UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of Report: February 1, 2006

(Date of earliest event reported)

 

UAL CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

 

1-6033

 

36-2675207

(State or other jurisdiction
of incorporation)

 

(Commission
File Number)

 

(I.R.S. Employer
Identification No.)

 

1200 East Algonquin Road, Elk Grove Township, Illinois 60007

(Address of principal executive offices)

 

(847) 700-4000

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 



 

ITEM 1.01.  Entry into a Material Definitive Agreement.

 

On February 1, 2006 (the “Effective Date”), UAL Corporation (the “Company”) consummated the transactions contemplated by its Second Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the United States Bankruptcy Code (the “Plan”).  Pursuant to the terms of the Plan, upon the Effective Date, the UAL Corporation 2006 Management Equity Incentive Plan (the “MEIP”) and the UAL Corporation 2006 Director Equity Incentive Plan (the “DEIP”), which were previously adopted by the Board of Directors of the Company (the “Board”) on January 10, 2006, became effective.  The aggregate number of shares of Common Stock, par value $.01 per share, of the Company (the “Common Stock”) reserved for grant under (i) the MEIP is 9,825,000 shares, as may be adjusted for any stock dividend, stock split, recapitalization, reorganization, merger or other subdivision or combination of the Common Stock, and (ii) the DEIP is 175,000 shares.  For a full description of the MEIP and DEIP, reference is made to the description of such plans in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 11, 2005, which is incorporated by reference herein.  The description of the MEIP and DEIP is qualified in its entirety by reference to the full text of the MEIP and DEIP, copies of which are filed herewith as Exhibits 10. 1 and 10.2 and are incorporated by reference herein.

 

The information described under Item 2.03 below “Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant” is incorporated herein by reference.

 

On January 23, 2006, the Nominating/Governance Committee of the Company’s Board of Directors approved a five-year travel benefit to certain of the directors of the Company who are departing the Board of Directors on the Effective Date. From and after the Effective Date, each such director, his spouse and dependent children, if any, will be entitled to unlimited, positive space, pleasure travel on United Airlines, including travel on United Express, as well as an annual tax gross-up payment with respect to the value of such travel benefits.

 

ITEM 1.02.  Termination of a Material Definitive Agreement.

 

In connection with the Company’s reorganization and emergence from bankruptcy, all existing shares of the Company’s capital stock were canceled pursuant to the Plan, as confirmed with the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the “Bankruptcy Court”) on January 20, 2006.  Therefore, upon the Effective Date, as set forth in the Plan, the Company’s 2000 Incentive Stock Plan (the “2000 Plan”) and the Company’s 2002 Share Incentive Plan (the “2002 Plan”) were terminated.  As of the Effective Date, any and all awards granted under the 2000 Plan and the 2002 Plan were terminated and will no longer be of any force or effect.

 

The 2000 Plan was filed with the Securities and Exchange Commission (the “Commission”) as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ending on June 30, 2000.  The 2002 Plan was filed with the Commission as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ending on September 30, 2002.  The descriptions contained in this Current Report of the 2000 Plan and the 2002 Plan are qualified in their entirety by reference to the full text of the Plans set forth in the respective exhibits.

 

In addition, as set forth in the Company’s Current Report on Form 8-K as filed on October 28, 2005 (the “October 8-K”), on October 27, 2005, the Board adopted an amendment to the Company’s 1995 Directors Plan (the “1995 Plan”) and resolved that upon the Effective Date, the 1995 Plan and any rights to receive stock under the 1995 Plan would be terminated, except that eligible cash fees which have been deferred and are not subject to an election to receive stock would continue to be due under the 1995 Plan and would be payable in accordance with the terms of the 1995 Plan.  The description of the amendment and termination of the 1995 Plan discussed herein is qualified in its entirety by reference to the full text of the amendment to the 1995 Plan set forth as Exhibit 10.1 to the October 8-K, which is incorporated by reference herein.

 

Under the terms of the Plan, the underlying option agreements pursuant to the 2000 Plan, the 2002 Plan and the 1995 Plan, together with the Agreement among the Company, United Air Lines, Inc. and Douglas A. Hacker, dated as of April 27, 2001, were rejected and terminated as of the Effective Date.

 

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ITEM 2.03.  Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

Exit Facility

 

On the Effective Date, the Company’s wholly owned subsidiary, United Air Lines, Inc. (“United”), entered into a new senior secured revolving credit facility and term loan (the “Exit Facility”) provided by a syndicate of banks and other financial institutions led by J.P. Morgan Securities Inc. and Citicorp Global Markets Inc., as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A. (“JPMCB”) and Citicorp USA, Inc. (“CITI”), as co-administrative agents and co-collateral agents, General Electric Capital Corporation, as syndication agent, and JPMCB, as paying agent.  The Exit Facility provides for a total commitment of up to $3.0 billion, comprised of two separate tranches: (i) a Tranche A consisting of up to $200 million revolving commitment available for Tranche A loans and for standby letters of credit to be issued in the ordinary course of business of United or one of its subsidiary guarantors and (ii) a Tranche B consisting of a term loan commitment of up to $2.45 billion available at the time of closing and additional term loan commitments of up to $350 million available upon, among other things, United’s acquiring unencumbered title to some or all of the airframes and engines that are currently subject to United’s 1997 EETC transaction.  The loans mature on February 1, 2012.

 

Borrowings under the Exit Facility bear interest at a floating rate, which can be either a base rate, or at our option, a LIBOR rate, plus an applicable margin of 2.75% in the case of the base rate loans and 3.75% in the case of the LIBOR loans.  The Tranche B term loan requires regularly scheduled semi-annual payments of principal equal to 0.5% of the original principal amount of the Tranche B term loan.  Interest is payable on the last day of the applicable interest period but in no event less often than quarterly.  At any time prior to February 1, 2007, United may use the proceeds from any lower cost refinancing to redeem some or all of the term loans at a price equal to 101% of the principal amount plus accrued and unpaid interest, if any, to the date of redemption.

 

The obligations under the Exit Facility are unconditionally guaranteed by the Company and certain of the direct and indirect domestic subsidiaries of the Company (other than United) (the “Guarantors”) and are secured by a security interest in substantially all of the tangible and intangible assets of the Guarantors.  The obligations under the Exit Facility are also secured by a pledge of the capital stock of United and its direct and indirect subsidiaries, except that a pledge of any first tier foreign subsidiary is limited to 65% of the stock of such subsidiary and such foreign subsidiaries are not required to pledge the stock of their subsidiaries.

 

The Exit Facility contains covenants that will limit the ability of United and the Guarantors to, among other things, incur or guarantee additional indebtedness, create liens, pay dividends on or repurchase stock, make certain types of investments, restrict dividends or other payments from United’s direct or indirect subsidiaries, enter into transactions with affiliates, sell assets or merge with other companies, modify corporate documents or change lines of business.  The Exit Facility also requires compliance with several financial covenants, including (i) a minimum ratio of EBITDA to the sum of cash interest expense, aircraft rent and scheduled debt payments, (ii) a minimum unrestricted cash balance of $1.2 billion, to be reduced to $1.0 billion after December 31, 2006, and (iii) a minimum ratio of market value of collateral to the sum of (A) the aggregate outstanding amount of the loans plus (B) the undrawn amount of outstanding letters of credit, (C) the unreimbursed amount of drawings under such letters of credit and (D) the termination value of certain interest rate protection and hedging agreements with the exit lenders and their affiliates, of 150%.

 

The Company will use the borrowings under the Exit Facility to finance working capital needs and for other general corporate purposes.

 

The Exit Facility is attached hereto as Exhibit 10.1 and is incorporated herein by reference.  The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the Exit Facility which is filed as Exhibit 4.1 to this Form 8-K.

 

Indentures

 

On the Effective Date, the Company issued $500,000,000 aggregate principal amount of 6% Senior Notes due 2031 (the 6% Notes) to the Pension Benefit Guaranty Corporation (“PBGC”), pursuant to an Indenture, dated as

 

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of the Effective Date, between the Company, United, as guarantor, and The Bank of New York Trust Company, N.A., as trustee (the “PBGC Indenture”).  The PBGC Indenture also provides for the issuance of up to $500,000,000 aggregate principal amount of 8% Contingent Notes (the “8% Notes” and, together with the 6% Notes, the “PBGC Notes”), issuable upon certain financial trigger events.  Also on the Effective Date, the Company issued $149,646,114 aggregate principal amount of 5% Senior Convertible Notes due 2020 (the “O’Hare Notes” and together with the PBGC Notes, the “Notes”) to the respective trustees (the “Trustees”) for certain holders of unsecured Chicago municipal bond claims for distribution to or on behalf of such holders, pursuant to an Indenture, dated as of the Effective Date, between UAL Corporation, United Air Lines, Inc., as guarantor, and The Bank of New York Trust Company, N.A., as trustee (the “O’Hare Indenture”).  The Notes were issued pursuant to Section 1145 of the Bankruptcy Code, which exempts the issuance of securities from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”).

 

PBGC Notes

 

The 6% Notes were issued to the PBGC upon the Company’s exit from bankruptcy.  The PBGC Indenture and form of 6% Note, which is attached as an exhibit to the PBGC Indenture, provide, among other things, that the 6% Notes will bear interest at a rate of 6 percent per year (payable semi-annually in cash or, on or prior to December 31, 2011, in common stock or 6% Notes, in arrears on June 30 and December 31 of each year, beginning on June 30, 2006), and will mature on February 1, 2031.  The 8% Notes are contingently issuable to the PBGC in up to eight equal tranches of $62.5 million (with no more than two tranches issued on a single date), in any year from the fiscal year ending December 31, 2009 to the fiscal year ending December 31, 2017 in which there is an issuance triggered. Issuance is triggered when the Company’s earnings before interest, taxes, depreciation, amortization and rents exceed $3.5 billion over the prior twelve months, provided that an issuance would not cause a default under any other securities then existing (in which case the Company must issue common stock having a value of $62.5 million in lieu of the prohibited tranche of 8% Notes).  Each issued tranche would mature 15 years from its respective issuance date.  The PBGC Indenture and form of 8% Note, which is attached as an exhibit to the Indenture, provide, among other things, that the 8% Notes will bear interest at a rate of 8 percent per year (payable semi-annually in cash in arrears).  The Company will pay interest in cash on overdue principal and overdue installments of interest at the rate borne by the PBGC Notes plus 1% per annum.

 

The Company may redeem the PBGC Notes at its option, in whole or in part on a pro rata basis at any time and from time to time at a purchase price equal to 100% of the principal, plus accrued and unpaid interest, if any, to the date of purchase, payable in cash or in common stock.  Upon a change in ownership or a fundamental change (each as defined in the PBGC Indenture) of the Company, each holder of the PBGC Notes will have the right to require the Company to purchase such holder’s PBGC Notes at a purchase price equal to 100% of the principal amount of the PBGC Notes, together with accrued and unpaid interest, if any, to the date of purchase, payable in cash or in common stock.

 

The PBGC Notes will be senior unsecured obligations of the Company.  The 6% Notes will rank senior in right to the 8% Notes and notes issued under the Plan to employee groups (the “Employee Notes”) and pari passu with the O’Hare Notes. The 6% Notes will rank junior to the Company’s credit facility, the Company’s and the guarantor’s obligations under the Ninth Amendment to the Co-Branded Card Marketing Services Agreement between the Company, Guarantor, Chase Bank U.S.A., N.A. and various other parties (the “Card Marketing Agreement”) and other secured indebtedness of the Company; provided, that the 6% Notes will be pari passu with such indebtedness of the Company to the extent any such indebtedness is unsecured. The 8% Notes will rank junior to the 6% Notes, the Company’s credit facility, the Card Marketing Agreement and other secured indebtedness of the Company and the O’Hare Notes, and will be pari passu with the Employee Notes.  The PBGC Notes will be fully and unconditionally guaranteed by United Air Lines, Inc. The guarantee will be the guarantor’s unsecured obligations and will be effectively subordinated to the guarantor’s secured indebtedness to the extent of the value of assets securing such indebtedness.

 

The PBGC Indenture provides that the Company may not consolidate with or merge into any person or convey, transfer or lease all or substantially all of its assets to another person unless: (i) (A) in the case of a merger or consolidation, the Company is the surviving person, or (B) in the case of a merger or consolidation where the Company is not the surviving person and in the case of any such conveyance, transfer or lease, the resulting, surviving or transferee person is a corporation organized and existing under the laws of the United States or any

 

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state thereof and such corporation assumes all the Company’s obligations under the PBGC Notes and the PBGC Indenture; (ii) if, as a result of such transaction the PBGC Notes become convertible or exchangeable into common stock or securities issued by a third party, such third party guarantees all of the Company’s obligations under the PBGC Notes and the PBGC Indenture; (iii) after giving effect to the transaction no event of default, and no event that, after notice or passage of time, would become an event of default, has occurred and is continuing; and (iv) other conditions described in the PBGC Indenture are met.

 

The PBGC Indenture also provides that a guarantor may not consolidate with or merge into any person or convey, transfer or lease its properties and assets substantially as an entity to another person unless (i) after giving effect to the transaction no event of default, and no event that, after notice or passage of time, would become an event of default, has occurred and is continuing; and (ii) the guarantor survives or the surviving person assumes the obligations of such guarantor.

 

The PBGC Indenture governing the PBGC Notes contains customary events of default. Under the PBGC Indenture, events of default include (i) default in payment of any interest under the PBGC Notes, which default continues for 30 days; (ii) default in the payment of any principal amount with respect to the PBGC Notes, when the same becomes due and payable; (iii) the Company fails to provide notice of a change in ownership or a fundamental change; (iv) default in the performance of, or breach of, any covenant or warranty with respect to the PBGC Notes, which default continues for 60 days after receipt of notice by holders of at least 25% in aggregate principal amount of the outstanding PBGC Notes of that series; provided, however, that breaches of covenants with respect to notice of change in ownership, notice of default, compliance certificates and changes in organizational documents do not require notice by holders; (v) certain events of bankruptcy, insolvency or reorganization affecting the Company or the guarantor; and (vi) any guarantee ceases to be in full force and effect or is declared null and void or any guarantor denies that it has any further liability under any guarantee, or gives notice to such effect (other than by reason of the termination of the PBGC Indenture), and such condition shall have continued for a period of 30 days after written notice of such failure requiring the guarantor or the Company to remedy the same will have been given to the Company by the trustee or to the Company and the trustee by the holders of 25% in aggregate principal amount at maturity of the PBGC Notes of such series affected outstanding. If an event of default occurs, other than for certain events of bankruptcy or insolvency, either the trustee or the holders of not less than 25% in aggregate principal amount of the PBGC Notes of such series affected then outstanding may declare the principal of the PBGC Notes of that series and any accrued and unpaid interest through the date of such declaration immediately due and payable. In the case of certain events of bankruptcy or insolvency, the principal amount of the PBGC Notes of that series together with any accrued interest through the occurrence of such event shall automatically become and be immediately due and payable.

 

The PBGC Indenture governing the PBGC Notes does not contain any financial or operating covenants or restrictions on the payment of dividends, the incurrence of indebtedness, incurrence of liens or the issuance or repurchase of securities by the Company or any of its subsidiaries.

 

This description of the PBGC Indenture governing the PBGC Notes is qualified in its entirety by reference to the full text of the document, a copy of which is attached hereto as Exhibit 4.2, and is incorporated herein by reference.

 

O’Hare Notes

 

The O’Hare Notes were issued upon the Company’s exit from bankruptcy.  The O’Hare Indenture and form of O’Hare Note, which is attached as an exhibit to the O’Hare Indenture, provide, among other things, that the O’Hare Notes will bear interest at a rate of five percent per year (payable semi-annually in cash or, on or prior to February 1, 2007, in common stock, in arrears on June 30 and December 31 of each year, beginning on June 30, 2006), and will mature on February 1, 2021.  The Company will pay interest in cash on overdue principal and overdue installments of interest at the rate borne by the O’Hare Notes plus 1% per annum.

 

The Company may redeem the O’Hare Notes at its option, in whole or in part on a pro rata basis, at any time and from time to time after February 1, 2011, at a purchase price equal to 100% of the principal, plus accrued and unpaid interest, if any, to the date of purchase, payable in cash or in common stock. Upon a change in ownership or a fundamental change (each as defined in the O’Hare Indenture) of the Company, each holder of the O’Hare

 

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Notes will have the right to require the Company to purchase such holder’s O’Hare Notes at a purchase price equal to 100% of the principal amount of the O’Hare Notes, together with accrued and unpaid interest, if any, to the date of purchase, payable in cash or in common stock.

 

Holders may require the Company to purchase for cash or shares or a combination thereof, at the Company’s election, all or a portion of their O’Hare Notes on February 1, 2011 and February 1, 2016 at a purchase price equal to 100% of the principal amount of the O’Hare Notes to be repurchased plus accrued and unpaid interest, if any, to the purchase date.

 

The O’Hare Notes will be senior unsecured obligations of the Company.  The O’Hare Notes will rank junior to the Company’s credit facility, the Card Marketing Agreement and any other secured indebtedness of the Company.  The O’Hare Notes will be pari passu to the 6% Notes, and senior to the Employee Notes and the 8% Notes.  The O’Hare Notes will rank pari passu with all current and future senior unsecured debt of the Company or the guarantor and senior to all current and future subordinated debt of the Company. The O’Hare Notes will be fully and unconditionally guaranteed by United Air Lines, Inc. The guarantee will be the guarantor’s unsecured obligations.

 

Holders may convert, at any time on or prior to maturity, redemption, a change in ownership or a fundamental change, any of their O’Hare Notes (or portions thereof) into shares of the Company’s common stock at a conversion price which will initially be 125% of the average of last reported sales prices of the Company’s common stock for the 60 consecutive trading days following February 1, 2006. In lieu of delivery of shares of the Company’s common stock upon conversion of all or any portion of the O’Hare Notes, the Company may elect to pay holders surrendering O’Hare Notes for conversion cash or a combination of shares of common stock and cash.

 

The O’Hare Indenture provides that the Company may not consolidate with or merge into any person or convey, transfer or lease all or substantially all of its assets to another person unless: (i) (A) in the case of a merger or consolidation, the Company is the surviving person, or (B) in the case of a merger or consolidation where the Company is not the surviving person and in the case of any such conveyance, transfer or lease, the resulting, surviving or transferee person is a corporation organized and existing under the laws of the United States or any state thereof and such corporation assumes all the Company’s obligations under the O’Hare Notes and the O’Hare Indenture; (ii) if, as a result of such transaction the O’Hare Notes become convertible or exchangeable into common stock or securities issued by a third party, such third party guarantees all of the Company’s obligations under the O’Hare Notes and the O’Hare Indenture; (iii) after giving effect to the transaction no event of default, and no event that, after notice or passage of time, would become an event of default, has occurred and is continuing; and (iv) other conditions described in the O’Hare Indenture are met.

 

The O’Hare Indenture also provides that a guarantor may not consolidate with or merge into any person or convey, transfer or lease its properties and assets substantially as an entity to another person unless (i) after giving effect to the transaction no event of default, and no event that, after notice or passage of time, would become an event of default, has occurred and is continuing; and (ii) the guarantor survives or the surviving person assumes the obligations of such guarantor.  Upon the assumption of the guarantor’s obligations by such person in such circumstances, the guarantor will not be discharged from its obligations under the O’Hare Notes and the O’Hare Indenture.

 

The O’Hare Indenture governing the O’Hare Notes contains customary events of default. Under the O’Hare Indenture, events of default include (i) default in payment of any interest under the O’Hare Notes, which default continues for 30 days; (ii) default in the payment of any principal amount with respect to the O’Hare Notes, when the same becomes due and payable; (iii) the Company fails to provide notice of a change in ownership or a fundamental change; (iv) default in the performance of, or breach of, any covenant or warranty with respect to the O’Hare Notes, which default continues for 60 days after receipt of notice by holders of at least 25% in aggregate principal amount of the outstanding O’Hare Notes; provided, however, that breaches of covenants with respect to notice of change in ownership, notice of default, compliance certificates and changes in organizational documents do not require notice by holders; (v) the Company defaults in its obligation to deliver shares of common stock of the Company, cash or other property upon conversion of a holder’s exercise of their right to convert its O’Hare Notes; (vi) certain events of bankruptcy, insolvency or reorganization affecting the Company or the guarantor; and (vii) any guarantee ceases to be in full force and effect or is declared null and void or any guarantor denies that it has any

 

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further liability under any guarantee, or gives notice to such effect (other than by reason of the termination of the O’Hare Indenture), and such condition shall have continued for a period of 30 days after written notice of such failure requiring the guarantor or the Company to remedy the same will have been given to the Company by the trustee or to the Company and the trustee by the holders of 25% in aggregate principal amount at maturity of the O’Hare Notes of such series affected outstanding. If an event of default occurs, other than for certain events of bankruptcy or insolvency, either the trustee or the holders of not less than 25% in aggregate principal amount of the O’Hare Notes then outstanding may declare the principal of the O’Hare Notes and any accrued and unpaid interest through the date of such declaration immediately due and payable. In the case of certain events of bankruptcy or insolvency, the principal amount of the O’Hare Notes together with any accrued interest through the occurrence of such event shall automatically become and be immediately due and payable.

 

The O’Hare Indenture governing the O’Hare Notes does not contain any financial or operating covenants or restrictions on the payment of dividends, the incurrence of indebtedness, incurrence of liens or the issuance or repurchase of securities by the Company or any of its subsidiaries.

 

This description of the O’Hare Indenture governing the O’Hare Notes is qualified in its entirety by reference to the full text of the document, a copy of which is attached hereto as Exhibit 4.3, and is incorporated herein by reference.

 

PBGC 2% Convertible Preferred Stock

 

Items 3.02 and 5.03 of this Current Report on Form 8-K are incorporated herein by this reference for a description of the issuance and terms of the Company’s PBGC 2% Convertible Preferred Stock.

 

ITEM 3.02.  Unregistered Sales of Equity Securities.

 

Pursuant to the Plan, upon the filing with the State of Delaware of the Company’s Restated Certificate of Incorporation (the “Certificate”), the Company issued or reserved for issuance up to 125,000,000 shares of the Company’s Common Stock, par value $.01 per share (the “Common Stock”) as follows: (a) 115,000,000 shares to be distributed as the Unsecured Distribution and Employee Distribution (each as defined in the Plan), (b) up to 9,825,000 shares (or options or other rights to acquire shares) pursuant to the terms of the MEIP and (c) 175,000 shares (or option or other rights to acquire shares) pursuant to the terms of the DEIP.  The Common Stock replaces the Company’s prior common stock registered under Section 12(b) of the Act (which prior common stock was canceled concurrently as of the effective time of the Plan.  In addition, pursuant to the Plan, the Company issued 5,000,000 shares of 2% Convertible Preferred Stock, par value $.01 per share, of the Company (the “PBGC Preferred Stock”) to the PBGC pursuant to the terms of that certain Settlement Agreement by and among the Company, its direct and indirect subsidiaries and the PBGC.  The Notes, the PBGC Preferred Stock and the Common Stock were issued pursuant to Section 1145 of the Bankruptcy Code, which exempts the issuance of securities from the registration requirements of the Securities Act of 1933, as amended.

 

ITEM 5.02.  Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

 

Upon the Effective Date, the following directors have departed UAL’s Board of Directors in connection with UAL’s emergence from Chapter 11:  W. Douglas Ford, Dipak C. Jain, Paul E. Tierney, Jr., and George B. Weiksner, Jr.  Mr. Ford served as a member of the Audit Committee and Public Responsibility Committee of the Board of Directors.  Mr. Jain served as Chairman of the Public Responsibility Committee and was a member of the Audit Committee.  Mr. Tierney served as Chairman of the Audit Committee and was a member of the Executive Committee and Nominating/Governance Committee of the Board of Directors.  Mr. Weiksner served as a member of the Public Responsibility Committee.

 

In addition, upon the Effective Date, in connection with UAL’s emergence from Chapter 11, the following individuals are becoming members of UAL’s Board of Directors by operation of its Plan of Reorganization:  Richard J. Almeida, Walter Isaacson, Janet Langford Kelly, Robert D. Krebs and David Vitale.

 

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Committee Memberships.

 

The following directors will be members of the Audit Committee of the Board of Directors of UAL:  David Vitale (Chairman), Richard J. Almeida, John H. Walker, Robert S. Miller and Robert D. Krebs.

 

The following directors will be members of the Executive Committee of the Board of Directors of UAL:  Glenn F. Tilton (Chairman), James J. O’Connor, David Vitale, W. James Farrell, Walter Isaacson, Stephen R. Canale and Mark A. Bathurst.  Mr. O’Connor will continue to serve as the lead director of the Board of Directors.

 

The following directors will be members of the Human Resources Committee of the Board of Directors of UAL:  W. James Farrell (Chairman), James J. O’Connor, John H. Walker, Richard J. Almeida, Janet Langford Kelly, David Vitale, Stephen R. Canale and Mark A. Bathurst.

 

The following directors will be members of the Human Resources Subcommittee of the Board of Directors of UAL:  W. James Farrell (Chairman), James J. O’Connor, John H. Walker, Richard J. Almeida, Janet Langford Kelly and David Vitale.

 

The following directors will be members of the Nominating/Governance Committee of the Board of Directors of UAL:  James J. O’Connor (Chairman), W. James Farrell and Walter Isaacson.

 

The following directors will be members of the Public Responsibility Committee of the Board of Directors of UAL:  Walter Isaacson (Chairman), Janet Langford Kelly, Robert D. Krebs, Robert S. Miller, Stephen R. Canale and Mark A. Bathurst.

 

Mr. Canale and Captain Bathurst serve on the Human Resources Committee, but not the Human Resources Subcommittee.  Mr. Canale and Captain Bathurst are employees of United.  Captain Bathurst is the Chairman of the Air Line Pilots Association (“ALPA”)-Master Executive Council and an officer of ALPA.  ALPA and United are parties to a collective bargaining agreement for our pilots represented by ALPA.  Mr. Canale is President and Directing General Chairman of the International Association of Machinists and Aerospace Workers (“IAM”) District Lodge 141.  The IAM and United are parties to collective bargaining agreements for our ramp and stores, public contact employees, food service, security officers, maintenance instructors, fleet technical instructors and Mileage Plus employees represented by the IAM.

 

ITEM 5.03.  Amendments to Articles of Incorporation and Bylaws

 

In connection the Company’s reorganization and emergence from bankruptcy, the Company adopted the Certificate and the Amended and Restated Bylaws of the Company (the “Bylaws”), effective as of the Effective Date. The following sets forth a description of the key provisions of the Certificate and Bylaws. This description of the Certificate and Bylaws is qualified in its entirety by reference to the full text of these documents, which are filed as Exhibits 3.1 and 3.2 to this Current Report on Form 8-K.

 

Authorized Capital Stock

 

The Company’s authorized capital stock consists of 1,255,000,002 shares of stock, divided into five classes, as follows: (i) 250,000,000 shares of preferred stock, without par value (the “Serial Preferred Stock”), (ii) 5,000,000 shares of PBGC 2% Convertible Preferred Stock, par value $0.01 per share (the “PBGC Preferred Stock”), (iii) one share of Class Pilot MEC Junior Preferred Stock, par value $0.01 per share (the ‘‘Class Pilot MEC Preferred Stock’’), (iv) one share of Class IAM Junior Preferred Stock, par value $0.01 per share (the “Class IAM Preferred Stock’’ and, together with the Serial Preferred Stock, the PBGC Preferred Stock and the Class Pilot MEC Preferred Stock,  the ‘‘Preferred Stock’’), and (v) 1,000,000,000 shares of Common Stock, par value $0.01 per share (the “Common Stock”).

 

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Serial Preferred Stock

 

The Company’s board of directors (the “Board”) is authorized to (i) issue up to 250,000,000 shares of Serial Preferred Stock in one or more series and (ii) fix the number of shares in each such series, as well as the designations, powers, preferences and relative rights and restrictions thereof.

 

PBGC 2% Convertible Preferred Stock

 

The PBGC Preferred Stock has the characteristics set forth below.

 

Ranking

 

The Board is authorized to issue up to 5,000,000 shares of PBGC Preferred Stock to the Pension Benefit Guaranty Corporation (“PBGC”) which shall rank on parity with the Serial Preferred Stock and rank senior to all junior securities, including without limitation, the Class Pilot MEC Preferred Stock, the Class IAM Preferred Stock and all shares of Common Stock.

 

Dividends

 

The Company shall pay preferential dividends to the holders of the PBGC Preferred Stock, which accrue on a daily basis at the rate of 2% per annum on the sum of the liquidation value plus all accumulated and unpaid dividends thereon.  The liquidation value is equal to $100, subject to increase as set forth in the Certificate.  Dividends on the PBGC Preferred Stock are payable in kind.  Dividends shall accrue until the earlier of (i) the date upon which the liquidation value, plus all accrued and unpaid dividends, are paid or the shares are redeemed by the Company, (ii) the date upon which the PBGC Preferred shares are converted into conversion stock (as discussed below) or (ii) the date on which the shares of PBGC Preferred Stock are otherwise acquired by the Company.

 

Liquidation

 

Upon any liquidation, dissolution and/or winding up of the Company, each holder of PBGC Preferred Stock shall be paid in preference to any junior securities, an amount in cash equal to the liquidation value of each share of PBGC Preferred Stock owned by such holder, plus any accrued but unpaid dividends on such PBGC Preferred Stock.

 

Redemption

 

Upon a fundamental change (as defined in the Certificate), each holder of PBGC Preferred Stock is entitled to receive the aggregate liquidation value of the shares of PBGC Preferred Stock owned by such holder, plus all accrued and unpaid dividends thereon.  The Company may at any time redeem all or any portion of the shares of PBGC Preferred Stock then outstanding, at a price per share equal to the liquidation value thereof, plus all accrued and unpaid dividends thereon.

 

Voting Rights

 

The holders of PBGC Preferred Stock shall have no voting rights, except that the affirmative vote of the holders of a majority of the outstanding PBGC Preferred Stock, voting as a separate class, shall be necessary to authorize any amendment to the Certificate which would adversely affect the powers, preferences or special rights of any of the PBGC Preferred Shares.

 

Conversion

 

At any time and from time to time following the earlier of (i) February 1, 2008 and (ii) any fundamental change or change of ownership (each as defined in the Certificate), any holder of PBGC Preferred Stock may convert all or any portion of his, her or its shares into a number of shares of conversion stock computed by multiplying the number of shares to be converted by such share’s liquidation value and dividing the result by the

 

9



 

conversion price then in effect.   On February 1, 2021, each share of PBGC Preferred Stock shall be automatically converted into conversion stock (based on the formula set forth above).  The conversion price shall be 125% of the average of the closing prices of the sales of Common Stock on all domestic securities exchanges on which such Common Stock may at the time be listed, averaged over a period beginning on the date of issuance of the PBGC Preferred Stock and ending on the 60th consecutive trading day following such date.  In order to prevent dilution upon certain events, such conversion price is subject to adjustment from time to time, as set forth in the Certificate.

 

Class Pilot MEC Junior Preferred Stock

 

The Class Pilot MEC Preferred Stock shall only be issued to and held by (i) the United Airlines Pilots Master Executive Counsel (“MEC”) of the Air Line Pilots Association, International (“ALPA”) or (ii) a duly authorized agent acting on behalf of the MEC.

 

Ranking

 

The PBGC Preferred Stock shall be deemed to rank senior to the Class Pilot MEC Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up.  The Class IAM Preferred Stock shall be deemed to rank on parity with the Class Pilot MEC Preferred Stock.  All shares of Common Stock shall be deemed to rank junior to the Class Pilot MEC Preferred Stock.

 

Dividends

 

The holder of the share of Class Pilot MEC Preferred Stock shall not be entitled to receive any dividends or other distributions.

 

Liquidation

 

Upon any liquidation, dissolution and/or winding up of the Company, the holder of the Class Pilot MEC Preferred Stock shall be entitled to receive, in preference to any junior securities, an amount equal to $0.01 for the share of Class Pilot MEC Preferred Stock, but such holder shall not be entitled to receive any further payments or other distributions.

 

Consolidation, Merger, etc.

 

Upon consummation of a Merger Transaction (as defined in the Certificate), the share of Class Pilot MEC Preferred Stock shall be converted, reclassified, 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, and the qualifications, limitations or restrictions thereof, that the Class Pilot MEC Preferred Stock had, in respect of the Company, immediately prior to such transaction.

 

Redemption

 

Upon (i) the ALPA Termination Date (as defined below) or (ii) the transfer of such share to an unauthorized holder, the share of Class Pilot MEC Preferred Stock shall automatically be redeemed at a price of $0.01 per share.

 

Voting Rights

 

Until such time as (the “ALPA Termination Date”) (i) there are no longer any persons represented by ALPA employed by the Company or its affiliates, (ii) the collective bargaining agreements between ALPA and the Company has been amended so that it provides that ALPA no longer has the right to elect a director of the Company, the holder of the share of Class Pilot MEC Preferred Stock shall have the right (a) voting as a separate class, to (1) elect one director to the Board at each annual meeting of stockholders for a term of office to expire at the succeeding annual meeting of stockholders, (2) remove such director with or without cause and (3) fill any vacancies in such directorship resulting from death, resignation, disqualification, removal or other cause, and

 

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(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 Company (other than the election of directors), except as otherwise required by law. For purposes of the foregoing, the share of Class Pilot MEC Preferred Stock shall have one vote.  In addition, the affirmative vote of the holder of the share of Class Pilot MEC Preferred Stock voting as a separate class is necessary to authorize an amendment to the Certificate which would adversely affect the powers, preferences or special rights of the Class Pilot MEC Preferred Stock.

 

Class IAM Junior Preferred Stock

 

The Class IAM Preferred Stock shall only be issued to and held by (i) the International Association of Machinists and Aerospace Workers (the “IAM”) or (ii) a duly authorized agent acting on behalf of the IAM.

 

Ranking

 

The PBGC Preferred Stock shall be deemed to rank senior to the Class IAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up.  The Class IAM Preferred Stock shall be deemed to rank on parity with the Class Pilot MEC Preferred Stock.  All shares of Common Stock shall be deemed to rank junior to the Class IAM Preferred Stock.

 

Dividends

 

The holder of the share of Class IAM Preferred Stock shall not be entitled to receive any dividends or other distributions.

 

Liquidation

 

Upon any liquidation, dissolution and/or winding up of the Company, the holder of the share of Class IAM Preferred Stock shall be entitled to receive, in preference to any junior securities, an amount equal to $0.01 for the share of Class IAM Preferred Stock, but such holder shall not be entitled to receive any further payments or other distributions.

 

Consolidation, Merger, etc.

 

Upon consummation of a Merger Transaction, the share of Class IAM Preferred Stock shall be converted, reclassified, 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, and the qualifications, limitations or restrictions thereof, that the Class IAM Preferred Stock had, in respect of the Company, immediately prior to such transaction.

 

Redemption

 

Upon (i) the IAM Termination Date (as defined below) or (ii) the transfer of such share to an unauthorized holder, the share of Class IAM Preferred Stock shall automatically be redeemed at a price of $0.01 per share.

 

Voting Rights

 

Until such time as (the “IAM Termination Date”) (i) there are no longer any persons represented by IAM employed by the Company or its affiliates, (ii) the letter agreement between IAM and the Company no longer provides that IAM has the right to elect a director of the Company, the holder of the share of Class IAM Preferred Stock shall have the right (a) voting as a separate class, to (1) elect one director to the Board at each annual meeting of stockholders for a term of office to expire at the succeeding annual meeting of stockholders, (2) remove such director with or without cause and (3) fill any vacancies in such directorship resulting from death, resignation, disqualification, removal or other cause, 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

 

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vote on all matters submitted to a vote of the holders of Common Stock of the Company (other than the election of directors), except as otherwise required by law. For purposes of the foregoing, the share of Class IAM Preferred Stock shall have one vote.  In addition, the affirmative vote of the holders of the share of Class IAM Preferred Stock voting as a separate class is necessary to authorize an amendment to the Certificate which would adversely affect the powers, preferences or special rights of the Class IAM Preferred Stock.

 

Common Stock

 

Dividends

 

The holders of Common Stock shall be entitled to receive dividends, if and when declared payable from time to time by the Board.

 

Liquidation

 

Upon any liquidation, dissolution and/or winding up of the Company, after all securities ranking prior to the Common Stock have been paid in full that to which they are entitled, the holders of the then outstanding Common Stock shall be entitled to receive, pro rata, the remaining assets of the Company available for distribution to its stockholders.

 

Voting Rights

 

Each outstanding share of Common Stock of the Company shall entitle the holder thereof to one vote on each matter submitted to a vote at a meeting of stockholders.

 

Preemptive Rights

 

The Certificate does not grant any preemptive rights.

 

Foreign Ownership Limitation

 

The Certificate limits the total number of shares of equity securities held by all persons who fail to qualify as citizens of the United States to having no more than 24.9% of the voting power of the outstanding equity securities.

 

Restrictions on Issuance of Securities

 

The Certificate provides that the Company shall not issue nonvoting equity securities on or prior to the second anniversary of the Company’s emergence from protection under Chapter 11 of the Bankruptcy Code to the extent prohibited by Section 1123(a)(6) of the United States Bankruptcy Code for so long as such section is in effect and applicable to the Company.  In addition, except as required by law or as approved by the Company’s stockholders, the Company shall not issue serial preferred stock with voting rights (unless such serial preferred stock is convertible into Common Stock, in which case such serial preferred stock may vote with the Common Stock on an as-converted basis).

 

5% Ownership Limit

 

The Certificate provides, subject to certain exceptions therein, that any attempted transfer of the Company’s securities prior to the earliest of (A) February 1, 2011, (B) the repeal, amendment or modification of Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”) in such a way as to render the restrictions imposed by Section 382 no longer applicable to the Company, (C) the beginning of a taxable year of the Company in which no Tax Benefits (as defined in the Certificate) are available, and (D) the date on which the limitation amount imposed by Section 382 in the event of an ownership change of the Company, would not be materially less than the net operating loss carry forward or net unrealized built-in loss of the Company (the “Restriction Release Date”), or any attempted transfer of the Company’s securities pursuant to an agreement entered

 

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into prior to the Restriction Release Date, shall be prohibited and void ab initio insofar as it purports to transfer ownership or rights in respect of such stock to the purported transferee (y) if the transferor is a Five-Percent Shareholder (as defined in the Certificate) or (z) to the extent that, as a result of such transfer either (1) any person or group of persons shall become a Five-Percent Shareholder or (2) the percentage stock ownership interest in the Company of any Five-Percent Shareholder shall be increased.  The Certificate provides an exception to this limitation for securities held by the PBGC.

 

Number of Directors

 

The Certificate provides that the Board shall be fixed by a resolution of the Board, but in no event shall be fewer than five.  The initial number of directors shall be 12, and shall not be increased to more than 12 directors prior to February 1, 2008.  Directors shall hold office until the next annual meeting and may resign at any time upon written notice to the Company.  Notwithstanding the foregoing, during any period when the holders of any series of Preferred Stock have the right to elect additional directors as provided for or fixed by or pursuant to the provisions of the Certificate, then upon commencement and for the duration of the period during which such right continues:  (i) the then otherwise total authorized number of directors of the Company shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed by or pursuant to said provisions, and (ii) each such additional director shall serve until such office terminates pursuant to said provisions, whichever occurs earlier, subject to his or her earlier death, disqualification, resignation or removal; provided however whenever such holders are divested of such rights pursuant to the provisions of such series of Preferred Stock, the terms of office of all such additional Directors elected by the holders of such series of Preferred Stock, or elected, or fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate and the total authorized number of directors of the Company shall be reduced accordingly.

 

Removal of Directors

 

The Bylaws provide that any director may be removed with or without cause, except as provided by law.

 

Vacancies on the Board of Directors

 

The Certificate and Bylaws provide that, except as may be otherwise provided pursuant to the obligations of the Company to certain holders of Preferred Stock, any vacancy on the Board that results from an increase in the number of directors may be filled by a majority of the Board then in office. Any director of any class elected to fill a vacancy resulting from an increase in the number of directors of that class will hold office for a term that coincides with the remaining term of that class.

 

Stock Certificates

 

The Bylaws provide that the shares of Common Stock shall be uncertificated and that all other shares of the Company shall be represented by certificate or shall be uncertificated, as determined by the Board.

 

Stockholder Action by Written Consent

 

The Certificate provides that no stockholder action may be taken except at an annual or special meeting of stockholders and that stockholders may not take any action by written consent.

 

Amendment to Certificate of Incorporation

 

The Certificate provides that the Company reserves the right to amend, alter, change or repeal any provision contained in the Certificate in a manner in keeping with the Certificate or the Delaware General Corporation Law (“GCL”), and that all rights conferred upon stockholders are granted subject to that reservation.

 

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Amendment of Bylaws

 

The Certificate provides that the Board may alter, amend or repeal the Bylaws; provided, that no bylaws adopted shall invalidate any prior act of the Board that would have been valid if such bylaws had not been adopted.  The Bylaws provide that they may be amended or altered or adopted either: (i) by the affirmative vote of at least the majority of the votes entitled to be cast by the Board or (ii) by the affirmative vote of the holders of at least a majority in voting power of the stock entitled to vote thereon.

 

Special Meeting of Stockholders

 

The Bylaws provide that special meetings of the stockholders may be only be called by the chief executive officer of the Company, the chairman of the Board or the Board.

 

Quorum

 

The Bylaws provide that the holders of a majority of the capital stock issued, outstanding and entitled to vote at a meeting of stockholders, present in person or represented by proxy, will constitute a quorum at any meeting of the stockholders held for the transaction of business.

 

Notice of Stockholder Meeting

 

The Bylaws provide that written notice of meetings of stockholders, stating the place, date and hour of the meeting and the purpose(s) for which the meeting is called, must be given, personally or by mail, to each stockholder of record entitled to vote whenever stockholders are required or permitted to take any action at any meeting not less than 10 nor more than 60 days before the date of the meeting.

 

Delivery & Notice Requirements of Stockholder Nominations and Proposals

 

The Bylaws provide that at any annual stockholders’ meeting only such business may be transacted as has been: (i) specified in the notice of meeting or any supplement thereto given by or at the direction of the Board or any duly authorized committee thereof; (ii) otherwise properly brought by or at the direction of the Board or any duly authorized committee thereof; or (iii) otherwise properly brought by any stockholder of the Company (A) who is a stockholder of record on the date of the giving of the notice provided for in the Bylaws and on the record date for the determination of stockholders entitled to notice of and to vote at such annual meeting, and (B) who complies with the notice procedures set forth in the Bylaws.

 

Nominations of directors, other than those directors appointed pursuant to the Certificate by a union affiliated with the Company (the “union directors”), may be made at any annual or special meeting of stockholders called for the purpose of electing such directors, (i) by or at the direction of the Board or any duly authorized committee thereof; or (ii) by any stockholder of the Company (A) who is a stockholder of record on the date of the giving of the notice provided for in the Bylaws and on the record date for the determination of stockholders entitled to notice of and to vote at such annual meeting, and (B) who complies with the notice procedures set forth in the Bylaws.

 

When proposing to nominate a director, other than a union director, a stockholder’s written notice to the secretary of the Company must set forth (A) with respect to any nominee: (i) the name, age and addresses of the person, (ii) such person’s principal occupation or employment, (iii) the class and number of shares which are beneficially owned by the nominee, (iv) any other information that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for elections of directors pursuant to the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, (v) such nominee’s written consent to serve as a director if so elected and (vi) such other information as may be reasonably necessary to permit the Corporation to determine that the nominee satisfies the qualification requirements set forth in the Certificate and that no violation of the Clayton Act will occur and (B) as to the proposing stockholder, (i) the name and address of record of the stockholder; (ii) the class and number of shares which are beneficially owned by the stockholder; (iii) a description of all arrangements or understandings between the stockholder and any other person or persons (including their names) pursuant to which the nomination is to be

 

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made by such stockholder; (iv) a representation that the stockholder intends to appear in person or by proxy at the meeting to nominate the person named in the notice and (v) any other information that would required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for elections of directors pursuant to the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated there under.

 

For a proposal, other than nominations of persons for election to the Board, to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely written notice thereof to the secretary of the Company and such business must be a proper matter for stockholder action.   A stockholder’s written notice to the secretary for either an annual meeting or a special meeting, other than with respect to nomination of directors, must set forth: (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting; (ii) the name and address of record of the stockholder proposing that business; (iii) the class and number of shares which are beneficially owned by the stockholder; (iv) a description of all arrangements or understandings between the stockholder and any other person or persons (including their names) in connection with the proposal and any material interest of the stockholder in the business; and (v) a representation that the stockholder intends to appear in person or by proxy at the meeting to bring the business before the meeting.

 

Board Committees

 

Except as otherwise provided in the Restated Certificate, the Board may, by resolution adopted by the affirmative vote of at least a majority of the votes entitled to be cast by the entire Board, designate one or more committees of the Board, each such committee to consist of one or more directors.

 

Limitation of Personal Liability of Directors

 

     The Certificate provides that no director will be personally liable to the Company or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for (i) any breach of the director’s duty of loyalty to the Company 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 GCL or (iv) for any transaction from which a director derived an improper personal benefit.

 

Indemnification of Officers & Directors

 

The Certificate provides that each person who was or is made a party or is threatened to be made a party or is involved in any threatened, pending or completed 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, officer, or employee, of the Company or is or was serving at the request of the Company as a director, officer, or employee of another corporation or of a partnership, joint venture, trust or other enterprise shall be indemnified and held harmless by the Company to the fullest extent authorized by the GCL, as the same exists or may hereafter be amended, against all expense, liability and loss actually and reasonably incurred or suffered by such person in connection therewith.  Such indemnification shall continue as to a person who has ceased to be a director, officer, or employee and shall inure to the benefit of his or her heirs, executors and administrators.  Notwithstanding anything to the contrary, the Company shall not be obligated to indemnify a director, officer, or employee for costs and expenses relating to proceedings (or any part thereof) instituted against the Company by such director, officer, or employee (other than proceedings pursuant to which such director, officer, or employee is seeking to enforce such director’s, officer’s, or employee’s indemnification rights hereunder).  The right to indemnification shall include the right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its final disposition.

 

The right to indemnification shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate, by-law, agreement, vote of stockholders or disinterested directors or otherwise.

 

In addition, the Certificate provides that the Company may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Company or another corporation, partnership, joint venture,

 

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trust or other enterprise against any such expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the GCL.

 

No Stockholder Rights Plan

 

Except as set forth in the Bylaws, the Board shall not adopt a stockholder rights plan without the approval of the Company’s stockholders prior to, or within one year following the adoption of any such rights plan.

 

ITEM 9.01.  Financial Statements and Exhibits

 

Exhibit No.

 

Description

3.1

 

Restated Certificate of UAL Corporation

 

 

 

3.2

 

Amended and Restated Bylaws of UAL Corporation

 

 

 

4.1

 

Revolving Credit, Term Loan and Guaranty Agreement, dated as of February 1, 2006, among United Air Lines, Inc., as borrower, UAL Corporation and the subsidiaries of United Air Lines, Inc. and UAL Corporation, as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as co-administrative agent, co-collateral agent and paying agent, Citicorp USA, Inc., as co-administrative agent and co-collateral agent, J.P. Morgan Securities Inc. and Citigroup Global Markets, Inc., as joint lead arrangers and joint bookrunners, and General Electric Capital Corporation, as syndication agent

 

 

 

4.2

 

PBGC Indenture, dated as of February 1, 2006, between UAL Corporation, as issuer, United Air Lines, Inc., as guarantor, and The Bank of New York Trust Company, N.A., as trustee

 

 

 

4.3

 

O’Hare Indenture, dated as of February 1, 2006, between UAL Corporation, as issuer, United Air Lines, Inc., as guarantor, and The Bank of New York Trust Company, N.A., as trustee

 

 

 

10.1

 

UAL Corporation 2006 Management Equity Incentive Plan

 

 

 

10.2

 

UAL Corporation 2006 Director Equity Incentive Plan

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: February 1, 2006

 

 

 

 

UAL CORPORATION

 

 

 

By:

/s/ Paul R. Lovejoy

 

 

Name: Paul R. Lovejoy

 

Title: Senior Vice President, General Counsel and Secretary

 

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EXHIBIT INDEX

 

Exhibit No.

 

Description

3.1*

 

Restated Certificate of UAL Corporation

 

 

 

3.2*

 

Amended and Restated Bylaws of UAL Corporation

 

 

 

4.1*

 

Revolving Credit, Term Loan and Guaranty Agreement, dated as of February 1, 2006, among United Air Lines, Inc., as borrower, UAL Corporation and the subsidiaries of United Air Lines, Inc. and UAL Corporation, as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as co-administrative agent, co-collateral agent and paying agent, Citicorp USA, Inc., as co-administrative agent and co-collateral agent, J.P. Morgan Securities Inc. and Citigroup Global Markets, Inc., as joint lead arrangers and joint bookrunners, and General Electric Capital Corporation, as syndication agent

 

 

 

4.2*

 

PBGC Indenture, dated as of February 1, 2006, between UAL Corporation, as issuer, United Air Lines, Inc., as guarantor, and The Bank of New York Trust Company, N.A., as trustee

 

 

 

4.3*

 

O’Hare Indenture, dated as of February 1, 2006, between UAL Corporation, as issuer, United Air Lines, Inc., as guarantor, and The Bank of New York Trust Company, N.A., as trustee

 

 

 

10.1*

 

UAL Corporation 2006 Management Equity Incentive Plan

 

 

 

10.2*

 

UAL Corporation 2006 Director Equity Incentive Plan

 


* Filed herewith electronically.

 

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Exhibit 3.1

 

RESTATED CERTIFICATE
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 the Corporation was duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware (the “GCL”).

 

ARTICLE FIRST.  The name of the Corporation is UAL CORPORATION.

 

ARTICLE SECOND.  The registered office of the Corporation in the State of Delaware is located at 2711 Centerville Road, Suite 400, in the City of Wilmington, County of Newcastle, Delaware 19808. The name and address of its registered agent is The Prentice-Hall Corporation System, Inc., 2711 Centerville Road, Suite 400, in the City of Wilmington, County of Newcastle, Delaware 19808.

 

ARTICLE THIRD.  The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the GCL.

 

ARTICLE FOURTH.  The total number of shares of capital stock of all classes of which the Corporation shall have authority to issue is 1,255,000,002, divided into five classes, as follows: 250,000,000 shares of Preferred Stock, without par value (hereinafter referred to as ‘‘Serial Preferred Stock’’), 5,000,000 shares of PBGC 2% Convertible Preferred Stock, par value $0.01 per share (the “PBGC Preferred Stock”), one (1) share of Class Pilot MEC Junior Preferred Stock, par value $0.01 per share (the ‘‘Class Pilot MEC Preferred Stock’’), one (1) share of Class IAM Junior Preferred Stock, par value $0.01 per share (the “Class IAM Preferred Stock’’ and, together with the Serial Preferred Stock, the PBGC Preferred Stock, and the Class Pilot MEC Preferred Stock,  the ‘‘Preferred Stock’’), and 1,000,000,000 shares of Common Stock, par value $0.01 per share (the “Common Stock”).

 

PART I

 

Serial Preferred Stock

 

The board of directors of the Corporation (the “Board of Directors”) is expressly authorized, without any vote or other action by the stockholders and subject to limitations prescribed by law, 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, Part I or any resolution adopted by the Board of Directors pursuant thereto.

 

PART II

 

PBGC 2% 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 in this Article Fourth, Part II.  Certain defined terms used in this Part II shall have the definitions ascribed to them in Section 10 hereof.

 

Section 1.               Dividends.

 

1.1           General Obligation. To the extent permitted under the GCL, the Corporation shall pay preferential dividends to the holders of the PBGC Preferred Stock as provided in this Section 1.1 by increasing the aggregate Liquidation Value thereof on each Dividend Reference Date (as hereinafter defined) by an amount equal to the amount of the dividends to be paid.  Once the Liquidation Value has been so increased, the dividends relating to such increase shall be deemed to have been paid.  Except as otherwise provided herein, dividends on each share of the PBGC Preferred Stock (a “PBGC Preferred Share”) shall accrue on a daily basis at the rate of 2% per annum of the sum of the Liquidation Value thereof plus all accumulated and unpaid dividends thereon from and including the date of issuance of such PBGC Preferred Share (or, in the case of accumulated and unpaid dividends, from and including the Dividend Reference Date (as defined below) on which they were accumulated) to and including the first to occur of (i) the date on which the Liquidation Value of such PBGC Preferred Share, plus all accrued and unpaid dividends thereon, is paid to the holder thereof in connection with the liquidation, dissolution and/or winding up of the Corporation (including any transaction deemed to be a liquidation, dissolution and winding up of the Corporation under Section 2.2 below) or the redemption of such PBGC Preferred Share by the Corporation, (ii) the date on which such PBGC Preferred Share is converted into shares of Conversion Stock hereunder or (iii) the date on which such PBGC Preferred Share is otherwise acquired by the Corporation.  Such dividends shall be cumulative and shall accrue on a daily basis whether or not they have been declared and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends.  Each distribution on the PBGC Preferred Stock shall be

 

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payable to holders of record as they appear on the records of the Corporation on the record date declared by the Board of Directors, which shall be not fewer than ten (10) nor more than sixty (60) days preceding the related Dividend Reference Date.  The date on which the Corporation initially issues any PBGC Preferred Share shall be deemed to be its “date of issuance” regardless of the number of times transfer of such PBGC Preferred Share is made on the stock records maintained by or for the Corporation and regardless of the number of certificates which may be issued to evidence such PBGC Preferred Share.

 

1.2           Dividend Reference Dates.  To the extent not paid on June 30 and December 31 of each year, beginning June 30, 2006 (the “Dividend Reference Dates”), all dividends which have accrued on each PBGC Preferred Share outstanding during the six-month period (or the period beginning on the date of issuance of the PBGC Preferred Stock and ending on June 30, 2006 in the case of the initial Dividend Reference Date) ending upon each such Dividend Reference Date shall be accumulated (and dividends shall accrue thereon pursuant to Section 1.1) and shall remain accumulated dividends with respect to such PBGC Preferred Share until paid to the holder thereof pursuant to Section 1.1.

 

1.3           Pro Rata Payment.  All dividends paid with respect to PBGC Preferred Shares pursuant to this Section 1 shall be paid pro rata and in like manner to the holders of each PBGC Preferred Share entitled thereto.

 

Section 2.               Liquidation.

 

2.1           Generally.  Upon any liquidation, dissolution and/or winding up of the Corporation (whether voluntary or involuntary, and including any transaction deemed to be a liquidation, dissolution and winding up of the Corporation pursuant to Section 2.2 below):

 

(a)           each holder of PBGC Preferred Stock shall be entitled to be paid in respect of each PBGC Preferred Share then held by such holder, prior to and in preference to any distribution or payment to be made in respect of any Junior Securities or to be made in respect of any PBGC Preferred Shares pursuant to Section 2.1(b) below, an amount in cash equal to all accrued and unpaid dividends on such PBGC Preferred Share; and

 

(b)           each holder of PBGC Preferred Stock shall be entitled to be paid in respect of each PBGC Preferred Share then held by such holder, prior to and in preference to any distribution or payment to be made in respect of any Junior Securities, an amount in cash equal to the Liquidation Value of each such PBGC Preferred Share.

 

2.2           Deemed Liquidations.  The consummation of any Change in Ownership or Fundamental Change shall be deemed to be a liquidation, dissolution and winding up of the Corporation for purposes of this Section 2 (and, upon consummation thereof, each holder of PBGC Preferred Stock shall be entitled to receive, in exchange for cancellation of such holder’s PBGC Preferred Shares, payment from the Corporation of the amounts payable under this Section 2 with respect to such holder’s PBGC Preferred Shares upon a liquidation, dissolution and/or winding up of the Corporation).

 

2.3           Notice of Liquidations; Distribution of Partial Liquidation Proceeds.  Except as otherwise agreed by the holders of a majority of the PBGC Preferred Shares then outstanding, not fewer than 45 days prior to the date of any liquidation, dissolution and/or winding up of the Corporation stated therein, the Corporation shall mail written notice of any liquidation, dissolution and/or winding up of the Corporation (including any transaction deemed to be a liquidation, dissolution and winding up of the Corporation under Section 2.2 above) to each record holder of PBGC Preferred Stock, setting forth in reasonable detail the amount of proceeds to be paid with respect to each PBGC Preferred Share and each share of Common Stock in connection with such liquidation, dissolution and/or winding up of the

 

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Corporation.  If, upon any liquidation, dissolution and/or winding up of the Corporation (whether voluntary or involuntary, and including any transaction deemed to be a liquidation, dissolution and winding up of the Corporation under Section 2.2 above), the Corporation’s assets to be distributed among the holders of the PBGC Preferred Stock are insufficient to permit payment to such holders of the aggregate amount which they are entitled to be paid under Section 2.1(a) and Section 2.1(b) above, then the entire assets available to be distributed to the Corporation’s stockholders shall be distributed pro rata among the holders of the PBGC Preferred Stock and Serial Preferred Stock ranking pari passu with the PBGC Preferred Stock on a pari passu basis according to the Liquidation Value of each PBGC Preferred Share and the liquidation value of each other share of Serial Preferred Stock.

 

Section 3.               Ranking.  The PBGC Preferred Stock shall, with respect to dividends, distributions and the distribution of assets upon liquidation, dissolution or winding up of the Corporation (including any transaction deemed to be a liquidation, dissolution and winding up of the Corporation under Section 2.2 above), rank on a parity with the Serial Preferred Stock and rank senior to the Junior Securities, including without limitation the Class Pilot MEC Preferred Stock, the Class IAM Preferred Stock and all shares of Common Stock.  In determining whether any class or series of stock of the Corporation ranks on a parity or junior to the PBGC Preferred Stock, such class or series shall be deemed to rank:

 

(a)           on a parity with the PBGC Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the liquidation prices per share thereof are different from those of the PBGC Preferred Stock, if the holders of such class or series of Serial Preferred Stock and the PBGC 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

 

(b)           junior to the PBGC Preferred Stock, as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of PBGC 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.

 

Section 4.               Redemptions.

 

4.1           Optional Redemption.  The Corporation may at any time and from time to time redeem all or any portion of the shares of PBGC Preferred Stock then outstanding.  Upon any such redemption, the Corporation shall pay a price per PBGC Preferred Share equal to the Liquidation Value thereof (plus all accrued and unpaid dividends thereon).  Each holder of PBGC Preferred Shares shall promptly surrender and deliver to the Corporation the certificates representing such shares.  If fewer than all of the PBGC Preferred Shares outstanding are to be redeemed by the Corporation at any time, then the number of PBGC Preferred Shares to be redeemed from each holder of PBGC Preferred Shares at such time shall be determined pro rata based upon the aggregate Liquidation Value of all PBGC Preferred Shares held by each such holder (plus all accrued and unpaid dividends thereon).

 

4.2           Redemption Payments.  For each PBGC Preferred Share that is to be redeemed hereunder, the Corporation shall be obligated on the Redemption Date to pay to the holder thereof (upon surrender by such holder at the Corporation’s principal office of the certificate representing such PBGC Preferred Share) an amount in cash in immediately available funds equal to the Liquidation Value of such PBGC Preferred Share, plus all accrued and unpaid dividends thereon.  If the funds of the Corporation legally available for redemption of PBGC Preferred Shares on any Redemption Date are insufficient to redeem the total number of PBGC Preferred Shares to be redeemed on such date, those funds which are legally available shall be used to redeem the maximum possible number of PBGC Preferred Shares pro rata among the holders of the PBGC Preferred Shares to be redeemed based upon the aggregate Liquidation

 

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Value of all PBGC Preferred Shares held by each such holder, plus all accrued and unpaid dividends thereon.

 

4.3           Notice of Redemption.  Except as otherwise provided herein, the Corporation shall mail written notice of each redemption of PBGC Preferred Stock to each record holder thereof not less than 45 days prior to the date on which such redemption is to be made.  In case fewer than the total number of PBGC Preferred Shares represented by any certificate are redeemed, a new certificate representing the number of unredeemed PBGC Preferred Shares shall be issued to the holder thereof within five Business Days after surrender of the certificate representing the redeemed PBGC Preferred Shares.

 

4.4           Determination of the Number of Each Holder’s Shares to be Redeemed.  Except as otherwise provided herein, the PBGC Preferred Shares to be redeemed from the holders thereof in redemptions hereunder shall be allocated among such holders on a pro rata basis in accordance with the aggregate Liquidation Value of all PBGC Preferred Shares held by each such holder, plus all accrued and unpaid dividends thereon.

 

4.5           Dividends After Redemption Date.  No PBGC Preferred Share shall be entitled to any dividends accruing after the date on which the Liquidation Value of such PBGC Preferred Share, together with all accrued and unpaid dividends thereon through the date of payment, is paid in full in immediately available funds to the holder of such PBGC Preferred Share.  On such date, all rights of the holder of such PBGC Preferred Share shall cease, and such PBGC Preferred Share shall no longer be deemed to be issued and outstanding.

 

4.6           Redeemed or Otherwise Acquired Shares.  Any PBGC Preferred Shares converted, redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof, and, if necessary to provide for the lawful redemption or purchase of such shares, the capital represented by such shares shall be reduced in accordance with the GCL.  All such shares shall upon their cancellation be retired from the available capital stock of the Corporation and no longer be authorized shares of Preferred Stock of the Corporation.

 

Section 5.               Voting Rights.  Except as otherwise required by applicable law, the holders of PBGC Preferred Stock shall have no voting rights except that the affirmative vote of the holders of a majority of the outstanding PBGC Preferred Shares, voting as a separate 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 or otherwise) 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 powers, preferences or special rights of any of the PBGC Preferred Shares.

 

Section 6.               Conversion.

 

6.1           Conversion Procedure.

 

(a)           (i) At any time and from time to time following the earlier of (A) the second anniversary of the date of issuance of the PBGC Preferred Stock and (B) a Fundamental Change or a Change in Ownership pursuant to Section 2.3 above (in which case, any conversion would be effective simultaneously with the consummation of the Fundamental Change or Change in Ownership), any holder of PBGC Preferred Stock may convert all or any portion of such holder’s PBGC Preferred Stock (including any fraction of a PBGC Preferred Share) held by such holder into the number of shares of Conversion Stock computed by multiplying the number of such holder’s PBGC Preferred Shares to be

 

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converted by the Liquidation Value (plus all accrued and unpaid dividends thereon) and dividing the result by the Conversion Price then in effect.

 

(ii)           On the 15th anniversary of the date of issuance, each PBGC Preferred Share shall automatically convert into the number of shares of Conversion Stock computed by dividing the Liquidation Value (plus all accrued and unpaid dividends thereon) of such PBGC Preferred Share by the Conversion Price then in effect.
 

(b)           Except as otherwise provided herein, each conversion of PBGC Preferred Stock shall be deemed to have been effected as of the close of business on the date on which the certificate or certificates representing the PBGC Preferred Stock to be converted have been surrendered for conversion at the principal office of the Corporation.  At the time any such conversion has been effected, the rights of the holder of the shares converted as a holder of PBGC Preferred Stock shall cease and the Person or Persons in whose name or names any certificate or certificates for shares of Conversion Stock are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the shares of Conversion Stock represented thereby.

 

(c)           The conversion rights of any PBGC Preferred Share subject to redemption hereunder shall terminate on the Redemption Date for such PBGC Preferred Share.

 

(d)           Notwithstanding any other provision hereof, if a conversion of PBGC Preferred Stock is to be made in connection with a Change in Ownership, a Fundamental Change or similar transaction affecting the Corporation, the conversion of any shares of PBGC Preferred Stock may, at the election of the holder thereof, be conditioned upon the consummation of such transaction, in which case such conversion (i) shall not become effective unless such transaction is consummated, and (ii) shall be deemed to be effective immediately prior to the consummation of such transaction.

 

(e)           As soon as possible after a conversion has been effected, but in any event within ten Business Days thereafter, the Corporation shall deliver to the converting holder:

 

(i)            a certificate or certificates representing the number of shares of Conversion Stock issuable by reason of such conversion in the name of the record holder thereof and in such denomination or denominations as the converting holder has specified;
 
(ii)           a certificate representing any shares of PBGC Preferred Stock which were represented by the certificate or certificates delivered to the Corporation in connection with such conversion but which were not converted; and
 
(iii)          payment of the amount payable under Section 6.1(i) below with respect to such conversion.
 

(f)            Upon conversion of each share of PBGC Preferred Stock, the Corporation shall take all such actions as are necessary in order to insure that the Conversion Stock issuable with respect to such conversion shall be validly issued, fully paid and nonassessable, free and clear of all taxes, liens, charges and encumbrances with respect to the issuance thereof.

 

(g)           The Corporation shall not close its books against the transfer of PBGC Preferred Stock or of Conversion Stock issued or issuable upon conversion of PBGC Preferred Stock in any manner which interferes with the timely conversion of PBGC Preferred Stock.  The Corporation shall assist and cooperate, in all reasonable respects, with any holder of PBGC Preferred Shares required to make any governmental filings or obtain any governmental approval prior to or in connection with any conversion

 

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of PBGC Preferred Shares hereunder (including, without limitation, making any filings required to be made by the Corporation).

 

(h)           The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of issuance upon the conversion of the PBGC Preferred Stock, such number of shares of Conversion Stock issuable upon the conversion of all outstanding PBGC Preferred Stock.  All shares of Conversion Stock which are so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens, charges and encumbrances.  The Corporation shall take all such actions as may be necessary to assure that all such shares of Conversion Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Conversion Stock may be listed (except for official notice of issuance which shall be delivered by the Corporation promptly after such issuance).  The Corporation shall not take any action which would cause the number of authorized but unissued shares of Common Stock to be fewer than the number of Conversion Shares required to be reserved hereunder for issuance upon conversion of all outstanding PBGC Preferred Stock.

 

(i)            If any fractional interest in a share of Conversion Stock would, except for the provisions of this subparagraph, be delivered upon any conversion of any PBGC Preferred Shares, the Corporation, in lieu of delivering the fractional share therefor, shall pay an amount to the holder thereof equal to the Market Price of such fractional interest as of the date of conversion.

 

6.2           Conversion Price.

 

(a)           The initial Conversion Price shall be 125% of the average of the closing prices of the sales of Common Stock on all domestic securities exchanges on which such Common Stock may at the time be listed, averaged over a period beginning on the date of issuance of the PBGC Preferred Stock and ending on the 60th consecutive trading day following such date (the “Conversion Price”).  The Corporation shall deliver to Pension Benefit Guaranty Corporation (“PBGC”), on or prior to the 65th trading day following the date of issuance of the PBGC Preferred Stock, written notice setting forth the initial Conversion Price and the calculation thereof.  In order to prevent dilution of the conversion rights granted under this Section 6, the Conversion Price shall be subject to adjustment from time to time pursuant to this Section 6.2 and Section 6.4 below.

 

(b)           If and whenever the Corporation issues or sells, or in accordance with Section 6.3 is deemed to have issued or sold, any shares of its Common Stock for a consideration per share less than the Market Price in effect immediately prior to the time of such issuance or sale, then immediately upon such issuance or sale or deemed issuance or sale the Conversion Price shall be reduced to the Conversion Price determined by dividing (a) the sum of (1) the product derived by multiplying the Conversion Price in effect immediately prior to such issuance or sale by the number of shares of Common Stock Deemed Outstanding immediately prior to such issue or sale, plus (2) the consideration, if any, received by the Corporation upon such issuance or sale, by (b) the number of shares of Common Stock Deemed Outstanding immediately after such issuance or sale.

 

(c)           Notwithstanding the foregoing, there shall be no adjustment in the Conversion Price as a result of (i) any issuance or sale (or deemed issuance or sale) of any Common Stock to directors, employees, consultants, and advisors of the Corporation and its Subsidiaries pursuant to stock option plans, stock ownership plans or other compensatory arrangements approved by the Board of Directors (as such number of shares is proportionately adjusted for subsequent stock splits, combinations and dividends affecting the Common Stock) or (ii) any issuance of Common Stock upon the conversion, exchange or exercise of any securities issued on or prior to the date of issuance of the PBGC Preferred Stock or pursuant to the Plan of Reorganization.

 

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6.3           Effect on Conversion Price of Certain Events.  For purposes of determining the adjusted Conversion Price under Section 6.2 above, the following shall be applicable:

 

(a)           Issuance of Rights or Options.  If the Corporation in any manner grants or sells any Options, other than as expressly provided in the Plan of Reorganization, and the price per share for which Common Stock is issuable upon the exercise of such Options, or upon the conversion or exchange of any Convertible Securities issuable upon the exercise of such Options, is less than the Market Price in effect immediately prior to the time of the granting or sale of such Options, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the granting or sale of such Options for such price per share.  For purposes of this paragraph, the “price per share for which Common Stock is issuable” shall be determined by dividing (A) the total amount, if any, received or receivable by the Corporation as consideration for the granting or sale of such Options, plus the minimum aggregate amount of additional consideration payable to the Corporation upon the exercise of all such Options, plus in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options.  No further adjustment of the Conversion Price shall be made when Convertible Securities are actually issued upon the exercise of such Options or when Common Stock is actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities.

 

(b)           Issuance of Convertible Securities.  If the Corporation in any manner issues or sells any Convertible Securities, other than as expressly provided in the Plan of Reorganization, and the price per share for which Common Stock is issuable upon the conversion or exchange thereof is less than the Market Price in effect immediately prior to the time of such issue or sale, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the issuance or sale of such Convertible Securities for such price per share.  For the purposes of this paragraph, the “price per share for which Common Stock is issuable” shall be determined by dividing (A) the total amount received or receivable by the Corporation as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities.  No further adjustment of the Conversion Price shall be made when Common Stock is actually issued upon the conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustments of the Conversion Price had been or are to be made pursuant to other provisions of this Section 6, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

 

(c)           Change in Option Price or Conversion Rate.  If the purchase price provided for in any Option, the additional consideration, if any, payable upon the issue, conversion or exchange of any Convertible Securities or the rate at which any Convertible Security is convertible into or exchangeable for Common Stock changes at any time, the Conversion Price in effect at the time of such change shall be adjusted immediately to the Conversion Price which would have been in effect at such time had such Option or Convertible Security originally provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold.  For purposes of Section 6.3, if the terms of any Option or Convertible Security which was outstanding as of the date of issuance of the PBGC Preferred Stock are changed in the manner described in the immediately

 

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preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change; provided that no such change shall at any time cause the Conversion Price hereunder to be increased.

 

(d)           Treatment of Expired Options and Unexercised Convertible Securities.  Upon the expiration of any Option or the termination of any right to convert or exchange any Convertible Security without the exercise of any such Option or right, the Conversion Price then in effect hereunder shall be adjusted immediately to the Conversion Price that would have been in effect at the time of such expiration or termination had such Option or Convertible Security, to the extent outstanding immediately prior to such expiration or termination, never been issued.  For purposes of this Section 6.3, the expiration or termination of any Option or Convertible Security that was outstanding as of the date of issuance of the PBGC Preferred Stock shall not cause the Conversion Price hereunder to be adjusted unless, and only to the extent that, a change in the terms of such Option or Convertible Security caused it to be deemed pursuant to Section 6.3(c), to have been issued after the date of issuance of the PBGC Preferred Stock.

 

(e)           Calculation of Consideration Received.  If any Common Stock, Option or Convertible Security is issued or sold or deemed to have been issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Corporation therefor (net of discounts, commissions and related expenses).  If any Common Stock, Option or Convertible Security is issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Corporation shall be the Market Price thereof as of the date of the sale or issuance by the Corporation of such Common Stock, Option or Convertible Security.  If any Common Stock, Option or Convertible Security is issued to the owners of the non-surviving Person in connection with any merger or consolidation in which the Corporation is the surviving Person, the amount of consideration therefor shall be deemed to be the fair value of the portion of the net assets and business of the non-surviving Person that is attributable to such Common Stock, Option or Convertible Security, as the case may be.  The fair value of any consideration or net assets other than cash and securities (and, if applicable, the portion thereof attributable to any such stock or securities) shall be determined in good faith by the Board of Directors.

 

(f)            Integrated Transactions.  In case any Common Stock, Option or Convertible Security is issued in connection with the issue or sale of other securities of the Corporation, together comprising one integrated transaction in which no specific consideration is allocated to such Common Stock, Option or Convertible Security by the parties thereto, the Common Stock, Option or Convertible Security shall be deemed to have been issued for a consideration of $.01.

 

(g)           Treasury Shares.  The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation or any of its Subsidiaries, and the disposition of any shares so owned or held shall be considered an issue or sale of Common Stock.

 

(h)           Record Date.  If the Corporation takes a record of the holders of Common Stock for the purpose of entitling them (a) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (b) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issuance or sale of the shares of Common Stock to be issued or sold upon the declaration of such dividend or upon the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

 

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6.4           Subdivision or Combination of Common Stock.  If the Corporation at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision shall be proportionately reduced, and if the Corporation at any time combines (by reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination shall be proportionately increased.

 

6.5           Reorganization, Reclassification, Consolidation, Merger or Sale.  Any recapitalization, reorganization, reclassification, consolidation, merger, sale or disposition of all or substantially all of the Corporation’s property or assets or other transaction, in each case which is effected in such a manner that the holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities, property or assets with respect to or in exchange for Common Stock, is referred to herein as an “Organic Change.”  Prior to the consummation of any Organic Change, unless the PBGC Preferred Stock receives in such Organic Change either (i) on an as-converted basis, the same proportionate consideration as the Common Stock or (ii) in exchange therefor, preferred stock of the successor Person resulting from the Organic Change (or its parent Person) bearing the same relative rights, privileges and priorities as the PBGC Preferred Stock, the Corporation shall make appropriate provisions to insure that the PBGC Preferred Stock shall not be cancelled or retired as a result of such Organic Change and each of the holders of the PBGC Preferred Stock shall thereafter have the right to acquire and receive, in lieu of the shares of Conversion Stock immediately theretofore acquirable and receivable upon the conversion of such holder’s PBGC Preferred Stock, such shares of stock, securities or assets as such holder would have received in connection with such Organic Change if such holder had converted in accordance with this Section 6 all of such holder’s PBGC Preferred Stock immediately prior to such Organic Change (plus all accrued and unpaid dividends on all PBGC Preferred Shares held by such holder immediately prior to such Organic Change).  In each such case, the Corporation shall also make appropriate provisions to insure that the provisions of this Section 6 shall thereafter be applicable to the PBGC Preferred Stock (including, in the case of any such consolidation, merger, sale or disposition in which the successor Person or purchasing Person is other than the Corporation, an immediate adjustment of the Conversion Price to the value for the Common Stock reflected by the terms of such consolidation, merger, sale or disposition, and a corresponding immediate adjustment in the number of shares of Conversion Stock acquirable and receivable upon conversion of PBGC Preferred Stock, if the value so reflected is less than the Market Price in effect immediately prior to such consolidation, merger, sale or disposition).  The Corporation shall not effect any such consolidation, merger, sale or disposition, unless prior to the consummation thereof, the successor Person (if other than the Corporation) resulting from consolidation or merger or the Person purchasing such assets assumes by written instrument, the obligation to deliver to each holder of PBGC Preferred Shares of stock, securities, property or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire.

 

6.6           Certain Events.  If any event occurs of the type contemplated by the provisions of this Section 6 but not expressly provided for by such provisions (other than in respect of any compensatory arrangement described in Section 6.2(c)(i) above), then the Board of Directors shall make an appropriate adjustment in the Conversion Price so as to protect the rights of the holders of PBGC Preferred Stock; provided that no such adjustment shall increase the Conversion Price as otherwise determined pursuant to this Section 6 or decrease the number of shares of Conversion Stock issuable upon the conversion of any PBGC Preferred Share.

 

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6.7           Notices.

 

(a)           As soon as practicable after any adjustment of the Conversion Price, the Corporation shall give written notice thereof to all holders of PBGC Preferred Stock, setting forth in reasonable detail and certifying the calculation of such adjustment.

 

(b)           The Corporation shall give written notice to all holders of PBGC Preferred Stock at least 20 days prior to the date on which the Corporation closes its books or takes a record (i) with respect to any dividend or distribution upon Common Stock, (ii) with respect to any pro rata subscription offer to holders of Common Stock or (iii) for determining rights to vote with respect to any Organic Change, dissolution or liquidation.

 

(c)           The Corporation shall also give written notice to all holders of PBGC Preferred Stock at least 20 days prior to the date on which any Organic Change shall take place.

 

Section 7.               Registration of Transfer.  The Corporation shall keep at its principal office a register for the registration of PBGC Preferred Stock.  Upon the surrender of any certificate representing PBGC Preferred Stock at such place, the Corporation shall, at the request of the record holder of such certificate, execute and deliver (at the Corporation’s expense) a new certificate or certificates in exchange therefor representing in the aggregate the number of PBGC Preferred Shares represented by the surrendered certificate.  Each such new certificate shall be registered in such name and shall represent such number of PBGC Preferred Shares as is requested by the holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate, and dividends shall accrue on the PBGC Preferred Stock represented by such new certificate from the date to which dividends have been fully paid on such PBGC Preferred Stock represented by the surrendered certificate.

 

Section 8.               Liquidating Dividends.  If the Corporation declares or pays a dividend upon the Common Stock payable otherwise than in cash out of earnings or earned surplus (determined in accordance with United States generally accepted accounting principles) except for a stock dividend payable in shares of Common Stock (a “Liquidating Dividend”), then the Corporation shall pay to the holders of PBGC Preferred Stock at the time of payment thereof the Liquidating Dividends which would have been paid in respect of shares of Conversion Stock had such PBGC Preferred Stock been converted immediately prior to the date on which a record is taken for such Liquidating Dividend, or, if no record is taken, the date as of which the record holders of such class of Common Stock entitled to such dividends are to be determined.  The Liquidation Value of any PBGC Preferred Share shall be reduced by the amount of any Liquidating Dividend paid in respect of such Share.

 

Section 9.               Replacement.  Upon receipt of evidence reasonably satisfactory to the Corporation of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing PBGC Preferred Shares, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Corporation, or, in the case of any such mutilation upon surrender of such certificate, the Corporation shall execute and deliver in lieu of such certificate a new certificate of like kind representing the number of PBGC Preferred Shares represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate, and dividends shall accrue on the PBGC Preferred Stock represented by such new certificate from the date to which dividends have been fully paid on the PBGC Preferred Stock represented by such lost, stolen, destroyed or mutilated certificate or, if there is no such date, from the date of issuance of the PBGC Preferred Stock represented by such lost, stolen, destroyed or mutilated certificate.

 

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Section 10.             Definitions.

 

10.1         “Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York, New York or U.S. governmental agencies are authorized or obligated by applicable law or executive order to remain closed.

 

10.2         “Change in Ownership” means any sale, disposition, transfer or issuance or series of sales, dispositions, transfers and/or issuances of shares of the capital stock by the Corporation or any holders thereof which results in any Person or group of Persons (as the term “group” is used under the Securities Exchange Act of 1934, as amended), other than the holders of Common Stock and PBGC Preferred Stock as of the date of issuance of the PBGC Preferred Stock, owning capital stock of the Corporation possessing the voting power (under ordinary circumstances and without regard to cumulative voting rights) to elect a majority of the Board of Directors.

 

10.3         “Common Stock” means the Corporation’s Common Stock and any capital stock of any class of the Corporation hereafter authorized which is not limited to a fixed sum or percentage of par or stated value in respect to the rights of the holders thereof to participate in dividends or in the distribution of assets upon any liquidation, dissolution or winding up of the Corporation.

 

10.4         “Common Stock Deemed Outstanding” means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock outstanding or that would be outstanding upon exercise or conversion of all Options and Convertible Securities, whether or not the Options or Convertible Securities are actually exercisable at such time, including any shares of Common Stock issuable upon conversion of the PBGC Preferred Stock.

 

10.5         “Conversion Stock” means shares of Common Stock; provided that if there is a change such that the securities issuable upon conversion of the PBGC Preferred Stock are issued by a Person other than the Corporation or there is a change in the type or class of securities so issuable, then the term “Conversion Stock” shall mean shares of the security issuable upon conversion of the PBGC Preferred Stock if such security is issuable in shares, or shall mean the smallest unit in which such security is issuable if such security is not issuable in shares.

 

10.6         “Convertible Securities” means any stock or securities directly or indirectly convertible into or exchangeable for Common Stock.

 

10.7         “Fundamental Change” means the occurrence of any of the following:  (a) any sale, transfer or disposition of more than 50% of the property or assets of the Corporation and its Subsidiaries on a consolidated basis (measured either by book value in accordance with generally accepted accounting principles consistently applied or by fair market value determined in the reasonable good faith judgment of the Board of Directors) in any transaction or series of transactions (other than sales in the ordinary course of business) and (b) any merger or consolidation to which the Corporation is a party, except for (x) a merger which is effected solely to change the state of incorporation of the Corporation or (y) a merger in which the Corporation is the surviving Person, the terms of the PBGC Preferred Stock are not changed or altered in any respect, the PBGC Preferred Stock is not exchanged for cash, securities or other property or assets, and after giving effect to such merger, the holders of the capital stock of the Corporation as of the date prior to the merger or consolidation shall continue to own the outstanding capital stock of the Corporation possessing the voting power (under ordinary circumstances) to elect a majority of the Board of Directors.

 

10.8         “Junior Securities” means any capital stock or other equity securities of the Corporation, except for the Serial Preferred Stock and the PBGC Preferred Stock.

 

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10.9         “Liquidation Value” of any PBGC Preferred Share as of any particular date shall be the sum of (a) $100 and (b) all increases in Liquidation Value pursuant to Section 1.1 above.

 

10.10       “Market Price” of any security means the average of the closing prices of such security’s sales on all securities exchanges on which such security may at the time be listed, or, if there has been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such security is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is not quoted in the NASDAQ System, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar successor organization, in each such case averaged over a period of 21 days consisting of the day as of which “Market Price” is being determined and the 20 consecutive Business Days prior to such day.  If at any time such security is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the “Market Price” shall be the fair value thereof determined in good faith by the Corporation.

 

10.11       “Options” means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.

 

10.12       “Person” means an individual, a corporation, a limited liability company, an association, a partnership, a joint venture, a trust, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

 

10.13       “Plan of Reorganization” means the Joint Plan of Reorganization under Chapter 11 of the United States Bankruptcy Code confirmed by the United States Bankruptcy Court for the Northern District of Illinois, on behalf of the Corporation and 27 other direct and indirect wholly owned subsidiaries, in Case No. 02-B-48191, as in effect on the date of issuance of the PBGC Preferred Stock.

 

10.14       “Redemption Date” as to any PBGC Preferred Share means the applicable date specified in the notice of any redemption given in accordance with Section 4.3 above; provided that no such date shall be a Redemption Date unless the Liquidation Value of such PBGC Preferred Share, plus all accrued and unpaid dividends thereon, is actually paid in full on such date, and if not so paid in full, the Redemption Date shall be the date on which all such amounts are fully paid.

 

10.15       “Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that person or a combination thereof.  For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control the managing general partner of such limited liability company, partnership, association or other business entity.

 

Section 11.             Amendment and Waiver.  No amendment, modification or waiver shall be binding or effective with respect to any provision of this Article FOURTH, Part II without the prior written consent of the holders of a majority of the PBGC Preferred Shares outstanding at the time such action is taken.

 

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Section 12.             Notices.  Except as otherwise expressly provided hereunder, all notices referred to herein shall be in writing and shall be delivered by registered or certified mail, return receipt requested and postage prepaid, or by reputable overnight courier service, charges prepaid, and shall be deemed to have been given when so mailed or sent (i) to the Corporation, at its principal executive offices and (ii) to any stockholder, at such holder’s address as it appears in the stock records of the Corporation (unless otherwise indicated by any such holder).

 

PART III

 

Class Pilot MEC Junior 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 in this Article Fourth, Part III.

 

Section 1.               Issuance; Restrictions on Transfer.

 

The share of Class Pilot MEC Preferred Stock shall be issued only to, and shall be held only by, (i) the United Airlines Pilots Master Executive Council (the “MEC”) 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. (“United”) or (ii) a duly authorized agent acting for the benefit of the MEC. Any purported sale, transfer, pledge or other disposition (a “transfer”) of the share of Class Pilot MEC Preferred Stock to any person, other than a successor to the MEC by merger or reorganization of ALPA (in any such case, an “ALPA Successor”), or a duly authorized agent acting for the benefit of ALPA or an ALPA 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, such holder or any other person or entity, 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 Subsection 9.2 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 this Article FOURTH, Part III, the following terms shall have the meanings indicated:

 

2.1           “Affiliate” shall have the meaning defined in Rule 12b-2 under the Exchange Act.

 

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 Pilot MEC 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           “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor act thereto.

 

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2.5           “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.

 

2.6           “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.

 

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 for the 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.

 

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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 PBGC Preferred Stock shall be deemed to rank senior to the Class Pilot MEC Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up.  The Class IAM Preferred Stock shall 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 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 (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 (as defined in Section 8.1 below), to elect one member of the board of directors (or similar governing body) of such company.

 

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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 such time (the “ALPA Termination Date”) as (i) there are no longer any persons represented by ALPA (or any ALPA Successor) employed by the Corporation or any of its Affiliates or (ii) the collective bargaining agreement between the Corporation or any of its Affiliates and ALPA has been amended by the parties thereto so that such agreement no longer provides that ALPA has the right to appoint a director of the Corporation, the holder of the share of Class Pilot MEC Preferred Stock shall have the right (a) voting as a separate class, to (1) elect one director to the Board of Directors at each annual meeting of stockholders for a term of office to expire at the succeeding annual meeting of stockholders, (2) remove such director with or without cause and (3) fill any vacancies in such directorship resulting from death, resignation, disqualification, removal or other cause, 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 Directors), except as otherwise required by law.

 

8.2           The affirmative vote of the holder of the share of Class Pilot MEC Preferred Stock, voting as a separate 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 powers, preferences or special rights of the Class Pilot MEC Preferred Stock.

 

8.3           For purposes of the foregoing provisions of Sections 8.1 and 8.2, the share of Class Pilot MEC Preferred Stock shall have one (1) vote.

 

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, as provided herein below. 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 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.

 

9.2           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

 

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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 the 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 IV

 

Class IAM 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 in this Article Fourth, Part IV.

 

Section 1.               Issuance; Restrictions on Transfer.

 

The share of Class IAM Preferred Stock shall be issued only to, and shall be held only by, (i) the International Association of Machinists and Aerospace Workers (the “IAM”) pursuant to the IAM’s authority as the collective bargaining representative for certain crafts or classes of public contact employees, ramp and stores employees, food service and security officer employees, Mileage Plus public contact employees, fleet technical instructors and related and maintenance instructor employees employed by United 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 by merger or reorganization of the IAM (in any such case, an “IAM Successor”), or a duly authorized agent acting for the benefit of the IAM or an IAM 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, such holder or any other person or entity, 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 Subsection 9.2 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 this Article Fourth, Part IV, the following terms shall have the meanings indicated:

 

2.1           “Affiliate” shall have the meaning defined in Rule 12b-2 under the Exchange Act.

 

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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           “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor act thereto.

 

2.5           “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.

 

2.6           “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.

 

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 for the 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.

 

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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 PBGC Preferred Stock shall be deemed to rank senior to the Class IAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up.  The Class Pilot MEC Preferred Stock shall 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 shall 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 (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

 

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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 (as defined in Section 8.1 below), 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 such time (the “IAM Termination Date”) as (i) there are no longer any persons represented by the IAM (or any IAM Successor) employed by the Corporation or any of its Affiliates or (ii) the letter agreement between the Corporation and the IAM, dated as of May 1, 2003, no longer provides that the IAM has the right to appoint a director of the Corporation, the holder of the share of Class IAM Preferred Stock shall have the right (a) voting as a separate class, to (1) elect one director to the Board of Directors at each annual meeting of stockholders for a term of office to expire at the succeeding annual meeting of stockholders, (2) remove such director with or without cause and (3) fill any vacancies in such directorship resulting from death, resignation, disqualification, removal or other cause, 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 Directors), except as otherwise required by law.

 

8.2           The affirmative vote of the holder of the share of Class IAM Preferred Stock, voting as a separate 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 powers, preferences or special rights of the Class IAM Preferred Stock.

 

8.3           For purposes of the foregoing provisions of Sections 8.1 and 8.2, the share of Class IAM Preferred Stock shall have one (1) vote.

 

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, as provided herein below. 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 share upon the surrender

 

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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 the 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 V

 

Common 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 in this Article Fourth, Part V.

 

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

 

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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, 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.

 

PART VI

 

General Provisions

 

Section 1.               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.

 

Section 2.               Non-Citizen Voting Limitation.  All (x) capital stock of, or other equity interests in, the Corporation, (y) securities convertible into or exchangeable for shares of capital stock, voting securities or other equity interests in the Corporation, and (z) options, warrants or other rights to acquire the securities described in clauses (x) and (y), whether fixed or contingent, matured or unmatured, contractual, legal, equitable or otherwise (collectively, “Equity Securities”) shall be subject to the following limitations:

 

(a)           Non-Citizen Voting Limitation.  In no event shall the total number of shares of Equity Securities held by all persons who fail to qualify as a “citizen of the United States,” as the term is used in Section 40102(a)(15) of Title 49 of the United States Code, in any similar legislation of the United States enacted in substitution or replacement therefor, and as interpreted by the Department of Transportation, be entitled to be more than 24.9% (or such other maximum percentage as such Section or substitute or replacement legislation shall hereafter provide) of the aggregate votes of all outstanding Equity Securities of the Corporation (the “Cap Amount”).

 

(b)           Allocation of Cap Amounts.  The restrictions imposed by the Cap Amount shall be applied pro rata among the holders of Equity Securities who fail to qualify as “citizens of the United States” based on the number of votes the underlying securities are entitled to.

 

Each certificate or other representative document for Equity Securities (including each such certificate or representative document for Equity Securities issued upon any permitted transfer of Equity Securities) shall contain a legend in substantially the following form:

 

“The [type of Equity Securities] represented by this [certificate/representative document] are subject to voting restrictions with respect to [shares/warrants, etc.] held by persons or entities that fail to qualify as “citizens of the United States” as the term is defined used in Section 40102(a)(15) of Title 49 of the United States Code.  Such voting restrictions are contained in the Restated Certificate of UAL Corporation, as the same may be amended or restated from time to time.  A complete and correct copy of

 

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the Restated Certificate shall be furnished free of charge to the holder of such shares of [type of Equity Securities] upon written request to the Secretary of UAL Corporation.”

 

Section 3.               Restrictions on Issuance of Securities.  (a) The Corporation shall not issue nonvoting equity securities on or prior to the second anniversary of the Corporation’s emergence from protection under Chapter 11 of the Bankruptcy Code to the extent prohibited by Section 1123(a)(6) of the United States Bankruptcy Code for so long as such section is in effect and applicable to the Corporation (except to the extent of any voting restrictions on the PBGC Preferred Stock set forth in this Restated Certificate).

 

(b)           Except as required by law or as approved by the Stockholders, the Corporation shall not issue serial preferred stock pursuant to Article Fourth, Part I with voting rights (unless such serial preferred stock is convertible into Common Stock, in which case such serial preferred stock may vote with the Common Stock on an as-converted basis).

 

Section 4.               Stockholder Action.  Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of such stockholders and may not be effected by any consent in writing by such stockholders.

 

Section 5.               5% Ownership Limit.

 

5.1           For purposes of Sections 5, 6 and 7, the following terms shall have the meanings indicated (and any references to any portions of Treasury Regulation § 1.382-2T shall include any successor provisions):

 

5% Transaction” means any Transfer of Corporation Securities described in clause (y) or (z) of paragraph 5.2, subject to the provision of such paragraph 5.2.

 

An “Affiliate” of any Person means any other Person, that, directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, such Person; and, for the purposes of this definition only, “control” (including the terms “controlling”, “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management, policies or activities of a Person whether through the ownership of securities, by contract or agency or otherwise.

 

Associate” has the meaning ascribed to such term in Rule 12b-2 under the Exchange Act.

 

A Person will be deemed the “Beneficial Owner” of, and will be deemed to “Beneficially Own,” and will be deemed to have “Beneficial Ownership” of:

 

(a) any securities that such Person or any of such Person’s Affiliates or Associates is deemed to “Beneficially Own” within the meaning of Rule 13d-3 under the Exchange Act, and any securities deposited into a trust established by or on behalf of the Person or any of its Affiliates or Associates, the sole beneficiaries of which are the shareholders of the Person;

 

(b) any securities (the “Underlying Securities”) that such Person or any of such Person’s Affiliates or Associates has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (written or oral), or upon the exercise of conversion rights,

 

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exchange rights, rights, warrants or options, or otherwise (it being understood that such Person will also be deemed to be the Beneficial Owner of the securities convertible into or exchangeable for the Underlying Securities); and

 

(c) any securities Beneficially Owned by persons that are part of a “group” (within the meaning of Rule 13d-5(b) under the Exchange Act) with such Person.

 

For purposes of calculating the percentage of Voting Securities that are Beneficially Owned by any Person, such calculation will be made based on the aggregate number of issued and outstanding securities at the time of such calculation, but will not include in the denominator any such securities issuable upon any options, warrants or other securities that are exercisable for such securities.

 

Code” means the Internal Revenue Code of 1986, as amended.

 

Corporation Securities” means (i) shares of Common Stock, (ii) shares of Preferred Stock (other than preferred stock described in Section 1504(a)(4) of the Code), (iii) warrants, rights, or options (including options within the meaning of Treasury Regulation § 1.382-2T(h)(4)(v)) to purchase stock of the Corporation, and (iv) any other interest that would be treated as “stock” of the Corporation pursuant to Treasury Regulation § 1.382-2T(f)(18).

 

Effective Date” means February 1, 2006.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor act thereto.

 

Five-Percent Shareholder” means a Person or group of Persons that is identified as a “5-percent shareholder” of the Corporation pursuant to Treasury Regulation § 1.382-2T(g).

 

Percentage Stock Ownership” means the percentage Stock Ownership interest as determined in accordance with Treasury Regulation § 1.382-2T(g), (h), (j) and (k).

 

Person” means any individual, firm, corporation or other legal entity, and includes any successor (by merger or otherwise) of such entity.

 

Prohibited Transfer” means any purported Transfer of Corporation Securities to the extent that such Transfer is prohibited and/or void under this Section 5.

 

Tax Benefit” means the net operating loss carryovers, capital loss carryovers, general business credit carryovers, alternative minimum tax credit carryovers and foreign tax credit carryovers, as well as any loss or deduction attributable to a “net unrealized built-in loss” within the meaning of Section 382, of the Corporation or any direct or indirect subsidiary thereof.

 

Transfer” means, with respect to any Person other than the Corporation, any direct or indirect sale, transfer, assignment, conveyance, pledge or other disposition, other than a sale, transfer, assignment, conveyance, pledge or other disposition to a wholly owned subsidiary of the transferor, or, if the transferor is wholly owned by a Person, to a wholly owned subsidiary of such Person.  A Transfer also shall include the creation or grant of

 

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an option (including an option within the meaning of Treasury Regulation § 1.382-2T(h)(4)(v)).

 

Voting Securities” means all securities that by their terms are entitled to vote generally in the election of directors of the Corporation (without giving effect to any contractual limitations on voting).

 

5.2           Any attempted Transfer of Corporation Securities prior to the earliest of (A) February 1, 2011, (B) the repeal, amendment or modification of Section 382 of the Code (and any comparable successor provision) (“Section 382”) in such a way as to render the restrictions imposed by Section 382 no longer applicable to the Corporation, (C) the beginning of a taxable year of the Corporation (or any successor thereof) in which no Tax Benefits are available, and (D) the date on which the limitation amount imposed by Section 382 in the event of an ownership change of the Corporation, as defined in Section 382, would not be materially less than the net operating loss carryforward or net unrealized built-in loss of the Corporation (the “Restriction Release Date”), or any attempted Transfer of Corporation Securities pursuant to an agreement entered into prior to the Restriction Release Date, shall be prohibited and void ab initio so far as it purports to transfer ownership or rights in respect of such stock to the Purported Transferee (y) if the transferor is a Five-Percent Shareholder or (z) to the extent that, as a result of such Transfer (or any series of Transfers of which such Transfer is a part), either (1) any Person or group of Persons shall become a Five-Percent Shareholder other than by reason of Treasury Regulation Section 1.382T(j)(3) or any successor to such regulation or (2) the Percentage Stock Ownership interest in the Corporation of any Five-Percent Shareholder shall be increased; provided, that this paragraph 5.2 shall not apply to, nor shall any other provision in this Restated Certificate prohibit, restrict or limit in any way, the issuance of Corporation Securities by the Corporation in accordance with the Second Amended Joint Plan of Reorganization of the Corporation dated January 20, 2006 (the “Chapter 11 Plan”).  Notwithstanding the foregoing, the transfer restrictions described in this Section 5.2 shall not apply if (A) the Transferor is any of PBGC, any Person who purchased or acquired all or any part of the Unsecured PBGC Claim (as defined in the Plan of Reorganization) prior to Corporation’s emergence from protection under Chapter 11 of the Bankruptcy Code pursuant to the Plan of Reorganization, or any of the trusts holding assets of the United Airlines Pilot Defined Benefit Pension Plan, the United Airlines Flight Attendant Defined Benefit Pension Plan, the United Airlines Ground Retirement Income Plan or the Management, Administrative and Public Contract Defined Benefit Pension Plan of United (each, a “PBGC Transferor”) and (B) the Transfer is of Corporation Securities that the PBGC Transferor obtained pursuant to the terms of the Plan of Reorganization.

 

5.3           The restrictions set forth in paragraph 5.2 shall not apply to an attempted Transfer that is a 5% Transaction if the transferor or the transferee obtains the prior written approval of the Board of Directors or a duly authorized committee thereof.

 

As a condition to granting its approval pursuant to this paragraph 5.3, the Board of Directors may, in its discretion, require (at the expense of the transferor and/or transferee) an opinion of counsel selected by the Board of Directors that the Transfer shall not result in the application of any Section 382 limitation on the use of the Tax Benefits.  The Board of Directors may exercise the authority granted by this Section 5 through duly authorized officers or agents of the Corporation.

 

5.4           Each certificate representing shares of Corporation Securities issued prior to the Restriction Release Date shall contain the legend set forth on Exhibit A hereto, evidencing the restrictions set forth in this Section 5 and Sections 6 and 7.

 

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Section 6.               Treatment of Excess Securities.

 

6.1           No employee or agent of the Corporation shall record any Prohibited Transfer, and the purported transferee of such a Prohibited Transfer (the “Purported Transferee”) shall not be recognized as a stockholder of the Corporation for any purpose whatsoever in respect of the Corporation Securities which are the subject of the Prohibited Transfer (the “Excess Securities”). Until the Excess Securities are acquired by another Person in a Transfer that is not a Prohibited Transfer, the Purported Transferee shall not be entitled with respect to such Excess Securities to any rights of stockholders of the Corporation, including, without limitation, the right to vote such Excess Securities and to receive dividends or distributions, whether liquidating or otherwise, in respect thereof, if any; provided, however, that the Transferor of such Excess Securities shall not be required to disgorge, and shall be permitted to retain for its own account, any proceeds of such Transfer, and shall have no further rights, responsibilities, obligations or liabilities with respect to such Excess Securities, if such Transfer was a Prohibited Transfer pursuant to Section 5.2(z). Once the Excess Securities have been acquired in a Transfer that is not a Prohibited Transfer, the Corporation Securities shall cease to be Excess Securities. For this purpose, any transfer of Excess Securities not in accordance with the provisions of this Section 5 shall also be a Prohibited Transfer.

 

6.2           If the Board of Directors determines that a Transfer of Corporation Securities constitutes a Prohibited Transfer then, upon written demand by the Corporation, the Purported Transferee shall transfer or cause to be transferred any certificate or other evidence of ownership of the Excess Securities within the Purported Transferee’s possession or control, together with any dividends or other distributions that were received by the Purported Transferee from the Corporation with respect to the Excess Securities (“Prohibited Distributions “), to an agent designated by the Board of Directors (the” Agent”). The Agent shall thereupon sell to a buyer or buyers, which may include the Corporation, the Excess Securities transferred to it in one or more arm’s-length transactions (over the New York Stock Exchange or other national securities exchange on which the Corporation Securities may be traded, if possible, or otherwise privately); provided, however, that the Agent shall effect such sale or sales in an orderly fashion and shall not be required to effect any such sale within any specific time frame if, in the Agent’s discretion, such sale or sales would disrupt the market for the Corporation Securities or otherwise would adversely affect the value of the Corporation Securities.  If the Purported Transferee has resold the Excess Securities before receiving the Corporation’s demand to surrender Excess Securities to the Agent, the Purported Transferee shall be deemed to have sold the Excess Securities for the Agent, and shall be required to transfer to the Agent any Prohibited Distributions and proceeds of such sale, except to the extent that the Corporation grants written permission to the Purported Transferee to retain a portion of such sales proceeds not exceeding the amount that the Purported Transferee would have received from the Agent pursuant to Section 6.3 if the Agent rather than the Purported Transferee had resold the Excess Securities.

 

6.3           The Agent shall apply any proceeds of a sale by it of Excess Securities and, if the Purported Transferee had previously resold the Excess Securities, any amounts received by it from a Purported Transferee as follows: (x) first, such amounts shall be paid to the Agent to the extent necessary to cover its costs and expenses incurred in connection with its duties hereunder; (y) second, any remaining amounts shall be paid to the Purported Transferee, up to the amount paid by the Purported Transferee for the Excess Securities (or the fair market value, (1) calculated on the basis of the closing market price for the Corporation Securities on the day before the Prohibited Transfer, (2) if the Corporation Securities are not listed or admitted to trading on any stock exchange but are traded in the over-the-counter market, calculated based upon the difference between the highest bid and lowest asked prices, as such prices are reported by the National Association of Securities Dealers through its NASDAQ system or any successor system on the day before the Prohibited Transfer or, if none, on the last preceding day for which such quotations exist, or (3) if the Corporation Securities are neither listed nor admitted to trading on any stock exchange nor traded in the over-the-counter market, then as determined in good faith by the Board of Directors, of the Excess Securities at the time of the Prohibited Transfer to the Purported Transferee by gift, inheritance, or similar Transfer), which amount (or fair market value) shall be determined at the

 

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discretion of the Board of Directors; and (z) third, any remaining amounts, subject to the limitations imposed by the following proviso, shall be paid to one or more organizations qualifying under Section 501(c)(3) of the Code (or any comparable successor provision) (“Section 501(c)(3)”) selected by the Board of Directors; provided, however, that if the Excess Securities (including any Excess Securities arising from a previous Prohibited Transfer not sold by the Agent in a prior sale or sales), represent a 5% or greater Percentage Stock Ownership in any class of Corporation Securities, then any such remaining amounts to the extent attributable to the disposition of the portion of such Excess Securities exceeding a 4.99% Percentage Stock Ownership interest in such class shall be paid to two or more organizations qualifying under Section 501(c)(3) selected by the Board of Directors.  The recourse of any Purported Transferee in respect of any Prohibited Transfer shall be limited to the amount payable to the Purported Transferee pursuant to clause (y) of the preceding sentence.  In no event shall the proceeds of any sale of Excess Securities pursuant to this Section 5 inure to the benefit of the Corporation.

 

6.4           If the Purported Transferee fails to surrender the Excess Securities or the proceeds of a sale thereof to the Agent within thirty days from the date on which the Corporation makes a written demand pursuant to Section 6.2, then the Corporation shall use its best efforts to enforce the provisions hereof, including the institution of legal proceedings to compel the surrender.

 

6.5           The Corporation shall make the written demand described in Section 6.2 within thirty days of the date on which the Board of Directors determines that the attempted Transfer would result in Excess Securities; provided, however, that if the Corporation makes such demand at a later date, the provisions of Sections 5 and 6 shall apply nonetheless.

 

Section 7.               Board Authority.

 

The Board of Directors shall have the power to determine all matters necessary for assessing compliance with Sections 5 and 6, including, without limitation, (A) the identification of Five-Percent Shareholders, (B) whether a Transfer is a 5% Transaction or a Prohibited Transfer, (C) the Percentage Stock Ownership in the Corporation of any Five-Percent Shareholder, (D) whether an instrument constitutes a Corporation Security, (E) the amount (or fair market value) due to a Purported Transferee pursuant to clause (y) of Section 6, and (F) any other matters which the Board of Directors determines to be relevant; and the good faith determination of the Board of Directors on such matters shall be conclusive and binding for all the purposes of Sections 5 and 6.

 

ARTICLE FIFTH.

 

Unless otherwise indicated, any reference in this Article Fifth to “Section,” “subsection,” “paragraph,” “subparagraph,” or “clause” shall refer to a Section, subsection, paragraph, subparagraph or clause in this Article Fifth.

 

Section 1.               Definitions.  As used in this Restated Certificate, the following terms shall have the following meanings:

 

1.1           “Chief Executive Officer” means the Chief Executive Officer of the Corporation.

 

1.2           “Director” means a director of the Corporation.

 

1.3           “entire Board of Directors” means all Directors of the Corporation who would be in office if there were no vacancies.

 

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1.4           “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor act thereto.

 

1.5           “GCL” means the General Corporation Law of the State of Delaware, as amended from time to time.

 

1.6           “Person” means any individual, corporation, limited liability company, association, partnership, joint venture, trust or unincorporated organization, or a governmental entity or any department, agency or political subdivision thereof.

 

1.7           “Restated Bylaws” means the Amended and Restated Bylaws of the Corporation, as amended from time to time.

 

1.8           “Stockholders” means the stockholders of the Corporation.

 

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 of Directors. The Board of Directors 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 of Directors 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.  Except as otherwise provided for or fixed by or pursuant to the provisions of Article Fourth hereof relating to the rights of the holders of any class or series of stock to elect Directors and take certain actions with respect to such elected Directors, the number of Directors shall be fixed from time to time exclusively pursuant to a resolution of the Board of Directors (but shall not be fewer than five).  The initial number of Directors shall be twelve, and shall not be increased to any number greater than twelve prior to February 1, 2008.

 

2.3           Term of Office.  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.

 

2.4           Resignation of Directors. Any Director may resign at any time upon written notice to the Corporation.

 

2.5           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, 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.

 

Section 3.               Special Voting Provisions.

 

3.1           Election of Directors.  Notwithstanding any other provision of this Restated Certificate, and except as otherwise required by law, whenever the holders of one or more series of Preferred Stock shall have the right, voting separately as a class, to elect one or more Directors, the term of office, the filling of vacancies, the removal from office and other features of such directorships shall be governed by the terms

 

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of this Restated Certificate or the resolution or resolutions of the Board of Directors establishing such series of Preferred Stock.  During any period when the holders of any series of Preferred Stock have the right to elect additional Directors as provided for or fixed by or pursuant to the provisions of Article Fourth hereof, then upon commencement and for the duration of the period during which such right continues:  (i) the then otherwise total authorized number of Directors of the Corporation shall automatically be increased by such specified number of Directors, and the holders of such Preferred Stock shall be entitled to elect the additional Directors so provided for or fixed by or pursuant to said provisions, and (ii) each such additional Director shall serve until such office terminates pursuant to said provisions, whichever occurs earlier, subject to his or her earlier death, disqualification, resignation or removal.  Except as otherwise provided by the Board of Directors in the resolution or resolutions establishing a series of Preferred Stock, whenever the holders of any series of Preferred Stock having a right to elect additional Directors are divested of such right pursuant to the provisions of such series of Preferred Stock, the terms of office of all such additional Directors elected by the holders of such series of Preferred Stock, or elected, or fill any vacancies resulting from the death, resignation, disqualification or removal of such additional Directors, shall forthwith terminate and the total authorized number of Directors of the Corporation shall be reduced accordingly.

 

3.2           Amendment to the Restated Bylaws.  The Board of Directors is expressly authorized to make, alter, amend or repeal the Restated Bylaws; provided, however, that no bylaws hereafter adopted shall invalidate any prior act of the Board of Directors that would have been valid if such bylaws had not been adopted.

 

ARTICLE 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 GCL, 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 or is involved in any threatened, pending or completed 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, officer, or employee, of the Corporation or is or was serving at the request of the Corporation as a director, officer, or employee 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, or employee or in any other capacity while serving as a director, officer, or employee, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the GCL, 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) actually and reasonably incurred or suffered by such person in connection therewith.  Such indemnification shall continue as to a person who has ceased to be a director, officer, or employee 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.  Notwithstanding anything to the contrary herein, the Corporation shall not be obligated to indemnify a director, officer, or

 

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employee for costs and expenses relating to proceedings (or any part thereof) instituted against the Corporation by such director, officer, or employee (other than proceedings pursuant to which such director, officer, or employee is seeking to enforce such director’s, officer’s, or employee’s indemnification rights hereunder).  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 GCL 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.

 

(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 GCL 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 GCL, 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, 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 GCL.

 

ARTICLE SEVENTH.          Except as expressly provided in this Restated Certificate, 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.

 

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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 said Corporation as at present in force.

 

IN WITNESS WHEREOF, I have hereunto subscribed by name and affixed the seal of this Corporation this 1st day of February, 2006.

 

 

UAL CORPORATION

 

 

 

 

By:

/s/ Paul R. Lovejoy

 

 

Name:

Paul R. Lovejoy

 

Title:

Senior Vice President,

 

 

General Counsel

 

 

and Secretary

 

 

 

 

 

 

Attest:

 

 

 

 

 

/s/ Deborah S. Porter

 

 

 

 

 

 

Title: Assistant Secretary

 

 

 



 

EXHIBIT A

 

Form of Stock Legend

 

The shares of UAL Corporation Common Stock represented by this Certificate are issued pursuant to the Plan of Reorganization for UAL Corporation, as confirmed by the United States Bankruptcy Court for the Northern District of Illinois.  The transfer of securities represented hereby is subject to restriction pursuant to Article Fourth, Part VI, Sections 5, 6 and 7 of the Restated Certificate of Incorporation of UAL Corporation.  UAL Corporation will furnish a copy of its Restated Certificate of Incorporation to the holder of record of this Certificate without charge upon written request addressed to UAL Corporation at its principal place of business.

 


Exhibit 3.2

 

AMENDED AND RESTATED BYLAWS

 

OF UAL CORPORATION

 

(as amended and restated on February 1, 2006)

 

ARTICLE 1

 

Definitions

 

As used in these Restated Bylaws, unless the context otherwise requires, the following terms shall have the following meanings:

 

1.1           “Assistant Secretary” means an Assistant Secretary of the Corporation.

 

1.2           “Assistant Treasurer” means an Assistant Treasurer of the Corporation.

 

1.3           “Board” means the Board of Directors of the Corporation.

 

1.4           “Chairman” means the Chairman of the Board of Directors of the Corporation.

 

1.5           “Change in Ownership” means any sale, disposition, transfer or issuance or series of sales, dispositions, transfers and/or issuances of shares of the capital stock by the Corporation or any holders thereof which results in any person or group of persons (as the term “group” is used under the Securities Exchange Act of 1934, as amended), other than the holders of Common Stock and PBGC Preferred Stock as of the date of issuance of the PBGC Preferred Stock, owning capital stock of the Corporation possessing the voting power (under ordinary circumstances and without regard to cumulative voting rights) to elect a majority of the Board.

 

1.6           “Chief Executive Officer” means the Chief Executive Officer of the Corporation.

 

1.7           “Common Stock” means the common stock, par value $0.01 per share, of the Corporation.

 

1.8           “Corporation” means UAL Corporation.

 

1.9           “Director” means a director of the Corporation.

 

1.10         “Entire Board” means all Directors who would be in office if there were no vacancies.

 

1.11         “Fundamental Change” means the occurrence of any of the following:  (a) any sale, transfer or disposition of more than 50% of the property or assets of the Corporation and its subsidiaries on a consolidated basis (measured either by book value in accordance with generally accepted accounting principles consistently applied or by fair market value determined in the reasonable good faith judgment of the Board) in any transaction or series of transactions (other than sales in the ordinary course of business) and (b) any merger or consolidation to which the Corporation is a party, except for (x) a merger which is effected solely to change the state of incorporation of the Corporation or (y) a merger in which the Corporation is the surviving person, the terms of the PBGC Preferred Stock are not changed or altered in any respect, the PBGC Preferred Stock is not exchanged for cash, securities or other property or assets, and after giving effect to such merger, the holders of the capital stock of the Corporation as of the date prior to the merger or consolidation shall continue to own the outstanding capital stock of the Corporation possessing the voting power (under ordinary circumstances) to elect a majority of the Board.

 

1.12         “General Counsel” means the General Counsel of the Corporation.

 



 

1.13         “GCL” means the General Corporation Law of the State of Delaware, as amended from time to time.

 

1.14         “PBGC Preferred Stock” means the 2% convertible preferred stock, par value $0.01, of the Corporation.

 

1.15         “Preferred Stock” means the serial preferred stock, without par value, of the Corporation and the PBGC Preferred Stock.

 

1.16         “President” means the President of the Corporation.

 

1.17         “Restated Certificate” means the Restated Certificate of Incorporation of the Corporation, as amended from time to time.

 

1.18         “Restated Bylaws” means the Amended and Restated Bylaws of the Corporation, as amended from time to time.

 

1.19         “Rights Plan” means an arrangement for distribution to Stockholders of Common Stock or Preferred Stock purchase rights that provide all Stockholders, other than persons who meet certain criteria specified in the arrangement, with the right to purchase Common Stock or Preferred Stock at less than the prevailing market price (sometimes referred to as a “poison pill”).

 

1.20         “Secretary” means the Secretary of the Corporation.

 

1.21         “Stockholders” means the stockholders of the Corporation.

 

1.22         “Treasurer” means the Treasurer of the Corporation.

 

1.23         “Union Directors” means those directors of the Corporation elected by the holders of Class IAM Preferred Stock and the Class Pilot MEC Preferred Stock pursuant to Article Fourth, Parts III and IV of the Restated Certificate.

 

1.24         “Vice President” means a Vice President of the Corporation.

 

ARTICLE 2

 

Stockholders’ Meetings

 

2.1           Annual Meeting.  A meeting of Stockholders shall be held annually for the election of Directors and the transaction of other business at an hour and date as shall be determined by the Board and designated in the notice of meeting.

 

2.2           Special Meetings.  Subject to the Restated Certificate, a special meeting of the Stockholders may be called only by the Chief Executive Officer, the Chairman or the Board, and at an hour and date as shall be determined by them.  At any special meeting of Stockholders, no business other than that set forth in the notice thereof given pursuant to Section 2.4 may be transacted.

 

2.3           Place of Meetings.  All meetings of Stockholders shall be held at such places, within or without the State of Delaware, as may from time to time be fixed by the Board or as specified or fixed in the respective notices.  The Board may, in its sole discretion, determine that a meeting of the Stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the GCL (or any successor provision thereto).  Any previously scheduled meeting of the Stockholders may be postponed by action of the Board taken prior to the time previously scheduled for such annual meeting of Stockholders.

 

2.4           Notices of Stockholders’ Meetings.  Except as otherwise provided in Section 2.5 or otherwise required by the Restated Certificate or applicable law, written notice of each meeting of Stockholders, whether annual or special, shall be given to each Stockholder required or permitted to take any action at or entitled to notice of such meeting not less than ten (10) nor more than sixty (60) days before the date on which the meeting is to be

 

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held, by delivering such notice to him, personally or by mail. If mailed, such notice shall be deemed to be given when deposited in the United States mail, with postage prepaid, directed to the Stockholder at his address as it appears on the stock books of the Corporation.  Every notice of a meeting of Stockholders shall state the place, date and hour of the meeting and the purpose or purposes for which the meeting is called.

 

2.5           Waivers of Notice.  Notwithstanding any other provision in these Restated Bylaws, notice of any meeting of Stockholders shall not be required as to any Stockholder who shall attend such meeting in person or be represented by proxy, except when such Stockholder attends such meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business at such meeting because the meeting is not lawfully called or convened.  If any Stockholder shall, in person or represented by proxy, waive notice of any meeting, whether before or after such meeting, notice thereof shall not be required as to such Stockholder.

 

2.6           Quorum Requirements and Required Vote at Stockholder Meetings.

 

(a)           Except as otherwise required by applicable law, the Restated Certificate or these Restated Bylaws, at all meetings of Stockholders the presence, in person or represented by proxy, of the holders of outstanding shares representing at least a majority of the total voting power entitled to vote at a meeting of Stockholders shall constitute a quorum for the transaction of business; provided, however, that where a separate vote of a class or classes or series of stock is required the presence in person or represented 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.

 

(b)           Except as otherwise required by applicable law, the Restated Certificate or these Restated Bylaws, including, without limitation, Section 3.3 hereof, the affirmative vote of a majority in voting power of the shares present in person or represented by proxy and entitled to vote on the subject matter at a meeting of Stockholders at which a quorum is present shall be the act of the Stockholders.

 

(c)           The holders of a majority in voting power of the shares entitled to vote and present in person or represented by proxy at any meeting of Stockholders, whether or not a quorum is present, may adjourn such meeting to another time and placeAt any such adjourned meeting at which a quorum shall be present, any business may be transacted that might have been transacted at the meeting as originally called.  Unless otherwise required by applicable law, the Restated Certificate or these Restated Bylaws, no notice of an adjourned meeting need be given.

 

2.7           Proxies.  Each Stockholder entitled to vote at a meeting of Stockholders may authorize another person or persons to act for him by proxy, but such proxy shall no longer be valid eleven months after the date of such proxy.

 

2.8           Judges.  At every meeting of Stockholders, the votes shall be conducted by two judges appointed for that purpose by the Board. All questions with respect to the qualification of voters, the validity of the proxies and the acceptance or rejection of votes shall be decided by such judges.  Before acting at any meeting, the judges shall be sworn faithfully to execute their duties with strict impartiality and according to the best of their ability. If any judge appointed to act at any meeting shall fail to be present or shall decline to act, the Board or the Chairman shall appoint another judge to act in his place.

 

2.9           Conduct of Stockholders’ Meetings.  The Chairman or, in his absence, a Director or officer designated by the Chairman, shall preside at all meetings of Stockholders and may establish such rules of procedure for conducting the meetings as he or she deems fair and reasonable.

 

2.10         Proposing Business or Nominating Directors, other than Union Directors, at Stockholders’ Meetings.

 

(a)           No business may be transacted at an annual meeting of Stockholders unless (1) specified in the notice of such meeting or any supplement thereto, given by or at the direction of the Board (or any duly authorized committee of the Board); (2) otherwise properly brought before the annual meeting by or at the direction of the Board (or any duly authorized committee of the Board); or (3) otherwise properly brought before the annual meeting by any Stockholder who (A) is a Stockholder of record on the date of the giving of the notice provided for in this Section 2.10 and, as of the record date for the determination of Stockholders, is entitled to vote at such annual meeting on the matter that is being brought before the meeting by such Stockholder, and (B) complies with the notice procedures set forth in this Section 2.10.

 

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(b)           Nominations for Directors, other than Union Directors, may be made at any annual meeting of Stockholders or at any special meeting of Stockholders called for the purpose of electing such Directors (the annual meeting or any special meeting of Stockholders herein called the “Stockholders’ Meeting”), (1) by or at the direction of the Board (or any duly authorized committee of the Board), or (2) by any Stockholder who (A) is a Stockholder of record on the date of the giving of the notice provided for in this Section 2.10 and, as of the record date for the determination of Stockholders, is entitled to vote at such Stockholders’ Meeting on the election of such Directors, and (B) complies with the notice procedures set forth in this Section 2.10.

 

(c)           In addition to any other applicable requirements for business to be properly brought before, or for a nomination of a Director, other than a Union Director, to be made at, a Stockholders’ Meeting by a Stockholder, such Stockholder must have given timely notice in writing to the Secretary.  For a Stockholders’ Meeting that is an annual meeting, a timely written notice must be delivered to, or mailed to and received by, the Secretary at the principal executive offices of the Corporation not less than one hundred-twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of Stockholders.  In the event the annual meeting is called for a date that is more than thirty (30) days earlier than or more than sixty (60) days later than such anniversary date, or if the Stockholders’ Meeting is a special meeting, notice by the Stockholder, in order to be timely, must be received not later than the close of business on the tenth (10th) calendar day following the day on which notice of the date of the Stockholders’ Meeting was mailed or public disclosure of the date of the Stockholders’ Meeting was first made, whichever first occurs.  In no event shall any adjournment of a Stockholders’ Meeting or any announcement or notice thereof commence a new time period for the giving of a notice as described above.

 

(1)           When proposing business other than the election of Directors in accordance with this Section, a Stockholder’s notice to the Secretary must set forth (A) a brief description of the business desired to be brought before the Stockholders’ Meeting and the reasons for conducting such business at the Stockholders’ Meeting, (B) the name and record address of such Stockholder, (C) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such Stockholder, (D) a description of all arrangements or understandings between such Stockholder and any other person or persons (including their names) in connection with the proposal of such business by such Stockholder and any material interest of such Stockholder in such business and (E) a representation that such Stockholder intends to appear in person or by proxy at the Stockholders’ Meeting to bring such business before the meeting.

 

(2)           When proposing to nominate a Director, other than a Union Director, a Stockholder’s notice to the Secretary must set forth (A) as to each person whom the Stockholder proposes to nominate for election as a Director, other than a Union Director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person, (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder, (v) the written consent of such person to be named as a nominee and to serve as a Director if so elected and (vi) such other information as may be reasonably necessary (as defined by the Board) to permit the Corporation to determine that (y) the person satisfies any qualification requirements of the Restated Certificate and (z) no violation of the Clayton Act will occur; and (B) as to the Stockholder giving notice, (i) the name and record address of such Stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such Stockholder, (iii) a description of all arrangements or understandings between such Stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such Stockholder, (iv) a representation that such Stockholder intends to appear in person or by proxy at the Stockholders’ Meeting to nominate the persons named in its notice and (v) any other information relating to such Stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.  The Board shall have the power to determine all matters necessary for assessing compliance with the foregoing requirements.

 

(3)           A Stockholder may propose to nominate a Director at a Stockholders’ Meeting that is a special meeting by complying with the notice requirements of this Section only if such Stockholders’ Meeting has been called for the purpose of electing Directors.  A Stockholder may not propose any other

 

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business to be brought before a Stockholders’ Meeting that is a special meeting regardless of the purpose for which such Stockholders’ Meeting has been called.

 

(4)           Nominations for Union Directors shall only be made by the holders of the class of stock eligible to elect such class of Directors, and then only in accordance with the procedures and qualification requirements of the Restated Certificate and any stockholder agreements applicable to such nomination process.

 

(d)           If the chairman of the Stockholders’ Meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the Stockholders’ Meeting that the nomination was defective and such defective nomination shall be disregarded.

 

(e)           No business shall be conducted at a Stockholders’ Meeting except business brought before the Stockholders’ Meeting in accordance with the procedures set forth in Article 2 of these Restated Bylaws; provided, however, that, once business has been properly brought before the Stockholders’ Meeting in accordance with such procedures, nothing in this Section 2.10 shall be deemed to preclude discussion by any Stockholder of any such business.  If the chairman of a Stockholders’ Meeting determines that business was not properly brought before the Stockholders’ Meeting in accordance with the foregoing procedures, the chairman shall declare to the Stockholders’ Meeting that the business was not properly brought before the meeting and such business shall not be transacted.

 

2.11         List of Stockholders.  It shall be the duty of the Secretary or other officer who has charge of the stock ledger to prepare and make, at least ten (10) days before each Stockholders’ Meeting, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in such stockholder’s name.  Such list shall be produced and kept available at the times and places required by law.

 

ARTICLE 3

 

Board Of Directors

 

3.1           Number and Term of Office.  The number and term of office of Directors on the Board shall be determined as provided in the Restated Certificate.

 

3.2           Powers.  The Board may, except as otherwise provided in the Restated Certificate or the GCL, exercise all such powers and do all such acts and things as may be exercised or done by the Corporation.

 

3.3           Election.  Except as otherwise required by applicable law or the Restated Certificate, and notwithstanding Section 2.6(c) hereof, Directors shall be elected by a plurality of the votes cast at a meeting of Stockholders by the holders of shares entitled to vote on their election.

 

3.4           Place of Meetings.  Meetings of the Board may be held either within or without the State of Delaware.

 

3.5           Organization Meeting.  The Board shall meet as soon as practicable after each annual meeting of Stockholders at the place of such annual meeting for the purpose of organization and the transaction of other business. No notice of such meeting of the Board shall be required. Such organization meeting may be held at any other time or place specified in a notice given as hereinafter provided for special meetings of the Board, or in a consent and waiver of notice thereof, signed by all of the Directors.

 

3.6           Stated Meetings.  The Board shall from time to time, by resolution adopted by the affirmative vote of at least a majority of the votes entitled to be cast by the entire Board, appoint the time and place for holding stated meetings of the Board; and such meetings shall thereupon be held at the time and place so appointed, without the giving of any special notice with regard thereto.  Any and all business may be transacted at any stated meeting.

 

3.7           Special Meetings.  Special meetings of the Board shall be held whenever called by the Secretary of the Board, at the direction of any three Directors, or by the Chairman, or, in the event that the office of the Chairman is vacant, by the Chief Executive Officer, or in the event that the office of the Chairman and Chief Executive Officer

 

5



 

are vacant, by the President.  Notice of a special meeting shall set forth a description of such meeting and be sent to the Directors as provided in Section 3.8.

 

3.8           Notices of Board Meetings.  Notice of any meeting shall be sent to each Director at his residence or usual place of business either (a) by reputable overnight delivery service in circumstances to which such service guarantees next day delivery, not later than on the day that is the second business day immediately preceding the day of such meeting, or (b) by facsimile, telex, telegram or electronic mail, not later than twenty-four (24) hours before the time of such meeting.  If sent by overnight delivery service, such notice shall be deemed to be given when delivered to such service; if sent by facsimile, telex, telegram or electronic mail, such notice shall be deemed to be given when transmitted.  Notice of any meeting of the Board need not however be given to any Director, if waived by him in writing or if, subject to applicable law, he shall be present at the meeting. Any meeting of the Board shall be a legal meeting without any notice thereof having been given if all of the Directors shall be present thereat, except when a Director attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.

 

3.9           Quorum and Manner of Acting.  Except as otherwise required by applicable law, the Restated Certificate or these Restated Bylaws, the presence at any organization, stated or special meeting of Directors having at least a majority of the votes entitled to be cast by the Entire Board shall constitute a quorum for the transaction of business; and, except as otherwise required by applicable law, the Restated Certificate or these Restated Bylaws, the affirmative vote of a majority of the votes entitled to be cast by the Directors present at any meeting at which a quorum is present shall be the act of the Board.  In the absence of a quorum, the affirmative vote of a majority of the votes entitled to be cast by the Directors present may adjourn any meeting, from time to time, until a quorum is present.

 

3.10         Telephone Meetings.  Directors or members of any committee of the Board may participate in a meeting of the Board or of such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 3.10 shall constitute presence in person at such meeting.

 

3.11         Chairman of the Board Pro Tempore.  In the absence of both the Chairman and the Chief Executive Officer at any meeting of the Board, the Board may appoint from among its members a Chairman of the Board pro tempore, who shall preside at such meeting, except where otherwise provided by law.

 

3.12         Removal of Directors.  Any Director or the entire Board may be removed with or without cause as provided under the GCL.

 

3.13         Vacancies and Newly Created Directorships.  Except as otherwise provided in the Restated Certificate, vacancies and newly created directorships resulting from any increase in the authorized number of Directors may be filled by a majority of the Directors then in office, even if less than a quorum, or by a sole remaining Director, and the Directors so chosen shall hold office until the next election of Directors and until their successors are duly elected and qualified or until earlier resignation or removal.  If there are no Directors in office, then an election of Directors may be held in the manner provided by statute.

 

3.14         Directors’ Fees.  The Board shall have authority to determine, from time to time, the amount of compensation that shall be paid to its members for attendance at meetings of the Board or of any committee of the Board, which compensation may be payable currently or deferred.

 

3.15         Action Without Meeting.  Any action required or permitted to be taken at any meeting of the Board or any committee of the Board may be taken without a meeting if all of the members of the Board or of any such committee, as the case may be, consent thereto in writing, by electronic transmission or transmissions, or as otherwise permitted by law and, if required by law, the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or of such committee.  Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

 

3.16         Emergency Bylaws.  In the event of any emergency, disaster or catastrophe, as referred to in Section 110 of the GCL, or other similar emergency condition, as a result of which a quorum of the Board or a standing committee of the Board cannot readily be convened for action, then the director or directors in attendance at the meeting shall constitute a quorum.  Such director or directors in attendance may further take action to appoint

 

6



 

one or more of themselves or other directors to membership on any standing or temporary committees of the Board as they shall deem necessary and appropriate, provided that such appointments comply with any and all applicable laws, as well as rules of any securities exchange to which the Corporation is subject.

 

ARTICLE 4

 

Board Committees

 

4.1           Designation.

 

(a)           Except as otherwise provided in the Restated Certificate, the Board may, by resolution adopted by the affirmative vote of at least a majority of the votes entitled to be cast by the entire Board designate one or more committees of the Board, each such committee to consist of one or more Directors.  Except as otherwise provided in the Restated Certificate, unless sooner discharged by the affirmative vote of a majority of the votes entitled to be cast by the entire Board, members of each committee of the Board shall hold office until the organization meeting of the Board in the next subsequent year and until their respective successors are appointed.  The Nominating/Governance Committee of the Board shall have power to recommend to the Board a chairman of each committee of the Board by the affirmative vote of a majority of the votes entitled to be cast by all of the members of the Nominating/Governance Committee.  The Board shall have the power to appoint one of its members to act as chairman of each committee of the Board.

 

(b)           So far as practicable, members of each committee of the Board shall be appointed annually at the organization meeting of the Board.  The Board may designate one or more Directors as alternate members of any committee of the Board, who may replace any absent or disqualified member at any meeting of such committee.

 

(c)           Notwithstanding the foregoing, the Board shall at all times maintain an Audit Committee, a Human Resources Committee and a Nominating/Governance Committee.

 

(d)           Notwithstanding the foregoing, except as required by law, no committee of the Board will have the authority to (i) issue dividends, distributions or securities, except for issuances of cash or securities pursuant to employee benefit plans; (ii) to approve a Fundamental Change or Change in Ownership, except as may be required in the exercise of fiduciary duties; or (iii) to take any action that would require the approval of the Stockholders pursuant to the GCL.  Notwithstanding Section 8.1, this Section 4.1(d) may only be amended by the affirmative vote of the holders of at least a majority in voting power of the stock entitled to vote thereon, at an annual meeting of Stockholders or at a special meeting thereof, the notice of which meeting shall include the form of the proposed amendment to this Section 4.1(d).

 

4.2           Meetings.

 

(a)           Stated meetings of any committee of the Board shall be held at such times and at such places as shall be fixed, from time to time, by resolution adopted by the Board or by the affirmative vote of a majority of the votes entitled to be cast by the members of such committee of the Board and upon notification pursuant to Section 4.3 to all the members of such committee.    Any and all business may be transacted at any stated meeting of any committee of the Board.

 

(b)           Special meetings of any committee of the Board may be called at any time by the chairman of such committee or by any two members of such committee.  Notice of a special meeting of any committee of the Board shall set forth a description of the business to be transacted at such meeting and be sent to the members of such committee of the Board as provided in Section 4.3.

 

4.3           Notice of Board Committee Meetings.  Notice of any meeting of any committee of the Board shall be sent to each member of such committee at his residence or usual place of business either (a) by reputable overnight delivery service in circumstances to which such service guarantees next day delivery, not later than on the day that is the second business day immediately preceding the day of such meeting, or (b) by facsimile, telex, telegram or electronic mail, not later than twenty-four (24) hours before the time of such meeting.  If sent by overnight delivery service, such notice shall be deemed to be given when delivered to such service; if sent by facsimile, telex, telegram or electronic mail, such notice shall be deemed to be given when transmitted.  Notice of any meeting of a committee of the Board need not however be given to any member of such committee, if waived by him in writing or if, subject to applicable law, he shall be present at the meeting.  Any meeting of a committee of

 

7



 

the Board shall be a legal meeting without any notice thereof having been given if all of the members shall be present thereat except when a Director attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.

 

4.4           Place of Meetings.  Meetings of any committee of the Board may be held either within or without the State of Delaware.

 

4.5           Quorum and Voting Requirements of Board Committees.

 

(a)           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 a committee of the Board shall constitute a quorum for the transaction of business, and any act of a committee 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 such committee at which a quorum is present.

 

(b)           The members of any committee of the Board shall act only as a committee of the Board, and the individual members of the Board shall have no power as such.

 

4.6           Records.  Each committee of the Board shall keep a record of its acts and proceedings and shall report the same, from time to time, to the Board. The Secretary, or, in his absence, an Assistant Secretary, shall act as secretary to each committee of the Board, or a committee of the Board may, in its discretion, appoint its own secretary.

 

4.7           Vacancies.  Except as otherwise provided in the Restated Certificate, any vacancy in any committee of the Board shall be filled by a majority of the Directors then in office.

 

4.8           Executive Committee.

 

(a)           In addition to any requirements set forth in the Restated Certificate, an Executive Committee shall be appointed, to consist of the Chairman, ex officio, and two or more other Directors; provided, however, that at least a majority of the Executive Committee shall consist of Directors who are neither officers nor employees of the Corporation or of any of its affiliated corporations.

 

(b)           Subject to the provisions of the GCL, the Executive Committee shall have and may exercise all the powers of the Board in the management of the business and affairs of the Corporation, including, without limitation, the power to authorize the seal of the Corporation to be affixed to all papers that may require it, but excluding any powers granted by the Board to any other committee of the Board; provided, that neither the Executive Committee nor any other committee of the Board shall be authorized to (i) elect any officer designated as such in Section 5.1 or to fill any vacancy in any such office, (ii) designate the Chief Executive Officer, (iii) fill any vacancy in the Board or any newly created Directorship, (iv) amend these Restated Bylaws or (v) take any action that under these Restated Bylaws is required to be taken by vote of a specified proportion of the entire Board or of the Directors at the time in office.

 

(c)           Subject to any provision in the Restated Certificate or the GCL, any action herein authorized to be taken by the Executive Committee and which is duly taken by it in accordance herewith shall have the same effect as if such action were taken by the Board.

 

ARTICLE 5

 

Officers, Employees and Agents:

Powers And Duties

 

5.1           Officers.  The officers of the Corporation, who shall be elected by the Board, may be a Chairman of the Board (who shall be a Director),a Treasurer and one or more Assistant Treasurers, and shall be a Chief Executive Officer (who shall be a Director), a President, one or more Vice Presidents, a General Counsel, a Secretary and one or more Assistant Secretaries.  The Board may also elect such other officers and select such other employees or agents as, from time to time, may appear to be necessary or advisable in the conduct of the affairs of the Corporation.  Any officer may also be elected to another office or offices.

 

8



 

5.2           Term of Office.  Subject to the provisions of the Restated Certificate, so far as practicable, each officer shall be elected at the organization meeting of the Board in each year, and shall hold office until the organization meeting of the Board in the next subsequent year and until his successor is chosen or until his earlier death, resignation or removal in the manner hereinafter provided.

 

5.3           Removal of Officers.  Any officer may be removed at any time, either for or without cause, by the affirmative vote of at least a majority of the votes entitled to be cast by the entire Board, at any meeting called for that purpose.

 

5.4           Vacancies.  If any vacancy occurs in any office, the Board may elect a successor to fill such vacancy for the remainder of the term.

 

5.5           Chief Executive Officer.  The Chief Executive Officer shall have general and active control of the business and affairs of the Corporation. He shall have general power (a) to execute bonds, deeds and contracts in the name of the Corporation, (b) to affix the corporate seal, (c) to sign stock certificates, (d) subject to the provisions of the Restated Certificate, these Restated Bylaws and the approval of the Board, to select all employees and agents of the Corporation whose selection is not otherwise provided for and to fix the compensation thereof, (e) to remove or suspend any employee or agent who shall not have been selected by the Board, (f) to suspend for cause, pending final action by the Board any employee or agent who shall have been selected by the Board and (g) to exercise all the powers usually and customarily performed by the chief executive officer of a corporation.

 

5.6           Chairman of the Board.

 

(a)           The Board may elect a Director as Chairman of the Board.

 

(b)           The Chairman shall preside at all meetings of Stockholders and of the Board at which he may be present.  The Chairman shall have such other powers and duties as he may be called upon by the Board to perform.

 

5.7           President.  The President, if not designated as Chief Executive Officer of the Corporation, shall perform such duties as are delegated by the Board, the Chairman or the Chief Executive Officer.  In the event of an absence, disability or vacancy in the office of the Chief Executive Officer, the President shall act in the place of the Chief Executive Officer with authority to exercise all his powers and perform his duties.

 

5.8           Vice Presidents and Other Officers.  The several Vice Presidents and other elected officers, including, without limitation, the General Counsel, shall perform all such duties and services as shall be assigned to or required of them, from time to time, by the Board, or the Chief Executive Officer, respectively.  In the event of the absence or disability of both the Chairman and the Chief Executive Officer, the President may designate one of the several Vice Presidents to act in his place with authority to exercise all of his powers and perform his duties, provided that the Board may change such designation, or if the President fails or is unable to make such designation, the Board may make such designation at a regular or special meeting called for that purpose.

 

5.9           Secretary.  The Secretary shall attend to the giving of notice of all meetings of Stockholders and the Board and shall keep and attest true records of all proceedings thereat.  He shall have charge of the corporate seal and have authority to attest any and all instruments or writings to which the same may be affixed.  He shall keep and account for all books, documents, papers and records of the Corporation, except those which are directed to be in charge of the Treasurer.  He shall have authority to sign stock certificates and shall generally perform all the duties usually appertaining to the office of secretary of a corporation.  In the absence of the Secretary, an Assistant Secretary or Secretary pro tempore shall perform his duties.

 

5.10         Treasurer.  The Treasurer, if any, shall be responsible for the collection, receipt, care, custody and disbursement of the funds of the Corporation and shall deposit or cause to be deposited all funds of the Corporation in and with such depositories as the Board shall, from time to time, direct.  He shall have the care and custody of all securities owned by the Corporation, and shall deposit such securities with such banks or in such safe deposit vaults, and under such controls, as the Board shall, from time to time, direct.  He shall disburse funds of the Corporation on the basis of vouchers properly approved for payment by the controller of the Corporation or his duly authorized representative.  He shall be responsible for the maintenance of detailed records of cash and security transactions and shall prepare such reports thereof as may be required. He shall have the power to sign stock certificates and to endorse for deposit or collection or otherwise all checks, drafts, notes, bills of exchange or other commercial paper payable to the Corporation and to give proper receipts or discharges therefor.  He shall have such other duties as are

 

9



 

commonly incidental to the office of treasurer of a corporation. In the absence of the Treasurer, an Assistant Treasurer shall perform his duties.

 

5.11         Additional Powers and Duties.  In addition to the foregoing especially enumerated duties and powers, the officers of the Corporation shall perform such other duties and exercise such further powers as may be provided in these Restated Bylaws or as the Board may, from time to time, determine or as may be assigned to them by any competent superior officer.

 

5.12         Compensation.  Except as otherwise provided in the Restated Certificate, the compensation of all officers of the Corporation shall be fixed, from time to time, by the Board.

 

ARTICLE 6

 

Stock And Transfers Of Stock

 

6.1           Stock Certificates.  The Common Stock shall be uncertificated.  The shares of the Corporation other than the Common Stock shall be represented by certificates or shall be uncertificated.  The Board shall have the power and authority to make such rules and regulations as it may deem expedient concerning the issue, transfer and registration of uncertificated shares or certificates for shares of stock of the Corporation.  Each certificate shall be signed by the Chairman or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, certifying the number of certificated shares owned by such Stockholder in the Corporation.  Any or all of the signatures on the certificate may be a facsimile. In case any officer, Transfer Agent or Registrar who has signed or whose facsimile signature has been placed upon a certificate shall cease to be such officer, Transfer Agent or Registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, Transfer Agent or Registrar at the date of issuance.

 

6.2           Transfer Agents and Registrars.  The Board may, in its discretion, appoint responsible banks or trust companies as the Board may deem advisable, from time to time, to act as Transfer Agents and Registrars of the stock of the Corporation; and, when such appointments shall have been made, no stock certificate shall be valid until countersigned by one of such Transfer Agents and registered by one of such Registrars.

 

6.3           Transfers of Stock.  Except as otherwise provided in the Restated Certificate, and subject to any other transfer restriction applicable thereto, shares of stock may be transferred by delivery of the certificates therefor, accompanied either by an assignment in writing on the back of the certificates or by written power of attorney to sell, assign and transfer the same, signed by the record holder thereof; but no transfer shall affect the right of the Corporation to pay any dividend upon the stock to the holder of record thereof, or to treat the holder of record as the holder in fact thereof for all purposes, and no transfer shall be valid, except between the parties thereto, until such transfer shall have been made upon the books of the Corporation.  No transfer of stock in violation of the provisions of Article Fourth, Part IV, Sections 4 and 5 of the Restated Certificate shall be valid as against the Corporation for any purpose.

 

6.4           Lost Certificates.  In case any certificate of stock shall be lost, stolen or destroyed, the Board, in its discretion, may authorize the issuance of a substitute certificate in place of the certificate lost, stolen or destroyed and may cause such substitute certificate to be countersigned by the appropriate Transfer Agent (if any) and registered by the appropriate Registrar (if any), provided that, in each such case, the applicant for a substitute certificate shall furnish to the Corporation and to such of its Transfer Agents and Registrars as may require the same, evidence to their satisfaction, in their discretion, of the loss, theft or destruction of such certificate and of the ownership thereof, and also such security or indemnity as may be required by them.

 

6.5           Record Date.

 

(a)           In order that the Corporation may determine the Stockholders entitled to notice of or to vote at any meeting of Stockholders or any adjournment thereof, or, subject to applicable law, to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board is authorized, from time to time, to fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action.

 

10



 

(b)           A determination of Stockholders of record entitled to notice of or to vote at a meeting of Stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.

 

ARTICLE 7

 

Miscellaneous

 

7.1           Fiscal Year.  The fiscal year of the Corporation shall be the calendar year.

 

7.2           Surety Bonds.  The Treasurer, each Assistant Treasurer and such other officers or agents of the Corporation as the Board may direct, from time to time, shall be bonded for the faithful performance of their duties in such amounts and by such surety companies as the Board may determine.  The premiums on such bonds shall be paid by the Corporation and the bonds so furnished shall be in the custody of the Chief Executive Officer or the chief financial officer.

 

7.3           Signature of Negotiable Instruments.  All bills, notes, checks or other instruments for the payment of money shall be signed or countersigned by such officer or officers and in such manner as, from time to time, may be prescribed by resolution (whether general or special) of the Board.

 

7.4           Subject to Law and Restated Certificate.  All powers, duties and responsibilities provided for in these Restated Bylaws, whether or not explicitly so qualified, are qualified by the provisions of the Restated Certificate and all applicable laws.

 

7.5           Voting of Stocks.  Unless otherwise ordered by the Board of Directors, the Chairman of the Board, President and General Counsel shall each have full power and authority, in the name of and on behalf of the Corporation, to attend, act and vote at any meeting of stockholders of a corporation in which the Corporation may hold stock, and, in connection with any such meeting, shall posses and may exercise any and all rights and powers incident to the ownership of such stock which, as the owner thereof, the Corporation might possess and exercise.  The Board of Directors from time to time may confer like powers upon any other person or persons.

 

7.6           Rights Plan.  The Board shall not adopt a Rights Plan without the approval of the Stockholders; provided that the Board may determine to adopt a Rights Plan without first submitting it to a vote of the Stockholders if, under the circumstances then existing, the Board, including a majority of the independent Directors (as determined in accordance with NASDAQ listing standards), in the exercise of its fiduciary responsibilities, determines that it is in the best interest of the Stockholders to adopt a Rights Plan without the delay in adoption that would come from the time reasonably anticipated to seek Stockholder approval.  In the event that the Board adopts a Rights Plan as contemplated by the foregoing sentence, the Board shall submit such Rights Plan to the Stockholders for ratification within 365 days of the date of adoption by the Board and, if such ratification is not obtained within such 365 day period, such Rights Plan will automatically expire.  Any such Rights Plan so adopted by the Board, notwithstanding its ratification by the Stockholders, shall include a provision requiring a committee of the Board comprised solely of independent Directors to review the Rights Plan at least every three years and report to the Board as to whether it recommends that the Board modify or terminate such Rights Plans, which review will be supported by a report and recommendation from investment bankers and attorneys engaged by the Committee, based on an evaluation of the Corporation’s performance, markets and developments in relevant corporate law.  This Section 7.6 shall automatically sunset and be deemed to be of no further force and effect on the date that is two years after the Effective Date (“Sunset Date”).  This Section 7.6 may not be amended prior to the Sunset Date without approval of the Stockholders.

 

ARTICLE 8

 

Amendments

 

8.1           Amendment of these Restated Bylaws.  Except as herein otherwise expressly provided, these Restated Bylaws may be altered or repealed and new bylaws, not inconsistent with any provision of the Restated Certificate or applicable law, may be adopted, either (a) by the affirmative vote of at least a majority of the votes entitled to be cast by the entire Board, or (b) by the affirmative vote of the holders of at least a majority in voting power of the stock entitled to vote thereon, at an annual meeting of Stockholders, or at a special meeting thereof,

 

11



 

the notice of which meeting shall include the form of the proposed amendment or supplement to or modification of these Restated Bylaws or of the proposed new bylaws, or a summary thereof.

 

12


Exhibit 4.1

 

 

REVOLVING CREDIT, TERM LOAN AND GUARANTY AGREEMENT

 

 

Among

 

UNITED AIR LINES, INC.,

 

as Borrower,

 

 

and

 

 

UAL CORPORATION,

 

the Parent,

 

 

and

 

 

THE SUBSIDIARIES OF THE BORROWER AND THE PARENT NAMED HEREIN,

 

as Guarantors

 

 

and

 

 

THE LENDERS PARTY HERETO,

 

 

and

 

 

JPMORGAN CHASE BANK, N.A.,
as Co-Administrative Agent, Co-Collateral Agent and Paying Agent

 

CITICORP USA, INC.,

as Co-Administrative Agent and Co-Collateral Agent

 

J.P. MORGAN SECURITIES INC.,

as Joint Lead Arranger and Joint Bookrunner

 

CITIGROUP GLOBAL MARKETS, INC.,
as Joint Lead Arranger and Joint Bookrunner

 

GENERAL ELECTRIC CAPITAL CORPORATION,

as Syndication Agent

 

 

Dated as of February 1, 2006

 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

SECTION 1.

DEFINITIONS

2

 

 

 

 

SECTION 1.01

Defined Terms

2

 

SECTION 1.02

Terms Generally

30

 

SECTION 1.03

Accounting Terms; GAAP

30

 

 

 

SECTION 2.

AMOUNT AND TERMS OF CREDIT

31

 

 

 

 

SECTION 2.01

Commitments of the Lenders

31

 

SECTION 2.02

Letters of Credit

32

 

SECTION 2.03

Requests for Borrowings

37

 

SECTION 2.04

Funding of Borrowings

38

 

SECTION 2.05

Interest Elections

39

 

SECTION 2.06

Interest on Loans

40

 

SECTION 2.07

Default Interest

40

 

SECTION 2.08

Alternate Rate of Interest

41

 

SECTION 2.09

Amortization of Tranche B Loan; Repayment of Loans; Evidence of Debt

41

 

SECTION 2.10

Optional Termination or Reduction of Commitment

43

 

SECTION 2.11

Mandatory Prepayment; Commitment Termination

44

 

SECTION 2.12

Optional Prepayment of Loans

46

 

SECTION 2.13

Increased Costs

47

 

SECTION 2.14

Break Funding Payments

48

 

SECTION 2.15

Taxes

49

 

SECTION 2.16

Payments Generally; Pro Rata Treatment

50

 

SECTION 2.17

Mitigation Obligations; Replacement of Lenders

51

 

SECTION 2.18

Certain Fees

52

 

SECTION 2.19

Commitment Fee

52

 

SECTION 2.20

Letter of Credit Fees

52

 

SECTION 2.21

Nature of Fees

52

 

SECTION 2.22

Right of Set-Off

53

 

SECTION 2.23

Security Interest in Letter of Credit Account

53

 

SECTION 2.24

Payment of Obligations

53

 

SECTION 2.25

Defaulting Lenders

53

 

 

 

SECTION 3.

REPRESENTATIONS AND WARRANTIES

54

 

 

 

 

SECTION 3.01

Organization and Authority

54

 

SECTION 3.02

Air Carrier Status

54

 

SECTION 3.03

Due Execution

54

 

SECTION 3.04

Statements Made

55

 

SECTION 3.05

Financial Statements; Material Adverse Change

56

 

SECTION 3.06

Ownership

56

 

SECTION 3.07

Liens

56

 

i



 

 

 

Page

 

 

 

 

SECTION 3.08

Compliance with Laws and Agreements

56

 

SECTION 3.09

Insurance

57

 

SECTION 3.10

Use of Proceeds

57

 

SECTION 3.11

Litigation and Environmental Matters

57

 

SECTION 3.12

Slot Utilization

58

 

SECTION 3.13

Primary Foreign Slot Utilization

58

 

SECTION 3.14

Primary Route Utilization

58

 

SECTION 3.15

Margin Regulations; Investment Company Act

58

 

SECTION 3.16

Ownership Interest in Slots, Routes and Gates

59

 

SECTION 3.17

ERISA

59

 

SECTION 3.18

Indebtedness; Off-Balance Sheet Transactions

59

 

SECTION 3.19

Properties

59

 

SECTION 3.20

Perfected Security Interests

60

 

SECTION 3.21

Payment of Taxes

60

 

SECTION 3.22

Solvency

60

 

SECTION 3.23

Section 1110

61

 

SECTION 3.24

Labor Matters

61

 

 

 

SECTION 4.

CONDITIONS OF LENDING

61

 

 

 

 

SECTION 4.01

Conditions Precedent to Initial Loans and Initial Letters of Credit

61

 

SECTION 4.02

Conditions Precedent to Each Loan and Each Letter of Credit

67

 

 

 

SECTION 5.

AFFIRMATIVE COVENANTS

69

 

 

 

 

SECTION 5.01

Financial Statements, Reports, etc

69

 

SECTION 5.02

Existence

73

 

SECTION 5.03

Insurance

73

 

SECTION 5.04

Maintenance of Properties

75

 

SECTION 5.05

Obligations and Taxes

75

 

SECTION 5.06

Notice of Event of Default, etc

75

 

SECTION 5.07

Access to Books and Records

75

 

SECTION 5.08

Compliance with Laws

76

 

SECTION 5.09

Appraisal Reports and Field Audits

77

 

SECTION 5.10

FAA and DOT Matters; Citizenship

77

 

SECTION 5.11

Gate Interests

78

 

SECTION 5.12

Slot Utilization

78

 

SECTION 5.13

Primary Foreign Slot Utilization

78

 

SECTION 5.14

Primary Route Utilization; Route Reporting

79

 

SECTION 5.15

Additional Subsidiaries

80

 

SECTION 5.16

Concentration Account

80

 

SECTION 5.17

Operational Matters

80

 

ii



 

 

 

Page

 

 

 

 

SECTION 5.18

Additional Collateral; Updated Schedules; Additional Grantors

80

 

SECTION 5.19

Non-Primary Route Flight Operations

81

 

SECTION 5.20

Further Assurances

81

 

 

 

SECTION 6.

NEGATIVE COVENANTS

82

 

 

 

 

SECTION 6.01

Liens

82

 

SECTION 6.02

Merger, etc

84

 

SECTION 6.03

Indebtedness

84

 

SECTION 6.04

Fixed Charge Coverage

86

 

SECTION 6.05

Unrestricted Cash Reserve

86

 

SECTION 6.06

Coverage Ratio

86

 

SECTION 6.07

Guarantees and Other Liabilities

87

 

SECTION 6.08

Dividends; Capital Stock

87

 

SECTION 6.09

Transactions with Affiliates

88

 

SECTION 6.10

Investments, Loans and Advances

88

 

SECTION 6.11

Disposition of Assets

89

 

SECTION 6.12

Nature of Business

89

 

SECTION 6.13

Changes to Corporate Documents

89

 

SECTION 6.14

Restricted Prepayments

89

 

SECTION 6.15

Restrictive Agreements

90

 

SECTION 6.16

Fiscal Year

90

 

 

 

SECTION 7.

EVENTS OF DEFAULT

90

 

 

 

 

SECTION 7.01

Events of Default

90

 

 

 

SECTION 8.

THE AGENTS

94

 

 

 

 

SECTION 8.01

Administration by Agents

94

 

SECTION 8.02

Rights of Agent, Paying Agent and Collateral Agents

95

 

SECTION 8.03

Liability of Agents

95

 

SECTION 8.04

Reimbursement and Indemnification

96

 

SECTION 8.05

Successor Agents

96

 

SECTION 8.06

Independent Lenders

97

 

SECTION 8.07

Advances and Payments

97

 

SECTION 8.08

Sharing of Setoffs

97

 

SECTION 8.09

Other Agents

98

 

 

 

SECTION 9.

GUARANTY

98

 

 

 

 

SECTION 9.01

Guaranty

98

 

SECTION 9.02

No Impairment of Guaranty

99

 

iii



 

 

 

Page

 

 

 

 

SECTION 9.03

Continuation and Reinstatement, etc

100

 

SECTION 9.04

Subrogation

100

 

 

 

SECTION 10.

MISCELLANEOUS

100

 

 

 

 

SECTION 10.01

Notices

100

 

SECTION 10.02

Successors and Assigns

100

 

SECTION 10.03

Confidentiality

105

 

SECTION 10.04

Expenses; Indemnity; Damage Waiver

105

 

SECTION 10.05

Governing Law; Jurisdiction; Consent to Service of Process

107

 

SECTION 10.06

No Waiver

107

 

SECTION 10.07

Extension of Maturity

107

 

SECTION 10.08

Amendments, etc

107

 

SECTION 10.09

Severability

109

 

SECTION 10.10

Headings

109

 

SECTION 10.11

Survival

109

 

SECTION 10.12

Execution in Counterparts; Integration; Effectiveness

109

 

SECTION 10.13

Prior Agreements

110

 

SECTION 10.14

Further Assurances

110

 

SECTION 10.15

USA Patriot Act

110

 

SECTION 10.16

WAIVER OF JURY TRIAL

110

 

iv



 

 

 

 

 

ANNEX A

Commitment Amounts

 

EXHIBIT A

Form of Real Estate Mortgage

 

EXHIBIT B

Form of Security Agreement

 

EXHIBIT C

Form of Pledge Agreement

 

EXHIBIT D

Form of Slot, Gate and Route Security and Pledge Agreement

 

EXHIBIT E

Form of Aircraft Mortgage

 

EXHIBIT F-1

Form of Trademark Security Agreement

 

EXHIBIT F-2

Form of Patent Security Agreement

 

EXHIBIT F-3

Form of Copyright Security Agreement

 

EXHIBIT G-1

Form of Opinion of Kirkland & Ellis

 

EXHIBIT G-2

Form of Opinion of Vedder, Price, Kaufman & Kammholz

 

EXHIBIT G-3

Form of Opinion of McAfee & Taft

 

EXHIBIT H

Form of Instrument of Assumption and Joinder

 

EXHIBIT I

Form of Intercreditor Agreement

 

EXHIBIT J

Form of Assignment and Acceptance

 

EXHIBIT K

Form of Contribution Agreement

 

EXHIBIT L

Form of Deposit Account Control Agreement

 

EXHIBIT M

Form of Investment Property Control Agreement

 

 

 

SCHEDULE 1.01(a)

Excluded Flight Simulators

 

SCHEDULE 1.01(b)

Primary Foreign Slots

 

SCHEDULE 1.01(c)

Primary Routes

 

SCHEDULE 1.01(d)

Intentionally omitted

 

SCHEDULE 1.01(e)

Primary Gate Interests

 

SCHEDULE 1.01(f)

Primary Supporting Route Facilities

 

SCHEDULE 1.01(g)

Immaterial Subsidiaries

 

SCHEDULE 1.01(h)

Primary Slots

 

SCHEDULE 3.06

Subsidiaries

 

SCHEDULE 3.07

Existing Liens

 

SCHEDULE 3.08

Material Agreements

 

SCHEDULE 3.11

Litigation

 

SCHEDULE 3.17

ERISA

 

SCHEDULE 3.18

Indebtedness

 

SCHEDULE 3.19(a)

Real Property Interests

 

SCHEDULE 3.23

Section 1110 Collateral

 

SCHEDULE 5.21

Post Closing Items

 

SCHEDULE 6.09

Transactions with Affiliates

 

SCHEDULE 6.10

Existing Investments

 

SCHEDULE 6.15

Restrictive Agreements

 

v



 

REVOLVING CREDIT, TERM LOAN AND GUARANTY AGREEMENT
Dated as of February 1, 2006

 

REVOLVING CREDIT, TERM LOAN AND GUARANTY AGREEMENT, dated as of February 1, 2006, among UNITED AIR LINES, INC., a Delaware corporation (the “Borrower”), UAL CORPORATION, a Delaware corporation and the parent company of the Borrower (the “Parent”) and the direct and indirect domestic subsidiaries of the Parent other than Immaterial Subsidiaries signatory hereto (the “Subsidiaries” and together with the Parent, each a “Guarantor” and collectively the “Guarantors”), JPMORGAN CHASE BANK, N.A., a national banking corporation (“JPMCB”), CITICORP USA, INC., a Delaware corporation (“CITI”), GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (“GE Capital”), each of the Lenders from time to time party hereto, JPMCB and CITI, as co-administrative agents (each, an “Agent” and together, the “Agents”) and co-collateral agents for the Lenders (each, a “Collateral Agent” and together, the “Collateral Agents”), JPMCB, as paying agent (in such capacity, the “Paying Agent”) for the Lenders, J.P. MORGAN SECURITIES INC. (“JPMSI”) and CITIGROUP GLOBAL MARKETS, INC. (“CGMI”), as joint lead arrangers and joint bookrunners, and GE Capital, as syndication agent.

 

INTRODUCTORY STATEMENT

 

The Borrower has applied to the Lenders for a loan facility of up to $3,000,000,000 comprised of (a) a revolving credit and letter of credit facility in an aggregate principal amount not to exceed $200,000,000 as set forth herein and (b) a term loan in an aggregate principal amount up to $2,800,000,000 as set forth herein ($350,000,000 of which shall be available as a Delayed Draw Tranche B Loan (as defined below)), all of the Borrower’s obligations under each of which are to be guaranteed by the Guarantors.

 

The proceeds of the Loans will be used to repay in full all of the obligations of the Borrower and the Guarantors under and in connection with the Existing DIP Facility, for working capital and other general corporate purposes of the Borrower and the Guarantors and for the other purposes described in Section 3.10.

 

To provide guarantees and security for the repayment of the Loans, the reimbursement of any draft drawn under a Letter of Credit and the payment of the other Obligations of the Borrower and the Guarantors hereunder and under the other Loan Documents, the Borrower and the Guarantors will, among other things, provide to the Agents, the Collateral Agents and the Lenders the following (each as more fully described herein):

 

(a)           a guaranty from each of the Guarantors of the due and punctual payment and performance of the Obligations of the Borrower hereunder pursuant to Section 9 hereof; and

 

(b)           a security interest on or mortgages (or comparable Liens) with respect to the Collateral from the Borrower and each of the Guarantors pursuant to the Collateral Documents.

 

Accordingly, the parties hereto hereby agree as follows:

 



 

SECTION 1.           DEFINITIONS

 

SECTION 1.01       Defined Terms.

 

1997 EETC Facility” shall mean that certain multiple tranche enhanced equipment pass through trust certificate financing commonly referred to as the “1997-1 EETC Transaction,” the purpose of which was to finance 14 aircraft in the Borrower’s fleet, which the Borrower entered into in December, 1997.

 

ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

 

Account” shall mean any right to payment for goods sold or leased or for services rendered, whether or not earned by performance.

 

Account Debtor” shall mean the Person obligated on an Account.

 

Adjusted LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

 

Affiliate” shall mean, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person.  For purposes of this definition, a Person (a “Controlled Person”) shall be deemed to be “controlled by” another Person (a “Controlling Person”) if the Controlling Person possesses, directly or indirectly, power to direct or cause the direction of the management and policies of the Controlled Person whether by contract or otherwise; provided, that neither the trustees under the Indentures nor the PBGC shall be Affiliates of the Borrower or any Guarantor.

 

Agents” shall have the meaning set forth in the first paragraph of this Agreement.

 

Agreement” shall mean this Revolving Credit, Term Loan and Guaranty Agreement, as the same may be amended, restated, modified, supplemented, extended or amended and restated from time to time.

 

Air Transportation Stabilization Act and Regulations” shall mean the Air Transportation Safety and System Stabilization Act, P.L. 107-42, as the same may be amended from time to time, and the regulations promulgated thereunder (14 C.F.R. Part 1310) and related OMB Regulations, 14 C.F.R. Part 1300.

 

Aircraft” shall have the meaning set forth in the Aircraft Mortgage.

 

Aircraft Mortgage” shall mean that “Aircraft Mortgage” as defined in Section 4.01(e), as the same may be amended, restated, modified, supplemented, extended or amended and restated from time to time.

 

Aircraft Protocol” shall mean the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment, as the same may be amended from time to time, available at: http://www.unidroit.org/english/conventions/mobile-equipment/aircraftprotocol.pdf, or any successor URL.

 

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Airport Authority” shall mean any public or private board or other body or organization chartered or otherwise established for the purpose of administering, operating or managing airports or related facilities.

 

Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the sum of the Federal Funds Effective Rate in effect on such day plus ½ of 1%.  Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

 

Appraisal Report” shall mean an appraisal in form and substance reasonably satisfactory to the Agents and prepared by the Appraisers or the Real Estate Appraiser, which certifies, at the time of determination, the Appraised Value of the applicable Appraised Collateral, Eligible Collateral or Cure Collateral, as the case may be.

 

Appraised Collateral” shall mean Collateral that is Mortgaged Collateral, Primary Routes, Primary Slots, Primary Foreign Slots, Flight Simulators, Ground Support Equipment, Real Property Assets, the Denver Training Facility or any other individual asset that is included in an Appraisal Report.

 

Appraised Value” shall mean (a) in the case of such Appraised Collateral (excluding the Denver Training Facility but including Primary Slots and Ground Support Equipment), Eligible Collateral or assets, the fair market value thereof as reflected in the most recent Appraisal Report obtained in respect of such Collateral or assets in accordance with this Agreement, (b) in the case of the Denver Training Facility, the in-use value thereof as reflected in the most recent Appraisal Report obtained in respect of the Denver Training Facility in accordance with this Agreement (less (i) the amount attributed to the Real Property Assets associated with the Denver Training Facility, as set forth in the most current Appraisal Report prepared by the Appraiser in accordance with this Agreement, and (ii) the amount attributed to the Flight Simulators located at the Denver Training Facility, as set forth in the most current Appraisal Report prepared by the applicable Appraiser in accordance with this Agreement) and (c) in the case of Eligible Accounts Receivable, Eligible Accounts Receivable, as reflected in the most recent Officer’s Certificate delivered pursuant to Section 5.01(q), each such value referred to in this definition to be (A) determined in a manner satisfactory to the Agents and (B) subject to reserves and other criteria established by the Agents in their commercially reasonable discretion.

 

 “Appraisers” shall mean (a) Simat, Helliesen & Eichner, Inc., as to the Mortgaged Collateral, Primary Slots, Primary Routes, Primary Foreign Slots, Ground Support Equipment, Flight Simulators and Denver Training Facility and (b) such other appraisal firm or firms as may be retained by the Agents, in consultation with the Borrower, from time to time.

 

Approved Fund” shall have the meaning given such term in Section 10.02(b).

 

Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.02), and accepted by the Paying Agent, substantially in the form of Exhibit J.

 

3



 

Availability Period” shall mean the period from and including the Closing Date to but excluding the Termination Date.

 

Bankruptcy Code” shall mean The Bankruptcy Reform Act of 1978, as heretofore and hereafter amended, and codified as 11 U.S.C. Section 101 et seq.

 

Bankruptcy Court” shall mean the United States Bankruptcy Court for the Northern District of Illinois.

 

Board” shall mean the Board of Governors of the Federal Reserve System of the United States.

 

Borrower” shall have the meaning set forth in the first paragraph of this Agreement.

 

Borrowing” shall mean the incurrence, conversion or continuation of Loans of a single Type made from all the Tranche A Lenders or the Tranche B Lenders, as the case may be, on a single date and having, in the case of Eurodollar Loans, a single Interest Period.

 

“Borrowing Request” shall mean a request by the Borrower for a Borrowing in accordance with Section 2.03.

 

Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in New York City are required or authorized to remain closed (and, for a Letter of Credit, other than a day on which the Issuing Lender issuing such Letter of Credit is closed); provided, however, that when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits on the London interbank market.

 

Cape Town Treaty” shall mean, collectively, the Aircraft Protocol and the Convention, as the same may be amended from time to time.

 

Capitalized Lease” shall mean, as applied to any Person, any lease of property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with GAAP.  The amount of obligations of such Person under a Capitalized Lease shall be the capitalized amount thereof determined in accordance with GAAP.

 

Cash Collateralization” shall have the meaning given such term in Section 2.02(j).

 

CERCLA” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as heretofore and hereafter amended.

 

CGMI” shall have the meaning set forth in the first paragraph of this Agreement.

 

Change in Law” shall mean, after the date hereof, (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority, Airport Authority, or Foreign Aviation Authorities after the date of this Agreement applicable to the Borrower or any of the Guarantors or (c) compliance by any Lender or the Issuing Lender (or, for purposes of Section 2.13(b), by any lending office of such Lender or by such Lender’s or the Issuing

 

4



 

Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

 

Change of Control” shall mean (a) the acquisition after the Closing Date of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of Equity Interests representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Parent; (b) during any period of up to 12 consecutive months, the occupation of a majority of the seats (other than vacant seats) on the Board of Directors of the Parent by Persons who were neither (i) directors at the time of the Consummation of the Plan of Reorganization nor (ii) nominated by the Board of Directors of the Parent or the Borrower nor (iii) appointed by directors so nominated; or (c) the Parent at any time owning less than 100% of the Equity Interests in the Borrower.

 

Chase Bank” shall mean Chase Bank USA, N.A.

 

CITI” shall have the meaning set forth in the first paragraph of this Agreement.

 

Closing Date” shall mean the date on which this Agreement has been executed and the conditions precedent to the making of the initial Loans or the issuance of the initial Letter of Credit (whichever may occur first) set forth in Section 4.01 have been satisfied or waived.

 

Co-Branded Agreement” shall mean that certain Co-Branded Card Marketing Services Agreement, effective July 1, 2001, among the Borrower, the Parent, UAL Loyalty Services, LLC and Chase Bank, as heretofore amended and as may be further amended, restated, modified, supplemented, extended or amended and restated from time to time.

 

Co-Branded Obligations” shall mean the obligations of the Borrower, the Parent and UAL Loyalty Services, LLC to Chase Bank under the Co-Branded Agreement.

 

Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

 

Collateral” shall mean all of the “Collateral” referred to in the Collateral Documents, which shall not include (a) the Escrow Accounts, (b) the Payroll Accounts, (c) Petty Cash Accounts, and (d) other items as set forth in the Collateral Documents.

 

Collateral Agents” shall have the meaning set forth in the first paragraph of this Agreement.

 

Collateral Documents” shall mean, collectively, the Security Agreement, the Pledge Agreement, the Aircraft Mortgage (including, without limitation, any Mortgage Supplement), the Real Estate Mortgages, the SGR Security Agreement, the Trademark Security Agreement, the Patent Security Agreement, the Copyright Security Agreement, any Control

 

5



 

Agreements and other agreements, instruments or documents that create or purport to create a Lien in favor of the Collateral Agents for the benefit of the Secured Parties.

 

Commitment Fee” shall have the meaning set forth in Section 2.19.

 

Confirmation Order” shall mean the order of the Bankruptcy Court confirming the Plan of Reorganization pursuant to Section 1129 of the Bankruptcy Code, together with all schedules and exhibits thereto.

 

Consummation of the Plan of Reorganization” shall mean the occurrence of the Effective Date (as defined in the Plan of Reorganization) and the substantial consummation of the Plan of Reorganization within the meaning of Section 1101(2) of the Bankruptcy Code.

 

Contribution Agreement” shall mean a contribution agreement among the Borrower and each of the Guarantors, substantially in the form of Exhibit K hereto, as such agreement may be amended, restated, amended and restated, supplemented or otherwise modified, renewed or replaced from time to time.

 

Control Agreements” shall mean the Deposit Account Control Agreements and the Investment Property Control Agreements.

 

Convention” shall mean the Convention on International Interests in Mobile Equipment (Cape Town, 2001), as the same may be amended from time to time, available at: http://www.unidroit.org/english/conventions/mobile-equipment/mobile-equipment.pdf, or any successor URL.

 

Copyright Security Agreement” shall mean that certain Copyright Security Agreement as defined in Section 4.01(f), as the same may be amended, restated, modified, supplemented, extended or amended and restated from time to time.

 

Cure Collateral” shall mean (a) cash collateral pledged to the Collateral Agents (and held in a segregated account over which the Collateral Agents have sole and exclusive control), (b) the Ground Support Equipment (to the extent landlord lien waivers have been delivered to the Collateral Agents as required by Section 4.04(b) of the Security Agreement), (c) the Primary Slots, (d) the Eligible Accounts Receivable or (e) other assets of the Borrower or any Guarantor which shall be reasonably satisfactory to the Required Lenders, and all of which Ground Support Equipment, Primary Slots, Eligible Accounts Receivable or other assets shall (i) be valued by a new Appraisal Report or Field Audit, as the case may be, at the time the Borrower designates such assets as Eligible Collateral and (ii) be subject to a perfected first priority lien and/or mortgage (or comparable lien) in favor of the Collateral Agents (subject to junior liens permitted hereunder).

 

DCA” shall mean Ronald Reagan Washington National Airport.

 

Defaulting Lender” shall mean any Lender that (a) has failed to fund any portion of the Loans or participations in any Letter of Credit required to be funded hereunder within one (1) Business Day of the date required to be funded by it hereunder, unless the subject of a good faith dispute or subsequently cured, (b) has otherwise failed to pay over to the Agents or any Lender (or its banking Affiliates) any other amount required to be paid by it hereunder within one (1) Business Day of the date when due, unless the subject of a good faith dispute or

 

6



 

subsequently cured, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.

 

Delayed Draw Tranche B Loan” shall have the meaning given to such term in

Section 2.01(c) hereof.

 

Delayed Draw Tranche B Loan Availability Period” shall mean the period commencing on the Closing Date and ending on the Delayed Draw Tranche B Loan Commitment Termination Date.

 

Delayed Draw Tranche B Loan Commitment” shall mean the commitment of the Tranche B Lenders to make Delayed Draw Tranche B Loans to the Borrower up to an aggregate principal amount, at any one time, not in excess of the amount set forth opposite such Lender’s name under the column entitled “Delayed Draw Tranche B Loan Commitment” on Annex A attached hereto or as may be subsequently set forth in the Register from time to time, as the case may be, and as may be reduced from time to time pursuant to Section 2.10 and 2.11.

 

Delayed Draw Tranche B Loan Commitment Percentage” shall mean, at any time, with respect to each Tranche B Lender, the percentage obtained by dividing its Delayed Draw Tranche B Loan Commitment at such time by the Total Delayed Draw Tranche B Loan Commitment.

 

Delayed Draw Tranche B Loan Commitment Termination Date” shall mean the earliest to occur of (i) the five month anniversary of the Closing Date, (ii) the date on which the full amount of the Delayed Draw Tranche B Loan Commitment has been borrowed and (iii) the date on which the Delayed Draw Tranche B Loan Commitment shall terminate in accordance with Section 2.10 or Article 7 hereof.

 

Denver Training Facility” shall mean that certain parcel of real property owned in fee by the Borrower and located at 7401 Martin Luther King Boulevard, Denver, Colorado 80207 (as such real property is more particularly described in the applicable Real Estate Mortgage, together with all Collateral described in such Real Estate Mortgage) and all assets located on or used in conjunction with such property (including, without limitation, all Flight Simulators located at such location, training program contracts for training programs conducted at such location, but excluding assets located at the above address not owned by the Borrower or otherwise encumbered identified on Schedule 1.01(a)), taken as a whole.

 

Deposit Account Control Agreement” shall mean an agreement in writing substantially in the form of Exhibit L attached hereto or in form and substance reasonably satisfactory to the Collateral Agents, by and among the Borrower or any Guarantor, as the case may be, the Collateral Agents, and any bank at which any deposit account of the Borrower or any Guarantor, as the case may be, is at any time maintained (other than Escrow Accounts, Payroll Accounts, Petty Cash Accounts and any accounts maintained at the Agents).

 

Dollars” and “$” shall mean lawful money of the United States of America.

 

DOT” shall mean the United States Department of Transportation and any successor thereto.

 

7



 

Earned Revenue Percentage” shall mean, a percentage, representing the estimated portion of credit revenue which has been earned at any point in time, based on a rolling twelve-month analysis of ticket sales versus “load levels” (i.e. tickets used for actual flights) experienced by the Borrower during the most recent Rolling Twelve Month period for which such information is available at the time of such determination.  The Earned Revenue Percentage shall initially be set at 46% and shall be subject to re-determination by either of the Agents based upon the results of each field audit of the Borrower conducted after the Closing Date.

 

EBITDAR” shall mean, for any period, all as determined in accordance with GAAP, the consolidated net income (or net loss) of the Parent and its Subsidiaries for such period, plus (a) the sum of (i) depreciation expense; (ii) amortization expense; (iii) other non-cash charges; (iv) consolidated federal, state and local income tax expense; (v) gross interest expense for such period less gross interest income for such period; (vi) aircraft rent expense; (vii) extraordinary, non-recurring or unusual losses; (viii) any non-cash non-recurring charge or non-cash restructuring charge; (ix) the cumulative effect (whether positive or negative) of any change in accounting principles; (x) cash restructuring charges not to exceed $75,000,000 paid in fiscal year 2006 and (xi) any other cash restructuring charges in an amount not to exceed $15,000,000 in any fiscal year (other than fiscal year 2006) less (b) extraordinary, non-recurring or unusual gains plus or minus (c) the amount of cash received or expended in such period in respect of any amount which, under clause (a)(viii) above, was taken into account in determining EBITDAR for such or any prior period.

 

EETC Deposit” shall mean certain funds that may be segregated or otherwise set aside in connection with any potential dispute concerning the amount of accrued interest that may be owed by the Borrower with respect to Tranche A of the 1997 EETC Facility.

 

EETC Transaction” shall mean an enhanced equipment trust certificate or other similar refinancing transaction solely with respect to up to nineteen (19) aircraft (which may include the fourteen (14) aircraft that are subject to the 1997 EETC Facility) having a current market value pursuant to an Appraisal Report not in excess of $600,000,000 in the aggregate.

 

Eligible Accounts means, at the time of any determination thereof, each Account with respect to (i) balances owed to the Borrower for revenues associated with the Borrower’s performance of cargo shipments for various freight brokers, freight forwarders and other airlines, (ii) balances owed to the Borrower from customers utilizing credit cards issued by the Borrower under the Universal Air Travel Plan utilized by the Borrower, (iii) balances owed to the Borrower from travel agencies for amounts charged back by the Borrower for additional passenger fares not properly charged at the time of the initial ticketing and other violations and (iv) balances owed to the Borrower from corporate customers generated from the sale of parts and the leasing of various airport ground equipment and gates and other non-transportation goods and services, in each case where such Account is not ineligible for inclusion in the calculation of Eligible Accounts pursuant to any of clauses (a) through (o) below.  Without limiting the foregoing, to qualify as Eligible Accounts, an Account shall indicate no person other than the Borrower or a Guarantor as payee or remittance party.  Criteria and eligibility standards used in determining Eligible Accounts may be fixed and revised from time to time by the Agents, in their reasonable discretion, and in the Agents’ reasonable exclusive judgment, with any changes in such criteria to be effective upon the date of the next Field Audit to be conducted pursuant to the terms herein.

 

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Unless otherwise approved from time to time in writing by the Agents, no Account shall be an Eligible Account if, without duplication:

 

(a)           the Borrower or a Guarantor does not have sole lawful and absolute title to such Account; or

 

(b)           it is not subject to a valid and perfected first priority Lien in favor of the Collateral Agents for the benefit of the Secured Parties, subject to no other Liens other than Liens permitted by the Agreement; or

 

(c)           (i) it is unpaid more than 90 days from the original date of invoice or 60 days from the original due date or (ii) it has been written off the books of the Borrower or a Guarantor or has been otherwise designated on such books as uncollectible; or

 

(d)           the Account Debtor is insolvent or the subject of any bankruptcy case or insolvency proceeding of any kind (other than postpetition accounts payable of an Account Debtor that is a debtor-in-possession under the Bankruptcy Code and reasonably acceptable to the Agents); or

 

(e)           the Account is not payable in Dollars or the Account Debtor is either not organized under the laws of the United States of America, any state of the United States of America or the District of Columbia or is located outside or has its principal place of business or substantially all of its assets outside the United States; or

 

(f)            the Account Debtor is the United States of America or any department, agency or instrumentality thereof, unless the relevant Borrower duly assigns its rights to payment of such Account to the Agent pursuant to the Assignment of Claims Act of 1940, as amended, which assignment and related documents and filings shall be in form and substance reasonably satisfactory to the Agents; or

 

(g)           the associated revenue from such Account has not been earned by the Borrower or the Guarantor; or

 

(h)           to the extent the Account is classified as a note receivable by the Borrower or a Guarantor; or

 

(i)            the Account is a non-trade Account, or relates to payments for interest; or

 

(j)            it arises out of a sale made by the Borrower or a Guarantor to an employee, officer, agent, director, stockholder, Subsidiary or Affiliate of the Borrower or a Guarantor; or

 

(k)           such Account was not paid in full, and the Borrower or a Guarantor created a new receivable for the unpaid portion of the Account, and other Accounts constituting chargebacks, debit memos (other than debit memos reflecting balances owed to the Borrower referred to in clause (iii) of the first

 

9



 

sentence of this definition of Eligible Accounts) and other adjustments for unauthorized deductions; or

 

(l)            such Account is subject to any counterclaim, deduction, defense, setoff or dispute, but only to the extent of the amount of such counterclaim, deduction, defense, setoff or dispute, unless the Agents, in their sole discretion, have established an appropriate reserve and determine to include such Account as an Eligible Account; or

 

(m)          the Account does not comply in all material respects with the requirements of all applicable laws and regulations, whether Federal, state or local; or

 

(n)           as to any Account, to the extent that a check, promissory note, draft, trade acceptance or other instrument for the payment of money has been received, presented for payment and returned uncollected for any reason (other than bank error prior to the correction thereof); or

 

(o)           the Account is due from another airline.

 

Eligible Accounts Receivable” shall mean, at the time of determination thereof, the sum of Eligible Accounts plus Estimated Credit Card Receivables Component.

 

Eligible Assignee” shall mean (a) a commercial bank having total assets in excess of $1,000,000,000, (b) a finance company, insurance company or other financial institution or fund, in each case reasonably acceptable to the Agents, which in the ordinary course of business extends credit of the type contemplated herein and has total assets in excess of $200,000,000 and whose becoming an assignee would not constitute a prohibited transaction under Section 4975 of the Code or Section 406 of ERISA, (c) an Affiliate of the assignor Lender, (d) an Approved Fund and (e) any other financial institution reasonably satisfactory to the Agents.

 

Eligible Collateral” shall mean (a) all Mortgaged Collateral (including, without limitation, aircraft, spare parts, spare engines and QEC Kits), Flight Simulators, Primary Routes and the Real Property Assets, in each case to the extent owned or held by the Borrower or a Guarantor and on which the Collateral Agents shall have a valid and perfected first priority lien and/or mortgage (or comparable lien), provided that if an Aircraft is (i) Parked, then 50% of the Appraised Value of such Aircraft as set forth in the most recent Appraisal Report shall be excluded from Eligible Collateral provided that an Appraisal Report establishing the current Appraised Value of such Aircraft in its Parked condition is delivered to the Agents within ninety (90) days of such Aircraft being Parked, and if no such Appraisal Report shall have been delivered within such period, then such Parked Aircraft shall be excluded from Eligible Collateral or (ii) Stored, then such Aircraft shall be excluded from Eligible Collateral, and (b) any Cure Collateral designated by the Borrower at its discretion.

 

Engine” shall have the meaning set forth in the Aircraft Mortgage.

 

Environmental Laws” shall mean all laws (including common law), rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions or legally binding

 

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agreements issued, promulgated or entered into by or with any Governmental Authority, relating to the environment, preservation or reclamation of natural resources, the handling, treatment, storage, disposal, Release or threatened Release of any Hazardous Material or the exposure of any Person (including employees) to any Hazardous Materials.

 

Environmental Liability” shall mean any liability (including any liability for damages, natural resource damage, costs of environmental remediation, administrative oversight, costs, fines or penalties) directly resulting from or based upon (a) violation of any Environmental Law or requirement of any Airport Authority relating to environmental matters, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the environment or (e) any contract, agreement, lease or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

Equity Interests” shall mean shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person (whether direct or indirect), and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

 

ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

 

ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

 

Escrow Accounts” shall mean certain funds set aside by the Borrower or any Guarantor to manage the collection and payment of amounts collected by the Borrower or such Guarantor for the benefit of third party beneficiaries relating to: (a) federal income tax withholding and backup withholding tax, employment taxes, transportation excise taxes and security related charges, including, without limitation, (i) federal payroll withholding taxes, as described in Sections 3101, 3111 and 3402 of the Code, (ii) federal Unemployment Tax Act taxes, as described in Chapter 23 of Subtitle C of the Code, (iii) federal air transportation excise taxes, as described in Sections 4261 and 4271 of the Code, (iv) federal security charges, as described in Title 49 of the Code of Federal Regulations of 2002 (referred to in this definition as the “CFR”), Chapter XII, Part 1510, (v) federal Animal and Plant Health Inspection Service of the United States Department of Agriculture (APHIS) user fees, as described in Title 21 of the United States Code (2002) (referred to in this definition as “U.S.C.”) Section 136a and 7 CFR Section 354.3, (vi) federal Immigration and Naturalization Service (INS) fees, as described in 8 CFR Part 286, (vii) federal customs taxes as described in 19 U.S.C. Section 58c, and (viii) federal jet fuel taxes as described in Sections 4091 and 4092 of the Code collected on behalf of and owed to the federal government; (b) any and all state and local income tax withholding, employment taxes and related charges and fees and similar taxes, charges and fees, including, but not limited to, state and local payroll withholding taxes, unemployment and supplemental unemployment taxes, disability taxes, workman’s or workers’ compensation charges and related

 

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charges and fees that are analogous to those described in Subtitle C of the Code and that are described in or are analogous to Chapter 23 of Title 19 Delaware Code Annotated (2002) collected on behalf of and owed to state and local authorities, agencies and entities; (c) passenger facility fees and charges as described in 49 U.S.C. Section 40117 (2005) and Title 14 of the CFR, Subchapter 1, Part 158 collected on behalf of and owed to various Airport Authorities or other applicable Governmental Authorities; (d) taxes, fees and charges similar to any of the foregoing set aside or collected on behalf of, or owed to, Foreign Aviation Authorities, Governmental Authorities or Airport Authorities; and (e) other funds held in trust for an identified beneficiary; in each case held in escrow accounts or trust funds in an aggregate amount for all of such Escrow Accounts not in excess of $250,000,000.

 

Estimated Credit Card Receivables Component” shall mean an amount representing the estimated earned but outstanding portion of retail credit card receivables due from major credit card providers (including, without limitation, Visa, MasterCard, American Express, Discover and Carte Blanche) in connection with ticket purchases from the Borrower, as determined semi-annually in accordance with the following formula and set forth in the most recent Officer’s Certificate delivered to the Agents pursuant to Section 5.01(q). Such amount shall be equal to three (3) times the average daily adjusted credit card sales (i.e., the product of (a) three (3) multiplied by (b) the gross retail credit card sales for the most recent fiscal month available at the time of determination multiplied by (c) the Earned Revenue Percentage divided by (d) the number of days in such month), subject to such adjustments as may be deemed appropriate by either of the Agents based upon the results of each Field Audit of the Borrower conducted after the Closing Date.

 

Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

 

Eurodollar Borrowing” shall mean a Borrowing comprised of Eurodollar Loans.

 

Event of Default” shall have the meaning given such term in Section 7.

 

Excluded Taxes” shall mean, with respect to the Paying Agent, Agents, Collateral Agents, any Lender, any Issuing Lender or any other recipient of any payment to be made by or on account of any Obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender, any withholding tax that is imposed by any jurisdiction other than the United States of America or any state thereof or is imposed by the United States of America on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure to comply with Section 2.15(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.15(a).

 

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Existing DIP Facility” shall mean that certain Revolving Credit, Term Loan and Guaranty Agreement (as amended, restated, amended and restated, supplemented, extended or otherwise modified to the date hereof), dated as of December 24, 2002, among the Borrower, the Parent, the direct and indirect subsidiaries of the Borrower and Parent party thereto, the lenders from time to time party thereto, JPMCB and CITI, as co-administrative agents and co-collateral agents, and JPMCB, as paying agent.

 

Existing DIP Facility Letter of Credit” shall mean each letter of credit that was issued under the Existing DIP Facility and remains outstanding as of the Closing Date.

 

FAA” shall mean the Federal Aviation Administration of the United States of America and any successor thereto.

 

Federal Funds Effective Rate” shall mean, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Agents from three Federal funds brokers of recognized standing selected by it.

 

Fees” shall collectively mean the Commitment Fees, Letter of Credit Fees and other fees referred to in Sections 2.18, 2.19 and 2.20.

 

Field Audit” shall mean a field examination conducted by a Field Auditor of the Borrower’s and the Guarantors’ accounts receivable and books and records related thereto, and the results of such field examination shall be reasonably satisfactory to the Agents in all respects.

 

Field Auditor” shall mean the Agents or their respective Affiliates, appraisers or other advisors who may be retained by the Agents to conduct a Field Audit.

 

Fifth-Freedom Rights” shall mean the operational right to enplane passenger traffic and cargo in a foreign country and deplane it in another foreign country.

 

Fixed Charge Coverage Ratio” shall mean, at any date for which such ratio is to be determined, the ratio of EBITDAR for the Rolling Twelve Month period ended on such date to the sum of the following for such period: (a) Interest Expense, plus (b) the aggregate cash aircraft rental expense of the Parent and its Subsidiaries on a consolidated basis for such period payable in cash in respect of any aircraft leases (other than Capitalized Leases), all as determined in accordance with GAAP, plus (c) scheduled principal payments on all Indebtedness (including Capitalized Leases) of the Parent and its Subsidiaries on a consolidated basis.

 

Flight Simulators” shall mean the flight simulators and flight training devices of the Borrower or any applicable Guarantor (including, without limitation, any such simulators or training devices located on a Real Property Asset) other than the flight simulators listed on Schedule 1.01(a) (as such Schedule may be amended from time to time with the consent of the Agents to remove one or more flight simulators from such Schedule).

 

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Foreign Aviation Authorities” shall mean any foreign governmental, quasi-governmental, regulatory or other agencies, public corporations or private entities that exercise jurisdiction over the issuance or authorization (a) to serve any foreign point on each of the Routes and/or to conduct operations related to the Routes and Supporting Route Facilities and/or (b) to hold and operate any Foreign Slots.

 

Foreign Lender” shall mean any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located.  For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

Foreign Slot” shall mean all of the rights and operational authority, now held or hereafter acquired, of Borrower and, if applicable, a Guarantor, to conduct one landing or takeoff at a specific time or in a specific time period on a specific day of the week at each non-U.S. airport served in conjunction with Borrower’s, or, if applicable, a Guarantor’s operations over a Route.

 

GAAP” shall mean generally accepted accounting principles applied in accordance with Section 1.03.

 

Gate Interests” shall mean all of the right, title, privilege, interest, and authority now or hereafter acquired or held by the Borrower or, if applicable, a Guarantor in connection with the right to use or occupy space in any airport terminal located in the United States at which the Borrower conducts scheduled operations.

 

 “GE Capital” shall have the meaning set forth in the first paragraph of this Agreement.

 

Governmental Authority” shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank organization, or other entity exercising executive, legislative, judicial, taxing or regulatory powers or functions of or pertaining to government.  Governmental Authority shall not include any Airport Authority.

 

Ground Support Equipment” shall mean the equipment owned by the Borrower or, if applicable, a Guarantor for crew and passenger ground transportation, cargo, mail and luggage handling, catering, fuel/oil servicing, de-icing, aircraft maintenance and servicing, dispatching, security and motor vehicles.

 

Guarantee” of or by any Person (the “guarantor”) shall mean any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement

 

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condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include (i) endorsements for collection or deposits or (ii) customary contractual indemnities in commercial agreements, in each case in the ordinary course of business and consistent with past practice.  The amount of any obligation relating to a Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made (or, if less, the maximum reasonably anticipated liability for which such Person may be liable pursuant to the terms of the instrument evidencing such Guarantee) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform) as determined by the guaranteeing Person in good faith.

 

Guarantor” shall have the meaning set forth in the first paragraph of this Agreement.

 

Hazardous Materials” shall mean all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

 

Hedging Agreement” shall mean any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions.

 

Immaterial Subsidiaries” shall mean one or more Subsidiaries of the Parent, for which, (a) the assets of all such designated Subsidiaries constitute, in the aggregate, less than or equal to 2½% of the total assets of the Parent and its Subsidiaries on a consolidated basis, and (b) the revenues of such Subsidiaries account for less than or equal to 2½% of the total revenues of the Parent and its Subsidiaries on a consolidated basis.  The Immaterial Subsidiaries as of the Closing Date shall be listed on Schedule 1.01(g).

 

Indebtedness” of any Person shall mean, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accrued expenses incurred and current accounts payable, in each case in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Obligations of such Person in respect of Capitalized Leases, (i) all

 

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obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (k) all obligations of such person to pay a specified purchase price for goods or services, whether or not delivered or accepted, i.e., take-or-pay and similar obligations, and (l) all obligations in respect of Hedging Agreements valued at the amount equal to what would be payable by such Person to its counterparty to such Hedging Agreements if such Hedging Agreement was terminated early on such date of determination.  The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

 

Indemnified Taxes” shall mean Taxes other than Excluded Taxes.

 

Indemnitee” shall have the meaning given such term in Section 10.04(b).

 

Indentures” shall mean, collectively, the (a) Senior Convertible Note Indenture, (b) Senior Convertible Note Indenture-2 and (c) the Senior Note Indenture.

 

Intercreditor Agreement” shall mean that certain Intercreditor Agreement dated the date hereof between the Agents, the Collateral Agents, Chase Bank, the Borrower and the Guarantors party thereto in substantially the form attached as Exhibit I.

 

Interest Election Request” shall mean a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.05.

 

Interest Expense” shall mean, for any period, the gross cash interest expense (including the interest component of Capitalized Leases), of the Parent and its Subsidiaries on a consolidated basis for such period, including, without limitation or duplication, (a) cash interest expense in respect of the Loans and all other outstanding Indebtedness, (b) commissions, discounts and other fees and charges payable in connection with letters of credit, and (c) net payments payable in connection with all Hedging Agreements involving interest rates (including amortization of any discount), all as determined in accordance with GAAP.

 

Interest Payment Date” shall mean (a) as to any Eurodollar Loan having an Interest Period of two weeks or one, two or three months, the last day of such Interest Period, (b) as to any Eurodollar Loan having an Interest Period of more than three months, the last day of such Interest Period and, in addition, each date during such Interest Period that would be the last day of an Interest Period commencing on the same day as the first day of such Interest Period but having a duration of three months or any integral multiple thereof and (c) with respect to ABR Loans, the last Business Day of each March, June, September and December.

 

Interest Period” shall mean, as to any Borrowing of Eurodollar Loans, the period commencing on the date of such Borrowing (including as a result of a conversion from ABR Loans) or on the last day of the preceding Interest Period applicable to such Borrowing and ending two weeks thereafter or on the numerically corresponding day (or if there is no corresponding day, the last day) in the calendar month that is one, three, six, nine or twelve months thereafter, as the Borrower may elect in the related notice delivered pursuant to

 

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Sections 2.03 or 2.05; provided, however, that, to be available as an Interest Period hereunder, any two week, nine month or twelve month Interest Period requested by the Borrower must be available to all of the Lenders; provided, further, that (a) if any Interest Period would end on a day which shall not be a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (b) no Interest Period shall end later than the Termination Date.

 

Investment Property” shall mean all of the Borrower’s and Guarantors’ investment property, as such term is defined in the New York Uniform Commercial Code, whether now owned or hereafter acquired, including, but not limited to, all securities, security entitlements, securities accounts, commodity contracts, commodity accounts, stocks, bonds, mutual fund shares, money market shares and U.S. Government securities.

 

Investment Property Control Agreement” shall mean an agreement in writing substantially in the form of Exhibit M attached hereto or in form and substance reasonably satisfactory to the Collateral Agents, by and among the Borrower or any Guarantor, as the case may be, and any securities intermediary, commodity intermediary or other Person who has custody, control or possession of any Investment Property.

 

Investments” shall mean any stock, evidence of indebtedness or other security of any Person, any loan, advance, contribution of capital, extension of credit or commitment therefor (including, without limitation, the Guarantee of loans made to others, but excluding current trade and customer accounts receivable arising in the ordinary course of business and payable in accordance with customary trading terms in the ordinary course of business), and any purchase or acquisition of (a) any security of another Person or (b) a line of business, or all or substantially all of the assets, of any Person.

 

Issuing Lender” shall mean JPMCB or CITI (or any of their banking affiliates), each in its capacity as the issuer of Letters of Credit hereunder, and their successors in such capacity as provided in Section 2.02(i), and one or more other Lenders, which other Lenders shall be reasonably satisfactory to the Borrower and the Agents.  The Issuing Lender may, in its reasonable discretion, in consultation with the Borrower, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Lender, in which case the term “Issuing Lender” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

 

Jet Fuel Supply Agreement” shall mean that certain Jet Fuel Supply Agreement, entered into effective as of October 21, 2003, as amended from time to time, among the Borrower, UAFC and MSCG, pursuant to which MSCG will supply jet fuel for the Borrower’s domestic operations, will assume certain of the Borrower’s and UAFC’s existing supply and third-party sale agreements and will sublease certain of the Borrower’s and UAFC’s existing infrastructure agreements.

 

JFK” shall mean New York’s John F. Kennedy (JFK) International Airport.

 

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Joint Commitment Letter” shall mean that certain Amended and Restated Joint Commitment Letter dated as of November 16, 2005 among the Agents, JPMSI, CGMI, GE Capital and the Borrower.

 

Joint Lead Arrangers” shall mean JPMSI and CGMI.

 

JPMCB” shall have the meaning set forth in the first paragraph of this Agreement.

 

JPMSI” shall have the meaning set forth in the first paragraph of this Agreement.

 

LC Disbursement” shall mean a payment made by the Issuing Lender pursuant to a Letter of Credit.

 

LC Exposure” shall mean, at any time, the sum of (a) the aggregate maximum undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time.  The LC Exposure of any Tranche A Lender at any time shall be its Tranche A Commitment Percentage of the LC Exposure at such time.

 

Lenders” shall mean the Tranche A Lenders and the Tranche B Lenders.

 

Letter of Credit” shall mean (a) any irrevocable letter of credit issued pursuant to Section 2.02, which letter of credit shall be (i) a standby letter of credit, (ii) issued for purposes that are consistent with the ordinary course of business of the Borrower or any Guarantor, (iii) denominated in Dollars and (iv) otherwise in such form as may be reasonably approved from time to time by the Agents and the applicable Issuing Lender and (b) each Existing DIP Facility Letter of Credit.  On the Closing Date, each Existing DIP Facility Letter of Credit shall be deemed for all purposes herein to be a Letter of Credit issued pursuant to Section 2.02 and to constitute usage of the Total Tranche A Commitment.

 

Letter of Credit Account” shall mean the account established by the Borrower under the sole and exclusive control of the Paying Agent maintained at the office of the Paying Agent at 270 Park Avenue, New York, New York 10017 designated as the “United Airlines LC Account” that shall be used solely for the purposes set forth herein.

 

Letter of Credit Fees” shall mean the fees payable in respect of Letters of Credit pursuant to Section 2.20.

 

LGA” shall mean New York’s LaGuardia Airport.

 

LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Paying Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period,

 

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as the rate for dollar deposits with a maturity comparable to such Interest Period.  In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Paying Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

 

Lien” shall mean (a) any mortgage, deed of trust, pledge, hypothecation, security interest, easement (including, without limitation, reciprocal easement agreements and utility agreements), rights-of-ways, reservations, encroachments, zoning and other land use restrictions, claim or any other title defect, lease, encumbrance, restriction, lien or charge of any kind whatsoever, (b) the interest of a vendor or a lessor under any conditional sale, capital lease or other title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) and (c) in the case of securities, any purchase option, call or similar right or interest of a third party with respect to such securities (other than employee stock option plans).

 

Loan” shall mean, collectively, the Tranche A Loans and the Tranche B Loans.

 

Loan Documents” shall mean this Agreement, the Letters of Credit (including applications for Letters of Credit and related reimbursement agreements), the Collateral Documents, the Intercreditor Agreement and any other instrument or agreement (which is designated as a Loan Document therein) executed and delivered to the Paying Agent, the Agents, the Collateral Agents or any Lender, in each case, as the same may be amended, restated, modified, supplemented, extended or amended and restated from time to time.

 

Material Adverse Change” shall mean any event, development or circumstance that has had or could reasonably be expected to have a Material Adverse Effect.

 

Material Adverse Effect” shall mean a material adverse effect on (a) the business, property, operations or condition (financial or otherwise) of the Borrower and the Guarantors, taken as a whole, (b) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Agents and the Lenders thereunder, or (c) the ability of the Borrower or any Guarantor to perform its respective obligations under the Loan Documents.

 

Material Agreement” shall mean any credit agreement, indenture, or other agreement related to indebtedness of the Borrower or any Guarantor for borrowed money in excess of $40,000,000 (other than this Credit Agreement and the other Loan Documents).

 

“Material Indebtedness” shall mean Indebtedness (other than the Loans and Letters of Credit), of any one or more of the Borrower and Guarantors in an aggregate principal amount exceeding $40,000,000.

 

Maturity Date” shall mean February 1, 2012.

 

Minority Lenders” shall have the meaning given such term in Section 10.08(b).

 

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Moody’s” shall mean Moody’s Investors Service, Inc.

 

Morgan Lewis” shall have the meaning given such term in Section 10.04(a).

 

Mortgaged Collateral” shall mean all of the “Collateral” as defined in the Aircraft Mortgage (including any Mortgage Supplement), defined to include, without limitation, all aircraft, spare engines, spare parts inventory and QEC Kits included within the Collateral.

 

Mortgage Supplement” shall have the meaning set forth in the Aircraft Mortgage.

 

MSCG” shall mean Morgan Stanley Capital Group Inc.

 

Multiemployer Plan” shall mean a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of) the Borrower or a Subsidiary of the Borrower or an ERISA Affiliate, and each such plan for the five-year period immediately following the latest date on which the Borrower, or a Subsidiary of the Borrower or an ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan.

 

Multiple Employer Plan” shall mean a Single Employer Plan, which (a) is maintained for employees of the Borrower or an ERISA Affiliate and at least one person (as defined in Section 3(9) of ERISA) other than the Borrower and its ERISA Affiliates or (b) was so maintained and in respect of which the Borrower or an ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such Plan has been or were to be terminated.

 

Non-Primary Routes” shall mean all of the Routes other than the Primary Routes.

 

Obligations” shall mean the unpaid principal of and interest on (including interest, reasonable fees and reasonable out-of-pocket costs accruing after the maturity of the Loans and interest, reasonable fees and reasonable out-of-pocket costs accruing after the filing of any petition of bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest, fees or costs is allowed in such proceeding) the Loans and all other obligations and liabilities of the Borrower to any Agent or Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which arise under, out of, or in connection with, this Agreement, any other Loan Document, any treasury, depository and cash management services and automated clearing house transfers of funds services provided by a Lender or any of its banking Affiliates, but not any other Person, as permitted by Section 6.03(g), any foreign exchange contracts, currency swap agreements, currency future or option contracts and other similar agreements designed to hedge against fluctuations in foreign exchange rates and currency values and any interest rate swap, cap or collar agreements, interest rate future or option contracts and other similar agreements designed to hedge against fluctuations in interest rates, in each case to the extent that the Indebtedness related to such contract or agreement is owing to a Lender or any of its banking Affiliates and is permitted to be secured pursuant to Section 6.01(dd), or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement

 

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obligations, reasonable fees, indemnities, reasonable out-of-pocket costs, reasonable out-of-pocket expenses (including all reasonable fees, charges and disbursements of counsel to any Agent or Lender that are required to be paid by the Borrower pursuant hereto) or otherwise.

 

Officer’s Certificate” shall mean, as applied to the Borrower or any Guarantor, a certificate executed by a Responsible Officer of such Person in his/her capacity as such.

 

Other Taxes” shall mean any and all present or future stamp, mortgage, intangible or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.

 

Parent” shall have the meaning set forth in the first paragraph of this Agreement.

 

Parked” shall mean, as to any Aircraft, that such Aircraft has been removed from service and is not intended to be used for scheduled service for a period in excess of thirty (30) days, including, without limitation, those Aircraft that have been Stored, other than Aircraft temporarily grounded for maintenance being actively conducted.

 

Patent Security Agreement” shall mean that certain Patent Security Agreement as defined in Section 4.01(f), as the same may be amended, restated, modified, supplemented, extended or amended and restated from time to time.

 

Participant” shall have the meaning given such term in Section 10.02(d).

 

Patriot Act” shall mean the USA Patriot Act, Title III of Pub. L. 107-56, signed into law on October 26, 2001 or any subsequent legislation that amends, supplements or supersedes such Act.

 

Paying Agent” shall have the meaning set forth in the first paragraph of this Agreement.

 

Payroll Accounts” shall mean depository accounts used only for payroll.

 

PBGC” shall mean the Pension Benefit Guaranty Corporation, or any successor agency or entity performing substantially the same functions.

 

Permitted Acquisition” shall mean any acquisition, whether by purchase, merger, consolidation or otherwise, by the Parent, the Borrower or any Guarantor (other than the Parent) of all or substantially all the assets of, or all the Equity Interests in, a Person or a division, line of business or other business unit of a Person but only so long as:

 

(a)           (i) no Event of Default has occurred and is continuing immediately prior or immediately after giving effect to the Transactions and (ii) all transactions related thereto are consummated in all material respects in accordance with applicable laws;

 

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(b)           the Borrower has delivered to the Agents an Officer’s Certificate to the effect set forth in clause (a) above, together with the relevant financial information for the Person or assets to be acquired;

 

(c)           the Borrower has provided the Agents with written notice ten (10) days prior to a Permitted Acquisition and copies of the material acquisition documents promptly after consummation of such acquisition; and

 

(d)           the aggregate amount extended for such acquisition is in compliance with Section 6.10(u).

 

Permitted Investments” shall mean:

 

(a)           direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

 

(b)           direct obligations of state and local government entities in each case maturing within one year from the date of acquisition thereof, which have a rating of at least A- (or the equivalent thereof) from S&P or A-3 (or the equivalent thereof) from Moody’s;

 

(c)           obligations of domestic or foreign companies and their subsidiaries (including, without limitation, agencies, sponsored enterprises or instrumentalities chartered by an Act of Congress, which are not backed by the full faith and credit of the United States of America), including, without limitation, bills, notes, bonds, debentures, and mortgage-backed securities, in each case maturing within one year from the date of acquisition thereof;

 

(d)           investments in commercial paper maturing within 365 days from the date of acquisition thereof and having, at such date of acquisition, which have a rating of at least A-2 (or the equivalent thereof) from S&P or P-2 (or the equivalent thereof) from Moody’s;

 

(e)           investments in certificates of deposit, banker’s acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any other commercial bank of recognized standing organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $250,000,000 and which has a long term unsecured debt rating of at least A from S&P and A-2 from Moody’s (or is the principal banking Subsidiary of a bank holding company that has such ratings);

 

(f)            fully collateralized repurchase agreements with a term of not more than six (6) months for underlying securities that would otherwise be eligible for investment;

 

(g)           Investments of money in an investment company organized under the Investment Company Act of 1940, as amended, or in pooled accounts or funds offered through mutual funds, investment advisors, banks and brokerage houses which invest its assets in obligations of the type described in (a) through (f) above.  This could include, but not be limited

 

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to, money market funds or short-term and intermediate bonds funds; and

 

(h)           money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA (or the equivalent thereof) by S&P and Aaa (or the equivalent thereof) by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.

 

Permitted Liens” shall mean: (a) Liens imposed by law (other than Liens imposed under Environmental Laws and any Lien imposed under ERISA) for taxes, assessments, levies or charges of any Governmental Authority for claims not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP; (b) Liens of landlords, carriers, warehousemen, consignors, mechanics, materialmen and other Liens (other than Liens imposed under Environmental Laws and any Lien imposed under ERISA) in existence on the Closing Date (which, in the case of Real Property Assets, are specified in the applicable Real Estate Mortgage) or thereafter imposed by law and created in the ordinary course of business and securing obligations that are not overdue or are being contested in compliance with Section 5.05; (c) Liens (other than any Lien imposed under ERISA) incurred or deposits made (including, without limitation, surety bonds and appeal bonds) in connection with workers’ compensation, unemployment insurance and other types of social security benefits or to secure the performance of tenders, bids, leases, contracts (other than for the repayment of Indebtedness), statutory obligations and other similar obligations or arising as a result of progress payments under government contracts; (d) easements (including, without limitation, reciprocal easement agreements and utility agreements), rights-of-way, covenants, reservations, encroachments, land use restrictions or encumbrances, which (i) do not interfere materially with the ordinary conduct of the business of the Borrower or any Guarantor, as the case may be, (ii) do not materially detract from the value of the property to which they attach or materially impair the use thereof to the Borrower or any Guarantor, as the case may be and (iii) do not materially adversely affect the marketability of the applicable property; (e) letters of credit or deposits in the ordinary course to secure leases; (f) in the case of Real Property Assets, those Liens specified in the applicable Real Estate Mortgage; and (g) extensions, renewals or replacements of any Lien referred to in paragraphs (a) through (e) above, provided, that the principal amount of the obligation secured thereby is not increased and that any such extension, renewal or replacement is limited to the property originally encumbered thereby.

 

Person” shall mean any natural person, corporation, division of a corporation, partnership, limited liability company, trust, joint venture, association, company, estate, unincorporated organization or Governmental Authority or any agency or political subdivision thereof.

 

Petty Cash Accounts” shall mean domestic or foreign deposit accounts of the Borrower and Guarantors holding aggregate balances in an amount not to exceed $25,000,000 at any one time.

 

Plan” shall mean a Single Employer Plan or a Multiple Employer Plan that is a pension plan subject to the provisions of Title IV of ERISA, Section 412 of the Code or Section 302 of ERISA.

 

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Plan of Reorganization” shall mean the Debtors’ First Amended Joint Plan of Reorganization pursuant to Chapter 11 of the United States Bankruptcy Code, dated October 20, 2005, together with all schedules and exhibits thereto, as confirmed by the Confirmation Order, together with any amendments, supplements or modifications thereto that have been approved or authorized by the Bankruptcy Court prior to the Closing Date.

 

Pledge Agreement” shall mean that certain Pledge Agreement as defined in Section 4.01(c), as the same may be amended, restated, modified, supplemented, extended or amended and restated from time to time.

 

Primary Foreign Slots” shall mean the Foreign Slots set forth on Schedule 1.01(b), as such Schedule may be amended from time to time pursuant to Section 5.13(c).

 

Primary Gate Interests” shall mean the Gate Interests used by the Borrower to conduct scheduled nonstop operations from the points listed on Schedule 1.01(e) servicing the Primary Routes, to the extent such space is used for the operation of such flights.

 

Primary Routes” shall mean the Routes set forth on Schedule 1.01(c), as such Schedule may be amended from time to time pursuant to Section 5.18(b).

 

Primary Slots” shall mean those certain Slots located at LGA, DCA, JFK and any other Slots that may be transferred for consideration, all as set forth on Schedule 1.01(h), as such schedule may be amended from time to time pursuant to Section 5.12(c); provided that those certain Slots at LGA and JFK shall be excluded from Primary Slots if no Slot regulations apply at such airports.

 

Primary Supporting Route Facilities” shall mean the Supporting Route Facilities of the Borrower and, if applicable, a Guarantor, at the airports listed on Schedule 1.01(f), necessary to operate, or otherwise used in support of, the operation of scheduled service over the applicable Primary Route.

 

Prime Rate” shall mean the rate of interest per annum publicly announced from time to time by JPMCB as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

 

QEC Kits” shall mean the quick engine change kits of the Borrower and any applicable Guarantor.

 

Real Estate Appraiser” shall mean, in the case of the Real Property Assets, (a) CB Richard Ellis Inc., with respect to that certain parcel of real property located at 1200 Algonquin Road, Elk Grove Village, Illinois 60007, (b) National Valuation Consultants, Inc., with respect to the Denver Training Facility, or (c) such other appraisal firms as may be retained by the Agents, in consultation with the Borrower, from time to time.

 

Real Estate Mortgages” shall mean, collectively, (a) that certain Real Estate Mortgage, Assignment of Leases and Rents, Security Agreement, Fixture Filing and Financing Statement and that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement, Fixture Filing and Financing Statement, each dated the date hereof, by the Borrower to the Collateral Agents, in substantially the form of Exhibit A and (b) each other mortgage granted pursuant to the terms

 

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hereof, as the same may be amended, restated, modified, supplemented, extended or amended and restated from time to time.

 

Real Property Assets” shall mean those certain parcels of real property owned in fee by the Borrower and located at (i) 1200 Algonquin Road, Elk Grove Village, Illinois 60007 and (ii) the Denver Training Facility and together with, in each case, all buildings, improvements, facilities, appurtenant fixtures and equipment, easements and other property and rights incidental or appurtenant to the ownership of such parcel of real property (as each such real property is more particularly described in the applicable Real Estate Mortgage) (including, without limitation, all Collateral described in the applicable Real Estate Mortgage), and, from time to time, all Collateral identified in a Real Estate Mortgage granted pursuant to Section 5.15, Section 5.18 or any other provision of this Agreement, or designated as Cure Collateral.

 

Redeemable Stock” shall mean any class or series of Equity Interests of any Person that by its terms or otherwise (a) is required to be redeemed prior to the Maturity Date, (b) may be required to be redeemed at the option of the holder of such class or series of Equity Interests at any time prior to the Maturity Date or (c) is convertible into or exchangeable for (i) Equity Interests referred to in clause (a) or (b) above or (ii) Indebtedness having a scheduled maturity prior to the Maturity Date.

 

Register” shall have the meaning set forth in Section 10.02(b)(iv).

 

Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

 

Release” shall have the meaning specified in Section 101(22) of CERCLA.

 

Required Lenders” shall mean, at any time, Lenders having Tranche A Commitments at such time (or, if the Total Tranche A Commitment has been terminated, Lenders holding Tranche A Loans and LC Exposure at such time), Lenders having a Delayed Draw Tranche B Loan Commitment at such time and Lenders holding a portion of the Tranche B Loan at such time collectively representing in excess of 50% of the Total Commitment.

 

Responsible Officer” shall mean the chief executive officer, president, chief financial officer, treasurer, vice president, controller or chief accounting officer of the Borrower or the Guarantor, if applicable, but in any event, with respect to financial matters, the chief financial officer, treasurer, controller or chief accounting officer of the Borrower or the Guarantor, if applicable.

 

Restricted Payment” shall mean any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the Borrower or any Guarantor, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in the Borrower or any option, warrant or other right to acquire any such Equity Interests in the Borrower.

 

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Restricted Prepayments” shall mean, with respect to any Person, any repayment, redemption, repurchase, defeasance (including, but not limited to, in substance or legal defeasance) or other acquisition or retirement for value (other than through the issuance solely of Equity Interests (other than Redeemable Stock) or warrants, rights or options to acquire Equity Interests (other than Redeemable Stock)) of subordinated Indebtedness (or any transaction that has a substantially similar effect) of such Person or any Subsidiary of such Person, directly or indirectly (including by way of setoff or amendment of the terms of any subordinated Indebtedness in connection with any retirement or acquisition of such Indebtedness), which is made other than at any scheduled maturity thereof or by any scheduled repayment or scheduled sinking fund payment (collectively for this definition, a “prepayment”); provided that prepayment of the Loans shall not constitute a Restricted Prepayment.

 

Rolling Twelve Months” shall mean, with respect to any date of determination, the month then ended and the eleven (11) immediately preceding months considered as a single period.

 

Routes” shall mean the routes for which the Borrower or, if applicable, a Guarantor, holds or hereafter acquires the requisite authority to operate foreign air transportation pursuant to Title 49 including, without limitation, applicable frequencies, exemption and certificate authorities, Fifth-Freedom Rights and “behind/beyond rights”.

 

S&P” shall mean Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

 

SEC” shall mean the United States Securities and Exchange Commission.

 

Secured Parties” shall mean the Agents, the Collateral Agents, the Paying Agent, the Lenders and each of their respective successors and assigns.

 

Security Agreement” shall mean that certain Security Agreement as defined in Section 4.01(c), as the same may be amended, restated, modified, supplemented, extended or amended and restated from time to time.

 

Senior Convertible Note Indenture” shall mean that certain Indenture to be entered into by and among the Parent as issuer, the Borrower as guarantor and The Bank of New York Trust Company, N.A. as Trustee, for the issuance of $726,424,000 principal amount of Senior Convertible Notes, the form of which has heretofore been furnished to the Agents, or such other indenture on terms not materially adverse to the Lenders, as determined in the reasonable judgment of the Agents.

 

Senior Convertible Note Indenture-2” shall mean that certain Indenture dated as of February 1, 2006 by and among the Parent as issuer, the Borrower as guarantor and The Bank of New York Trust Company, N.A., as Trustee, for the issuance of $149,646,114 principal amount of Senior Convertible Notes or such other indenture on terms not materially adverse to the Lenders, as determined in the reasonable judgment of the Agents.

 

Senior Note Indenture” shall mean that certain Indenture, dated as of February 1, 2006 for the issuance of up to $1,000,000,000 (or, as may be adjusted pursuant to the terms of

 

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the Indenture) principal amount of Senior Notes or such other indenture on terms not materially adverse to the Lenders, as determined in the reasonable judgment of the Agents.

 

SGR Security Agreement” shall mean that certain Slot, Gate and Route Security and Pledge Agreement as defined in Section 4.01(d), as the same may be amended, restated, modified, supplemented, extended or amended and restated from time to time.

 

Single Employer Plan” shall mean a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or an ERISA Affiliate or (b) was so maintained and in respect of which the Borrower could reasonably be expected to have liability under Title IV of ERISA in the event such Plan has been or were to be terminated.

 

Slot” shall mean all of the rights and operational authority of the Borrower and, if applicable, a Guarantor, now held or hereafter acquired, to conduct one Instrument Flight Rule (as defined under the FAA regulations) or scheduled landing or takeoff operation at a specific time or during a specific time period at any airport in the United States at which landing or takeoff operations are restricted, including, but not limited to, slots, arrival authorizations, and other similar landing or takeoff authorities, whether pursuant to FAA, DOT or local airport regulations, including Title 14, federal or local statute or otherwise, now or hereinafter in effect; so long as such restrictions shall be or remain in effect at such airport.

 

Spare Engine” shall have the meaning set forth in the Aircraft Mortgage.

 

Spare Parts” shall have the meaning set forth in the Aircraft Mortgage.

 

Statutory Reserve Rate” shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Paying Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve percentages shall include those imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

 

Stored” shall mean, as to any Aircraft, Engine or Spare Engine (as each is defined in the Aircraft Mortgage), that such Aircraft, Engine or Spare Engine has been stored (a) with a low expectation of a return to service and (b) in a manner intended to minimize the rate of environmental degradation of the structure and components of such Aircraft, Engine or Spare Engine (as the case may be) during such period.

 

Subsidiary” shall mean, with respect to any Person (in this definition referred to as the “parent”), any corporation, association or other business entity (whether now existing or hereafter organized) of which at least a majority of the securities or other ownership or

 

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membership interests having ordinary voting power for the election of directors is, at the time as of which any determination is being made, owned or controlled by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

 

Supporting Route Facilities” shall mean gates, ticket counters and other facilities assigned, allocated, leased, or made available to the Borrower at non-U.S. airports used in the operation of scheduled service over a Route.

 

Swap Termination Value” means, in respect of any contract or agreement relating to Indebtedness permitted by 6.03(f), after taking into account the effect of any legally enforceable netting agreement relating to such contract or agreement, (a) for any date on or after the date such contract or agreement has been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such contract or agreement, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such contract or agreement (which may include a Lender or any Affiliate of a Lender).

 

Tax Sharing Agreement” shall mean an agreement among the Parent and certain of its Subsidiaries providing for tax sharing and/or tax allocation between the parties thereto which agreement shall be reasonably satisfactory to the Agents.

 

Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

 

Termination Date” shall mean the earlier to occur of (a) the Maturity Date and (b) the acceleration of the Loans and the termination of the Total Commitment in accordance with the terms hereof.

 

Termination Event” shall mean (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived), (b) an event described in Section 4068 of ERISA, (c) the withdrawal of the Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was a “substantial employer,” as such term is defined in Section 4001(a)(2) of ERISA, (d) the incurrence of liability by the Borrower or any ERISA Affiliate under Section 4064 of ERISA upon the termination of a Multiple Employer Plan, (e) the imposition of Withdrawal Liability or receipt of notice from a Multiemployer Plan that such liability may be imposed, (f) a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA, (g) providing notice of intent to terminate a Plan pursuant to Section 4041(c) of ERISA or the treatment of a Plan amendment as a termination under Section 4041 of ERISA, if such amendment requires the provision of security, (h) the institution of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, (i) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not

 

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waived, (j) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, or (k) any other event or condition which would reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the imposition of any liability under Title IV of ERISA (other than for the payment of premiums to the PBGC in the ordinary course).

 

Title 14” shall mean Title 14 of the United States Code of Federal Regulations, including Part 93, Subparts K and S thereof, as amended from time to time or any successor or recodified regulation.

 

Title 49” shall mean Title 49 of the United States Code, which, among other things, recodified and replaced the U.S. Federal Aviation Act of 1958, and the rules and regulations promulgated pursuant thereto or any subsequent legislation that amends, supplements or supersedes such provisions.

 

Total Commitment” shall mean, at any time, the sum of the Total Tranche A Commitment (or, if the Total Tranche A Commitment has been terminated, the Tranche A Total Commitment Usage at such time), the Total Delayed Draw Tranche B Loan Commitment (only until the Delayed Draw Tranche B Loan Commitment Termination Date shall have occurred) and the Total Tranche B Commitment at such time.

 

Total Commitment Percentage” shall mean, at any time, with respect to each Tranche A Lender or Tranche B Lender, the percentage obtained by dividing such Lender’s Tranche A Commitment, Delayed Draw Tranche B Loan Commitment and/or Tranche B Commitment, as the case may be, by the Total Commitment at such time.

 

Total Delayed Draw Tranche B Loan Commitment” shall mean, at any time, the sum of the Delayed Draw Tranche B Commitments at such time.

 

Total Tranche A Commitment” shall mean, at any time, the sum of the Tranche A Commitments at such time.

 

 “Total Tranche B Commitment” shall mean, at any time, the outstanding amount of the Tranche B Loan at such time.

 

Trademark Security Agreement” shall mean that certain Trademark Security Agreement as defined in Section 4.01(f), as the same may be amended, restated, modified, supplemented, extended or amended and restated from time to time.

 

Tranche A Commitment” shall mean the commitment of each Tranche A Lender to make Tranche A Loans hereunder in the amount set forth opposite its name in Annex A hereto or as may be subsequently set forth in the Register from time to time, as the case may be, and as may be reduced from time to time pursuant to Section 2.10 and Section 2.11.

 

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Tranche A Commitment Percentage” shall mean, at any time, with respect to each Tranche A Lender, the percentage obtained by dividing its Tranche A Commitment at such time by the Total Tranche A Commitment or, if the Tranche A Commitments have been terminated, the Tranche A Commitment Percentage of each Tranche A Lender that existed immediately prior to such termination.

 

Tranche A Lender” shall mean each Lender having a Tranche A Commitment.

 

Tranche A Loan” shall have the meaning set forth in Section 2.01(a).

 

Tranche A Total Commitment Usage” shall mean at any time, the sum of (a) the aggregate outstanding principal amount of all Tranche A Loans and (b) the aggregate LC Exposure at such time.

 

Tranche B Commitment” shall mean the commitment of each Tranche B Lender to make such amount of the Tranche B Loan hereunder in the amount set forth opposite its name in Annex A hereto or as may be subsequently set forth in the Register from time to time, as the case may be.

 

Tranche B Commitment Percentage” shall mean, at any time, with respect to each Tranche B Lender, the percentage obtained by dividing its Tranche B Commitment at such time by the Total Tranche B Commitment.

 

Tranche B Lender” shall mean each Lender having a Tranche B Commitment and/or a Delayed Draw Tranche B Loan Commitment.

 

Tranche B Loan” shall have the meaning set forth in Section 2.01(b).

 

Transactions” shall mean the execution, delivery and performance by the Borrower and Guarantors of this Agreement and the other Loan Documents to which they may be a party, the creation of the Liens in the Collateral in favor of the Collateral Agents, the borrowing of Loans, the use of the proceeds thereof and the request for and issuance of Letters of Credit hereunder.

 

Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

 

UAFC” shall mean United Aviation Fuels Corporation.

 

United States Citizen” shall have the meaning set forth in Section 3.02.

 

Unrestricted Cash” shall mean all cash and Permitted Investments of the Borrower or any Guarantor held in an account (other than Escrow Accounts, Payroll Accounts, Petty Cash Accounts and proceeds of insurance claims temporarily held pursuant to Section 2.11(b)) maintained at one of the Agents or an account at another bank or financial institution which account is the subject of a Control Agreement that has been executed and delivered to the Collateral Agents.

 

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Unused Total Tranche A Commitment” shall mean, at any time, (a) the Total Tranche A Commitment less (b) the Tranche A Total Commitment Usage.

 

Use or Lose Rule” shall mean with respect to Slots or Foreign Slots, as the case may be, the terms of 14 C.F.R. Section 93.227 or other applicable utilization requirements issued by the FAA, other Governmental Authorities, any Foreign Aviation Authorities or any Airport Authorities.

 

Withdrawal Liability” shall have the meaning given such term under Part I of Subtitle E of Title IV of ERISA and shall include liability that results from either a complete or partial withdrawal.

 

SECTION 1.02       Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented, extended, amended and restated or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s permitted successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (f) ”knowledge” or “aware” or words of similar import shall mean, when used in reference to the Borrower or the Guarantors, the actual knowledge of any Responsible Officer.

 

SECTION 1.03       Accounting Terms; GAAP.  Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Agents that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if either Agent (in consultation with the other Agent) notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.  Upon any such request for an amendment, Borrower, the Required Lenders and the Agents agree to consider in good faith any such amendment in order to amend the provisions of this Agreement so as to reflect equitably such accounting changes so that the criteria for evaluating the Borrower’s financial

 

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condition shall be the same after such accounting changes as if such accounting changes had not occurred.

 

SECTION 2.           AMOUNT AND TERMS OF CREDIT

 

SECTION 2.01       Commitments of the Lenders.

 

(a)           Tranche A Revolving Commitment.  (i) Each Tranche A Lender severally, and not jointly with the other Tranche A Lenders, agrees, upon the terms and subject to the conditions herein set forth, to make revolving credit loans (each a “Tranche A Loan” and collectively, the “Tranche A Loans”) to the Borrower at any time and from time to time during the Availability Period in an aggregate principal amount not to exceed, when added to such Tranche A Lender’s Tranche A Commitment Percentage of its LC Exposure, the Tranche A Commitment of such Lender, which Tranche A Loans may be repaid and reborrowed in accordance with the provisions of this Agreement.  At no time shall the sum of the then outstanding aggregate principal amount of the Tranche A Loans plus the LC Exposure exceed the Total Tranche A Commitment of $200,000,000 as the same may be reduced from time to time pursuant to Section 2.10 and Section 2.11.

 

(ii)           Each Borrowing of a Tranche A Loan shall be made from the Tranche A Lenders pro rata in accordance with their respective Tranche A Commitments; provided, however, that the failure of any Tranche A Lender to make any Tranche A Loan shall not in itself relieve the other Tranche A Lenders of their obligations to lend.

 

(b)           Tranche B Term Loan Commitment.  (i)  Each Tranche B Lender, severally and not jointly with the other Tranche B Lenders, agrees, upon the terms and subject to the conditions herein set forth, to make available to the Borrower a term loan in an aggregate principal amount equal to such Tranche B Lender’s Tranche B Commitment (collectively and together with the Delayed Draw Tranche B Loan, if made, as set forth in Section 2.01(c), the “Tranche B Loan”).  Upon the satisfaction (or waiver) of the conditions set forth in Section 4.01, each Tranche B Lender shall make its portion of the Tranche B Loan to the Borrower in the amount equal to such Tranche B Lender’s Tranche B Commitment Percentage of $2,450,000,000.  Once repaid, the Tranche B Loan may not be reborrowed and the Total Tranche B Commitment shall be automatically and permanently reduced by an amount equal to the amount so repaid.

 

(ii)           The Tranche B Loan shall be made by the Tranche B Lenders pro rata in accordance with their respective Tranche B Commitment; provided, however, that the failure of any Tranche B Lender to make its Tranche B Loan shall not in itself relieve the other Tranche B Lenders of their obligations to lend.

 

(c)           Delayed Tranche B Loan Availability. (i)  Each Tranche B Lender, severally and not jointly with the other Tranche B Lenders, agrees, upon the terms and subject to the conditions hereinafter set forth, to make available to the Borrower an additional Tranche B Loan (the “Delayed Draw Tranche B Loan”) on any Business Day during the Delayed Draw Tranche B Loan Availability Period.  Upon the satisfaction (or waiver) of the conditions set forth in Section 4.03, each Tranche B Lender shall make its portion of the Delayed Draw Tranche B

 

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Loan to the Borrower in the amount equal to such Tranche B Lender’s Delayed Draw Tranche B Loan Commitment Percentage of $350,000,000.  Once repaid, the Delayed Draw Tranche B Loan may not be reborrowed and the Total Delayed Draw Tranche B Loan Commitment shall be automatically and permanently reduced by an amount equal to the amount so repaid.  Once made, the Delayed Draw Tranche B Loan shall be a “Tranche B Loan” and a “Loan” for all purposes hereunder and shall be pari passu with all other Loans made hereunder.

 

(ii)           The Delayed Draw Tranche B Loan shall be made by the Tranche B Lenders holding a Delayed Draw Tranche B Loan Commitment pro rata in accordance with their respective Delayed Draw Tranche B Loan Commitments; provided, however, that the failure of any such Tranche B Lender to make its Delayed Draw Tranche B Loan shall not in itself relieve the other Tranche B Lenders of their obligations to lend.

 

(d)           Type of Borrowing.  Other than as otherwise provided in Section 2.03(b), each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith.  Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

 

(e)           Amount of Borrowing.  At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is in an integral multiple of $1,000,000 and not less than $5,000,000.  At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $1,000,000 provided, that an ABR Borrowing may be in an aggregate amount that is equal to the entire Unused Total Tranche A Commitment or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.02(f).  Borrowings of more than one Type may be outstanding at the same time.

 

(f)            Limitation on Interest Period.  Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.

 

SECTION 2.02       Letters of Credit.  (a) General.  Subject to the terms and conditions set forth herein, the Borrower may request the issuance of one or more Letters of Credit for its own account, in a form reasonably acceptable to the Agents, the Issuing Lender and the Borrower at any time and from time to time during the Availability Period.  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Lender relating to any Letter of Credit, the terms and conditions of this Agreement shall control.  At no time shall a Letter of Credit be issued if the sum of the then outstanding aggregate principal amount of the Tranche A Loans plus the LC Exposure (inclusive of the amount of such proposed Letter of Credit) would exceed the Total Tranche A Commitment of $200,000,000, as the same may be reduced from time to time pursuant to Sections 2.10 and 2.11.

 

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(b)           Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall either provide (i) telephonic notice promptly followed by written notice or (ii) hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Lender (which approval shall not be unreasonably withheld, delayed or conditioned)) to the Issuing Lender and the Paying Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit.  If requested by the Issuing Lender, the Borrower also shall submit a letter of credit application on the Issuing Lender’s standard form in connection with any request for a Letter of Credit; provided, that to the extent such standard form is inconsistent with the Loan Documents, the Loan Documents shall control.  A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension the LC Exposure (together with the then outstanding aggregate principal amount of the Tranche A Loans) shall not exceed $200,000,000.  No Issuing Lender (other than the Paying Agent or an Affiliate thereof) shall permit any such issuance, renewal, extension or amendment resulting in an increase in the amount of any Letter of Credit to occur without first obtaining written confirmation from either Agent (in consultation with the other Agent) that it is then permitted under this Agreement.

 

(c)           Expiration Date.  Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the Maturity Date.

 

(d)           Participations.  By the issuance of a Letter of Credit (or an amendment, renewal or extension of a Letter of Credit including any amendment increasing the amount thereof), including, without limitation, each Existing DIP Facility Letter of Credit that is deemed to be a Letter of Credit hereunder, and without any further action on the part of the Issuing Lender or the Tranche A Lenders, the Issuing Lender hereby grants to each Tranche A Lender, and each Tranche A Lender hereby acquires from the Issuing Lender, a participation in such Letter of Credit equal to such Tranche A Lender’s Tranche A Commitment Percentage of the aggregate amount available to be drawn under such Letter of Credit.  In consideration and in furtherance of the foregoing, each Tranche A Lender hereby absolutely and unconditionally agrees to pay to the Paying Agent, for the account of the Issuing Lender, such Tranche A Lender’s Tranche A Commitment Percentage of each LC Disbursement made by the Issuing Lender and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason.  Each Tranche A Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any

 

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amendment, renewal or extension of any Letter of Credit or the occurrence of an Event of Default or reduction or termination of the Tranche A Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

 

(e)           Reimbursement.  If the Issuing Lender shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Paying Agent an amount equal to such LC Disbursement not later than the first Business Day following the date the Borrower receives notice of such LC Disbursement; provided, that, to the extent not reimbursed and, subject to the satisfaction (or waiver) of the conditions to borrowing set forth herein, including, without limitation, making a request in accordance with Section 2.03(a) that such payment shall be financed with an ABR Borrowing in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Borrowing.  If the Borrower fails to make such payment when due (including by a Borrowing), the Paying Agent shall notify each Tranche A Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Tranche A Lender’s Tranche A Commitment Percentage thereof.  Promptly following receipt of such notice, each Tranche A Lender shall pay to the Paying Agent its Tranche A Commitment Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.04 with respect to Tranche A Loans made by such Tranche A Lender (and Section 2.04 shall apply, mutatis mutandis, to the payment obligations of the Tranche A Lenders), and the Paying Agent shall promptly pay to the Issuing Lender the amounts so received by it from the Tranche A Lenders.  Promptly following receipt by the Paying Agent of any payment from the Borrower pursuant to this paragraph, the Paying Agent shall distribute such payment to the Issuing Lender or, to the extent that Tranche A Lenders have made payments pursuant to this paragraph to reimburse the Issuing Lender, then to such Tranche A Lenders and the Issuing Lender as their interests may appear.  Any payment made by a Tranche A Lender pursuant to this paragraph to reimburse the Issuing Lender for any LC Disbursement (other than the funding of ABR Loans as contemplated above) shall not constitute a Tranche A Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

 

(f)            Obligations Absolute.  The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein or herein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Lender under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder.  Neither the Paying Agent, the Agents, the Tranche A Lenders nor the Issuing Lender, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or

 

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delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Lender; provided, that the foregoing shall not be construed to excuse the Issuing Lender from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Lender’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in the absence of gross negligence, bad faith or willful misconduct on the part of the Issuing Lender (as finally determined by a court of competent jurisdiction), the Issuing Lender shall be deemed to have exercised care in each such determination.  In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Lender may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

(g)           Disbursement Procedures.  The Issuing Lender shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit.  The Issuing Lender shall promptly notify the Paying Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Lender has made or will make an LC Disbursement thereunder; provided, that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Lender and the Tranche A Lenders with respect to any such LC Disbursement in accordance with the terms herein.

 

(h)           Interim Interest.  If the Issuing Lender shall make any LC Disbursement, then, unless the Borrower shall reimburse (including by a Borrowing) such LC Disbursement in full not later than the first Business Day following the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Loans; provided, that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.07 shall apply.  Interest accrued pursuant to this paragraph shall be for the account of the Issuing Lender, except that interest accrued on and after the date of payment by any Tranche A Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Lender shall be for the account of such Tranche A Lender to the extent of such payment.

 

(i)            Replacement of the Issuing Lender.  Any Issuing Lender may be replaced at any time by written agreement among the Borrower, the Agents, the replaced Issuing Lender and the successor Issuing Lender.  The Agents shall notify the Tranche A Lenders of any such replacement of the Issuing Lender.  At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Lender pursuant to Section 2.20.  From and after the effective date of any such replacement, (i) the successor Issuing Lender shall have all the rights and obligations of the Issuing Lender under this

 

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Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Lender” shall be deemed to refer to such successor or to any previous Issuing Lender, or to such successor and all previous Issuing Lenders, as the context shall require.  After the replacement of an Issuing Lender hereunder, the replaced Issuing Lender shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Lender under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

 

(j)            Replacement of Letters of Credit; Cash Collateralization.  Upon or prior to the occurrence of the Termination Date the Borrower shall (i) cause all Letters of Credit which expire after the Termination Date to be returned to the Issuing Lender undrawn and marked “cancelled” or (ii) if the Borrower is unable to do so in whole or in part either (A) provide one or more “back-to-back” letters of credit to one or more Issuing Lenders in a form reasonably satisfactory to each such Issuing Lender that is a beneficiary of such “back-to-back” letter of credit and the Agents, issued by a bank reasonably satisfactory to each such Issuing Lender and the Agents, and/or (B) deposit cash in the Letter of Credit Account, the sum of (A) and (B) of the foregoing sentence to be in an aggregate amount equal to 102% of the then undrawn stated amount of all LC Exposure (less the amount, if any, then on deposit in the Letter of Credit Account) as collateral security for the Borrower’s reimbursement obligations in connection therewith, such cash to be promptly remitted to the Borrower upon the expiration, cancellation or other termination or satisfaction of such reimbursement obligations in whole or in part (“Cash Collateralization”). The Paying Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account.  Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Paying Agent (in accordance with its usual and customary practices for investments of this type) and at the Borrower’s risk and reasonable expense, such deposits shall not bear interest.  Interest or profits, if any, on such investments shall accumulate in such account.  Moneys in such account shall be applied by the Paying Agent to reimburse the Issuing Lender for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time and paid over to the Borrower when such Letters of Credit are terminated or cancelled or when the reimbursement obligations have been satisfied, provided no Event of Default or event which upon notice or lapse of time or both would constitute an Event of Default has occurred or is continuing.

 

(k)           Issuing Lender Agreements.  Unless otherwise requested by the Paying Agent, each Issuing Lender shall report in writing to the Paying Agent (i) on the first Business Day of each week, the daily activity (set forth by day) in respect of Letters of Credit during the immediately preceding week, including all issuances, extensions, amendments and renewals, all expirations and cancellations and all disbursements and reimbursements, (ii) on or prior to each Business Day on which such Issuing Lender expects to issue, amend, renew or extend any Letter of Credit, the date of such issuance, amendment, renewal or extension, and the aggregate face amount of the Letters of Credit to be issued, amended, renewed, or extended by it and outstanding after giving effect to such issuance, amendment, renewal or extension occurred (and whether the amount thereof changed), it being understood that such Issuing Lender shall not permit any issuance, renewal, extension or amendment resulting in an increase in the amount of any Letter of Credit to occur without first obtaining written confirmation from either Agent (in

 

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consultation with the other Agent) that it is then permitted under this Agreement, (iii) on each Business Day on which such Issuing Lender makes any LC Disbursement, the date of such LC Disbursement and the amount of such LC Disbursement, (iv) on any Business Day on which a Borrower fails to reimburse an LC Disbursement required to be reimbursed to such Issuing Lender on such day, the date of such failure, and the amount and currency of such LC Disbursement and (v) on any other Business Day, such other information as the Paying Agent shall reasonably request.

 

SECTION 2.03       Requests for Borrowings.

 

(a)           Tranche A Loans.  Unless otherwise agreed to by the Agents in connection with making the initial Loans, to request a Borrowing of Tranche A Loans, the Borrower shall notify the Paying Agent of such request by telephone (i) in the case of a Eurodollar Borrowing, not later than 2:00 p.m., New York City time, three (3) Business Days before the date of the proposed Borrowing and (ii) in the case of an ABR Borrowing, not later than 2:00 p.m., New York City time, one (1) Business Day before the date of the proposed Borrowing (subject, in the case of an ABR Borrowing, to the last sentence of this Section 2.03(a)); provided, that any such notice of an ABR Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.02(e) may be given not later than 12:00 noon, New York City time, on the date of the proposed Borrowing.  Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Paying Agent of a written Borrowing Request in a form approved by the Paying Agent and signed by the Borrower.  Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.01(a):

 

(i)            the aggregate amount of the requested Borrowing (which shall not be less than $5,000,000 (and integral multiples of $1,000,000) in the case of a Eurodollar Borrowing and $1,000,000 (and integral multiples of $100,000) in the case of an ABR Borrowing);

 

(ii)           the date of such Borrowing, which shall be a Business Day;

 

(iii)          whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

 

(iv)          in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”.

 

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.  Promptly following receipt of a Borrowing Request in accordance with this Section 2.03(a), the Paying Agent shall advise each Tranche A Lender of the details thereof and of the amount of such Tranche A Lender’s Loan to be made as part of the requested Borrowing. Notwithstanding anything to the contrary contained herein, with respect to an ABR Borrowing in an aggregate amount of $20,000,000 or less, the Lenders shall make such Borrowings available

 

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to the Paying Agent and the Paying Agent shall disburse such Borrowings in accordance with the Borrower’s instructions consistent with this Agreement by 3:00 p.m., New York City time, on the same Business Day that the Borrower gives notice to the Paying Agent of such Borrowing by 12:00 p.m., New York City time.

 

(b)           Tranche B Loan.  To request the initial Borrowing of the Tranche B Loan or the Delayed Draw Tranche B Loan, the Borrower shall notify the Paying Agent of such request by telephone (i) in the case of a Eurodollar Borrowing, not later than 2:00 p.m., New York City time, three (3) Business Days before the date of the proposed Borrowing and (ii) in the case of an ABR Borrowing, not later than 2:00 p.m., New York City time, one (1) Business Day before the date of the proposed Borrowing (subject, in the case of an ABR Borrowing, to the last sentence of this Section 2.03(b)).  Such telephonic notice shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Paying Agent of a written Borrowing Request in a form approved by the Paying Agent and signed by the Borrower.  Such telephone and written Borrowing Request shall specify the following information in compliance with Section 2.01:

 

(i)            the aggregate amount of the requested Borrowing (which shall not be less than $5,000,000 (and integral multiples of $1,000,000) in the case of a Eurodollar Borrowing and $1,000,000 (and integral multiples of $100,000) in the case of an ABR Borrowing);

 

(ii)           the date of such Borrowing, which shall be a Business Day;

 

(iii)          the portion of the Borrowing that is to be an ABR Borrowing and that is to be a Eurodollar Borrowing; and

 

(iv)          in the case of such portion of the Borrowing that is a Eurodollar Borrowing, the initial Interest Period applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”.

 

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with respect to any portion of the requested Borrowing that is to be a Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.  Promptly following receipt of the Borrowing Request in accordance with this Section 2.03(b), the Paying Agent shall advise each Tranche B Lender of the details thereof and of the amount of such Tranche B Lender’s Loan to be made as part of the requested Borrowing.

 

SECTION 2.04       Funding of Borrowings.  (a)  Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 3:00 p.m., New York City time, or such earlier time as may be reasonably practicable, to the account of the Paying Agent most recently designated by it for such purpose by notice to the Lenders.  The Paying Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Paying Agent and designated by the Borrower in the applicable Borrowing

 

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Request; provided that ABR Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.02(e) shall be remitted by the Paying Agent to the Issuing Lender.

 

(b)           Unless the Paying Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Paying Agent such Lender’s share of such Borrowing, the Paying Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Paying Agent, then the applicable Lender and the Borrower severally agree to pay to the Paying Agent forthwith upon written demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Paying Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Paying Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans.  If such Lender pays such amount to the Paying Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

 

SECTION 2.05       Interest Elections.  (a)  Each Borrowing of Tranche A Loans and the Borrowing of the Tranche B Loan initially shall be of the Type or, in the case of the Tranche B Loan, Types specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.  Thereafter, the Borrower may elect to convert such Borrowings to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section.  The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Tranche A Loans or Tranche B Loan, as the case may be, comprising such Borrowing, and the Tranche A Loans and Tranche B Loan, as the case may be, comprising each such Type shall be considered a separate Borrowing. No more than ten (10) Borrowings of Eurodollar Loans may be outstanding at any one time.

 

(b)           To make an Interest Election Request pursuant to this Section, the Borrower shall notify the Paying Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03(a) or Section 2.03(b) if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election.  Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Paying Agent of a written Interest Election Request in a form approved by the Paying Agent and signed by the Borrower.

 

(c)           Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.01:

 

(i)            the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the

 

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information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

 

(ii)           the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

 

(iii)          whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

 

(iv)          if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

 

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

 

(d)           Promptly following receipt of an Interest Election Request, the Paying Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

 

(e)           If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

 

SECTION 2.06       Interest on Loans.

 

(a)           Subject to the provisions of Section 2.07, each ABR Loan shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days or, when the Alternate Base Rate is based on the Prime Rate, a year with 365 days or 366 days in a leap year) at a rate per annum equal to the Alternate Base Rate plus 2.75%.

 

(b)           Subject to the provisions of Section 2.07, each Eurodollar Loan shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal, during each Interest Period applicable thereto, to the Adjusted LIBO Rate for such Interest Period in effect for such Borrowing plus 3.75%.

 

(c)           Accrued interest on all Loans shall be payable in arrears on each Interest Payment Date applicable thereto, on the Termination Date and after the Termination Date on written demand and (with respect to Eurodollar Loans) upon any repayment or prepayment thereof (on the amount prepaid); provided that in the event of any conversion of any Eurodollar Loan to an ABR Loan, accrued interest on such Loan shall be payable on the effective date of such conversion.

 

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SECTION 2.07       Default Interest.  If the Borrower or any Guarantor, as the case may be, shall default in the payment of the principal of or interest on any Loan or in the payment of any other amount becoming due hereunder (including, without limitation, the reimbursement pursuant to Section 2.02(e) of any LC Disbursements), whether at stated maturity, by acceleration or otherwise, the Borrower or such Guarantor, as the case may be, shall on written demand of the Paying Agent from time to time pay interest, to the extent permitted by law, on all Loans and overdue amounts up to (but not including) the date of actual payment (after as well as before judgment) at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 360 days or when the Alternate Base Rate is applicable and is based on the Prime Rate, a year with 365 days or 366 days in a leap year) equal to (a) the rate then applicable for such Borrowings plus 2.0% and (b) in the case of all other amounts, the rate applicable for ABR Loans plus 2.0%.

 

SECTION 2.08       Alternate Rate of Interest.  In the event, and on each occasion, that on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Loan, the Paying Agent shall have reasonably determined (which determination shall be conclusive and binding upon the Borrower absent manifest error) that reasonable means do not exist for ascertaining the applicable Adjusted LIBO Rate, the Paying Agent shall, as soon as practicable thereafter, give written, facsimile or telegraphic notice of such determination to the Borrower and the Lenders, and any request by the Borrower for a Borrowing of Eurodollar Loans (including pursuant to a refinancing with Eurodollar Loans) pursuant to Section 2.03 shall be deemed a request for a Borrowing of ABR Loans.  After such notice shall have been given and until the circumstances giving rise to such notice no longer exist, each request for a Borrowing of Eurodollar Loans shall be deemed to be a request for a Borrowing of ABR Loans.

 

SECTION 2.09       Amortization of Tranche B Loan; Repayment of Loans; Evidence of Debt.

 

(a)           The Borrower shall repay principal of the Tranche B Loan on each semi-annual date set forth below in the aggregate principal amount set forth opposite such date (it being understood that each such amount shall be reduced proportionately if the Delayed Draw Tranche B Loan referred to in Section 2.01(c) is not made or, if made, is in an aggregate principal amount that is less than $350,000,000):

 

Date

 

Amount

 

August 1, 2006

 

$

14,000,000

 

February 1, 2007

 

$

14,000,000

 

August 1, 2007

 

$

14,000,000

 

February 1, 2008

 

$

14,000,000

 

August 1, 2008

 

$

14,000,000

 

February 1, 2009

 

$

14,000,000

 

August 1, 2009

 

$

14,000,000

 

February 1, 2010

 

$

14,000,000

 

August 1, 2010

 

$

14,000,000

 

February 1, 2011

 

$

14,000,000

 

August 1, 2011

 

$

14,000,000

 

February 1, 2012

unpaid principal amount of Tranche B Loan

 

 

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Once repaid, no portion of the Tranche B Loan may be reborrowed.

 

(b)           The Borrower hereby unconditionally promises to pay to the Paying Agent for the ratable account of each Lender the then unpaid principal amount of each Loan on the Termination Date.

 

(c)           Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

 

(d)           The Paying Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Paying Agent hereunder for the account of the Lenders and each Lender’s share thereof. The Borrower shall have the right, upon reasonable notice, to request information regarding the accounts referred to in the preceding sentence.

 

(e)           The entries made in the accounts maintained pursuant to paragraph (c) or (d) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Paying Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

 

(f)            Any Lender may request that Loans made by it be evidenced by a promissory note.  In such event, the Borrower shall promptly execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) in a form furnished by the Paying Agent and reasonably acceptable to the Borrower.  Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 10.02) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

 

SECTION 2.10       Optional Termination or Reduction of Commitment.

 

(a)           Upon at least one (1) Business Day prior written notice to the Paying Agent, the Borrower may at any time in whole permanently terminate, or from time to time in part permanently reduce, the Unused Total Tranche A Commitment or the Total Delayed Draw Tranche B Loan Commitment; provided that each such notice shall be revocable to the extent such termination or reduction would have resulted from a refinancing of the Obligations, which refinancing shall not be consummated or shall otherwise be delayed.  Each such reduction of the Unused Total Tranche A Commitment or the Total Delayed Draw Tranche B Loan Commitment

 

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shall be in the principal amount not less than $5,000,000 and in an integral multiple of $1,000,000.  Simultaneously with each reduction or termination of the Tranche A Commitment or the Total Delayed Draw Tranche B Loan Commitment, the Borrower shall pay to the Paying Agent for the account of (i) each Tranche A Lender the Commitment Fee accrued and unpaid on the amount of the Tranche A Commitment of such Tranche A Lender so terminated or reduced through the date thereof and (ii) each Tranche B Lender the Commitment Fee accrued and unpaid on the amount of the Delayed Draw Tranche B Loan Commitment of such Tranche B Lender so terminated or reduced through the date thereof.  Any reduction of the Total Tranche A Commitment or the Delayed Draw Tranche B Loan Commitment pursuant to this Section, as the case may be, shall be applied to reduce the Tranche A Commitment of each Tranche A Lender or the Delayed Draw Tranche B Loan Commitment of each Tranche B Lender, as the case may be.

 

(b)           The Total Delayed Draw Tranche B Loan Commitment shall automatically terminate on the last day of the Delayed Draw Tranche B Loan Availability Period.

 

SECTION 2.11       Mandatory Prepayment; Commitment Termination.

 

(a)           Within three (3) Business Days of the Borrower or any Guarantor receiving any net cash proceeds of an insurance claim, indemnity payments or other amounts received as the result of an Event of Loss (as defined in the Aircraft Mortgage) concerning an Airframe (as defined in the Aircraft Mortgage), the Borrower or such Guarantor shall deposit an amount equal to 100% of such net cash proceeds into an account that is maintained with the Paying Agent which the Borrower may use to replace such Airframe in accordance with the requirements of the Aircraft Mortgage, provided that upon the occurrence of an Event of Default prior to the use of such deposit for such purpose, such deposit may be applied by the Paying Agent to the prepayment of the Loans.

 

(b)           Within three (3) Business Days of the Borrower or any Guarantor receiving any net cash proceeds of an insurance claim, indemnity payments or other amounts received as the result of an Event of Loss (as defined in the Aircraft Mortgage) concerning an Engine, Spare Engine or, to the extent the value thereof exceeds $5,000,000 for such Event of Loss, Spare Parts (each as defined in the Aircraft Mortgage), the Borrower or such Guarantor shall deposit an amount equal to 100% of such net cash proceeds into an account that is maintained with the Paying Agent for such purpose which the Borrower may use to replace such Engine, Spare Engine or Spare Parts in accordance with the requirements of the Aircraft Mortgage, provided that no Event of Default, or an event which upon notice or lapse of time or both would constitute an Event of Default has occurred and is continuing and such party has (i) within 45 days after the receipt of such net cash proceeds, determined to apply such net cash proceeds to replace such Engine, Spare Engine or Spare Parts and (ii) as soon as commercially reasonable (A) and in any event within 180 days after the receipt of such net cash proceeds, has so applied such net cash proceeds or has entered into a binding contractual arrangement for such application, the amount of net cash proceeds necessary to replace such Spare Parts or (B) and in any event with 365 days after the receipt of such net cash proceeds, has so applied such net cash proceeds or has entered into a binding contractual arrangement for such application, the amount of net cash proceeds necessary to replace such Engine or Spare Engine; provided further that the Borrower shall have complied with Section 5.18(a) with respect to any such replacement.  In the event that (i) such determination or application described in the

 

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immediately preceding sentence shall not have occurred within the time periods provided, such net cash proceeds shall be applied to prepay the Loans in accordance with Section 2.11(g) or (ii) an Event of Default shall have occurred and be continuing prior to the use of such deposits for such purposes, such deposits may be applied by the Paying Agent to the prepayment of the Loans in accordance with Section 2.11(g).

 

(c)           Within three (3) Business Days of a Change of Control, the Borrower shall prepay the Loans in an amount equal to 100% of the then outstanding principal amount thereof.

 

(d)           Within three (3) Business Days of receipt by the Borrower of any proceeds of any EETC Transaction, the Borrower shall prepay the Tranche B Loans in an amount equal to the first $250,000,000 of such EETC Transaction proceeds. Each such prepayment of Tranche B Loans shall be applied pro rata among the Tranche B Lenders in accordance with each Tranche B Lender’s Tranche B Commitment Percentage.

 

(e)           Within three (3) Business Days of receipt by the Borrower or any Guarantor of any proceeds of a refinancing, refunding, renewal or extension which are required to be applied to prepay the Loans pursuant to the proviso to Section 6.03(t), the Borrower shall prepay the Loans in accordance with Section 2.11(g).

 

(f)            Within three (3) Business Days of receipt by the Borrower or any Guarantor of any proceeds from the issuance of additional Equity Interests or subordinated Indebtedness which are required to be applied to prepay the Loans pursuant to the proviso to Section 6.08(f), the Borrower shall prepay the Loans in accordance with Section 2.11(g).

 

(g)           Each prepayment of Loans pursuant to paragraphs (a), (b), (e) or (f) of this Section 2.11 or pursuant to Section 6.06(a) or (b) shall be applied to the Loans and to collateralization of the LC Exposure, pro rata based on the Total Commitment Percentages of the Tranche A Lenders and the Tranche B Lenders. Upon any such prepayment, the Total Tranche B Commitment and the Total Delayed Draw Tranche B Loan Commitment shall be automatically and permanently reduced in an amount equal to the amount so prepaid, provided, that if, at the time of any prepayment pursuant to this Section 2.11, the amounts to be applied to prepay the Tranche A Loans and collateralize the LC Exposure shall exceed the Tranche A Loans and the LC Exposure at such time, then such excess portion of such prepayment shall be held as Collateral for additional Tranche A Loans made hereunder, and Letters of Credit issued hereunder, subsequent to the application of such prepayment.

 

(h)           Upon the Termination Date, the Total Commitment shall be terminated in full and the Borrower shall repay the Loans in full and, except as the Agents may otherwise agree in writing, if any Letter of Credit remains outstanding, provide Cash Collateralization for such Letter of Credit.

 

(i)            All prepayments under this Section 2.11 shall be accompanied by accrued but unpaid interest on the principal amount being prepaid to (but not including) the date of prepayment, plus any Fees and any losses, costs and expenses, as more fully described in Sections 2.14 and 2.18 hereof.  Any prepayments of the Tranche B Loan under this Section 2.11

 

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shall be applied pro rata to the remaining scheduled amortization payments set forth in Section 2.09(a).

 

SECTION 2.12       Optional Prepayment of Loans.

 

(a)           Subject to Section 2.12(d) below, the Borrower shall have the right at any time and from time to time to prepay any Loans, in whole or in part, (i) with respect to Eurodollar Loans, upon (A) telephonic notice followed promptly by written or facsimile notice or (B) written or facsimile notice received by 1:00 p.m., New York City time, three Business Days prior to the proposed date of prepayment and (ii) with respect to ABR Loans, upon written or facsimile notice received by 1:00 p.m., New York City time, one Business Day prior to the proposed date of prepayment; provided that ABR Loans may be prepaid on the same day notice is given if such notice is received by the Agents by 12:00 noon, New York City time; provided further, however, that (A) each such partial prepayment shall be in an amount not less than $5,000,000 and in integral multiples of $1,000,000, (B) no prepayment of Eurodollar Loans shall be permitted pursuant to this Section 2.12(a) other than on the last day of an Interest Period applicable thereto unless such prepayment is accompanied by the payment of the amounts described in Section 2.14, and (C) no partial prepayment of a Borrowing of Eurodollar Loans shall result in the aggregate principal amount of the Eurodollar Loans remaining outstanding pursuant to such Borrowing being less than $10,000,000.

 

(b)           Any prepayments under Section 2.12(a) shall be applied at the Borrower’s option, to (i) repay the outstanding Tranche A Loans of the Tranche A Lenders (without any reduction in the Total Tranche A Commitment) until the Total Tranche A Commitment shall have been wholly and permanently terminated, all Tranche A Loans shall have been paid in full (plus any accrued but unpaid interest and fees thereon) and no Letters of Credit shall be outstanding, or, if outstanding, then backed by Cash Collateralization, and/or (ii) the Tranche B Loan of the Tranche B Lenders.  All prepayments under Section 2.12(a) shall be accompanied by accrued but unpaid interest on the principal amount being prepaid to (but not including) the date of prepayment, plus any Fees and any losses, costs and expenses, as more fully described in Sections 2.14 and 2.18 hereof.  Any partial prepayments of the Tranche B Loan shall be applied at the direction of the Borrower.

 

(c)           Each notice of prepayment shall specify the prepayment date, the principal amount of the Loans to be prepaid and in the case of Eurodollar Loans, the Borrowing or Borrowings pursuant to which made, shall be irrevocable and shall commit the Borrower to prepay such Loan by the amount and on the date stated therein; provided, that the Borrower may revoke any notice of prepayment under this Section 2.12 if such prepayment would have resulted from a refinancing of the Obligations hereunder, which refinancing shall not be consummated or shall otherwise be delayed.  The Paying Agent shall, promptly after receiving notice from the Borrower hereunder, notify each Lender of the principal amount of the Loans held by such Lender which are to be prepaid, the prepayment date and the manner of application of the prepayment.

 

(d)           All voluntary prepayments of the Tranche B Loans, in whole or in part, effected on or prior to the first anniversary of the Closing Date with the proceeds of a substantially concurrent issuance or incurrence of new term loans under a new facility shall be

 

46



 

accompanied by a prepayment fee equal to 1.00% of the aggregate principal amount of such prepayments if the applicable rate (or similar interest rate spread) applicable to such new term loans is or, upon the satisfaction of certain conditions, could be less than the applicable rate applicable to the Tranche B Loans on the Closing Date.

 

SECTION 2.13       Increased Costs.  (a)  If any Change in Law shall:

 

(i)            impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Lender;