Delaware or, if not a natural person, an
entity which has its principal place of business in the State of
Delaware and otherwise is permitted to act as a Trustee hereunder
under the laws of the State of Delaware, except that if the
Institutional Trustee has its principal place of business in the
State of Delaware and otherwise is permitted to act as a Trustee
hereunder under the laws of the State of Delaware, then the
Institutional Trustee shall also be the Delaware Trustee and
Section 3.9 shall have no application; and
(4) there shall at all times be an Institutional Trustee
hereunder which shall satisfy the requirements of Section 5.1(c).
Each Trustee shall be either a natural person at least 21 years
of age or a legal entity which shall act through one or more duly
appointed representatives.
(b) The initial Regular Trustees shall be:
Douglas A. Hacker
Francesca M. Maher
Thomas A. Mutryn
c/o UAL Corporation
1200 East Algonquin Road
Elk Grove Township, Illinois 60007
(c) There shall at all times be one Trustee which shall act
as Institutional Trustee. In order to act as Institutional
Trustee hereunder, such Trustee shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a Person
permitted by the Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000, and subject to supervision or
examination by Federal, State, Territorial or District of
Columbia authority. If such Person publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 5.1(c)(ii), the
combined capital and surplus of such Person shall be deemed to be
its combined capital and surplus as set forth in its most recent
report of condition so published.
If at any time the Institutional Trustee shall cease to
satisfy the requirements of clauses (i)-(ii) above, the
Institutional Trustee shall immediately resign in the manner and
with the effect set out in Section 5.2(d). If the Institutional
Trustee has or shall acquire any "conflicting interest" within
the meaning of Section 310(b) of the Trust Indenture Act, the
Institutional Trustee and the Holders of the Common Securities
(as if such Holders were the obligor referred to in Section
310(b) of the Trust Indenture Act) shall in all respects comply
with the provisions of Section 310(b) of the Trust Indenture Act.
The Preferred Guarantee shall be deemed to be specifically
described in this Declaration for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust
Indenture Act.
The initial Trustee which shall serve as the Institutional
Trustee is The First National Bank of Chicago, whose address is
as set forth in Section 14.1(b).
(d) The initial Trustee which shall serve as the Delaware
Trustee is First Chicago Delaware Inc., whose address is as set
forth in Section 14.1(c).
(e) Any action taken by Holders of Common Securities
pursuant to this Article V shall be taken at a meeting of Holders
of Common Securities convened for such purpose or by written
consent as provided in Section 12.2.
(f) No amendment may be made to this Section 5.1 which
would change any rights with respect to the number, existence or
appointment and removal of Trustees, except with the consent of
each Holder of Common Securities.
SECTION 5.2 Appointment, Removal and Resignation of
---------------------------------------
Trustees.
- --------
(a) Subject to Section 5.2(b), Trustees may be appointed or
removed without cause at any time:
(i) until the issuance of the Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of the Securities, by vote of
the Holders of a Majority in liquidation amount of the Common
Securities voting as a class.
(b) (i) The Trustee that acts as Institutional Trustee
shall not be removed in accordance with Section 5.2(a) until a
Successor Institutional Trustee possessing the qualifications to
act as Institutional Trustee under Section 5.1(c) has been
appointed and has accepted such appointment by written instrument
executed by such Successor Institutional Trustee and delivered to
the Regular Trustees, the Sponsor and the Institutional Trustee
being removed; and
(ii) the Trustee that acts as Delaware Trustee shall
not be removed in accordance with Section 5.2(a) until a
successor Trustee possessing the qualifications to act as
Delaware Trustee under Section 5.1(a)(3) (a "Successor Delaware
Trustee") has been appointed and has accepted such appointment by
written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees, the Sponsor and the
Delaware Trustee being removed.
(c) A Trustee appointed to office shall hold office until
such Trustee's successor shall have been appointed or until
death, removal or resignation.
(d) Any Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument (a "Resignation
Request") in writing signed by the Trustee and delivered to the
Sponsor and the Trust, which resignation shall take effect upon
such delivery or upon such later date as is specified therein;
provided however, that:
(i) no such resignation of the Trustee that acts as
the Institutional Trustee shall be effective until a Successor
Institutional Trustee possessing the qualifications to act as
Institutional Trustee under Section 5.1(c) has been appointed and
has accepted such appointment by instrument executed by such
Successor Institutional Trustee and delivered to the Trust, the
Sponsor and the resigning Institutional Trustee; and
(ii) no such resignation of the Trustee that acts as
the Delaware Trustee shall be effective until a Successor
Delaware Trustee has been appointed and has accepted such
appointment by instrument executed by such Successor Delaware
Trustee and delivered to the Trust, the Sponsor and the resigning
Delaware Trustee.
(e) If no Successor Institutional Trustee or Successor
Delaware Trustee shall have been appointed and accepted
appointment as provided in this Section 5.2 within 60 days after
delivery to the Sponsor and the Trust of a Resignation Request,
the resigning Institutional Trustee or Delaware Trustee may
petition any court of competent jurisdiction for appointment of a
Successor Institutional Trustee or Successor Delaware Trustee.
Such court may thereupon after such notice, if any, as it may
deem proper and prescribe, appoint a Successor Institutional
Trustee or Successor Delaware Trustee, as the case may be.
SECTION 5.3 Vacancies Among Trustees.
------------------------
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1 or if
the number of Trustees is increased pursuant to Section 5.1, a
vacancy shall occur. A resolution certifying the existence of
such vacancy by a majority of the Regular Trustees shall be
conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance
with the requirements of this Article V.
SECTION 5.4 Effect of Vacancies.
-------------------
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform
the duties of a Trustee, or any one of them, shall not operate to
annul the Trust. Whenever a vacancy in the number of Regular
Trustees shall occur, until such vacancy is filled as provided in
this Article V, the Regular Trustees in office, regardless of
their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the
Regular Trustees by this Declaration.
SECTION 5.5 Meetings.
--------
Meetings of the Regular Trustees shall be held from time to
time upon the call of any Trustee. Regular meetings of the
Regular Trustees may be held at a time and place fixed by
resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 48 hours before
such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 24 hours before a
meeting. Notices shall contain a brief statement of the time,
place and anticipated purposes of the meeting. The presence
(whether in person or by telephone) of a Regular Trustee at a
meeting shall constitute a waiver of notice of such meeting
except where a Regular Trustee attends a meeting for the express
purpose of objecting to the transaction of any activity on the
ground that the meeting has not been lawfully called or convened.
Unless provided otherwise in this Declaration, any action of the
Regular Trustees may be taken at a meeting by vote of a majority
of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter,
provided that a Quorum is present, or without a meeting by the
unanimous written consent of the Regular Trustees.
SECTION 5.6 Delegation of Power.
-------------------
(a) Any Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural
person over the age of 21 his or her power for the purpose of
executing any registration statement or amendment thereto or
other document or schedule filed with the Commission or making
any other governmental filing (including, without limitation
filings referred to in Section 3.11).
(b) The Regular Trustees shall have power to delegate from
time to time to such of their number the doing of such things and
the execution of such instruments either in the name of the Trust
or the names of the Regular Trustees or otherwise as the Regular
Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the
Trust, as set forth herein.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
-------------
Holders shall receive periodic distributions, redemption
payments and liquidation distributions in accordance with the
applicable terms of the relevant Holder's Securities
("Distributions"). Distributions shall be made to the Holders of
Preferred Securities and Common Securities in accordance with the
terms of the Securities as set forth in Exhibits B and C hereto.
If and to the extent that UAL makes a payment of interest and
principal on the Debentures held by the Institutional Trustee
(the amount of any such payment being a "Payment Amount"), the
Institutional Trustee shall and is directed to promptly make a
Distribution of the Payment Amount to Holders in accordance with
the terms of the Securities as set forth in Exhibits B and C
hereto.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
---------------------------------------
(a) The Regular Trustees shall issue on behalf of the Trust
securities in fully registered form representing undivided
beneficial interests in the assets of the Trust in accordance
with Section 7.1(b) and for the consideration specified in
Section 3.3.
(b) The Regular Trustees shall issue on behalf of the Trust
one class of preferred securities representing undivided
beneficial interests in the assets of the Trust having such terms
as are set forth in Exhibit B (the "Preferred Securities") which
terms are incorporated by reference in, and made a part of, this
Declaration as if specifically set forth herein, and one class of
common securities representing undivided beneficial interests in
the assets of the Trust having such terms as are set forth in
Exhibit C (the "Common Securities") which terms are incorporated
by reference in, and made a part of, this Declaration as if
specifically set forth herein. The Trust shall have no
securities or other interests in the assets of the Trust other
than the Preferred Securities and the Common Securities.
(c) The Certificates shall be signed on behalf of the Trust
by the Regular Trustees (or if there are more than two Regular
Trustees by any two of the Regular Trustees). Such signatures
may be the manual or facsimile signatures of the present or any
future Regular Trustee. Typographical and other minor errors or
defects in any such reproduction of any such signature shall not
affect the validity of any Security. In case any Regular Trustee
of the Trust who shall have signed any of the Certificates shall
cease to be such Regular Trustee before the Certificate so signed
shall be delivered by the Trust, such Certificate nevertheless
may be delivered as though the person who signed such Certificate
had not ceased to be such Regular Trustee; and any Certificate
may be signed on behalf of the Trust by such persons as, at the
actual date of the execution of such Security, shall be the
Regular Trustees of the Trust, although at the date of the
execution and delivery of the Declaration any such person was not
such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner
as is reasonably acceptable to the Regular Trustees, as evidenced
by their execution thereof, and may have such letters, numbers or
other marks of identification or designation and such legends or
endorsements as the Regular Trustees may deem appropriate, or as
may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which Securities may be listed, or to
conform to usage. Pending the preparation of definitive
Certificates, the Regular Trustees on behalf of the Trust may
execute temporary Certificates (printed, lithographed or
typewritten), substantially in the form of the definitive
Certificates in lieu of which they are issued, but with such
omissions, insertions and variations as may be appropriate for
temporary Certificates, all as may be determined by the Regular
Trustees. Each temporary Certificate shall be executed by the
Regular Trustees on behalf of the Trust upon the same conditions
and in substantially the same manner, and with like effect, as
definitive Certificates. Without unnecessary delay, the Regular
Trustees on behalf of the Trust will execute and furnish
definitive Certificates and thereupon any or all temporary
Certificates may be surrendered to the transfer agent and
registrar in exchange therefor (without charge to the Holders).
Each Certificate whether in temporary or definitive form shall be
countersigned by the manual signature of an authorized signatory
of the Person acting as registrar and transfer agent for the
Securities, which shall initially be The First National Bank of
Chicago.
(d) The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the
capital of the Trust and shall not constitute a loan to the
Trust.
(e) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be
validly issued, fully paid and non-assessable.
(f) Every Person, by virtue of having become a Holder or a
Preferred Security Beneficial Owner in accordance with the terms
of this Declaration, shall be deemed to have expressly assented
and agreed to the terms of, and shall be bound by, this
Declaration.
(g) Upon issuance of the Securities as provided in this
Declaration, the Regular Trustees on behalf of the Trust shall
return to UAL the $10 constituting initial trust assets as set
forth in the Original Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
--------------------
The Trust shall terminate:
(i) when all of the Securities shall have been called
for redemption and the amounts necessary for redemption thereof
shall have been paid to the Holders of Securities in accordance
with the terms of the Securities; or
(ii) when all of the Debentures shall have been
distributed to the Holders of Securities in exchange for all of
the Securities in accordance with the terms of the Securities; or
(iii) upon the expiration of the term of the Trust as
set forth in Section 3.15, and a certificate of cancellation is
filed by the Trustees with the Secretary of State of the State of
Delaware; or
(iv) upon the bankruptcy of UAL or the Trust; or
(v) upon the filing of a certificate of dissolution or
the equivalent with respect to UAL, the filing of a certificate
of cancellation with respect to the Trust after having obtained
the consent of at least a majority in liquidation amount of the
Securities, voting together as a single class, to file such
certificate of cancellation, or the revocation of the charter of
UAL and the expiration of 90 days after the date of revocation
without a reinstatement thereof; or
(vi) upon the entry of a decree of judicial dissolution
of UAL or the Trust.
The Trustees shall file a certificate of cancellation with
the Secretary of State of the State of Delaware after (i)
termination of the Trust in accordance with this Section 8.1,
(ii) satisfaction of creditors of the Trust and (iii)
distribution of the Trust's assets in accordance with this
Declaration. The provisions of Sections 3.10 and 4.2 and Article
X shall survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
----------------------
(a) Securities may only be transferred, in whole or in part,
in accordance with the terms and conditions set forth in this
Declaration. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and
void.
(b) Subject to this Article IX, Preferred Securities shall
be freely transferable.
(c) Subject to this Article IX, UAL and any Related Party
may only transfer Common Securities to UAL or a Related Party,
provided that any such transfer shall be subject to the condition
that the transferor shall have obtained (1) either a ruling from
the Internal Revenue Service or an unqualified written opinion
addressed to the Trust and delivered to the Trustees of
nationally recognized independent tax counsel experienced in such
matters to the effect that such transfer will not (i) cause the
Trust to be treated as issuing a class of interests in the Trust
differing from the class of interests represented by the Common
Securities originally issued to UAL, (ii) result in the Trust
acquiring or disposing of, or being deemed to have acquired or
disposed of, an asset, or (iii) result in or cause the Trust to
be treated as anything other than a grantor trust for United
States federal income tax purposes and (2) an unqualified written
opinion addressed to the Trust and delivered to the Trustees of a
nationally recognized independent counsel experienced in such
matters that such transfer will not cause the Trust to be an
Investment Company or controlled by an Investment Company.
SECTION 9.2 Transfer of Certificates.
------------------------
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be
effected without charge but only upon payment (with such
indemnity as the Regular Trustees may require) in respect of any
tax or other government charges which may be imposed in relation
to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new
Certificates to be issued in the name of the designated
transferee or transferees. Every Certificate surrendered for
registration of transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the Regular
Trustees duly executed by the Holder or such Holder's attorney
duly authorized in writing. Each Certificate surrendered for
registration of transfer shall be canceled by the Regular
Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon
the receipt by such transferee of a Certificate. By acceptance
of a Certificate, each transferee shall be deemed to have agreed
to be bound by this Declaration. The Trust shall not be required
(i) to issue, or register the transfer of or exchange of, any
Securities during the period beginning at the opening of 15
business days before the mailing of a notice of redemption of
Securities according to the terms of the Securities and ending at
the close of business on the day of the mailing of the relevant
notice of redemption or (ii) to register the transfer of or
exchange of any Security so selected for redemption, in whole or
in part, except the unredeemed portion of any Security being
redeemed in part.
SECTION 9.3 Deemed Security Holders.
-----------------------
The Trustees may treat the Person in whose name any
Certificate shall be registered on the books and records of the
Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of
receiving Distributions and for all other purposes whatsoever
and, accordingly, shall not be bound to recognize any equitable
or other claim to or interest in such Certificate or in the
Securities represented by such Certificate on the part of any
Person, whether or not the Trustees shall have actual or other
notice thereof.
SECTION 9.4 Book Entry Interests.
--------------------
The Preferred Securities Certificates, on original issuance,
will be issued in fully registered form. With respect to any
Certificates registered on the books and records of the Trust in
the name of a Clearing Agency or the nominee of a Clearing
Agency:
(i) the Trust and the Trustees shall be entitled to
deal with the Clearing Agency for all purposes of this
Declaration (including paying Distributions on such Certificates
and receiving approvals, votes or consents hereunder) as the
Preferred Security Holder and the sole holder of such
Certificates and, except as set forth herein, shall have no
obligation to the Preferred Security Beneficial Owners;
(ii) to the extent that the provisions of this Section
9.4 conflict with any other provisions of this Declaration, the
provisions of this Section 9.4 shall control; and
(iii) the rights of the Preferred Security Beneficial
Owners shall be exercised only through the Clearing Agency and
shall be limited to those established by law and agreements
between such Preferred Security Beneficial Owners and the
Clearing Agency and/or the Clearing Agency Participants. The
Clearing Agency will make book entry transfers among Clearing
Agency Participants and receive and transmit payments of
Distributions on such Certificates to such Clearing Agency
Participants; provided, that solely for the purposes of
determining whether the Holders of the requisite amount of
Preferred Securities have voted on any matter provided for in
this Declaration, so long as definitive Preferred Security
Certificates have not been issued (pursuant to Section 9.7
hereof), the Trustees may conclusively rely on, and shall be
protected in relying on, any written instrument (including a
proxy) delivered to the Trustees by the Clearing Agency setting
forth the Preferred Security Beneficial Owners' votes or
assigning the right to vote on any matter to any other Persons
either in whole or in part.
SECTION 9.5 Notices to Holders of Certificates.
----------------------------------
Whenever a notice or other communication to the Holders is
required to be given under this Declaration, the relevant
Trustees shall give such notices and communications to the
Holders and, with respect to any Preferred Security Certificate
registered in the name of a Clearing Agency or the nominee of a
Clearing Agency, the Trustees shall, except as set forth herein,
have no obligations to the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
----------------------------------------
If any Clearing Agency elects to discontinue its services as
securities depository with respect to the Preferred Securities,
the Regular Trustees may, in their sole discretion, appoint a
successor Clearing Agency with respect to the Preferred
Securities.
SECTION 9.7 Definitive Preferred Securities Certificates.
--------------------------------------------
If (i) a Clearing Agency elects to discontinue its services
as securities depository with respect to the Preferred Securities
and a successor Clearing Agency is not appointed within 90 days
after such discontinuance pursuant to Section 9.6 or (ii) the
Regular Trustees elect after consultation with the Sponsor to
terminate the book entry system through the Clearing Agency with
respect to the Preferred Securities, then, upon surrender of the
Certificates representing the Book Entry Interests with respect
to the Preferred Securities by the Clearing Agency, accompanied
by registration instructions, the Regular Trustees shall cause
definitive Preferred Security Certificates to be delivered to
Preferred Security Beneficial Owners in accordance with the
instructions of the Clearing Agency. Neither the Trustees nor
the Trust shall be liable for any delay in delivery of such
instructions and each of them may conclusively rely on, and shall
be protected in relying on, such instructions.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
-------------------------------------------------
If (a) any mutilated Certificates should be surrendered to
the Regular Trustees, or if the Regular Trustees shall receive
evidence to their satisfaction of the destruction, loss or theft
of any Certificate; and (b) there shall be delivered to the
Regular Trustees such security or indemnity as may be required by
them to keep each of them harmless, then in the absence of notice
that such Certificate shall have been acquired by a bona fide
purchaser, any two Regular Trustees on behalf of the Trust shall
execute and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like denomination. In connection with the
issuance of any new Certificate under this Section 9.8, the
Regular Trustees may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Certificate issued pursuant
to this Section shall constitute conclusive evidence of an
ownership interest in the relevant Securities, as if originally
issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 10.1 Exculpation.
-----------
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered
Person for any loss, damage or claim incurred by reason of any
act or omission performed or omitted by such Indemnified Person
in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of
such Indemnified Person's gross negligence (or, in the case of
the Institutional Trustee or the Delaware Trustee, negligence) or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such
information, opinions, reports or statements presented to the
Trust by any Person as to matters the Indemnified Person
reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable
care by or on behalf of the Trust, including information,
opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which
Distributions to Holders of Securities might properly be paid.
(c) Pursuant to Section 3803 (a) of the Business Trust Act,
the Holders of Securities, in their capacities as Holders, shall
be entitled to the same limitation of liability extended to
stockholders of private corporations for profit organized under
the General Corporation Law of the State of Delaware.
SECTION 10.2 Indemnification.
---------------
(a) To the fullest extent permitted by applicable law, the
Sponsor shall indemnify and hold harmless each Indemnified Person
from and against any loss, damage or claim incurred by such
Indemnified Person by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the
Trust and in a manner such Indemnified Person reasonably believed
to be within the scope of authority conferred on such Indemnified
Person by this Declaration, except that no Indemnified Person
shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Indemnified Person by reason of
gross negligence (or, in the case of the Institutional Trustee or
the Delaware Trustee, negligence) or willful misconduct with
respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by an Indemnified Person
in defending any claim, demand, action, suit or proceeding shall,
from time to time, be advanced by the Sponsor prior to the final
disposition of such claim, demand, action, suit or proceeding
upon receipt by the Sponsor of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be
determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 10.2(a).
(c) The provisions of this Section 10.2 shall survive the
termination of this Declaration.
SECTION 10.3 Outside Business.
----------------
The Sponsor and any Trustee may engage in or possess an
interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the
business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in
and to such independent ventures or the income or profits derived
therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed
wrongful or improper. Neither the Sponsor nor any Trustee shall
be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the
Trust, and the Sponsor or any Trustee shall have the right to
take for its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Trustee may engage or be
interested in any financial or other transaction with the Sponsor
or any Affiliate of the Sponsor or may act as depository, trustee
or agent for, or act on any committee or body of holders of,
securities or other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
-----------
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
--------------------------
(a) At all times during the existence of the Trust, the
Regular Trustees shall keep, or cause to be kept, full books of
account, records and supporting documents, which shall reflect in
reasonable detail each transaction of the Trust. The books of
account shall be maintained on the accrual method of accounting,
in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of
accounting for United States federal income tax purposes. The
books and records of the Trust, together with a copy of this
Declaration and a certified copy of the Certificate of Trust, and
any amendment thereto, shall at all times be maintained at the
principal office of the Trust and shall be open for inspection
for any examination by any Holder or its duly authorized
representative for any purpose reasonably related to its interest
in the Trust during normal business hours.
(b) If required by applicable law, the Regular Trustees
shall, as soon as available after the end of each Fiscal Year of
the Trust, cause to be prepared and mailed to each Holder of
Securities unaudited financial statements of the Trust for such
Fiscal Year, prepared in accordance with generally accepted
accounting principles, provided that if the Trust is required to
comply with the periodic reporting requirements of Sections 13(a)
or 15(d) of the Exchange Act, such financial statements for such
Fiscal Year shall be examined and reported on by a firm of
independent certified public accountants selected by the Regular
Trustees (which firm may be the firm used by the Sponsor).
(c) The Regular Trustees shall cause to be prepared and
mailed to each Holder of Securities an annual United States
federal income tax information statement, on such form as is
required by the Code, containing such information with regard to
the Securities held by each Holder as is required by the Code and
the Treasury Regulations. Notwithstanding any right under the
Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such statements within 30
days after the end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be prepared and
filed with the appropriate taxing authority an annual United
States federal income tax return, on such form as is required by
the Code, and any other annual income tax returns required to be
filed by the Regular Trustees on behalf of the Trust with any
state or local taxing authority, such returns to be filed as soon
as practicable after the end of each Fiscal Year of the Trust.
SECTION 11.3 Banking.
-------
The Trust shall maintain one or more bank accounts in the
name and for the sole benefit of the Trust. The sole signatories
for such accounts shall be designated by the Regular Trustees.
SECTION 11.4 Withholding.
-----------
The Trust and the Trustees shall comply with all withholding
requirements under United States federal, state and local law.
The Trust shall request, and the Holders shall provide to the
Trust, such forms or certificates as are necessary to establish
an exemption from withholding with respect to each Holder, and
any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Trust shall file
required forms with applicable jurisdictions and, unless an
exemption from withholding is properly established by a Holder,
shall remit amounts withheld with respect to the Holder to
applicable jurisdictions. To the extent that the Trust is
required to withhold and pay over any amounts to any authority
with respect to distributions or allocations to any Holder, the
amount withheld shall be deemed to be a distribution in the
amount of the withholding to the Holder. In the event of any
claimed overwithholding, Holders shall be limited to an action
against the applicable jurisdiction. If the amount to be
withheld was not withheld from a Distribution, the Trust may
reduce subsequent Distributions by the amount of such
withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
----------
(a) Except as otherwise provided in this Declaration or by
any applicable terms of the Securities, this Declaration may be
amended by, and only by, a written instrument executed by a
majority of the Regular Trustees; provided, however, that (i) no
amendment to this Declaration shall be made if such amendment or
modification would cause the Trust to be classified for United
States federal income tax purposes as other than a grantor trust
or would cause the Trust to be deemed an "investment company"
which is required to be registered under the 1940 Act, (ii) at
such time after the Trust has issued any Securities which remain
outstanding, any amendment which would adversely affect the
rights, privileges or preferences of any Holder of Securities may
be effected only with such additional requirements as may be set
forth in the terms of such Securities, (iii) Section 4.2, Section
9.1(c) and this Section 12.1 shall not be amended without the
consent of all of the Holders of the Securities, (iv) no
amendment which adversely affects the rights, powers and
privileges of the Institutional Trustee shall be made without the
consent of the Institutional Trustee, (v) Article IV shall not be
amended without the consent of the Sponsor and (vi) the rights of
Holders of Common Securities under Article V to increase or
decrease the number of, and to appoint, replace or remove,
Trustees shall not be amended without the consent of each Holder
of Common Securities.
(b) Notwithstanding Section 12.1(a)(ii), this Declaration
may be amended without the consent of the Holders of the
Securities to (i) cure any ambiguity, (ii) correct or supplement
any provision in this Declaration that may be defective or
inconsistent with any other provision of this Declaration, (iii)
add to the covenants, restrictions or obligations of the Sponsor,
(iv) preserve the status of the Trust as a grantor trust for
federal income tax purposes, and (v) conform to any changes in
Rule 3a-5 or any change in interpretation or application of Rule
3a-5 by the Commission, which amendment does not adversely affect
the rights, preferences or privileges of the Holders.
SECTION 12.2 Meetings of the Holders of Securities; Action
---------------------------------------------
by Written Consent.
- ------------------
(a) Meetings of the Holders of Preferred Securities and/or
Common Securities may be called at any time by the Regular
Trustees (or as provided in the terms of the Securities) to
consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any
stock exchange on which the Preferred Securities are listed or
admitted for trading. The Regular Trustees shall call a meeting
of Holders of Preferred Securities or Common Securities, if
directed to do so by Holders of at least 10% in liquidation
amount of such class of Securities. Such direction shall be
given by delivering to the Regular Trustees one or more calls in
a writing stating that the signing Holders of Securities wish to
call a meeting and indicating the general or specific purpose for
which the meeting is to be called. Any Holders of Securities
calling a meeting shall specify in writing the Certificates held
by the Holders of Securities exercising the right to call a
meeting and only those specified Certificates shall be counted
for purposes of determining whether the required percentage set
forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of
the Securities, the following provision shall apply to meetings
of Holders of Securities:
(i) Notice of any such meeting shall be given by mail
to all the Holders of Securities having a right to vote thereat
not less than 7 days nor more than 60 days prior to the date of
such meeting. Whenever a vote, consent or approval of the
Holders of Securities is permitted or required under this
Declaration or the rules of any stock exchange on which the
Preferred Securities are listed or admitted for trading, such
vote, consent or approval may be given at a meeting of the
Holders of Securities. Any action that may be taken at a meeting
of the Holders of Securities may be taken without a meeting if a
consent in writing setting forth the action so taken is signed by
Holders of Securities owning not less than the minimum aggregate
liquidation amount of Securities that would be necessary to
authorize or take such action at a meeting at which all Holders
of Securities having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a meeting
shall be given to the Holders of Securities entitled to vote who
have not consented in writing. The Regular Trustees may specify
that any written ballot submitted to the Holders of Securities
for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Regular
Trustees.
(ii) Each Holder of a Security may authorize any
Person to act for it by proxy on all matters in which a Holder of
a Security is entitled to participate, including waiving notice
of any meeting, or voting or participating at a meeting. No
proxy shall be valid after the expiration of 11 months from the
date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Holder of the Security
executing it. Except as otherwise provided herein or in the
terms of the Securities, all matters relating to the giving,
voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a
Delaware corporation and the Holders of the Securities were
stockholders of a Delaware corporation.
(iii) Each meeting of the Holders of the Securities
shall be conducted by the Regular Trustees or by such other
Person that the Regular Trustees may designate.
(iv) Unless otherwise provided in the Business Trust
Act, this Declaration or the rules of any stock exchange on which
the Preferred Securities are then listed or admitted for trading,
the Regular Trustees, in their sole discretion, shall establish
all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any
meeting at which any matter is to be voted on by any Holders of
Securities, waiver of any such notice, action by consent without
a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter
with respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional
-----------------------------------------------
Trustee.
- -------
(a) The Trustee which acts as initial Institutional Trustee
represents and warrants to the Trust and to the Sponsor at the
date of this Declaration, and each Successor Institutional
Trustee represents and warrants to the Trust and the Sponsor at
the time of the Successor Institutional Trustee's acceptance of
its appointment as Institutional Trustee, that:
(i) The Institutional Trustee is a national banking
association with trust powers, duly organized, validly existing
and in good standing under the laws of the United States, with
trust power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this
Declaration.
(ii) The execution, delivery and performance by the
Institutional Trustee of this Declaration has been duly
authorized by all necessary corporate action on the part of the
Institutional Trustee. The Declaration has been duly executed
and delivered by the Institutional Trustee, and constitutes a
legal, valid and binding obligation of the Institutional Trustee,
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency,
and other similar laws affecting creditors' rights generally and
to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
(iii) The execution, delivery and performance of this
Declaration by the Institutional Trustee do not conflict with or
constitute a breach of the Charter or By-laws of the
Institutional Trustee.
(iv) No consent, approval or authorization of, or
registration with or notice to, any banking authority which
supervises or regulates the Institutional Trustee is required for
the execution, delivery or performance by the Institutional
Trustee of this Declaration.
(v) The Institutional Trustee satisfies the
qualifications set forth in Section 5.1(c).
(b) The Trustee which acts as initial Delaware Trustee
represents and warrants to the Trust and the Sponsor at the date
of this Declaration, and each Successor Delaware Trustee
represents and warrants to the Trust and the Sponsor at the time
of the Successor Delaware Trustee's acceptance of its appointment
as Delaware Trustee, that it satisfies the qualifications set
forth in Section 5.1(a)(3).
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
-------
All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and shall
be delivered, telecopied or mailed by first class mail, as
follows:
(a) if given to the Trust, in care of the Regular
Trustees at the Trust's mailing address set forth below (or such
other address as the Regular Trustees on behalf of the Trust may
give notice of to the Holders of the Securities):
UAL Corporation Capital Trust I
c/o UAL Corporation
1200 East Algonquin Road
Elk Grove Township, Illinois 60007
Attention: Trustees
Facsimile No: (847) 700-4683
(b) if given to the Institutional Trustee, at the
mailing address of the Institutional Trustee set forth below (or
such other address as the Institutional Trustee may give notice
of to the Holders of the Securities):
The First National Bank of Chicago
One First National Plaza, Suite 0216
Chicago, Illinois 60670-0126
Attention: Corporate Trust Department
Facsimile No: (312) 407-1708
(c) if given to the Delaware Trustee, at the mailing
address of the Delaware Trustee set forth below (or such other
address as the Delaware Trustee may give notice of to the Holders
of the Securities):
First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801
Facsimile No: (312) 407-1708
(d) if given to the Holder of the Common Securities,
at the mailing address of the Sponsor set forth below (or such
other address as the Holder of the Common Securities may give
notice to the Trust):
UAL Corporation
1200 East Algonquin Road
Elk Grove Township, Illinois 60007
Attention: Corporate Secretary
Facsimile No: (847) 700-4683
(e) if given to any other Holder, at the address set
forth on the books and records of the Trust.
A copy of any notice to the Institutional Trustee or the
Delaware Trustee shall also be sent to the Trust. All notices
shall be deemed to have been given, when received in person,
telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is
refused delivery or cannot be delivered because of a changed
address of which no notice was given, such notice or other
document shall be deemed to have been delivered on the date of
such refusal or inability to deliver.
SECTION 14.2 Undertaking for Costs.
---------------------
All parties to this Declaration agree, and each Holder of
any Securities by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy
under this Declaration, or in any suit against the Institutional
Trustee for any action taken or omitted by it as Institutional
Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such
suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the
provisions of this Section 14.2 shall not apply to any suit
instituted by the Institutional Trustee, to any suit instituted
by any Holder of Preferred Securities, or group of Holders of
Preferred Securities, holding more than 10% in aggregate
liquidation amount of the outstanding Preferred Securities, or to
any suit instituted by any Holder of Preferred Securities for the
enforcement of the payment of the principal of or interest on the
Debentures, on or after the respective due dates expressed in
such Debentures.
SECTION 14.3 Governing Law.
-------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE;
PROVIDED HOWEVER, THAT THERE SHALL NOT BE APPLICABLE TO THE
TRUST, THE TRUSTEES OR THIS DECLARATION ANY PROVISIONS OF THE
LAWS (STATUTORY OR COMMON) OF THE STATE OF DELAWARE PERTAINING TO
TRUSTS, OTHER THAN THE BUSINESS TRUST ACT, THAT RELATE TO OR
REGULATE, IN A MANNER INCONSISTENT WITH THE TERMS HEREOF, (I) THE
FILING WITH ANY COURT OR GOVERNMENTAL BODY OR AGENCY OF TRUSTEE
ACCOUNTS OR SCHEDULES OF TRUSTEE FEES AND CHARGES, (II)
AFFIRMATIVE REQUIREMENTS TO POST BONDS FOR TRUSTEES, OFFICERS,
AGENTS OR EMPLOYEES OF A TRUST, (III) THE NECESSITY FOR OBTAINING
COURT OR OTHER GOVERNMENTAL APPROVAL CONCERNING THE ACQUISITION,
HOLDING OR DISPOSITION OF REAL OR PERSONAL PROPERTY, (IV) FEES OR
OTHER SUMS PAYABLE TO TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF
A TRUST, (V) THE ALLOCATION OF RECEIPTS AND EXPENDITURES TO
INCOME OR PRINCIPAL, (VI) RESTRICTIONS OR LIMITATIONS ON THE
PERMISSIBLE NATURE, AMOUNT OR CONCENTRATION OF TRUST INVESTMENTS
OR REQUIREMENTS RELATING TO THE TITLING, STORAGE OR OTHER MANNER
OF HOLDING OR INVESTING TRUST ASSETS, OR (VII) THE ESTABLISHMENT
OF FIDUCIARY OR OTHER STANDARDS OR RESPONSIBILITIES OR
LIMITATIONS ON THE ACTS OR POWERS OF TRUSTEES, THAT ARE
INCONSISTENT WITH THE LIMITATIONS OR LIABILITIES OR AUTHORITIES
AND POWERS OF TRUSTEES AS SET FORTH OR REFERENCED IN THIS
AGREEMENT. SECTION 3540 OF TITLE 12 OF THE DELAWARE CODE SHALL
NOT APPLY TO THE TRUST.
SECTION 14.4 Headings.
--------
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the
interpretation of this Declaration or any provision hereof.
SECTION 14.5 Partial Enforceability.
----------------------
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held
invalid, the remainder of this Declaration, or the application of
such provision to Persons or circumstances other than those to
which it is held invalid, shall not be affected thereby.
SECTION 14.6 Counterparts.
------------
This Declaration may contain more than one counterpart of
the signature pages and this Declaration may be executed by the
affixing of the signature of the Sponsor and each of the Trustees
to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers
had signed a single signature page.
SECTION 14.7 Intention of the Parties.
------------------------
It is the intention of the parties hereto that the Trust not
be classified for United States federal income tax purposes an
association taxable as a corporation or partnership but that the
Trust be treated as a grantor trust for United States federal
income tax purposes. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION 14.8 Successors and Assigns.
----------------------
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party
shall be deemed to be included, and all covenants and agreements
in this Declaration by the Sponsor and the Trustees shall bind
and inure to the benefit of their respective successors and
assigns, whether or not so expressed.
IN WITNESS WHEREOF, the undersigned have caused these
presents to be executed as of the day and year first above
written.
UAL CORPORATION,
as Sponsor
By: /s/ Douglas A. Hacker
---------------------
Name: Douglas A. Hacker
Title: Senior Vice President and Chief
Financial Officer
/s/ Douglas A. Hacker
- ---------------------
Douglas A. Hacker,
as Trustee
/s/ Francesca M. Maher
- ----------------------
Francesca M. Maher,
as Trustee
/s/ Thomas A. Mutryn
- --------------------
Thomas A. Mutryn,
as Trustee
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By: /s/ Richard D. Manella
----------------------
Name: Richard D. Manella
Title: Vice President
FIRST CHICAGO DELAWARE INC.,
as Trustee
By: /s/ Richard D. Manella
----------------------
Name: Richard D. Manella
Title: Vice President
There personally appeared before me Douglas A. Hacker (on
behalf of UAL Corporation, as Sponsor, and as a Trustee) and
Francesca M. Maher and Thomas A. Mutryn (as Trustees) who
acknowledged the foregoing instrument to be his, her or its free
act and deed and the free act and deed of UAL Corporation and the
Trustees of UAL Corporation Capital Trust I.
Before me,
/s/ Jeanne M. Rajala
- --------------------
Notary Public
My Commission Expires:
6-26-99
----------------------
There personally appeared before me Richard D. Manella (on
behalf of The First National Bank of Chicago, as Trustee) who
acknowledged the foregoing instrument to be his, her or its free
act and deed and the free act and deed of The First National Bank
of Chicago, as Trustee.
Before me,
/s/ Ann Longino
- ---------------
Notary Public
My Commission Expires:
5-17-98
----------------------
There personally appeared before me Richard D. Manella
(on behalf of First Chicago Delaware Inc., as Trustee) who
acknowledged the foregoing instrument to be his, her or its free
act and deed and the free act and deed of First Chicago Delaware
Inc., as Trustee.
Before me,
/s/ Ann Longino
- ---------------
Notary Public
My Commission Expires:
5-17-98
----------------------
EXHIBIT A
CERTIFICATE OF TRUST
OF
UAL CORPORATION CAPITAL TRUST I
This Certificate of Trust of UAL Corporation Capital
Trust I (the "Trust"), dated October 15, 1996, is being duly
executed and filed by the undersigned, as trustees, to form a
business trust under the Delaware Business Trust Act (12 Del.C.
Sec. 3801 et seq.).
1. Name. The name of the business trust formed hereby is
UAL Corporation Capital Trust I.
2. Delaware Trustee. The name and business address of the
trustee of the Trust with a principal place of business in the
State of Delaware are First Chicago Delaware Inc., a Delaware
corporation, 300 King Street, Wilmington, Delaware 19801.
3. Effective Date. This Certificate of Trust shall be
effective as of its filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of
the Trust at the time of filing this Certificate of Trust, have
executed this Certificate of Trust as of the date first above
written.
The First National Bank of Chicago,
as trustee
By: /s/ Richard D. Manella
----------------------
Name: Richard D. Manella
Title: Vice President
First Chicago Delaware Inc.,
as trustee
By: /s/ Steven M. Wagner
--------------------
Name: Steven M. Wagner
Title: Vice President
EXHIBIT B
TERMS OF
PREFERRED SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust of UAL Corporation Capital Trust I dated as
of December 30, 1996 (as amended from time to time, the
"Declaration"), the designations, rights, privileges,
restrictions, preferences and other terms and provisions of the
Preferred Securities are set forth below (each capitalized term
used but not defined herein having the meaning set forth in the
Declaration):
1. Designation and Number. Preferred Securities of the
Trust with an aggregate liquidation amount in the assets of the
Trust of ___________________________ (____) and a liquidation
amount in the assets of the Trust of $25 per Preferred Security,
are hereby designated as "13 1/4% Trust Originated Preferred
Securities." The Preferred Security Certificates evidencing the
Preferred Securities shall be substantially in the form attached
hereto as Annex I, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom
or practice or to conform to the rules of any stock exchange on
which the Preferred Securities are listed. The Preferred
Securities shall be issued to former holders of Depositary Shares
("Depositary Shares"),each representing 1/1,000 of a share of 12-
1/4% Series B Preferred Stock (the "Series B Preferred"), of UAL
Corporation ("UAL") in exchange for such Depositary Shares
pursuant to the Offer. In connection with such Offer and the
purchase by UAL of the Common Securities, UAL will deposit in the
Trust, and the Trust will purchase, respectively, as trust assets
Debentures of UAL having an aggregate principal amount equal to
$[__________], and bearing interest at an annual rate equal to
the annual Distribution rate on the Preferred Securities and
Common Securities and having payment and redemption provisions
which correspond to the payment and redemption provisions of the
Preferred Securities and Common Securities.
2. Distributions. (a) Periodic distributions payable on
each Preferred Security will be fixed at a rate per annum of 13
1/4% (the "Coupon Rate") of the stated liquidation amount of $25
per Preferred Security. Distributions in arrears will bear
interest at the rate per annum of 13 1/4% thereof, compounded
quarterly, to the extent permitted by law. The term
"Distributions" as used in these terms means such periodic cash
distributions and any such interest payable unless otherwise
stated. A Distribution will be made by the Institutional Trustee
only to the extent that interest payments are made in respect of
the Debentures held by the Trust. The amount of Distributions
payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-
day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number
of days elapsed in such a 30-day month.
(b) Distributions on the Preferred Securities will be
cumulative, will accrue from December 21, 1996 and will be
payable quarterly in arrears, on March 31, June 30, September 30
and December 31 of each year, commencing on December 31, 1996,
and at final maturity of the Debentures, except as otherwise
described below, but only if and to the extent that interest
payments are made in respect of the Debentures held by the Trust.
In addition, Holders of Preferred Securities will be entitled to
a cash distribution at the rate of 12-1/4% per annum of the
liquidation amount thereof from November 1, 1996 through December
20, 1996, payable on December 31, 1996 ("Pre-Issuance Interest").
With the exception of Pre-Issuance Interest, so long as UAL shall
not be in default in the payment of interest on the Debentures,
UAL has the right under the Indenture for the Debentures to defer
payments of interest by extending the interest payment period
from time to time on the Debentures for a period not exceeding 20
consecutive quarterly interest periods (each, an "Extension
Period") and, as a consequence, quarterly Distributions will
continue to accrue with interest thereon (to the extent permitted
by applicable law) at the rate of 13 1/4% per annum, compounded
quarterly to the extent permitted by law during any such
Extension Period. Prior to the termination of any such Extension
Period, UAL may further extend such Extension Period; provided
that such Extension Period together with all such previous and
further extensions thereof may not exceed 20 consecutive
quarterly interest periods and provided further that no Extension
Period may extend beyond the maturity of the Debentures. Upon
the termination of any Extension Period and the payment on the
next distribution payment date following such extension period of
all amounts then due, UAL may commence a new Extension Period,
subject to the above requirements. Any interest paid on the
Debentures during an Extension Period on an Interest Payment Date
shall be paid pro rata to the Holders of Preferred Securities on
the corresponding distribution payment date. Payments of accrued
Distributions will be payable to Holders of Preferred Securities
as they appear on the books and records of the Trust on the
record date for the first payment occurring on or after the end
of the Extension Period.
(c) Distributions on the Preferred Securities will be
payable promptly by the Institutional Trustee (or other Paying
Agent) upon receipt of immediately available funds to the Holders
thereof as they appear on the books and records of the Trust on
the relevant record dates, which will be 15 calendar days prior
to the relevant Distribution dates, except that the record date
for the payment to be made on December 31, 1996 shall be the date
of exchange of the Preferred Securities for the Depository
Shares, which record and payment dates correspond to the record
and interest payment dates on the Debentures. Distributions
payable on any Preferred Securities that are not punctually paid
on any Distribution payment date as a result of UAL having failed
to make the corresponding interest payment on the Debentures will
forthwith cease to be payable to the Person in whose name such
Preferred Security is registered on the relevant record date, and
such defaulted Distribution will instead be payable to the Person
in whose name such Preferred Security is registered on the
special record date established by the Regular Trustees, which
record date shall correspond to the special record date or other
specified date determined in accordance with the Indenture;
provided, however, that Distributions shall not be considered
payable on any Distribution payment date falling within an
Extension Period unless UAL has elected to make a full or partial
payment of interest accrued on the Debentures on such
Distribution payment date. Subject to any applicable laws and
regulations and the provisions of the Declaration, each payment
in respect of the Preferred Securities will be made as described
in paragraph 9 hereof. If any date on which Distributions are
payable on the Preferred Securities is not a Business Day, then
payment of the Distribution payable on such date will be made on
the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if
made on such date.
(d) All Distributions paid with respect to the Preferred
Securities and the Common Securities will be paid Pro Rata (as
defined herein) to the Holders thereof entitled thereto. If an
Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities with
respect to Distributions.
(e) In the event that there is any money or other property
held by or for the Trust that is not accounted for under the
Declaration, such money or property shall be distributed Pro Rata
among the Holders of the Preferred Securities and Common
Securities.
3. Liquidation Distribution Upon Dissolution. In the event
of any voluntary or involuntary dissolution, winding-up or
termination of the Trust, the Holders of the Preferred Securities
and Common Securities at the date of the dissolution, winding-up
or termination, as the case may be, will be entitled to receive
Pro Rata, solely out of the assets of the Trust available for
distribution to Holders of Preferred Securities and Common
Securities after satisfaction of liabilities to creditors, an
amount equal to the aggregate of the stated liquidation amount of
$25 per Preferred Security and Common Security plus accrued and
unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"), unless, in connection with
such dissolution, winding-up or termination, and after
satisfaction of liabilities to creditors, Debentures in an
aggregate principal amount equal to the aggregate stated
liquidation amount of such Preferred Securities and Common
Securities and bearing accrued and unpaid interest in an amount
equal to the accrued and unpaid Distributions on such Preferred
Securities and Common Securities shall be distributed Pro Rata to
the Holders of the Preferred Securities and Common Securities in
exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution
can be paid only in part because the Trust has insufficient
assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Trust on
the Preferred Securities and Common Securities shall be paid on a
Pro Rata basis, except that, if an Event of Default has occurred
and is continuing, the Preferred Securities shall have a priority
over the Common Securities with respect to such Liquidation
Distribution.
4. Redemption and Distribution of Debentures. The
Preferred Securities and Common Securities may only be redeemed
if Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of the Preferred Securities and
Common Securities are repaid, redeemed or distributed as set
forth below:
(a) Upon the repayment of the Debentures, in whole or in
part, whether at maturity, or upon redemption at any time or from
time to time on or after July 12, 2004, the proceeds of such
repayment will be promptly applied to redeem Pro Rata Preferred
Securities and Common Securities having an aggregate liquidation
amount equal to the aggregate principal amount of the Debentures
so repaid or redeemed, upon not less than 10 nor more than 60
days' notice, at a redemption price of $25 per Preferred and
Common Security plus an amount equal to accrued and unpaid
Distributions thereon to the date of redemption, payable in cash
(the "Redemption Price"). The date of any such repayment or
redemption of Preferred Securities and Common Securities shall be
established to coincide with the repayment or redemption date of
the Debentures.
(b) The Common Securities will be entitled to be redeemed
on a Pro Rata basis with the Preferred Securities, except that if
an Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities with
respect to the payment of the Redemption Price. If fewer than
all the outstanding Preferred Securities and Common Securities
are to be so redeemed, the Preferred Securities and the Common
Securities will be redeemed Pro Rata and the Preferred Securities
to be redeemed will be redeemed as described in paragraph
4(f)(ii) below. If a partial redemption would result in the
delisting of the Preferred Securities by any national securities
exchange or other organization on which the Preferred Securities
are then listed, UAL pursuant to the Indenture will only redeem
Debentures in whole and, as a result, the Trust may only redeem
the Preferred Securities in whole.
(c) If, at any time, a Tax Event or an Investment Company
Event (each as hereinafter defined, and each a "Special Event")
shall occur and be continuing, the Regular Trustees shall, unless
the Debentures are redeemed in the limited circumstances
described below, dissolve the Trust and, after satisfaction of
creditors, cause Debentures held by the Institutional Trustee
having an aggregate principal amount equal to the aggregate
stated liquidation amount of and accrued and unpaid interest
equal to accrued and unpaid Distributions on, and having the same
record date for payment as, the Preferred Securities and Common
Securities, to be distributed to the Holders of the Preferred
Securities and Common Securities on a Pro Rata basis in
liquidation of such Holders' interests in the Trust, within 90
days following the occurrence of such Special Event (the "90 Day
Period"), provided, however, that in the case of the occurrence
of a Tax Event, as a condition of such dissolution and
distribution, the Regular Trustees shall have received an opinion
(a "No Recognition Opinion") of a nationally recognized
independent tax counsel experienced in such matters , which
opinion may rely on any then applicable published revenue ruling
of the Internal Revenue Service, to the effect that the Holders
of the Preferred Securities will not recognize any gain or loss
for United States federal income tax purposes as a result of the
dissolution of the Trust and distribution of Debentures; and
provided, further, that, if and as long as at the time there is
available to the Trust the opportunity to eliminate, within the
90 Day Period, the Special Event by taking some ministerial
action, such as filing a form or making an election, or pursuing
some other similar reasonable measure that has no adverse effect
on the Trust, UAL, or the Holders of the Preferred Securities
("Ministerial Action"), the Trust will pursue such measure in
lieu of dissolution.
If, in the case of the occurrence of a Tax Event, (i) the
Regular Trustees have received an opinion (a "Redemption Tax
Opinion") of nationally recognized independent tax counsel
experienced in such matters that, as a result of a Tax Event,
there is more than an insubstantial risk that UAL would be
precluded from deducting the interest on the Debentures for
United States federal income tax purposes even if the Debentures
were distributed to the Holders of Preferred Securities and
Common Securities in liquidation of such Holder's interest in the
Trust as described in this paragraph 4(c) or (ii) the Regular
Trustees shall have been informed by such tax counsel that a No
Recognition Opinion cannot be delivered to the Trust, UAL shall
have the right at any time, upon not less than 10 nor more than
60 days notice, to redeem the Debentures in whole or in part for
cash at the Redemption Price within 90 days following the
occurrence of such Tax Event, and promptly following such
redemption Preferred Securities and Common Securities with an
aggregate liquidation amount equal to the aggregate principal
amount of the Debentures so redeemed will be redeemed by the
Trust at the Redemption Price on a Pro Rata basis; provided,
however, that, if at the time there is available to UAL or the
Regular Trustees on behalf of the Trust the opportunity to
eliminate, within such 90 day period, the Tax Event by taking
some Ministerial Action, UAL or the Regular Trustees on behalf of
the Trust will pursue such measure in lieu of redemption, and
provided further that UAL shall have no right to redeem the
Debentures while the Regular Trustees on behalf of the Trust are
pursuing such Ministerial Action. The Common Securities will be
redeemed Pro Rata with the Preferred Securities, except that, if
an Event of Default under the Indenture has occurred and is
continuing, the Preferred Securities will have a priority over
the Common Securities with respect to payment of the Redemption
Price.
"Tax Event" means that the Regular Trustees shall have
obtained an opinion (a "Dissolution Tax Opinion") of nationally
recognized independent tax counsel experienced in such matters
to the effect that on or after the Expiration Date as a result of
(a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing
authority thereof or therein, (b) any amendment to, or change in,
an interpretation or application of any such laws or regulations
by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory
determination), (c) any interpretation or pronouncement that
provides for a position with respect to such laws or regulations
that differs from the theretofore generally accepted position or
(d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated,
issued or announced or which interpretation or pronouncement is
issued or announced or which action is taken, in each case on or
after the Expiration Date, there is more than an insubstantial
risk that (i) the Trust is, or will be within 90 days of the date
thereof, subject to United States federal income tax with respect
to income accrued or received on the Debentures, (ii) the Trust
is, or will be within 90 days of the date thereof, subject to
more than a de minimis amount of taxes, duties or other
governmental charges or (iii) interest payable by UAL to the
Trust on the Debentures is not, or within 90 days of the date
thereof will not be, deductible by UAL for United States federal
income tax purposes.
"Investment Company Event" means that the Regular Trustees
shall have received an opinion of nationally recognized
independent counsel experienced in practice under the Investment
Company Act that, as a result of the occurrence of a change in
law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental
agency or regulatory authority or of the staff of such
governmental agency or regulatory authority (a "Change in 1940
Act Law"), there is more than an insubstantial risk that the
Trust is or will be considered an Investment Company which is
required to be registered under the Investment Company Act, which
Change in 1940 Act Law becomes effective on or after the
Expiration Date.
On the date fixed for any distribution of Debentures, upon
dissolution of the Trust, (i) the Preferred Securities will no
longer be deemed to be outstanding and (ii) certificates
representing Preferred Securities will be deemed to represent
beneficial interests in the Debentures having an aggregate
principal amount equal to the stated liquidation amount of, and
bearing accrued and unpaid interest equal to accrued and unpaid
Distributions on, such Preferred Securities until such
certificates are presented to UAL or its agent for transfer or
reissuance.
(d) The Trust may not redeem fewer than all the outstanding
Preferred Securities unless all accrued and unpaid Distributions
have been paid on all Preferred Securities for all quarterly
Distribution periods terminating on or prior to the date of
redemption.
(e) If Debentures are distributed to Holders of the
Preferred Securities, UAL, pursuant to the terms of the
Indenture, will use its best efforts to have the Debentures
listed on the New York Stock Exchange or on such other exchange
as the Preferred Securities were listed immediately prior to the
distribution of the Debentures.
(f) (i) Notice of any redemption of, or notice of
distribution of Debentures in exchange for, the Preferred
Securities and Common Securities (a "Redemption/Distribution
Notice") will be given by the Regular Trustees on behalf of the
Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 10 nor more
than 60 days prior to the date fixed for redemption or exchange
thereof. For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given
pursuant to this paragraph (f)(i), a Redemption/Distribution
Notice shall be deemed to be given on the day such notice is
first mailed by first class mail, postage prepaid, to Holders of
Preferred Securities and Common Securities. Each Redemption/
Distribution Notice shall be addressed to the Holders of
Preferred Securities and Common Securities at the address of each
such Holder appearing in the books and records of the Trust. No
defect in the Redemption/Distribution Notice or in the mailing of
either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect
to any other Holder.
(ii) In the event that fewer than all the outstanding
Preferred Securities are to be redeemed (subject to adjustment to
eliminate fractional Preferred Securities), the Preferred
Securities to be redeemed will be redeemed Pro Rata from each
Holder of Preferred Securities, it being understood that, in
respect of Preferred Securities registered in the name of and
held of record by DTC (or successor Clearing Agency) or any other
nominee, the distribution of the proceeds of such redemption will
be made to each Clearing Agency Participant (or Person on whose
behalf such nominee holds such securities) in accordance with the
procedures applied by such agency or nominee.
(iii) If the Trust gives a Redemption/Distribution
Notice in respect of a redemption of Preferred Securities as
provided in this paragraph 4 (which notice will be irrevocable)
then, immediately prior to the close of business on the
redemption date, provided that UAL has paid to the Trust in
immediately available funds a sufficient amount of cash in
connection with the related redemption or maturity of the
Debentures, Distributions will cease to accrue on the Preferred
Securities called for redemption, such Preferred Securities will
no longer be deemed to be outstanding and all rights of Holders
of such Preferred Securities so called for redemption will cease,
except the right of the Holders of such Preferred Securities to
receive the Redemption Price, but without interest on such
Redemption Price. Neither the Trustees nor the Trust shall be
required to register or cause to be registered the transfer of
any Preferred Securities which have been so called for
redemption. If any date fixed for redemption of Preferred
Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will
be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of
Preferred Securities is improperly withheld or refused and not
paid either by the Trust or by UAL pursuant to the Preferred
Guarantee, Distributions on such Preferred Securities will
continue to accrue, from the original redemption date to the date
of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of
calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by
the Regular Trustees on behalf of the Trust to the Holders of the
Preferred Securities.
(v) Upon the date of dissolution of the Trust and
distribution of Debentures as a result of the occurrence of a
Special Event, Preferred Security Certificates shall be deemed to
represent beneficial interests in the Debentures so distributed,
and the Preferred Securities will no longer be deemed outstanding
and may be canceled by the Regular Trustees. The Debentures so
distributed shall have an aggregate principal amount equal to the
aggregate liquidation amount of the Preferred Securities so
distributed.
(vi) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities
laws), UAL or any of its subsidiaries may at any time and from
time to time purchase outstanding Preferred Securities by tender,
in the open market or by private agreement.
5. Voting Rights. (a) Except as provided under paragraph
5(b) below and as otherwise required by law and the Declaration,
the Holders of the Preferred Securities will have no voting
rights.
(b) If any proposed amendment to the Declaration provides
for, or the Regular Trustees otherwise propose to effect, (i) any
action that would adversely affect the powers, preferences or
special rights of the Securities, whether by way of amendment to
the Declaration or otherwise, or (ii) the dissolution, winding-up
or termination of the Trust, other than in accordance with the
terms of the Declaration, then the Holders of outstanding
Securities will be entitled to vote on such amendment or proposal
as a class and such amendment or proposal shall not be effective
except with the approval of the Holders of Securities
representing a Majority in liquidation amount of such Securities;
provided, however, (A) if any amendment or proposal referred to
in clause (i) above would adversely affect only the Preferred
Securities or the Common Securities, then only the affected class
will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the
approval of a Majority in liquidation amount of such class of
Securities and (B) amendments to the Declaration shall be subject
to such further requirements as are set forth in Sections 12.1
and 12.2 of the Declaration.
In the event the consent of the Institutional Trustee, as
the holder of the Debentures, is required under the Indenture
with respect to any amendment, modification or termination of the
Indenture or the Debentures, the Institutional Trustee shall
request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination. The
Institutional Trustee shall vote with respect to such amendment,
modification or termination as directed by a Majority in
liquidation amount of the Securities voting together as a single
class (and, in the case of any other UAL Corporation Capital
Trust holding debt securities issued under the Indenture, voting
with the holders of securities of such other UAL Corporation
Capital Trust); provided that where such amendment, modification
or termination of the Indenture requires the consent or vote of
(1) holders of Debentures representing a specified percentage
greater than a majority in principal amount of the Debentures or
(2) each holder of Debentures, the Institutional Trustee may only
vote with respect to that amendment, modification or termination
as directed by, in the case of clause (1) above, the vote of
Holders of Securities representing such specified percentage of
the aggregate liquidation amount of the Securities, or, in the
case of clause (2) above, each Holder of Securities; and
provided, further, that the Institutional Trustee shall be under
no obligation to take any action in accordance with the
directions of the Holders of Securities unless the Institutional
Trustee shall have received, at the expense of the Sponsor, an
opinion of nationally recognized independent tax counsel
recognized as expert in such matters to the effect that the Trust
will not be classified for United States federal income tax
purposes as an association taxable as a corporation or a
partnership on account of such action and will be treated as a
grantor trust for United States federal income tax purposes
following such action.
Subject to Section 2.6 of the Declaration, and the
provisions of this and the next two succeeding paragraphs, the
Holders of a Majority in liquidation amount of the Preferred
Securities, voting separately as a class, shall have the right to
(A) on behalf of all Holders of Preferred Securities, waive any
past default, and its consequences, that is waivable under the
Declaration (subject to, and in accordance with, the Declaration)
and (B) direct the time, method, and place of conducting any
proceeding for any remedy available to the Institutional Trustee,
or exercising any trust or power conferred upon the Institutional
Trustee under the Declaration, including the right to direct the
Institutional Trustee, as the holder of the Debentures (and, in
the case of any other UAL Corporation Capital Trust holding debt
securities issued under the Indenture, voting with the holders of
preferred securities of such other UAL Corporation Capital
Trust), to (i) direct the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee,
or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waive any past
default and its consequences that is waivable under Section 5.7
of the Indenture, or (iii) exercise any right to rescind or annul
a declaration that the principal of all the Debentures shall be
due and payable; provided that where the taking of any action
under the Indenture requires the consent or vote of (1) holders
of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder
of Debentures, the Institutional Trustee may only take such
action if directed by, in the case of clause (1) above, the vote
of Holders of Preferred Securities representing such specified
percentage of the aggregate liquidation amount of the Preferred
Securities, or, in the case of clause (2) above, each Holder of
Preferred Securities. The Institutional Trustee shall not
revoke, or take any action inconsistent with, any action
previously authorized or approved by a vote of the Holders of the
Preferred Securities.
Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to
the Institutional Trustee or the Debenture Trustee as set forth
above, the Institutional Trustee shall be under no obligation to
take any of the foregoing actions at the direction of the Holders
of Preferred Securities unless the Institutional Trustee shall
have received, at the expense of the Sponsor, an opinion of
nationally recognized independent tax counsel recognized as
expert in such matters to the effect that the Trust will not be
classified for United States federal income tax purposes as an
association taxable as a corporation or a partnership on account
of such action and will be treated as a grantor trust for United
States federal income tax purposes following such action. If the
Institutional Trustee fails to enforce its rights under the
Declaration (including, without limitation, its rights, powers
and privileges as a holder of the Debentures under the Indenture)
to the fullest extent permitted by law, any Holder of Preferred
Securities may, upon such Holder's written request to the
Institutional Trustee to enforce such rights, institute a legal
proceeding directly against UAL to enforce the Institutional
Trustee's rights under the Declaration, without first instituting
a legal proceeding against the Institutional Trustee or any other
Person; provided that if an Event of Default is attributable to
the failure of UAL to pay interest or principal on the Debentures
on the date such interest or principal is otherwise payable (or
in the case of redemption, the redemption date), then a Holder of
Preferred Securities may directly institute a proceeding for
enforcement of payment to such Holder of the principal of or
interest on the Debentures having a principal amount equal to the
aggregate liquidation amount of the Preferred Securities of such
Holder without first (i) directing the Institutional Trustee to
enforce the terms of the Debentures or (ii) instituting a legal
proceeding against UAL to enforce the Institutional Trustee's
rights under the Debentures.
A waiver of an Indenture Event of Default by the
Institutional Trustee at the direction of the Holders of the
Preferred Securities will constitute a waiver of the
corresponding Event of Default under the Declaration in respect
of the Securities.
Any required approval or direction of Holders of Preferred
Securities may be given at a separate meeting of Holders of
Preferred Securities convened for such purpose, at a meeting of
all of the Holders of Securities of the Trust or pursuant to
written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to
vote, or of any matter upon which action by written consent of
such Holders is to be taken, to be mailed to each Holder of
record of Preferred Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such
Holders are entitled to vote or of such matter upon which written
consent is sought and (iii) instructions for the delivery of
proxies or consents.
No vote or consent of the Holders of Preferred Securities
will be required for the Trust to redeem and cancel Preferred
Securities or distribute Debentures in accordance with the
Declaration.
Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent under any of the circumstances
described above, any of the Preferred Securities at such time
that are owned by UAL or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common
control with UAL shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if
they were not outstanding.
Holders of the Preferred Securities will have no rights to
increase or decrease the number of Trustees or to appoint, remove
or replace a Trustee, which voting rights are vested solely in
the Holders of the Common Securities.
6. Pro Rata Treatment. A reference in these terms of the
Preferred Securities to any payment, distribution or treatment as
being "Pro Rata" shall mean pro rata to each Holder of Securities
according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in
relation to a payment, an Event of Default has occurred and is
continuing, in which case any funds available to make such
payment shall be paid first to each Holder of the Preferred
Securities pro rata according to the aggregate liquidation amount
of Preferred Securities held by the relevant Holder relative to
the aggregate liquidation amount of all Preferred Securities
outstanding, and only after satisfaction of all amounts owed to
the Holders of the Preferred Securities, to each Holder of Common
Securities pro rata according to the aggregate liquidation amount
of Common Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Common Securities
outstanding.
7. Ranking. The Preferred Securities rank pari passu and
payment thereon will be made Pro Rata with the Common Securities
except that, where an Event of Default occurs and is continuing,
the rights of Holders of Preferred Securities to payment in
respect of Distributions and payments upon liquidation,
redemption or otherwise rank in priority to the rights of Holders
of the Common Securities.
8. Mergers, Consolidations or Amalgamations.
(a) The Trust may not consolidate, amalgamate or merge with
or into, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to, any
Person, except as described in Sections 3 and 8(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees
or, if there are more than two, a majority of the Regular
Trustees and without the consent of the Holders of the
Securities, the Delaware Trustee or the Institutional Trustee,
consolidate, amalgamate or merge with or into, or be replaced by,
a trust organized as such under the laws of any State; provided
that:
(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations
of the Trust under the Preferred Securities; or
(B) substitutes for the Preferred Securities
other securities having substantially the same terms as
the Preferred Securities (the "Successor Securities")
so long as the Successor Securities rank the same as
the Preferred Securities rank with respect to
Distributions and payments upon liquidation, redemption
and otherwise;
(ii) the Sponsor expressly appoints a trustee of the
Successor Entity that possesses the same powers and duties
as the Institutional Trustee as the holder of the
Debentures;
(iii) the Preferred Securities or any Successor
Securities are listed, or any Successor Securities will be
listed upon notification of issuance, on any national
securities exchange or with another organization on which
the Preferred Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities
(including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights,
preferences and privileges of the Holders of the Preferred
Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of
such Holders' interests in the Preferred Securities as a
result of such merger, consolidation, amalgamation or
replacement);
(vi) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) such merger, consolidation, amalgamation or
replacement does not vary the investment of the Holders of
the Preferred Securities within the meaning of Treasury
Regulation Section 301.7701-4(c)(1), e.g., does not
substitute other assets for assets of the Trust to which the
Preferred Securities relate or add assets to the Trust to
which the Preferred Securities relate;
(viii) prior to such merger, consolidation,
amalgamation or replacement, the Sponsor has received an
opinion of a nationally recognized independent counsel to
the Trust experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation
or replacement does not adversely affect the rights,
preferences and privileges of the Holders of the
Preferred Securities (including any Successor
Securities) in any material respect (other than with
respect to any dilution of the Holders' interest in the
new entity);
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an
Investment Company; and
(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the
Successor Entity) will continue to be classified as a
grantor trust for United States federal income tax
purposes; and
(ix) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to
the extent provided by the Preferred Guarantee.
9. Transfer, Exchange, Method of Payments. Payment of
Distributions and payments on redemption of the Preferred
Securities will be payable, the transfer of the Preferred
Securities will be registrable, and Preferred Securities will be
exchangeable for Preferred Securities of other denominations of a
like aggregate liquidation amount, at the principal corporate
trust office of the Institutional Trustee in the City of New
York; provided that payment of Distributions may be made at the
option of the Regular Trustees on behalf of the Trust by check
mailed to the address of the Persons entitled thereto and that
the payment on redemption of any Preferred Security will be made
only upon surrender of such Preferred Security to the
Institutional Trustee.
10. Acceptance of Indenture and Preferred Guarantee. Each
Holder of Preferred Securities, by the acceptance thereof, agrees
to the provisions of (i) the Preferred Guarantee, including the
subordination provisions therein, and (ii) the Indenture and the
Debentures, including the subordination provisions of the
Indenture.
11. No Preemptive Rights. The Holders of Preferred
Securities shall have no preemptive or similar rights to
subscribe to any additional Preferred Securities or Common
Securities.
12. Miscellaneous. These terms shall constitute a part of
the Declaration. The Trust will provide a copy of the
Declaration and the Indenture to a Holder without charge on
written request to the Trust at its principal place of business.
Annex I
Certificate Number Number of Preferred Securities
B-__ _____________________
CUSIP NO. 90254Y 20 8
Certificate Evidencing Preferred Securities
of
UAL Corporation Capital Trust I
13 1/4% Trust Originated Preferred Securities
(liquidation amount $25 per Preferred Security)
UAL Corporation Capital Trust I, a statutory business trust
created under the laws of the State of Delaware (the "Trust"),
hereby certifies that _________ (the "Holder") is the registered
owner of _____ (______) preferred securities of the Trust
representing undivided beneficial interests in the assets of the
Trust designated the 13 1/4% Trust Originated Preferred
Securities (liquidation amount $25 per Preferred Security) (the
"Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designations,
rights, privileges, restrictions, preferences and other terms and
provisions of the Preferred Securities are set forth in, and this
certificate and the Preferred Securities represented hereby are
issued and shall in all respects be subject to the terms and
provisions of, the Amended and Restated Declaration of Trust of
the Trust dated as of December 30, 1996, as the same may be
amended from time to time (the "Declaration") including the
designation of the terms of Preferred Securities as set forth in
Exhibit B thereto. The Preferred Securities and the Common
Securities issued by the Trust pursuant to the Declaration
represent undivided beneficial interests in the assets of the
Trust, including the Debentures (as defined in the Declaration)
issued by UAL Corporation, a Delaware corporation ("UAL"), to the
Trust pursuant to the Indenture referred to in the Declaration.
The Holder is entitled to the benefits of the Guarantee Agreement
of UAL dated as of December 30, 1996, as the same may be amended
from time to time (the "Guarantee"), to the extent provided
therein. The Trust will furnish a copy of the Declaration, the
Guarantee and the Indenture to the Holder without charge upon
written request to the Trust at its principal place of business
or registered office.
The Holder of this Certificate, by accepting this
Certificate, is deemed to have (i) agreed to the terms of the
Indenture and the Debentures, including that the Debentures are
subordinate and junior in right of payment to all Senior
Indebtedness (as defined in the Indenture) as and to the extent
provided in the Indenture and (ii) agreed to the terms of the
Guarantee, including that the Guarantee is subordinate and junior
in right of payment to all other liabilities of UAL, including
the Debentures, except those made pari passu or subordinate by
their terms, and senior to all capital stock now or hereafter
issued by UAL and to any guarantee now or hereafter entered into
by UAL in respect of any of its capital stock.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, Trustees of the Trust have executed this
Certificate as of .
UAL CORPORATION CAPITAL TRUST I
By:_________________________
Name: Douglas A. Hacker
Title: Trustee
By:_________________________
Name: Francesca M. Maher
Title: Trustee
Countersigned and Registered:
THE FIRST NATIONAL BANK OF CHICAGO, as
Transfer Agent and Registrar
By:___________________________
Authorized Signature
The Trust will furnish without charge to any registered
owner of Preferred Securities who so requests, copies of the
Declaration, the Guarantee and the Indenture. Any such request
should be addressed to UAL Corporation Capital Trust I, c/o
Secretary, UAL Corporation, 1200 East Algonquin Road, Elk Grove
Township, Illinois 60007 or to the Registrar named on the face of
this Certificate.
The following abbreviations, when used in the inscription on
the face of this Certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations:
TEN COM -- as tenants in common
UNIF GIFT MIN ACT -- under Uniform Gifts to Minors Act and not as tenants
TENENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survival
Additional abbreviations may also be used though not in the
above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Please insert social security or other identifying number of
assignee)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert address and zip code of assignee)
the within Certificate and all rights and interests represented
by the Preferred Securities evidenced thereby, and hereby
irrevocably constitutes and
appoints_________________________________________________________
_________________________________________________________________
_________________________________________________________________
_______________ attorney to transfer the said Preferred
Securities on the books of the within-named Trust with full power
of substitution in the premises.
Dated: _________________________
Signature: _____________________
Note: The signature(s) to this assignment must correspond with
the name(s) as written upon the face of this certificate in every
particular, without alteration or enlargement, or any change
whatever.
NOTICE: Signature(s) must be guaranteed by an "eligible
guarantor institution" that is a member or participant in a
"signature guarantee program" (i.e., the Securities Transfer
Agents Medallion Program, the Stock Exchange Medallion Program or
the New York Stock Exchange, Inc. Medallion Signature Program).
EXHIBIT C
TERMS OF COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust of UAL Corporation Capital Trust I dated as
of December 30, 1996 (as amended from time to time, the
"Declaration"), the designations, rights, privileges,
restrictions, preferences and other terms and provisions of the
Common Securities are set forth below (each capitalized term used
but not defined herein having the meaning set forth in the
Declaration):
1. Designation and Number. Common Securities of the Trust
with an aggregate liquidation amount in the assets of the Trust
of _________________________________ (_________) and a
liquidation amount in the assets of the Trust of $25 per Common
Security, are hereby designated as "13 1/4% Trust Originated
Common Securities." The Common Security Certificates evidencing
the Common Securities shall be substantially in the form attached
hereto as Annex I, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom
or practice. The Common Securities are to be issued and sold to
UAL Corporation ("UAL") in consideration of $[_________] in cash.
In connection with the Offer and the purchase by UAL of the
Common Securities, UAL will deposit in the Trust, and the Trust
will purchase, respectively, as trust assets Debentures of UAL
having an aggregate principal amount equal to $[__________], and
bearing interest at an annual rate equal to the annual
Distribution rate on the Preferred Securities and Common
Securities and having payment and redemption provisions which
correspond to the payment and redemption provisions of the
Preferred Securities and Common Securities.
2. Distributions. (a) Periodic distributions payable on
each Common Security will be fixed at a rate per annum of 13 1/4%
(the "Coupon Rate") of the stated liquidation amount of $25 per
Common Security. Distributions in arrears for more than one
quarter will bear interest at the rate per annum of 13 1/4%
thereof (to the extent permitted by applicable law), compounded
quarterly, to the extent permitted by law. The term
"Distributions" as used in these terms means such periodic cash
distributions and any such interest payable unless otherwise
stated. A Distribution will be made by the Institutional Trustee
only to the extent that interest payments are made in respect of
the Debentures held by the Trust. The amount of Distributions
payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-
day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number
of days elapsed in such a 30-day month.
(b) Distributions on the Common Securities will be
cumulative, will accrue from December 21, 1996 and will be
payable quarterly in arrears, on March 31, June 30, September 30
and December 31 of each year, commencing on December 31, 1996,
and at final maturity of the Debentures, except as otherwise
described below, but only if and to the extent that interest
payments are made in respect of the Debentures held by the Trust.
In addition, Holders of Common Securities will be entitled to a
cash distribution at the rate of 12-1/4% per annum of the
liquidation amount thereof from November 1, 1996 through December
20, 1996, payable on December 31, 1996 ("Pre-Issuance Interest").
With the exception of Pre-Issuance Interest, so long as UAL shall
not be in default in the payment of interest on the Debentures,
UAL has the right under the Indenture for the Debentures to defer
payments of interest by extending the interest payment period
from time to time on the Debentures for a period not exceeding 20
consecutive quarterly interest periods (each, an "Extension
Period") and, as a consequence, quarterly Distributions will
continue to accrue with interest thereon (to the extent permitted
by applicable law) at the rate of 13 1/4% per annum, compounded
quarterly to the extent permitted by law during any such
Extension Period. Prior to the termination of any such Extension
Period, UAL may further extend such Extension Period; provided
that such Extension Period together with all such previous and
further extensions thereof may not exceed 20 consecutive
quarterly interest periods and provided further that no Extension
Period may extend beyond the maturity of the Debentures. Upon
the termination of any Extension Period and the payment on the
next distribution payment date following such Extension Period of
all amounts then due, UAL may commence a new Extension Period,
subject to the above requirements. Any interest paid on the
Debentures during an Extension Period on an Interest Payment Date
shall be paid pro rata to the Holders of Preferred Securities on
the corresponding distribution payment date. Payments of accrued
Distributions will be payable to Holders of Common Securities as
they appear on the books and records of the Trust on the record
date for the first payment occurring on or after the end of the
Extension Period.
(c) Distributions on the Common Securities will be payable
promptly by the Institutional Trustee (or other Paying Agent)
upon receipt of immediately available funds to the Holders
thereof as they appear on the books and records of the Trust on
the relevant record dates, which will be 15 calendar days prior
to the relevant Distribution dates except that the record date
for the payment to be made on December 31, 1996 shall be the date
of exchange of the Common Securities for the Depository Shares,
which record and payment dates correspond to the record and
interest payment dates on the Debentures. Distributions payable
on any Common Securities that are not punctually paid on any
Distribution payment date as a result of UAL having failed to
make the corresponding interest payment on the Debentures will
forthwith cease to be payable to the Person in whose name such
Common Security is registered on the relevant record date, and
such defaulted Distribution will instead be payable to the Person
in whose name such Common Security is registered on the special
record date established by the Regular Trustees, which record
date shall correspond to the special record date or other
specified date determined in accordance with the Indenture;
provided, however, that Distributions shall not be considered
payable on any Distribution payment date falling within an
Extension Period unless UAL has elected to make a full or partial
payment of interest accrued on the Debentures on such
Distribution payment date. Subject to any applicable laws and
regulations and the provisions of the Declaration, each payment
in respect of the Common Securities will be made as described in
paragraph 9 hereof. If any date on which Distributions are
payable on the Common Securities is not a Business Day, then
payment of the Distribution payable on such date will be made on
the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if
made on such date.
(d) All Distributions paid with respect to the Common
Securities and the Preferred Securities will be paid Pro Rata (as
defined herein) to the Holders thereof entitled thereto. If an
Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities with
respect to Distributions
(e) In the event that there is any money or other property
held by or for the Trust that is not accounted for under the
Declaration, such money or property shall be distributed Pro Rata
among the Holders of the Preferred Securities and Common
Securities.
3. Liquidation Distribution Upon Dissolution. In the event
of any voluntary or involuntary dissolution, winding-up or
termination of the Trust, the Holders of the Preferred Securities
and Common Securities at the date of the dissolution, winding-up
or termination, as the case may be, will be entitled to receive
Pro Rata, solely out of the assets of the Trust available for
distribution to Holders of Preferred Securities and Common
Securities, after satisfaction of liabilities to creditors, an
amount equal to the aggregate of the stated liquidation amount of
$25 per Preferred Security and Common Security plus accrued and
unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"), unless, in connection with
such dissolution, winding-up or termination, and after
satisfaction of liabilities to creditors, Debentures in an
aggregate principal amount equal to the aggregate stated
liquidation amount of such Preferred Securities and Common
Securities bearing accrued and unpaid interest in an amount equal
to the accrued and unpaid Distributions on such Preferred
Securities and Common Securities shall be distributed Pro Rata to
the Holders of the Preferred Securities and Common Securities in
exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution
can be paid only in part because the Trust has insufficient
assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Trust on
the Preferred Securities and Common Securities shall be paid on a
Pro Rata basis, except that, if an Event of Default has occurred
and is continuing, the Preferred Securities shall have a priority
over the Common Securities with respect to such Liquidation
Distribution.
4. Redemption and Distribution of Debentures. The Preferred
Securities and Common Securities may only be redeemed if
Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of the Preferred Securities and
Common Securities are repaid, redeemed or distributed as set
forth below:
(a) Upon the repayment of the Debentures, in whole or in
part, whether at maturity, or upon redemption at any time or from
time to time on or after July 12, 2004, the proceeds of such
repayment will be promptly applied to redeem Pro Rata Preferred
Securities and Common Securities having an aggregate liquidation
amount equal to the aggregate principal amount of the Debentures
so repaid or redeemed, upon not less than 10 nor more than 60
days' notice, at a redemption price of $25 per Preferred and
Common Security plus an amount equal to accrued and unpaid
Distributions thereon to the date of redemption, payable in cash
(the "Redemption Price"). The date of any such repayment or
redemption of Preferred Securities and Common Securities shall be
established to coincide with the repayment or redemption date of
the Debentures.
(b) The Common Securities will be entitled to be redeemed
on a Pro Rata basis with the Preferred Securities, except that,
if an Event of Default has occurred and is continuing, the
Preferred Securities shall have a priority over the Common
Securities with respect to the payment of the Redemption Price.
If fewer than all the outstanding Preferred Securities and Common
Securities are to be so redeemed, the Preferred Securities and
the Common Securities will be redeemed Pro Rata and the Common
Securities to be redeemed will be redeemed as described in
paragraph 4(e)(ii) below. If a partial redemption would result
in the delisting of the Preferred Securities by any national
securities exchange or other organization on which the Preferred
Securities are then listed, UAL pursuant to the Indenture will
only redeem Debentures in whole and, as a result, the Trust may
only redeem the Common Securities in whole.
(c) If, at any time, a Tax Event or an Investment Company
Event (each as hereinafter defined, and each a "Special Event")
shall occur and be continuing, the Regular Trustees shall, unless
the Debentures are redeemed in the limited circumstances
described below, dissolve the Trust and, after satisfaction of
creditors, cause Debentures held by the Institutional Trustee
having an aggregate principal amount equal to the aggregate
stated liquidation amount of and accrued and unpaid interest
equal to accrued and unpaid Distributions on, and having the same
record date for payment as, the Preferred Securities and Common
Securities, to be distributed to the Holders of the Preferred
Securities and Common Securities on a Pro Rata basis in
liquidation of such Holders' interests in the Trust, within 90
days following the occurrence of such Special Event (the "90 Day
Period"), provided, however, that in the case of the occurrence
of a Tax Event, as a condition of such dissolution and
distribution, the Regular Trustees shall have received an opinion
(a "No Recognition Opinion") of a nationally recognized
independent tax counsel experienced in such matters, which
opinion may rely on any then applicable published revenue rulings
of the Internal Revenue Service, to the effect that the Holders
of the Preferred Securities will not recognize any gain or loss
for United States federal income tax purposes as a result of the
dissolution of the Trust and distribution of Debentures; and
provided, further, that, if and as long as at the time there is
available to the Trust the opportunity to eliminate, within the
90 Day Period, the Special Event by taking some ministerial
action, such as filing a form or making an election, or pursuing
some other similar reasonable measure that has no adverse effect
on the Trust, UAL, or the Holders of the Preferred Securities
("Ministerial Action"), the Trust will pursue such measure in
lieu of dissolution.
If, in the case of the occurrence of a Tax Event, (i) the
Regular Trustees have received an opinion (a "Redemption Tax
Opinion") of nationally recognized independent tax counsel
experienced in such matters that, as a result of a Tax Event,
there is more than an insubstantial risk that UAL would be
precluded from deducting the interest on the Debentures for
United States federal income tax purposes even if the Debentures
were distributed to the Holders of Preferred Securities and
Common Securities in liquidation of such Holder's interest in the
Trust as described in this paragraph 4(c) or (ii) the Regular
Trustees shall have been informed by such tax counsel that a No
Recognition Opinion cannot be delivered to the Trust, UAL shall
have the right at any time, upon not less than 10 nor more than
60 days notice, to redeem the Debentures in whole or in part for
cash at the Redemption Price within 90 days following the
occurrence of such Tax Event, and promptly following such
redemption Preferred Securities and Common Securities with an
aggregate liquidation amount equal to the aggregate principal
amount of the Debentures so redeemed will be redeemed by the
Trust at the Redemption Price on a Pro Rata basis; provided,
however, that, if at the time there is available to UAL or the
Regular Trustees on behalf of the Trust the opportunity to
eliminate, within such 90 day period, the Tax Event by taking
some Ministerial Action, UAL or the Regular Trustees on behalf of
the Trust will pursue such measure in lieu of redemption, and
provided further that UAL shall have no right to redeem the
Debentures while the Regular Trustees on behalf of the Trust are
pursuing such Ministerial Action. The Common Securities will be
redeemed Pro Rata with the Preferred Securities, except that if
an Event of Default under the Indenture has occurred and is
continuing, the Preferred Securities will have a priority over
the Common Securities with respect to payment of the Redemption
Price.
"Tax Event" means that the Regular Trustees shall have
obtained an opinion (a "Dissolution Tax Opinion") of nationally
recognized independent tax counsel experienced in such matters to
the effect that on or after the Expiration Date as a result of
(a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing
authority thereof or therein, (b) any amendment to, or change in,
an interpretation or application of any such laws or regulations
by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory
determination), (c) any interpretation or pronouncement that
provides for a position with respect to such laws or regulations
that differs from the theretofore generally accepted position or
(d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated,
issued or announced or which interpretation or pronouncement is
issued or announced or which action is taken, in each case on or
after the Expiration Date, there is more than an insubstantial
risk that (i) the Trust is, or will be within 90 days of the date
thereof, subject to United States federal income tax with respect
to income accrued or received on the Debentures, (ii) the Trust
is, or will be within 90 days of the date thereof, subject to
more than a de minimis amount of taxes, duties or other
governmental charges or (iii) interest payable by UAL to the
Trust on the Debentures is not, or within 90 days of the date
thereof will not be, deductible by UAL for United States federal
income tax purposes.
"Investment Company Event" means that the Regular Trustees
shall have received an opinion of nationally recognized
independent counsel experienced in practice under the Investment
Company Act that, as a result of the occurrence of a change in
law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental
agency or regulatory authority or the staff of such governmental
agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Trust is or
will be considered an Investment Company which is required to be
registered under the Investment Company Act, which Change in 1940
Act Law becomes effective on or after the Expiration Date.
On the date fixed for any distribution of Debentures, upon
dissolution of the Trust, (i) the Common Securities will no
longer be deemed to be outstanding and (ii) any certificates
representing Common Securities will be deemed to represent
beneficial interests in the Debentures having an aggregate
principal amount equal to the stated liquidation amount of, and
bearing accrued and unpaid interest equal to accrued and unpaid
Distributions on, such Common Securities until such certificates
are presented to UAL or its agent for transfer or reissuance.
(d) The Trust may not redeem fewer than all the outstanding
Common Securities unless all accrued and unpaid Distributions
have been paid on all Common Securities for all quarterly
Distribution periods terminating on or prior to the date of
redemption.
(e)(i) Notice of any redemption of, or notice of
distribution of Debentures in exchange for, the Preferred
Securities and Common Securities (a "Redemption/Distribution
Notice") will be given by the Regular Trustees on behalf of the
Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 10 nor more
than 60 days prior to the date fixed for redemption or exchange
thereof. For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given
pursuant to this paragraph (e)(i), a Redemption/Distribution
Notice shall be deemed to be given on the day such notice is
first mailed by first class mail, postage prepaid, to Holders of
Preferred Securities and Common Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders
of Preferred Securities and Common Securities at the address of
each such Holder appearing in the books and records of the Trust.
No defect in the Redemption/Distribution Notice or in the mailing
of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect
to any other Holder.
(ii) In the event that fewer than all the outstanding
Common Securities are to be redeemed, the Common Securities to be
redeemed will be redeemed Pro Rata from each Holder of Common
Securities (subject to adjustment to eliminate fractional Common
Securities).
(iii) If the Trust gives a Redemption/Distribution
Notice in respect of a redemption of Common Securities as
provided in this paragraph 4 (which notice will be irrevocable),
then, immediately prior to the close of business on the
redemption date, provided that UAL has paid to the Trust in
immediately available funds a sufficient amount of cash in
connection with the related redemption or maturity of the
Debentures, Distributions will cease to accrue on the Common
Securities called for redemption, such Common Securities will no
longer be deemed to be outstanding and all rights of Holders of
such Common Securities so called for redemption will cease,
except the right of the Holders of such Common Securities to
receive the Redemption Price, but without interest on such
Redemption Price. Neither the Trustees nor the Trust shall be
required to register or cause to be registered the transfer of
any Common Securities which have been so called for redemption.
If any date fixed for redemption of Common Securities is not a
Business Day, then payment of the Redemption Price payable on
such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same
force and effect as if made on such date fixed for redemption. If
payment of the Redemption Price in respect of Common Securities
is improperly withheld or refused and not paid by the Trust,
Distributions on such Common Securities will continue to accrue,
from the original redemption date to the date of payment, in
which case the actual payment date will be considered the date
fixed for redemption for purposes of calculating the Redemption
Price.
(iv) Redemption/Distribution Notices shall be sent by
the Regular Trustees on behalf of the Trust to the Holders of the
Common Securities.
(v) Upon the date of dissolution of the Trust and
distribution of Debentures as a result of the occurrence of a
Special Event, Common Security Certificates shall be deemed to
represent beneficial interests in the Debentures so distributed,
and the Common Securities will no longer be deemed outstanding
and may be canceled by the Regular Trustees. The Debentures so
distributed shall have an aggregate principal amount equal to the
aggregate liquidation amount of the Common Securities so
distributed.
5. Voting Rights. (a) Except as provided under paragraph
5(b) below and as otherwise required by law and the Declaration,
the Holders of the Common Securities will have no voting rights.
(b) Holders of Common Securities have the sole right under
the Declaration to increase or decrease the number of Trustees,
and to appoint, remove or replace a Trustee, any such increase,
decrease, appointment, removal or replacement to be approved by
Holders of Common Securities representing a Majority in
liquidation amount of the Common Securities.
If any proposed amendment to the Declaration provides for,
or the Regular Trustees otherwise propose to effect, (i) any
action that would adversely affect the powers, preferences or
special rights of the Securities, whether by way of amendment to
the Declaration or otherwise, or (ii) the dissolution, winding-up
or termination of the Trust, other than in accordance with the
terms of the Declaration, then the Holders of outstanding
Securities will be entitled to vote on such amendment or proposal
as a class and such amendment or proposal shall not be effective
except with the approval of the Holders of Securities
representing a Majority in liquidation amount of such Securities;
provided, however, (A) if any amendment or proposal referred to
in clause (i) above would adversely affect only the Preferred
Securities or the Common Securities, then only the affected class
will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the
approval of a Majority in liquidation amount of such class of
Securities, (B) the rights of Holders of Common Securities under
Article V of the Declaration to increase or decrease the number
of, and to appoint, replace or remove, Trustees shall not be
amended without the consent of each Holder of Common Securities,
and (C) amendments to the Declaration shall be subject to such
further requirements as are set forth in Sections 12.1 and 12.2
of the Declaration.
In the event the consent of the Institutional Trustee, as
the holder of the Debentures, is required under the Indenture
with respect to any amendment, modification or termination of the
Indenture or the Debentures, the Institutional Trustee shall
request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination. The
Institutional Trustee shall vote with respect to such amendment,
modification or termination as directed by a Majority in
liquidation amount of the Securities voting together as a single
class (and, in the case of any other UAL Corporation Capital
Trust holding debt securities issued under the Indenture, voting
with the holders of securities of such other UAL Corporation
Capital Trust); provided that where such amendment, modification
or termination of the Indenture requires the consent or vote of
(1) holders of Debentures representing a specified percentage
greater than a majority in principal amount of the Debentures or
(2) each holder of Debentures, the Institutional Trustee may only
vote with respect to that amendment, modification or termination
as directed by, in the case of clause (1) above, the vote of
Holders of Securities representing such specified percentage of
the aggregate liquidation amount of the Securities, or, in the
case of clause (2) above, each Holder of Securities; and
provided, further, that the Institutional Trustee shall be under
no obligation to take any action in accordance with the
directions of the Holders of the Securities unless the
Institutional Trustee shall have received, at the expense of the
Sponsor, an opinion of nationally recognized independent tax
counsel recognized as an expert in such matters to the effect
that the Trust will not be classified for United States federal
income tax purposes as an association taxable as a corporation or
a partnership on account of such action and will be treated as a
grantor trust for United States federal income tax purposes
following such action.
Subject to Section 2.6 of the Declaration, and the
provisions of this and the next two succeeding paragraphs, the
Holders of a Majority in liquidation amount of the Common
Securities, voting separately as a class, shall have the right to
(A) on behalf of all Holders of Common Securities, waive any past
default, and its consequences, that is waivable under the
Declaration (subject to, and in accordance with, the Declaration)
and (B) direct the time, method, and place of conducting any
proceeding for any remedy available to the Institutional Trustee,
or exercising any trust or power conferred upon the Institutional
Trustee under the Declaration, including the right to direct the
Institutional Trustee, as holder of the Debentures (and, in the
case of any other UAL Corporation Capital Trust holding debt
securities issued under the Indenture, voting with the holders of
common securities of such other UAL Corporation Capital Trust),
to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or
exercising any trust or power conferred on the Debenture Trustee
with respect to the Debentures, (ii) waive any past default and
its consequences that is waivable under Section 5.7 of the
Indenture, or (iii) exercise any right to rescind or annul a
declaration that the principal of all the Debentures shall be due
and payable; provided that where the taking of any action under
the Indenture requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder
of Debentures, the Institutional Trustee may only take such
action if directed by, in the case of clause (1) above, the vote
of Holders of Common Securities representing such specified
percentage of the aggregate liquidation amount of the Common
Securities, or, in the case of clause (2) above, each Holder of
Common Securities. The Institutional Trustee shall not revoke,
or take any action inconsistent with, any action previously
authorized or approved by a vote of the Holders of the Preferred
Securities, and shall not take any action in accordance with the
direction of the Holders of the Common Securities under this
paragraph if the action is prejudicial to the Holders of
Preferred Securities.
Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to
the Institutional Trustee or the Debenture Trustee as set forth
above, the Institutional Trustee shall be under no obligation to
take any of the foregoing actions at the direction of the Holders
of Common Securities unless the Institutional Trustee shall have
received, at the expense of the Sponsor, an opinion of nationally
recognized independent tax counsel recognized as expert in such
matters to the effect that the Trust will not be classified for
United States federal income tax purposes as an association
taxable as a corporation or a partnership on account of such
action and will be treated as a grantor trust for United States
income tax purposes following such action.
Notwithstanding any other provision of these terms, each
Holder of Common Securities will be deemed to have waived any
Event of Default with respect to the Common Securities and its
consequences until all Events of Default with respect to the
Preferred Securities have been cured, waived by the Holders of
Preferred Securities as provided in the Declaration or otherwise
eliminated, and until all Events of Default with respect to the
Preferred Securities have been so cured, waived by the Holders of
Preferred Securities or otherwise eliminated, the Institutional
Trustee will be deemed to be acting solely on behalf of the
Holders of Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the
Institutional Trustee in accordance with the terms of the
Declaration or of the Securities. In the event that any Event of
Default with respect to the Preferred Securities is waived by the
Holders of Preferred Securities as provided in the Declaration,
the Holders of Common Securities agree that such waiver shall
also constitute the waiver of such Event of Default with respect
to the Common Securities for all purposes under the Declaration
without any further act, vote or consent of the Holders of the
Common Securities.
A waiver of an Indenture Event of Default by the
Institutional Trustee at the direction of the Holders of the
Preferred Securities will constitute a waiver of the
corresponding Event of Default under the Declaration in respect
of the Securities.
Any required approval or direction of Holders of Common
Securities may be given at a separate meeting of Holders of
Common Securities convened for such purpose, at a meeting of all
of the Holders of Securities of the Trust or pursuant to written
consent. The Regular Trustees will cause a notice of any meeting
at which Holders of Common Securities are entitled to vote, or of
any matter upon which action by written consent of such Holders
is to be taken, to be mailed to each Holder of record of Common
Securities. Each such notice will include a statement setting
forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is
sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of Common Securities will
be required for the Trust to redeem and cancel Common Securities
or distribute Debentures in accordance with the Declaration.
6. Pro Rata Treatment. A reference in these terms of the
Common Securities to any payment, distribution or treatment as
being "Pro Rata" shall mean pro rata to each Holder of Securities
according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in
relation to a payment, an Event of Default has occurred and is
continuing, in which case any funds available to make such
payment shall be paid first to each Holder of the Preferred
Securities pro rata according to the aggregate liquidation amount
of Preferred Securities held by the relevant Holder relative to
the aggregate liquidation amount of all Preferred Securities
outstanding, and only after satisfaction of all amounts owed to
the Holders of the Preferred Securities, to each Holder of Common
Securities pro rata according to the aggregate liquidation amount
of Common Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Common Securities
outstanding.
7. Ranking. The Common Securities rank pari passu and
payment thereon will be made Pro Rata with the Preferred
Securities except that, where an Event of Default occurs and is
continuing, the rights of Holders of Common Securities to payment
in respect of Distributions and payments upon liquidation,
redemption or otherwise are subordinate to the rights of Holders
of the Preferred Securities.
8. Mergers, Consolidations or Amalgamations.
(a) The Trust may not consolidate, amalgamate or merge with
or into, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to, any
Person, except as described in Sections 3 and 8(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees
or, if there are more than two, a majority of the Regular
Trustees and without the consent of the Holders of the
Securities, the Delaware Trustee or the Institutional Trustee,
consolidate, amalgamate or merge with or into, or be replaced by,
a trust organized as such under the laws of any State; provided
that:
(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations
of the Trust under the Preferred Securities; or
(B) substitutes for the Preferred Securities
other securities having substantially the same terms as
the Preferred Securities (the "Successor Securities")
so long as the Successor Securities rank the same as
the Preferred Securities rank with respect to
Distributions and payments upon liquidation, redemption
and otherwise;
(ii) the Sponsor expressly appoints a trustee of the
Successor Entity that possesses the same powers and duties
as the Institutional Trustee as the holder of the
Debentures;
(iii) the Preferred Securities or any Successor
Securities are listed, or any Successor Securities will be
listed upon notification of issuance, on any national
securities exchange or with another organization on which
the Preferred Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities
(including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights,
preferences and privileges of the Holders of the Preferred
Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of
such Holders' interests in the Preferred Securities as a
result of such merger, consolidation, amalgamation or
replacement);
(vi) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) such merger, consolidation, amalgamation or
replacement does not vary the investment of the Holders of
the Preferred Securities within the meaning of Treasury
Regulation Section 301.7701-4(c)(1), e.g., does not
substitute other assets for assets of the Trust to which the
Preferred Securities relate or add assets to the Trust to
which the Preferred Securities relate;
(viii) prior to such merger, consolidation,
amalgamation or replacement, the Sponsor has received an
opinion of a nationally recognized independent counsel to
the Trust experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation
or replacement does not adversely affect the rights,
preferences and privileges of the Holders of the
Preferred Securities (including any Successor
Securities) in any material respect (other than with
respect to any dilution of the Holders' interest in the
new entity);
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an
Investment Company; and
(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the
Successor Entity) will continue to be classified as a
grantor trust for United States federal income tax
purposes; and
(ix) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to
the extent provided by the Preferred Guarantee.
9. Transfer, Exchange, Method of Payments. Payment of
Distributions and payments on redemption of the Common Securities
will be payable, the transfer of the Common Securities will be
registrable, and Common Securities will be exchangeable for
Common Securities of other denominations of a like aggregate
liquidation amount, at the principal corporate trust office of
the Institutional Trustee in the City of New York; provided that
payment of Distributions may be made at the option of the Regular
Trustees on behalf of the Trust by check mailed to the address of
the Persons entitled thereto and that the payment on redemption
of any Common Security will be made only upon surrender of such
Common Security to the Institutional Trustee. Notwithstanding the
foregoing, transfers of Common Securities are subject to
conditions set forth in Section 9.1(c) of the Declaration.
10. Acceptance of Indenture. Each Holder of Common
Securities, by the acceptance thereof, agrees to the provisions
of (i) the Common Guarantee, including the Subordination
provisions thereof, and (ii) the Indenture and the Debentures,
including the subordination provisions thereof.
No Preemptive Rights. The Holders of Common Securities shall
have no preemptive or similar rights to subscribe to any
additional Common Securities or Preferred Securities.
12. Miscellaneous. These terms shall constitute a part of
the Declaration. The Trust will provide a copy of the
Declaration and the Indenture to a Holder without charge on
written request to the Trust at its principal place of business.
Annex I
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
Certificate Number Number of Common Securities
______
C-1
Certificate Evidencing Common Securities
of
UAL Corporation Capital Trust I
13 1/4% Trust Originated Common Securities
(liquidation amount $25 per Common Security)
UAL Corporation Capital Trust I, a statutory business trust
created under the laws of the State of Delaware (the "Trust"),
hereby certifies that UAL Corporation (the "Holder") is the
registered owner of _____________________________ (______) common
securities of the Trust representing undivided beneficial
interests in the assets of the Trust designated the 13 1/4% Trust
Originated Common Securities (liquidation amount $25 per Common
Security) (the "Common Securities"). The Common Securities are
transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer and satisfaction of
the other conditions set forth in the Declaration (as defined
below) including, without limitation, Section 9.1(c) thereof.
The designations, rights, privileges, restrictions, preferences
and other terms and provisions of the Common Securities are set
forth in, and this certificate and the Common Securities
represented hereby are issued and shall in all respects be
subject to the terms and provisions of, the Amended and Restated
Declaration of Trust of the Trust dated as of December 30, 1996,
as the same may be amended from time to time (the "Declaration")
including the designation of the terms of Common Securities as
set forth in Exhibit C thereto. The Common Securities and the
Preferred Securities issued by the Trust pursuant to the
Declaration represent undivided beneficial interests in the
assets of the Trust, including the Debentures (as defined in the
Declaration) issued by UAL Corporation, a Delaware corporation
("UAL"), to the Trust pursuant to the Indenture referred to in
the Declaration. The Holder is entitled to the benefits of the
Common Securities Guarantee Agreement dated as of December 30,
1996, as the same may be amended from time to time (the "Common
Guarantee"). The Trust will furnish a copy of the Declaration,
the Guarantee and the Indenture to the Holder without charge upon
written request to the Trust at its principal place of business
or registered office.
The Holder of this Certificate, by accepting this
Certificate, is deemed to have (i) agreed to the terms of the
Indenture and the Debentures, including that the Debentures are
subordinate and junior in right of payment to all Senior
Indebtedness (as defined in the Indenture) as and to the extent
provided in the Indenture, and (ii) agreed to the terms of the
Common Guarantee, including that the Common Guarantee is
subordinate and junior in right of payment to all other
liabilities of UAL including the Preferred Guarantee (as defined
in the Declaration), to the extent stated therein, and the
Debentures, except those made pari passu or subordinate by their
terms, and senior to all capital stock now or hereafter issued by
UAL and to any guarantee now or hereafter entered into by UAL in
respect of any of its capital stock.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, Trustees of the Trust have executed this
certificate as of .
UAL CORPORATION CAPITAL TRUST I
By: _________________________
Name: Douglas A. Hacker
Title: Trustee
By: _________________________
Name: Francesca M. Maher
Title: Trustee
Countersigned and Registered:
THE FIRST NATIONAL BANK OF CHICAGO, as
Transfer Agent and Registrar
By:___________________________
Authorized Signature
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfer this
Common Security Certificate to:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert assignee's social security or tax identification number)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably constitutes and appoints
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_______________ attorney to transfer this Common Security
Certificate on the books of the within-named Trust with full
power of substitution in the premises.
Dated: ____________________________
Signature: ________________________
Note: The signature(s) to this assignment must correspond with
the name(s) as written upon the face of this certificate in every
particular, without alteration or enlargement, or any change
whatever.
Exhibit 10.10
FIFTH AMENDMENT
UAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
(Effective as of July 12, 1994)
By virtue and in exercise of the amending power
reserved to UAL Corporation (the "Company") under Section 13.1(a)
of the UAL Corporation Employee Stock Ownership Plan (effective
as of July 12, 1994) (the "Plan"), which amending power
thereunder is subject to the approval of the Air Line Pilots
Association International ("ALPA") and the International
Association of Machinists and Aerospace Workers (the "IAM"), the
Company hereby amends the Plan, subject to the approval of ALPA
and the IAM, as follows, effective as of January 1, 1996 (except
as specified below).
1. The following is hereby added to the end of the
first paragraph of Section 1(p):
"With respect to a Participant who is a member of the
Management and Salaried Employee Group, if the Company
implements a program of vacation buy-backs applicable to
individuals who have not terminated employment, Compensation
shall include the amounts payable on or after January 1,
1996 under such a program. With respect to the Management
and Salaried Employee Group, notwithstanding the preceding
sentence, Compensation shall continue to exclude pay
received for vacation time that was accrued but not actually
taken as vacation before termination of employment by
retirement or otherwise."
2. Section 1(yy) is amended by adding the following
to the end of the section:
"The Wage Investment for members of the IAM Employee Group
shall be calculated by including hours for which the
Participant receives payment as a vacation buy back under a
vacation buy back program implemented by the Company on or
after January 1, 1996. Such Wage Investment shall be
credited in the Plan Year in which such payment occurs."
3. Section 5.4(a)(iv) is amended by adding the
following to the end of the section:
"Effective January 1, 1997, the Company elects to apply the
rule provided by Code Section 414(q)(1)(B)(ii).
Accordingly, commencing with the Plan Year beginning January
1, 1997, "highly compensated employee" means any Employee
who (1) was a 5% owner at any time during the Plan Year or
the preceding Plan Year, or (2) for the preceding Plan Year
both (i) had compensation from the employer in excess of
$80,000 (as indexed under Code Section 414(q)), and (ii) was
in the top-paid group of Employees."
4. Section 7.4(a)(iii) is amended by adding the
following to the end of the section:
"Effective January 1, 1997, the requirement that
distributions commence following age 70-1/2, but before
termination of employment, shall only apply in the case of a
Participant who is a 5% owner with respect to the Plan Year
in which the Participant attains age 70-1/2. For all
Participants other than the 5% owners referred to in the
preceding sentence, it is intended that distributions prior
to termination of employment be limited to the amount, if
any, required under Code Section 411(d)(6)(B)(ii).
Accordingly, (1) no distribution to such a Participant shall
be made unless the Participant elects to commence
distributions, (2) the amount of the distributions to such a
Participant shall not exceed the amount which the
Participant would have been required to receive, based upon
the Participant's Account balance as of December 31, 1996
under the terms of this Plan as they existed prior to
adoption of the Fifth Amendment, and (3) if, by regulation,
ruling or otherwise, it is established that it is
permissible to delay any distributions for such a
Participant until the Participant terminates employment,
then distributions shall be so delayed. In the case of any
Participant whose distributions commenced before January 1,
1997, distributions shall cease for the 1997 and subsequent
Plan Years if the employee so elects."
5. The following is hereby added to the end of
Section 7.11:
"If an appeal is filed regarding the status of a domestic
relations order following a determination by the Company of
the status of such order, and the Committee deadlocks with
respect to such appeal, then the matter shall not be
referred to a neutral arbitrator. Instead, the
determination by the Company concerning the status of such
domestic relations order shall be considered final."
6. Appendix A, concerning special annual allocations,
is amended by adding the following to the end of the paragraph
entitled "Other Special Annual Allocations":
"The Committee may adopt a Special Annual Allocation which
is designed to resolve situations which occurred in any Plan
Year during the Wage Investment Period even if the situation
occurred before the Plan Year immediately preceding the Plan
Year in which the Committee adopted the Special Annual
Allocation. Thus, for example, if the Committee determines
that, as a result of missing data or a similar reason, a
Participant's Account was not allocated the appropriate
number of shares in 1994, the Committee may adopt a Special
Annual Allocation for 1996 to resolve such situation."
7. Appendix A is amended by adding the following new
paragraph to the end of Appendix A:
"Special Annual Allocations for USERRA.
a. Notwithstanding any provisions of this Plan
to the contrary, contributions, benefits and service
credit with respect to qualified military service will
be provided in accordance with Section 414(u) of the
Internal Revenue Code.
b. The benefits required by subsection (a) above
shall be provided through a Special Annual Allocation
in the year in which the Participant is reemployed
following a period of qualified military service. The
number of shares to be credited to such Participant
under the Special Annual Allocation shall be determined
according to the methods set forth above for the
Special Annual Allocation for 1995. The Compensation
(or, in the case of a member of the IAM Employee Group,
the Wage Investment) for the affected Participant shall
be the Compensation or Wage Investment which the
employee would have received or been credited with
during the period of qualified military service. The
other data used for the Special Annual Allocation shall
be the data applicable to the Plan Year or Plan Years
in which the qualified military service occurred.
Thus, if a Participant is entitled to a Special Annual
Allocation for qualified military service performed in
1995, the Applicable Average Contribution shall be
calculated with respect to allocations in the 1995 Plan
Year. The Special Annual Allocation under this
subsection shall be effective for Participants who
returned to employment with the Company on or after
January 1, 1996. For Participants who return to
employment with the Company on or after October 1,
1994, but before January 1, 1996, shares were
previously credited under the Supplemental Plan, and
such shares shall be contributed to the accounts of
such Participants under this Plan as permitted under
Code Section 414(u)."
IN WITNESS WHEREOF, the Company has caused this Fifth
Amendment to be executed on December 31, 1996.
UAL CORPORATION
/s/ Douglas A. Hacker
---------------------
APPROVED BY:
AIR LINE PILOTS ASSOCIATION,
INTERNATIONAL
/s/ J. Randolph Babbitt
-----------------------
J. Randolph Babbitt, President
/s/ Michael H. Glawe
--------------------
Michael H. Glawe, MEC Chairman
INTERNATIONAL ASSOCIATION
OF MACHINISTS AND
AEROSPACE WORKERS
/s/ Kenneth W. Thiede
---------------------
Exhibit 10.17
FIFTH AMENDMENT
UAL CORPORATION
SUPPLEMENTAL ESOP
(Effective as of July 12, 1994)
By virtue and in exercise of the amending power
reserved to UAL Corporation (the "Company") under Section 13.1(a)
of the UAL Corporation Supplemental ESOP (effective as of July
12, 1994) (the "Plan"), which amending power thereunder is
subject to the approval of the Air Line Pilots Association
International ("ALPA") and the International Association of
Machinists and Aerospace Workers (the "IAM"), the Company hereby
amends the Plan, subject to the approval of ALPA and the IAM, as
follows, effective as of January 1, 1996 (except as specified
below).
1. The following new subsection 1.3(h)A is added
immediately following Section 1.3(h):
"(h)A "Distribution Period" means, the first week of
October, 1996, the first week of December 1996, and the
first week of each of the months of May, June, July, August,
September, October, November and December in 1997 and
subsequent Plan Years."
2. The following new subsection (c) is hereby added
to Section 2.7:
"(c) For a Participant who, on or after October 1, 1994
but before January 1, 1996, returned to employment with the
Company from qualified military service, shares were
initially credited under this Plan on account of such
service. Such shares shall be contributed to the ESOP to
the extent provided in the ESOP pursuant to Code section
414(u). To the extent such shares are contributed to the
ESOP for a Participant, they shall be reduced under this
Plan."
3. Section 3.1(b)(i) is amended to read as follows:
"(i) during the Distribution Period following the Valuation
Date coinciding with or next following the later of (x) the
earlier of the Participant's termination of employment with
the Employer and its Affiliates and the date the Participant
is determined to have a Total Disability, or (y) December
31, 1995, the Company shall pay such Participant (or if such
Participant is not living at the time for payment, such
Participant's Beneficiary) the value of the Participant's
vested Account; and"
4. The following is hereby added to the end of
Section 3.1(b):
"The Committee may, for any Participant or group of
Participants, defer all or part of a distribution to a
subsequent Distribution Period if distribution during the
Distribution Period referred to in clause (i) would not be
practicable (e.g., because necessary information is
unavailable)."
5. Section 3.1(c)(v) is amended to read as follows:
"Notwithstanding the foregoing, any election (or
modification or revocation thereof) under clauses (i) or
(ii) shall be void unless made at least one year prior to
the Participant's termination of employment with the
Employer (and its Affiliates) or prior to February 24, 1995.
In the case of any member of the IAM Employee Group whose
employment with the Employer and its Affiliates is not
terminated at the time of his election, the foregoing
sentence shall not apply. Instead any such election (or
modification or revocation thereof) shall be void unless
made (x) at least one year prior to the Participant's
termination of employment with the Employer (and its
affiliates), or (y) by December 13, 1996. Notwithstanding
the foregoing, any election under clauses (iii) or (iv)
shall be void unless made at least 30 days before the first
day of the Distribution Period in which the distribution
will be made."
IN WITNESS WHEREOF, the Company has caused this Fifth Amendment
to be executed on December 31, 1996.
UAL CORPORATION
/s/ Douglas A. Hacker
---------------------
APPROVED BY:
AIR LINE PILOTS ASSOCIATION,
INTERNATIONAL
/s/ J. Randolph Babbitt
-----------------------
J. Randolph Babbitt, President
/s/ Michael H. Glawe
--------------------
Michael H. Glawe, MEC Chairman
INTERNATIONAL ASSOCIATION
OF MACHINISTS AND
AEROSPACE WORKERS
/s/ Kenneth W. Thiede
---------------------
Exhibit 10.22
PREFERRED STOCK PURCHASE AGREEMENT
----------------------------------
PREFERRED STOCK PURCHASE AGREEMENT dated as of August 12,
1996, between UAL Corporation, a Delaware corporation ("UAL"),
and State Street Bank and Trust Company, a Massachusetts trust
company, acting solely in its capacity as trustee under the Plan
defined below and not in its individual capacity (the "Trustee").
W I T N E S E T H:
WHEREAS, on July 12, 1994, certain transactions contemplated
by the Agreement and Plan of Recapitalization dated March 25,
1994 by and among UAL and the unions representing certain of the
employees of United Air Lines, Inc., as amended, (the
"Recapitalization Agreement") were consummated. (The
recapitalization of UAL, as more fully described in the
Recapitalization Agreement, shall hereinafter be referred to as
the "Transaction");
WHEREAS, in connection with the Transaction, UAL established
the UAL Corporation Employee Stock Ownership Plan (the "Plan"),
which consists of an employee stock ownership plan and a stock
bonus plan; and
WHEREAS, a portion of the employee stock ownership plan
(Part A thereof) forms part of the stock bonus plan, includes a
money purchase pension plan and is intended to qualify as an
employee stock ownership plan under Section 4975(e)(7) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, UAL appointed the Trustee as the trustee of the UAL
Corporation Employee Stock Ownership Plan Trust (the "Trust"),
which was established to hold the assets of the Plan pursuant to
the terms of the Trust Agreement, by and between UAL and the
Trustee (the "Trust Agreement"); and
WHEREAS, Part A of the Plan and Trust Agreement provide that
the assets of the trust created thereunder attributable to the
Plan shall be invested primarily in shares of "employer
securities" of UAL within the meaning of Section 409(l) of the
Code; and
WHEREAS, UAL created a new class of securities designated as
the Class 1 ESOP Convertible Preferred Stock, par value ($0.01)
(the "Class 1 ESOP Convertible Preferred Stock" or the "ESOP
Preferred Stock"); and
WHEREAS, the Recapitalization Agreement provided for, among
other things, the transfer to the Trust of 13,813,282 shares of
the Class 1 ESOP Convertible Preferred Stock in a series of
transactions which shall occur during the 69 months immediately
following the Effective Time (as defined in the Recapitalization
Agreement); and
WHEREAS, the parties to the Recapitalization Agreement have
agreed to reduce the number of shares of Class 1 ESOP Convertible
Preferred Stock to be transferred to the Trust so that the Plan
may continue to satisfy Code Section 415; and
WHEREAS, the parties to the Recapitalization Agreement have
agreed to a corresponding increase in the number of shares of
Class 2 ESOP Convertible Preferred Stock to be issued; and
WHEREAS, UAL now wishes to sell and the Trustee now wishes
to purchase 2,367,575 shares of the Class 1 ESOP Convertible
Preferred Stock from UAL, in the amount, at the purchase price
and subject to the other terms and conditions as set forth in
this Agreement;
NOW, THEREFORE, in consideration of these premises and the
mutual promises contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. Purchase; Purchase Price. Subject to the terms and
conditions of this Agreement, the Trustee shall purchase on
behalf of the Plan (the "Purchase") from UAL, and UAL shall issue
and sell to the Trustee an aggregate of 2,367,575 shares of Class
1 ESOP Convertible Preferred Stock (the "Shares") for an
aggregate purchase price (the "Purchase Price") of
$574,255,316.25.
2. Closing; Payment. The Purchase shall be consummated
(the "Closing") at or about August 13, 1996 at the offices of
UAL, or at such time, date or place as shall be fixed by an
agreement of UAL and the Trustee. The date of the Closing shall
hereinafter be referred to as the "Closing Date." At the Closing,
UAL shall deliver to the Trustee a certificate or certificates
representing the Shares, which shall be registered in the name of
the Trustee, as trustee under the Trust, or in the name of its
nominee, against delivery to UAL by the Trustee of a check for a
dollar amount equal to the par value per Share times the number
of Shares described in Section 1 above (the "Cash Amount"),
representing the aggregate par value of the Shares and a
promissory note of the Trust (the "ESOP Note") substantially in
the form set forth in Exhibit A hereto, in an amount equal to the
difference between the Purchase Price and a dollar amount equal
to the par value per Share times the number of Shares described
in Section 1 above. Notwithstanding the foregoing, UAL may, with
the consent of the Trustee, accomplish the transfer of shares to
the Trustee by book entry, in which event a cross receipt in the
form set forth in Exhibit B hereto shall be executed by the
parties. UAL shall pay all stamp and other transfer taxes, if
any, that may be payable in respect of the issuance, sale and
delivery of the Shares and shall be entitled to any refund
thereof, and shall present the Trustee with evidence that such
transfer taxes either have been paid or are not due.
3. Representations and Warranties of UAL. UAL hereby
represents and warrants to the Trustee as follows:
UAL has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of
Delaware with corporate power and authority, including
governmental licenses, authorizations, consents and approvals, to
own, lease and operate its properties and conduct its business
except for licenses, authorizations, consents and approvals the
absence of which will not have a Material Adverse Effect. For
the purposes of this Agreement, "Material Adverse Effect" shall
mean any change or effect the consequence of which is materially
adverse to the condition (financial or otherwise), business,
assets or results of operations of UAL and its Subsidiaries (as
defined below) taken as a whole. UAL is duly qualified as a
foreign corporation to transact business and is in good standing
in each jurisdiction where its ownership or leasing of properties
or the conduct of its business requires such qualification,
except for the jurisdictions where the failure to be so qualified
would not have a Material Adverse Effect.
I.A.3.1 Except as set forth in Schedule 3.2 hereto,
the execution, delivery and performance of this Agreement and all
other documents or instruments to be executed or delivered by UAL
in connection with this Agreement are within UAL's powers and
have been duly authorized by all necessary corporate action.
This Agreement and all other documents or instruments to be
executed or delivered by UAL in connection with this Agreement
are, assuming due authorization, execution and delivery by the
Trustee, valid and binding upon UAL and enforceable against UAL
in accordance with their respective terms except as the
enforceability thereof may be limited by the effect of any
applicable bankruptcy, insolvency, fraudulent-conveyance,
reorganization, moratorium and similar laws affecting creditors'
rights generally, ERISA and by general principles of equity
(regardless of whether considered in a proceeding at law or in
equity).
I.A.3.2 Except as set forth in Schedule 3.3 hereto,
the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not
conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under (i) the Certificate
of Incorporation or Bylaws, each as amended, of UAL or any of its
Subsidiaries (as hereinafter defined), or (ii) except as set
forth in Schedule 3.3(ii) hereto, any provision of any indenture,
mortgage, deed of trust, agreement, instrument, order,
arbitration award, judgment or decree to which UAL or any of its
Subsidiaries is a party or by which any of their respective
assets are bound, or (iii) any material statute, material rule or
material regulation applicable to UAL or any of its Subsidiaries
of any court, bureau, board, agency or other governmental body
having jurisdiction.
I.A.3.3 As of the Closing Date, the authorized,
issued and outstanding capital stock of UAL shall be as set forth
in Schedule 3.4 hereto, and UAL shall have no obligations to
issue any additional shares pursuant to any options, warrants,
conversion rights or other arrangements except as set forth in
Schedule 3.4 hereto, and all shares of issued and outstanding
capital stock of UAL shall have been duly authorized and are
fully paid and nonassessable.
I.A.3.4 Each Subsidiary is a corporation or
partnership duly incorporated or formed, validly existing and in
good standing under the laws of its jurisdiction of incorporation
or formation, has all requisite power and authority including all
governmental licenses, authorizations, consents and approvals
required to own, lease and operate its properties (except those
the absence of which would not have a Material Adverse Effect)
and to conduct its business and is in good standing in each
jurisdiction where the character of the property owned or leased
by it or the nature of its activities make such qualification
necessary, except for those jurisdictions where failure to be so
qualified would not, individually or in the aggregate, have a
Material Adverse Effect. For purposes of this Agreement,
"Subsidiary" means any entity of which securities or other
ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing
similar functions are directly or indirectly owned by UAL prior
to the Closing Date. All Subsidiaries and their respective
jurisdictions of incorporation or formation are identified on
Schedule 3.5 hereto.
Except as otherwise disclosed on Schedule 3.5, all of the
outstanding capital stock of, or other ownership interests in,
each Subsidiary, is owned by UAL, directly or indirectly, free
and clear of any liens, claims, charges and encumbrances
(collectively "Liens") and free of any other limitation or
restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other ownership
interests). Except as disclosed on Schedule 3.5, there are
outstanding (i) no securities of UAL or any Subsidiary
convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in any Subsidiary,
and (ii) no options, subscriptions, warrants or other rights,
agreements, arrangements or commitments of any character to
acquire from UAL or any Subsidiary, and no other obligation of
UAL or any Subsidiary to issue, any capital stock, voting
securities or other ownership interests in, or any securities
convertible into or exchangeable or exercisable for any capital
stock, voting securities or ownership interest in, any Subsidiary
(the items in clauses (i) and (ii) being referred to collectively
as the "Subsidiary Securities"). There are no outstanding
obligations of UAL or any Subsidiary to repurchase, redeem or
otherwise acquire any outstanding Subsidiary Securities.
I.A.3.5 As of the Closing Date, the Shares (i) shall
have the rights, preferences and qualifications set forth in the
restated Certificate of Incorporation of UAL Corporation, (a copy
of which is attached hereto as Exhibit C), (ii) shall have been
duly and validly authorized and (iii) when issued and delivered
to the Trustee in exchange for the Cash Amount and the ESOP Note,
will be in proper form, validly issued, fully paid and
nonassessable. As of the Closing Date, UAL shall have full right
and authority to issue, sell, transfer, and deliver the Shares
and will effectively transfer to the Trustee, on the Closing
Date, the full right, title and interest therein and thereto,
free and clear of all Liens, except for (A) beneficial interests
accruing to participants in the Plan and their beneficiaries and
(B) any Liens created or imposed by the Trustee on behalf of the
Trust.
I.A.3.6 As of the Closing Date, the shares of Common
Stock (as hereinafter defined) into which the Shares are
convertible, shall be duly and validly authorized and reserved
for issuance and, when issued upon such conversion, will be
validly issued, fully paid and nonassessable and upon delivery to
the Trustee, the Trust will acquire full right, title and
interest to such shares of Common Stock free and clear of all
Liens, except for (i) beneficial interests accruing to the
participants in the Plan and their beneficiaries and (ii) any
Liens created or imposed by the Trustee on behalf of the Trust.
I.A.3.7 No authorization, approval or consent of, or
filing with, any governmental authority or agency or other third
party, is required in connection with the sale of the Shares by
UAL hereunder or the conversion of the Shares into Common Stock
except for (i) any of such as shall have been made or obtained
prior to the Closing, (ii) any of such relating to the listing on
any securities exchange of any shares of UAL common stock, par
value $.01 per share (the "Common Stock"), to be delivered upon
conversion of Shares and (iii) filings with and/or approvals of
the Internal Revenue Service. The Shares are being issued
pursuant to a valid exemption from registration under the
Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws.
I.A.3.8 UAL's filings with the Securities and
Exchange Commission ("Commission") for the years 1993, 1994 and
1995, respectively, at the time they were filed with the
Commission, (i) complied in all material respects with the
requirements of the Securities Act, or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as appropriate, and
the Rules and Regulations of the Commission respectively
promulgated thereunder, (ii) in the case of filings under the
Exchange Act, did not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements made therein, in light of the circumstances under
which they were made, not misleading and (iii) no registration
statement, as amended or supplemented, if applicable, filed
pursuant to the Securities Act as of the date such statement,
amendment or supplement became effective contained any untrue
statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading.
I.A.3.9 The consolidated financial statements of UAL,
together with related notes, schedules and reports thereon of
independent public accountants for the years 1993, 1994 and 1995,
respectively (collectively, the "Financial Statements"), included
in UAL's Annual Reports on Form 10-K and Quarterly Reports on
Form 10-Q ("Reports") for the years ended December 31, 1993, 1994
and 1995, respectively, all of which Reports previously have been
delivered to the Trustee, present fairly (except as may be
indicated in the notes thereto and subject to normal immaterial
year-end audit adjustments in the case of any unaudited interim
Financial Statements) the consolidated financial position and the
consolidated results of operation of UAL and its consolidated
Subsidiaries at the indicated dates and for the indicated
periods. The Financial Statements have been prepared in
accordance with generally accepted accounting principles
consistently applied throughout the periods involved except as
otherwise noted therein. UAL and its Subsidiaries considered as
one enterprise have no material liabilities or obligations,
contingent or otherwise, that are not fully disclosed in the
Financial Statements or the Reports.
I.A.3.10 Except as disclosed on Schedule 3.11 hereto,
since December 31, 1995, (i) there has been no event, and no
state of circumstances has existed, that has had or will, or
could reasonably be expected to, have a Material Adverse Effect,
(ii) there has not been any material transaction entered into by
UAL or any of its Subsidiaries, other than transactions in the
ordinary course of business or other than the transactions
contemplated in this Agreement or the Transaction, and (iii)
except for regular dividends on shares of its outstanding common
stock and preferred stock, there has been no dividend or
distribution of any kind declared, paid or made by UAL on any
class of its capital stock other than the distributions
contemplated by the Transaction.
I.A.3.11 Except as set forth in Schedule 3.12 there is
no action, suit or proceeding before or by any court or
government or administrative agency or body, domestic or foreign,
now pending or, to the best knowledge of UAL, threatened against
or affecting UAL or any of its Subsidiaries, which might have a
Material Adverse Effect.
I.A.3.12 UAL and its Subsidiaries hold all
certificates, authorizations or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary
to conduct the business now operated by them the absence of
which, individually or in the aggregate, would have a Material
Adverse Effect, and neither UAL nor any of its Subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit which,
individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material
Adverse Effect. UAL and its Subsidiaries are in compliance with
all rules, laws and regulations related to the operation of the
business of UAL and its Subsidiaries, except for instances of
noncompliance which, individually or in the aggregate, would not
have a Material Adverse Effect.
I.A.3.13 The Plan has been duly authorized by all
corporate action and Part A constitutes an employee stock
ownership plan within the meaning of Section 4975(e)(7) of the
Code and Section 407(d)(6) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), Part B (that portion
of the stock bonus plan which does not constitute an employee
stock ownership plan) constitutes a stock bonus plan under the
Code and the Plan will qualify under Section 401(a) of the Code
taking into account amendments which may be reasonably requested
by the Internal Revenue Service, but no representation or
warranty is made as to the compliance of the Plan in operation
under the referenced Code and ERISA sections; the Trust Agreement
has been duly authorized by all necessary corporate action on the
part of UAL; all contributions by UAL to the Plan and all
dividends paid on the ESOP Preferred Stock which are used by the
Trust to make the required principal and interest payments with
respect to the ESOP Note will be deductible by UAL or its
Subsidiaries for federal income tax purposes under Section 404 of
the Code (as in effect on the date of the Closing), except to the
extent there are insufficient "earnings and profits" under the
Code for the dividends to be deductible; and the ESOP Preferred
Stock constitutes "employer securities" within the meaning of
Section 409(l) of the Code.
I.A.3.14 There is no investment banker, broker or
finder which has been retained by or is authorized to act on
behalf of UAL or any Subsidiary or, to the knowledge of UAL, any
CRS Company who might be entitled to a fee or commission from
UAL, either Union or any affiliate of either of them upon
consummation of the transactions contemplated by this Agreement,
based upon arrangements made by or on behalf of UAL. For the
purposes of this Section 3.15, "CRS Company" and "Union" shall
have the respective meanings assigned to such terms in the
Recapitalization Agreement.
4. Representations and Warranties of The Trustee, as
Trustee. The Trustee, in its capacity as such, represents and
warrants as follows;
I.A.4.1 The Trustee (i) is a duly organized and
validly existing trust company in good standing and with full
authority to act as Trustee and exercise trust powers under the
laws of the Commonwealth of Massachusetts and (ii) has full
corporate power and authority to execute and deliver the Trust
Agreement and to carry out the transactions contemplated thereby.
I.A.4.2 The execution, delivery and performance of
this Agreement will not violate (i) the Trustee's Charter or
Bylaws, each as amended or restated to date, (ii) any provision
of any indenture, mortgage, deed of trust, agreement, instrument,
order, arbitration award, Judgment or decree to which the Trustee
or the Trust is a party or by which it or the Trust or any of
their respective assets are bound, or (iii) any statute, rule or
regulation applicable to the Trustee or the Trust of any court,
bureau, board, agency or other governmental body having
jurisdiction, which conflict, breach or default might have a
material adverse effect.
I.A.4.3 This Agreement and the Trust Agreement have
been duly executed and delivered by the Trustee on behalf of the
Trust and, assuming due authorization, execution and delivery by
UAL, each constitutes the legal, valid and binding obligation of
the Trust enforceable against the Trustee in accordance with
their respective terms, except as the enforceability thereof may
be limited by the effect of any applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors rights generally, ERISA and by
general principles of equity (regardless of whether considered in
a proceeding at law or in equity).
I.A.4.4 The Trustee is acquiring the shares on behalf
of the Plan pursuant to the Trust Agreement and the Plan solely
for investment purposes and not with a view toward, or for sale
in connection with, any public distribution thereof; provided,
however, nothing herein shall prohibit the Trustee from disposing
of any or all of the Shares.
I.A.4.5 No authorization, approval or consent of any
governmental authority or agency is necessary to be obtained by
the Trustee or the Plan in connection with the purchase of the
Shares by the Trustee on behalf of the Plan hereunder.
I.A.4.6 The Trustee, at the expense of UAL, has
retained independent legal counsel knowledgeable in matters
regarding ERISA and Code fiduciary responsibilities and has
retained an independent financial advisor to advise the Trustee
regarding the transactions contemplated by this Agreement.
I.A.4.7 The Trustee has not employed any broker,
finder or agent, or agreed to pay or incurred any brokerage fee,
finder's fee, commission or other similar form of compensation in
connection with this Agreement or the transactions contemplated
hereby.
I.A.4.8 Trustee has received an opinion of Houlihan,
Lokey, Howard and Zukin, Inc., financial advisor to the Trustee,
to the effect that (i) the Purchase Price is not greater than
fair market value, (ii) the Transaction is fair to the Plan from
a financial point of view, (iii) the conversion price with
respect to the Shares is reasonable and (iv) the interest rate on
the ESOP Note is not unreasonable.
5. Conditions to Closing.
I.A.5.1 Conditions to the Trustee Is Obligation at
Closing. The obligations of the Trustee hereunder are subject to
the fulfillment at or before the Closing of each of the following
conditions:
(a) The representations and warranties contained
in Section 3 hereof shall be true on and as of the Closing Date
and, the Trustee shall have been furnished with a certificate,
dated the Closing Date, to such effect, signed by an authorized
officer of UAL.
(b) The Trustee shall have received a cash
contribution to the Plan at least equal to the Cash Amount.
(c) No order of any court or administrative
agency shall be in effect which restrains or prohibits the
transactions contemplated by this Agreement, and no suit, action
or other proceedings by any governmental body or other person
shall have been instituted which questions the validity or
legality of the transactions contemplated by this Agreement which
suit, action or proceeding the Trustee reasonably determines,
upon advice of counsel, is more likely than not to successfully
challenge the validity or legality of the transactions
contemplated by this Agreement or otherwise result in a Material
Adverse Effect.
(d) Neither the Trustee nor UAL shall have
determined in good faith that the purchase of the Shares would
result in a "prohibited transaction" under ERISA or otherwise
violate the provisions of applicable law.
(e) The Trustee shall have received UAL's most
recent annual report on form 10-K and any subsequently filed
Quarterly Reports on Form 10-Q.
(f) The Trustee shall have received from
Kirkpatrick & Lockhart, counsel to the Trustee, an opinion in
substantially the form set forth in Schedule 5.1(f) hereto.
(g) The Trustee shall have received from
Francesca M. Maher, Vice President-Law and Corporate Secretary,
the opinion in substantially the form set forth in Schedule
5.1(g) hereto.
(h) The Trustee shall have received an opinion of
its financial advisor, in substantially the form set forth in
Schedule 5.1(h) hereto.
(i) The Trustee shall have made a good faith
determination that the purchase of the Shares contemplated
hereunder and the consummation of all other transactions
contemplated by the Agreement are prudent and in the best
interests of the Plan participants. In the event the Trustee is
unable to consummate the purchase of the Shares described in
Section 1 hereof at the Purchase Price by reason of the failure
of one or more of the conditions set forth in Sections 5.1(d),
(h) and (i) hereof, the Trustee agrees to negotiate in good faith
with UAL in an attempt to arrive at a purchase price for the
Shares at which the Trustee would consummate the purchase of
Shares contemplated by this Agreement.
(j) UAL shall have certified to the Trustee that
it has determined that it is reasonably likely to have sufficient
earnings and profits such that dividends paid on the Class 1 ESOP
Convertible Preferred Stock are reasonably likely to be
deductible under Section 404 of the Code.
I.A.5.2 Conditions to UAL's Obligations at Closing.
The obligations of UAL hereunder are subject to the fulfillment
at or before the Closing of each of the following conditions:
(a) The representations and warranties contained
in Section 4 hereof shall be true on and as of the Closing and,
UAL shall have been furnished with a certificate dated the
Closing Date to such effect, signed by an authorized officer of
the Trustee.
(b) No order of any court or administrative
agency shall be in effect which restrains or prohibits the
transactions contemplated by this Agreement, and no suit, action
or other proceedings by any governmental body or other person
shall have been instituted which questions the validity or
legality of the transactions contemplated by this Agreement which
suit, action or proceeding UAL reasonably determines, upon advice
of counsel, is more likely than not to successfully challenge the
validity or legality of the transactions contemplated by this
Agreement or otherwise result in a Material Adverse Effect.
(c) Neither the Trustee nor UAL shall have
determined in good faith that the purchase of the Shares would
result in a "prohibited transaction" under ERISA or otherwise
violate the provisions of applicable law.
(d) UAL shall have received an opinion of
Kirkpatrick & Lockhart, counsel to the Trustee, in the form set
forth in Schedule 5.2(d) hereto.
(e) The Trustee shall have delivered to UAL a
certification that the conditions set forth in section 5.1(d) and
section 5.1(i) have been satisfied.
6. Covenants of Trustee. The Trustee hereby covenants and
agrees as follows:
(a) Except as otherwise provided in the ESOP, all
cash contributions (including any earnings on such contributions)
that are received by the Trust and cash dividends (including any
earnings on such dividends) that are received by the Trust with
respect to the Class 1 ESOP Convertible Preferred Stock or Common
Stock issued upon conversion thereof will be, to the extent
permitted by law, applied solely for the purpose of making
principal and interest payments on the ESOP Note.
(b) The Trustee shall not transfer or otherwise
dispose of any shares of Common Stock issued upon conversion of
the Class 1 ESOP Convertible Preferred Stock unless such
securities have been registered under the Securities Act of 1933,
as amended, and any applicable state securities laws or pursuant
to an exemption or exemptions from such registration.
(c) The Trustee agrees that UAL may (with the
consent of the Air Line Pilots Association, International and the
International Association of Machinists and Aerospace Workers if
and to the extent such consent is required by the Plan) extend
the maturity of the ESOP Note for up to four (4) years, provided
that the interest rate on the ESOP Note, as extended, is
determined by the Trustee to be reasonable at the time of
extension.
7. Covenants of UAL. UAL hereby covenants and agrees as
follows:
(a) So long as any principal or interest amount
of the ESOP Note or any note representing a refinancing of the
ESOP Note remains unpaid, UAL shall use reasonable efforts to
cause Part A of the Plan to maintain its qualification as an
employee stock ownership plan within the meaning of Section
4975(e)(7) of the Code.
(b) So long as any principal or interest amount
of the ESOP Note or any note representing a refinancing of the
ESOP Note remains unpaid, UAL and its Subsidiaries shall make
contributions to the Plan which, when combined with any dividends
received by the Plan that can be used for the payment of such
debt, are sufficient to allow the Trustee to make, in a timely
fashion all scheduled principal and interest payments with
respect to the ESOP Note or any note representing a refinancing
of the ESOP Note; provided, however, that any contribution to the
Plan shall be limited to the extent that such contribution would
cause the aggregate contributions made by UAL and its
Subsidiaries for the relevant Plan year to exceed the limitations
set forth in Sections 404 or 415 of the Code. Any contributions
limited or not made in a timely fashion pursuant to the preceding
sentence shall be (i) carried over and paid to the Plan as soon
as is practicable in connection with contributions to the Plan
and (ii) increased by an amount sufficient for the Trustee to pay
any increased interest or other costs arising under the ESOP Note
from the failure to make any payment thereunder when due. The
Trustee shall be entitled to reimbursement upon demand for
reasonable attorney fees and other reasonable costs of collection
in enforcing the provisions of this Section 7(b).
(c) Registration of the Common Stock. As and if
required by applicable securities laws, UAL shall at all times
maintain an effective registration statement under the Securities
Act and timely comply with the reporting requirements under the
Exchange Act with respect to the shares of Common Stock into
which the Shares are convertible. The Trustee will provide UAL
with any information about the Trustee or such proposed sale
required to be included in such registration statement. The
Trustee will, upon receipt of notice from UAL that any such
registration statement includes an untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make any statement therein not
misleading, discontinue the distribution of Common Stock
thereunder until such misstatement or omission is eliminated.
The Trustee further agrees not to effect any public sale or
distribution of Common Stock without the consent of UAL during
the seven days prior to or ninety days after any registration
statement relating to an underwritten sale of securities of UAL
has become effective. UAL shall obtain any other federal, state
or local approvals as may be necessary from time to time to
enable the Trust to consummate any desired conversion or
disposition of the shares of Common Stock into which the Shares
are convertible.
8. Restrictive Legend. The Trustee understands that the
certificates representing the Shares, when issued, will bear the
following legend and that a notation restricting their transfer
will be made on the stock transfer books of UAL:
"The shares of stock represented by this
certificate have not been registered under the
Securities Act of 1933, as amended. Such shares may
not be sold, assigned, pledged or otherwise transferred
in the absence of an effective registration statement
under said Securities Act covering the transfer or an
opinion of counsel satisfactory to the issuer that
registration under said Securities Act is not required.
Notice
------
The shares, of stock represented by this
certificate are subject to a security interest in favor
of UAL Corporation."
9. Expenses. Whether or not the transactions contemplated
by this Agreement shall be consummated, UAL shall, as provided
for in the applicable engagement letter between UAL and the
Trustee (the "Engagement Letter"), pay the expenses incurred by
the Trustee in connection with the authorization, preparation,
negotiation, execution and performance of this Agreement and
related transactions.
10. Integration Amendment. This Agreement (including the
documents delivered pursuant hereto), together with the Plan,
Trust Agreement and Engagement Letter, constitutes the entire
agreement and understanding between the parties hereto relating
to the purchase of the shares of ESOP Preferred Stock and
supersedes any prior agreement or understanding relating in any
way to the transaction contemplated hereby. This Agreement may
be modified or amended only by a written instrument executed by
or on behalf of the parties hereto. The headings and captions
contained herein are solely for convenience of reference and do
not constitute a part of this Agreement or affect in any way its
meaning or construction.
11. Savings Clause. The invalidity, illegality or
enforceability of any one or more of the provisions of this
Agreement shall in no way affect or impair the validity and
enforceability of the remaining provisions hereof. In the event
any such provision shall be so declared unenforceable due to its
scope or breadth, it shall be narrowed to the scope or breadth
permitted by law.
12. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and
all of which together shall constitute one and the same
instrument. It shall not be necessary that any single
counterpart hereof be executed by all parties so long as each
party executed at least one counterpart.
13. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of Illinois without regard
to any principles of conflicts of law.
14. Survival of Representations, Warranties and Covenants.
All covenants contained in this Agreement (including in any
certificates delivered hereunder) shall survive the Closing or,
in the case of Section 9, Section 13 and Section 14 hereof, the
sooner termination of this Agreement. Notwithstanding the
Closing, or the sooner termination of this Agreement or any
investigation at any time made by or on behalf of either party,
UAL or the Trustee shall be liable for damages arising from its
breaches of representations or warranties under this Agreement
(including in any certificates delivered hereunder) which
breaches shall not be considered waived by consummation of the
transactions contemplated hereby, provided, however, that UAL and
the Trustee shall be liable only to the extent that notice
therefor is asserted by the other in writing and delivered prior
to the expiration of forty-two (42) months from the Closing or
sooner termination of this Agreement.
15. Notices. Any notice or other communication required or
permitted hereunder shall be in writing, either delivered by
hand, by mail, or by telex, telefax or telegram (charges
prepaid), and any such notice shall be effective when received at
the address specified below (or, if by mail, three business days
after deposited in the U.S. mails, registered or certified mail,
postage prepaid and return receipt requested):
By Mail
-------
If to UAL: UAL Corporation
- --------- P. 0. Box #66919
Chicago, IL 60666
Attn: Corporate Secretary
By Courier
----------
UAL Corporation
1200 Algonquin Road
Elk Grove Township, IL 60007
Attn: Corporate Secretary
If to the Trustee: State Street Bank and Trust Company
- ----------------- Retirement Investment Services
Batterymarch Park III
Three Pine Hill Drive
Quincy, MA 02169
Attn: UAL ESOP Administration
With a copy to: Kirkpatrick & Lockhart
1500 Oliver Building
Pittsburgh, PA 15222
Attn: Charles R. Smith, Esquire
Addresses may be changed by written notice given pursuant to this
Section. Any notice given hereunder may be given on behalf of
any party by his counsel or other authorized representatives.
16. Successors and Assigns: Assignability. This Agreement
shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto, and their respective legal
representatives, successors and assigns. This Agreement (i)
shall not confer upon any person other than the parties hereto
and their respective successors and assigns any rights or
remedies hereunder and (ii) shall not be assignable by operation
of law or otherwise by any party hereto.
17. Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto shall use
all reasonable efforts to take, or cause to be taken, all action
and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions
contemplated by this Agreement.
18. Certain Limitations. The execution and delivery of
this Agreement and the performance by the Trustee of this
Agreement have been, or will be, effected by the Trustee solely
in its capacity as Trustee and not individually.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereof have duly executed
and delivered this Agreement as of the date first above written.
UAL CORPORATION
By: /s/ Douglas A. Hacker
---------------------
Name: Douglas A. Hacker
Title: Senior Vice President
and Chief Financial Officer
State Street Bank and Trust
Company, solely in its capacity as
Trustee under the UAL Corporation
Employee Stock Ownership Plan Trust
and not individually
By: /s/ Kelly Q. Driscoll
---------------------
Name: Kelly Q. Driscoll
Title: Vice President
Exhibit 10.25
As Amended
February 29, 1996
FIRST REFUSAL AGREEMENT
This Agreement (the "Agreement") has been made and entered
into as of this 12th day of July, 1994 by and among UAL
Corporation, a Delaware corporation (the "Company"), The Air Line
Pilots Association, International ("ALPA"), pursuant to its
authority as the collective bargaining representative for the
crafts or class of pilots employed by United Airlines, Inc.
("United"), and The International Association of Machinists and
Aerospace Workers ("IAM"), pursuant to its authority as the
collective bargaining representative for the crafts or classes of
mechanics and related employees, ramp and stores employees, food
service employees, dispatchers and security officers employed by
United, and the Salaried/Management Employee Director (as defined
in Article FIFTH, Section 1.66 of the Restated Certificate (as
defined below)) on behalf of the salaried and management
employees of United who are not represented by any collective
bargaining organization (the "SAM") (ALPA, IAM and the SAM,
together, the "Employee Groups").
WHEREAS, pursuant to the terms of and schedules to the
Agreement and Plan of Recapitalization, dated as of March 25,
1994, by and among the Company, ALPA and the IAM (as amended, the
"Recapitalization Agreement"), including the terms of the
restated certificate of incorporation of the Company to be
effective as of the Effective Time (as defined in the
Recapitalization Agreement) (the "Restated Certificate"), neither
(i) a Non-Dilutive Issuance (as defined in Article FIFTH, Section
3.4(b)(vii) of the Restated Certificate) nor (ii) the issuance of
Permitted Bankruptcy Equity (as defined in Article FIFTH, Section
3.4(b)(vii)(B) of the Restated Certificate) (a "Bankruptcy
Issuance") shall constitute an Other Extraordinary Matter (as
defined in Article FIFTH, Section 3.4(b) of the Restated
Certificate) if, among other things, such issuance is subject to
the right of first refusal provided for hereunder; and
WHEREAS, the parties hereto have entered into this Agreement
in order to effectuate the terms and intent of the
Recapitalization Agreement and the Restated Certificate with
respect to the Company's grant of such right of first refusal to
the Employee Groups in connection with such Non-Dilutive Issuance
and/or such Bankruptcy Issuance;
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual covenants herein contained and other good and valuable
consideration the receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Right of First Refusal.
A. If, during the term of this Agreement, the Company
proposes to issue Equity Securities (as defined in Article FIFTH,
Section 1.37 of the Restated Certificate) pursuant to a
transaction which would constitute an Other Extraordinary Matter
pursuant to Article FIFTH, Section 3.4(b) of the Restated
Certificate or would not constitute an Other Extraordinary Matter
pursuant to Article FIFTH, Section 3.4(b)(vii)(A) or (B) of the
Restated Certificate (a "Proposed Equity Issuance"), the Company,
prior to making such Proposed Equity Issuance, shall provide each
of the Employee Groups with a written statement of the specific
terms of such Proposed Equity Issuance (the "Proposed Sale
Notice"); provided, however, that the issuance of Equity
Securities in exchange for the Series A Convertible Preferred
Stock, without par value (the "Series A Preferred Stock") of the
Company, or any underlying Equity Security upon the conversion of
any Equity Security so issued in exchange, shall not constitute a
Proposed Equity Issuance; provided, further, that the issuance of
Equity Securities in the four-for-one stock split in the form of
a stock dividend of Common Stock, $.01 par value ("Common
Stock"), on or with respect to the Common Stock of the Company,
and approved at the February 29, 1996 meeting of the Board of
Directors of the Company (the "Stock Split"), shall not
constitute a Proposed Equity Issuance. Each of the Employee
Groups shall then have 30 days to provide to the Company a
binding commitment to purchase up to its respective Proportionate
Percentage (as defined in subsection D below) of the Equity
Securities proposed to be issued in such Proposed Equity Issuance
on terms that are Equivalent (as defined in subsection E below)
to the terms set forth in the Proposed Sale Notice (the "Purchase
Commitment"), and the Company shall not consummate the Proposed
Equity Issuance during such 30 day period. If the Company
consummates a Proposed Equity Issuance within 180 days of the end
of the 30 day notice period with respect thereto, it shall honor
all the timely Purchase Commitments and shall reduce the amount
of securities offered pursuant to the Proposed Equity Issuance by
the amount of securities covered by such Purchase Commitments.
B. In addition to and not in limitation of the foregoing,
if one or more Employee Groups submit a Purchase Commitment
within the 30 day period provided for in subsection A above and
any other Employee Group either (i) indicates in writing during
such period that it does not intend to submit a Purchase
Commitment for all of its Proportionate Percentage of the
Proposed Equity Issuance or (ii) does not submit a Purchase
Commitment for all of its Proportionate Percentage of the
Proposed Equity Issuance within such 30 day period, then the
Company, prior to consummating a Proposed Equity Issuance, must
provide each of the Employee Groups that submitted a Purchase
Commitment for all of its Proportionate Percentage of the
Proposed Equity Issuance with the opportunity to provide an
additional purchase commitment with respect to the portion of the
Proposed Equity Issuance that is not subject to a Purchase
Commitment (an "Additional Purchase Commitment") within the last
to expire of (a) 15 days after receipt of written notice from the
Company of the opportunity to make an Additional Purchase
Commitment and (b) the unexpired portion of the 30 day period
referred to in subsection A above which remains after receipt of
written notice from the Company that any portion of the Proposed
Equity Issuance is not subject to a Purchase Commitment from any
other Employee Group (such longer period, the "APC Period"). The
Company shall not consummate the Proposed Equity Issuance during
such APC Period and if the Company consummates a Proposed Equity
Issuance within 180 days of the end of the notice period referred
to in the preceding sentence, it shall honor all the timely
Additional Purchase Commitments and shall reduce the amount of
securities offered pursuant to the Proposed Equity Issuance to
any person or entity other than the Employee Groups by the amount
of securities covered by such Additional Purchase Commitments.
C. Notwithstanding anything set forth in subsection B to
the contrary, if more than one Employee Group submit Additional
Purchase Commitments which in the aggregate are in excess of the
securities being offered pursuant to the Proposed Equity
Issuance, the Company shall accept such Additional Purchase
Commitments in proportion to the relative proportion that such
Employee Groups Proportionate Percentages bear to each other;
provided, however, that in no event shall any Employee Group be
obligated to purchase Equity Securities in excess of the amount
set forth in its Additional Purchase Commitment.
D. For the purposes of this Agreement, "Proportionate
Percentage" shall mean, for each of the Employee Groups, the
following:
ALPA: 46.23%
IAM: 37.13%
SAM: 16.64%
E. For the purpose of this Agreement,"Equivalent" shall
mean, in connection with a Proposed Equity Issuance, a Purchase
Commitment on substantially the same terms as that set forth in a
Proposed Sale Notice. If any Proposed Sale Notice provides for
consideration other than cash to be paid to the Company (the "Non-
Cash Consideration"), a Purchase Commitment must provide for
consideration to be paid to the Company, whether in cash or
otherwise, with a fair market value, as determined by the board
of directors of the Company, equal to the Non-Cash Consideration
to be paid to the Company pursuant to the Proposed Sale Notice in
order for such Purchase Commitment to be deemed Equivalent for
the purpose of subsection A above.
F. In the event that no Employee Group submits a Purchase
Commitment within the time period provided for in subsection A
above or the Purchase Commitments and Additional Purchase
Commitments, if any, submitted are for less than all of the
securities being offered in the Proposed Equity Issuance, the
Company may then consummate the Proposed Equity Issuance of such
securities not subject to Purchase Commitments or Additional
Purchase Commitments only upon the terms set forth in the
Proposed Sale Notice. Such Proposed Equity Issuance may not be
consummated unless it is consummated (i) within 180 days after
the later of the 30 day period provided for in subsection A above
or, if applicable, the APC Period provided for in subsection B
above and (ii) on the specific terms set forth in the Proposed
Sale Notice. Any subsequent Proposed Equity Issuance proposed by
the Company shall be subject to each of the provisions and
requirements of this Section 1 as if the prior Proposed Equity
Issuance that was not consummated for any reason never was
proposed by the Company.
G. Notwithstanding anything contained in this Section 1 to
the contrary, the provisions of this Section 1 shall be
inapplicable to issuances of Equity Securities (a) in accordance
with Article FIFTH, Subsection 3.4(b)(vii)(C) of the Restated
Certificate, (b) in exchange for the Series A Preferred Stock or
upon the conversion of any Equity Security so issued in exchange,
or (c) in connection with the Stock Split.
H. The Salaried/Management Employee Director may consult
with the senior executive of United having responsibility for
human resources concerning the exercise of any rights under this
Agreement. The Company shall assist the Salaried/Management
Director in the exercise of such rights, including providing
administrative and logistical support in disseminating Proposed
Sale Notices to the Salaried/Management Employees and collating
and processing any Purchase Commitments and Additional Purchase
Commitments received from such employees and, if requested, shall
similarly assist ALPA and the IAM.
I. To the extent consistent with its policies and
practices, United may, but shall not be obligated to, assist the
SAM Employee Group (to the same extent that either of the other
Employee Groups assists its members) in the exercise of their
rights under this Agreement in order to enable them to consummate
their Purchase Commitments made hereunder.
2. Term. This Agreement shall terminate and be of no further
force or effect upon the Termination Date (as defined in the
Restated Certificate).
3. Assignments. All right, title and interest in and to, and
all benefits and obligations arising under, this Agreement may be
assigned in whole or in part by any of the Employee Groups to any
of the Existing Plans and/or the ESOPs (as defined in Article
FIFTH, Sections 1.41 and 1.39 of the Restated Certificate,
respectively) without the consent of any other party hereto and
may not otherwise be assigned.
4. Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns. This Agreement is being
entered into for the benefit of the parties hereto (other than
the Salaried/Management Director) and for the Employee Groups
named herein. The Salaried/Management Director is not a party to
this Agreement in a personal capacity but only in the capacity of
the Salaried/Management Director as the nominal representative of
the SAM Employee Group to acknowledge their acceptance of the
benefits of this Agreement. Upon the replacement of the
individual named herein as the Salaried/Management Director, each
such successor to the office of Salaried/Management Director,
rather than the individual named herein, shall be authorized to
act hereunder as the Salaried/Management Director. The parties
hereto, on behalf of themselves and the Employee Groups that they
represent, agree that the Salaried/Management Director, and the
successor Salaried/Management Directors, shall not have any
personal liability under this Agreement.
5. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware
without regard to the conflicts of laws principles thereof.
6. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same
effect as if the signature thereto and hereto were upon the same
instrument.
7. Specific Performance. The parties hereto agree that if any
of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached,
irreparable damage would occur, no adequate remedy of law would
exist and damages would be difficult to determine, and that the
parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
8. Amendments. This Agreement may not be amended or modified
unless such amendment or modification is approved in writing by
each of the parties hereto.
9. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject
matter hereof and, except as otherwise contemplated hereby,
supersedes all other prior agreements and understandings, both
written and oral, between the parties hereto with respect to the
subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
UAL CORPORATION
By: /s/ James M. Guyette
--------------------
AIR LINE PILOTS ASSOCIATION,
INTERNATIONAL
By: /s/ R. D. Hall
--------------
INTERNATIONAL ASSOCIATION OF
MACHINISTS AND AEROSPACE
WORKERS
By: /s/ Ken Thiede
--------------
/s/ Joseph V. Vittoria
----------------------
Joseph V. Vittoria
Salaried/Management Employee
Director (not personally but as
representative of the
Salaried/Management Employees)
Exhibit 10.29
Description Of Complimentary Travel
And Cargo Carriage Benefits For UAL Directors
---------------------------------------------
Flight and Cargo Benefits - Director and Spouse
- -----------------------------------------------
Each director and spouse are entitled to complimentary, positive
space travel on United Airlines for pleasure or UAL business
travel. Each child of a director under age 25 and a dependent of
the director is also eligible for complimentary, positive space
travel on United. The director and spouse are also entitled to
use of the Red Carpet Rooms of United Airlines. Each UAL
director and spouse and eligible dependents are also entitled to
complimentary cargo carriage (excludes ground transportation) on
United Airlines of up to 2,500 pounds per director per year for
personal goods only (not business related). The goods will be
shipped as general freight.
Flight and Cargo Benefits - Director Emeriti
- --------------------------------------------
Each UAL Director Emeritus is afforded the same flight and cargo
benefits as are provided to current directors. From and after a
Change in Control (as defined in the UAL Corporation Retirement
Plan for Outside Directors), the travel benefit for Directors
Emeriti immediately prior to the Change in Control (including non-
employee directors who are directors immediately prior to the
change in control) or, if more favorable, for the directors or
the Chairman or President of UAL from time to time, is fixed as
the travel benefit in effect for Directors Emeriti from and after
such Change in Control.
Tax Consequences
- ----------------
Each director and each Director Emeritus is paid cash in an
amount designed as reimbursement for federal and state income tax
liability on the value of the above benefits.
Exhibit 23
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the
incorporation of our report included in the UAL Corporation Form
10-K for the year ended December 31, 1996, into the company's
previously filed Post-Effective Amendment No. 1 to Form S-8 (File
No. 2-67368) and Post-Effective Amendment No. 2 to Form S-8 (File
No. 33-37613) for the Employees' Stock Purchase Plan of UAL
Corporation; Post-Effective Amendment No. 1 to Form S-8 (File No.
33-38613) for the United Air Lines, Inc. Management and Salaried
Employees' 401(k) Retirement Savings Plan; Post-Effective
Amendment No. 1 to Form S-8 (File No. 33-44552), Form S-8 (File
No. 33-57331), and Form S-8 (File No. 333-03041) for the United
Air Lines, Inc. Ground Employees' 401(k) Retirement Savings Plan;
Post-Effective Amendment No. 1 to Form S-8 (File No. 33-44553)
and Form S-8 (File No. 33-62749) for the United Air Lines, Inc.
Flight Attendant Employees' 401(k) Retirement Savings Plan; Post-
Effective Amendment No. 1 to Form S-8 (File No. 33-59950) and
Form S-8 (File No. 333-03039) for the United Air Lines, Inc.
Pilots' Directed Account Retirement Income Plan; Post-Effective
Amendment No. 2 to Form S-8 (File No. 33-41968), Form S-8 (File
No. 33-10206), Form S-8 (File No. 33-61007), and Form S-8 (File
No. 333-03043) for the UAL Corporation 1981 Incentive Stock Plan;
Form S-8 (File No. 33-58385) for Stock in Lieu of Cash Bonuses
for Certain Executive Officers; Form S-8 and Post-Effective
Amendment No. 1 to Form S-8 (File No. 33-60675) for Directors
Fees Taken in Stock Under UAL Corporation 1995 Directors Plan;
Form S-3 (File No. 33-57192), as amended; Form S-4 (File No. 33-
57579), as amended; Form S-8 (File No. 333-01437) for Stock in
Lieu of Cash Bonuses for Certain Officers; and Form S-4 (File
Nos. 333-14245 and 333-14245-01), as amended.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Chicago, Illinois
March 5, 1997
Exhibit 99
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1996
Employees' Stock Purchase Plan of UAL Corporation
(Full title of the Plan)
UAL Corporation
(Employer sponsoring the Plan, issuer of the
participations in the Plan and issuer of
the shares held pursuant to the Plan)
1200 Algonquin Road, Elk Grove Township, Illinois
Mailing Address:
UAL Corporation, P.O. Box 66919, Chicago, Illinois 60666
(Address of principal executive offices)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To UAL Corporation:
We have audited the accompanying statements of financial position
of the Employees' Stock Purchase Plan of UAL Corporation (the
"Plan") as of December 31, 1996 and 1995 and the related
statements of changes in participants' equity for each of the
three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Plan's
administrator. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by the Plan's administrator, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of the Plan as of December 31, 1996 and 1995 and the changes in
its participants' equity for each of the three years in the
period ended December 31, 1996, in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 26, 1997
Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the sponsor and issuer of the participants of the Plan, UAL
Corporation has duly caused this Annual Report to be signed on
its behalf by the undersigned thereunto duly authorized.
UAL Corporation
Administrator
Dated February 26, 1997 By /s/ Douglas A. Hacker
Douglas A. Hacker
Senior Vice President - Finance