UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

OR

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 1-6033
 
 

UAL CORPORATION
(Exact name of Registrant as specified in its charter)

 
 
 

Delaware	36-2675207
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
Location:  1200 East Algonquin Road, Elk Grove Township, Illinois            60007
Mailing Address:  P. O. Box 66919, Chicago, Illinois                                     60666
(Address of principal executive offices)                                                            (Zip Code)
Registrant's telephone number, including area code:  (847) 700-4000

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes    X       No ___

     Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
 
 

	Outstanding at
Class	April 30, 2003
Common Stock ($0.01 par value)	99,505,579

 
 
 
 
 

UAL Corporation and Subsidiary Companies Report on Form 10-Q
For the Quarter Ended March 31, 2003

Index
PART I.		FINANCIAL INFORMATION			Page No.
	Item 1. Financial Statements
			Condensed Statements of Consolidated  Financial Position (Unaudited) - - as of March  31, 2003 and December 31, 2002	3
			Statements of Consolidated Operations  (Unaudited) - for the three months ended  March 31, 2003 and 2002	5
			Condensed Statements of Consolidated Cash Flows (Unaudited) - for the three  months ended March 31, 2003 and 2002	6
			Notes to Consolidated Financial Statements (Unaudited)	7
		Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		15
		Item 3. Quantitative and Qualitative Disclosures About Market Risk		23
		Item 4. Controls and Procedures		24
PART II.		OTHER INFORMATION
		Item 6. Exhibits and Reports on Form 8-K		25
Signatures		26
Exhibit Index		27

 
 
 
 
 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

UAL Corporation and Subsidiary Companies
(Debtor and Debtor-in-Possession)
Condensed Statements of Consolidated Financial Position (Unaudited)
(In Millions)

	March 31	December 31
Assets	2003	2002
Current assets:
Cash and cash equivalents	$ 637	$ 886
Restricted cash	504	462
Short-term investments	285	388
Receivables, net	915	788
Income tax receivables	326	326
Inventories, net	294	310
Prepaid expenses and other	233	219
	3,194	3,379
Operating property and equipment:
Owned	19,606	19,588
Accumulated depreciation and amortization	(5,471)	(5,306)
	14,135	14,282
Capital leases	2,529	2,573
Accumulated amortization	(497)	(494)
	2,032	2,079
	16,167	16,361
Other assets:
Long-term restricted cash	140	116
Investments	75	124
Intangibles, net	410	412
Pension assets	1,162	1,162
Aircraft lease deposits	803	776
Prepaid rent	201	408
Other, net	969	918
	3,760	3,916
	$23,121	$23,656

See accompanying Notes to Consolidated Financial Statements.
 
 

UAL Corporation and Subsidiary Companies
(Debtor and Debtor-in-Possession)
Condensed Statements of Consolidated Financial Position (Unaudited)
(In Millions)

	March 31	December 31
Liabilities and Stockholders' Equity	2003	2002
Current liabilities:
Current portions of long-term debt and
capital lease obligations	$ 60	$ -
Advance ticket sales	1,176	1,021
Accrued salaries, wages and benefits	1,407	1,496
Accounts payable	420	284
Other	1,233	1,190
	4,296	3,991
Long-term debt	732	700
Other liabilities and deferred credits:
Deferred pension liability	4,824	4,661
Postretirement benefit liability	1,905	1,809
Deferred income taxes	257	249
Other	918	894
	7,904	7,613
Liabilities subject to compromise	14,012	13,833
Commitments and contingent liabilities (See note)
Preferred stock committed to Supplemental ESOP	-	2
Stockholders' equity:
Preferred stock	-	-
Common stock at par	1	1
Additional capital invested	5,072	5,070
Retained deficit	(4,760)	(3,417)
Accumulated other comprehensive loss	(2,659)	(2,663)
Treasury stock	(1,475)	(1,472)
Other	(2)	(2)
	(3,823)	(2,483)
	$23,121	$23,656

See accompanying Notes to Consolidated Financial Statements.
 
 
 

UAL Corporation and Subsidiary Companies
(Debtor and Debtor-in-Possession)
Statements of Consolidated Operations (Unaudited)
(In Millions, Except Per Share)

	Three Months Ended
	March 31
	2003	2002
Operating revenues:
Passenger	$ 2,548	$ 2,758
Cargo	164	141
Other	472	389
	3,184	3,288
Operating expenses:
Salaries and related costs	1,536	1,589
Aircraft fuel	571	398
Commissions	65	127
Purchased services	334	336
Aircraft rent	201	209
Landing fees and other rent	240	248
Depreciation and amortization	234	239
Cost of sales	373	279
Aircraft maintenance	118	145
Other	325	347
Special charges	-	82
	3,997	3,999
Loss from operations	(813)	(711)
Other income (expense):
Interest expense	(131)	(142)
Interest capitalized	1	11
Interest income	5	19
Equity in losses of affiliates	-	(2)
Non-operating special charges	(137)	-
Reorganization items, net	(248)	-
Gain on sale of investment	-	46
Miscellaneous, net	(20)	(16)
	(530)	(84)
Loss before income taxes and distributions
on preferred securities	(1,343)	(795)
Credit for income taxes	-	(286)
Loss before distributions on preferred securities	(1,343)	(509)
Distributions on preferred securities, net of tax	-	(1)
Net loss	$(1,343)	$ (510)
Net loss per share, basic	$(14.16)	$ (9.22)

See accompanying Notes to Consolidated Financial Statements.
 
 

UAL Corporation and Subsidiary Companies
(Debtor and Debtor-in-Possession)
Condensed Statements of Consolidated Cash Flows (Unaudited)
(In Millions)

	Three Months
	Ended March 31
	2003	2002
Cash and cash equivalents at beginning
of period	$ 886	$ 1,688
Cash flows from operating activities	(188)	(85)
Cash flows from reorganization activities:
Net loss from reorganization items	(248)	-
Write off of Company lease certificates	215	-
Increase in liabilities	24	-
	(9)	-
Cash flows from investing activities:
Additions to property and equipment	(36)	(29)
Proceeds on disposition of property and
equipment	6	40
Proceeds on sale of investments	-	137
Increase in restricted cash	(66)	(201)
Decrease in short-term investments	103	340
Other, net	(33)	20
	(26)	307
Cash flows from financing activities:
Proceeds from issuance of long-term debt	92	540
Repayment of long-term debt	(65)	(598)
Principal payments under capital
lease obligations	(53)	(56)
Dividends paid	-	(2)
Decrease in debt certificates under Company leases	-	280
	(26)	164
Increase (decrease) in cash and cash equivalents	(249)	386
Cash and cash equivalents at end of period,
excluding restricted cash	$ 637	$2,074
Cash paid during the period for:
Interest (net of amounts capitalized)	$ 103	$ 109
Non-cash transactions:
Long-term debt incurred in connection
with additions to equipment and other assets	$ -	$ 487

See accompanying Notes to Consolidated Financial Statements.
 
 
 

UAL Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements (Unaudited)

The Company

        UAL Corporation ("UAL" or the "Company") is a holding company whose principal subsidiary is United Air Lines, Inc. ("United").

Interim Financial Statements

        The consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to or as permitted by such rules and regulations, although UAL believes that the disclosures are adequate to make the information presented not misleading. In management's opinion, all adjustments (which include only normal recurring adjustments, reorganization items and other special charges described below) necessary for a fair presentation of the results of operations for the three-month periods have been made. These financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in UAL's Annual Report on Form 10-K for the year 2002.

Voluntary Reorganization Under Chapter 11

      Bankruptcy Proceedings. On December 9, 2002 (the "Petition Date"), UAL, United and 26 direct and indirect wholly owned subsidiaries (collectively, the "Debtors") filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the "Bankruptcy Court"). The reorganization cases are being jointly administered under the caption "In re: UAL Corporation, et al., Case No. 02-48191" (the "Chapter 11 Cases"). Included in the Consolidated Financial Statements are subsidiaries that are not party to the Chapter 11 Cases and are not Debtors. The assets and liabilities of such non-filing subsidiaries are not considered material to the Consolidated Financial Statements.

        The Debtors continue to operate their businesses as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and applicable court orders. All vendors are being paid for all goods furnished and services provided after the Petition Date. However, under Section 362 of the Bankruptcy Code, the filing of the bankruptcy petition automatically stays most actions against a debtor, including most actions to collect pre-petition indebtedness or to exercise control over the property of the debtor's estate. Absent an order of the Bankruptcy Court, substantially all pre-petition liabilities are subject to settlement under a plan of reorganization to be approved by the Bankruptcy Court.

        Notwithstanding the preceding general discussion of the automatic stay, the Debtors' rights to possess and operate certain qualifying aircraft, aircraft engines and other aircraft-related equipment that are leased or subject to a security interest or conditional sale contract are governed by a particular provision of the Bankruptcy Code that specifies different treatment. Under Section 1110 of the Bankruptcy Code ("Section 1110"), the automatic stay lasts for only 60 days with respect to eligible property except under two conditions. The debtor may extend the 60-day period by agreement of the relevant financier, with court approval. Alternatively, the debtor may agree to perform all of the obligations under the applicable financing and cure any defaults thereunder as required by the Bankruptcy Code. In the absence of either such arrangement, the financier may take possession of the property and enforce any of its contractual rights or remedies to sell, lease or otherwise retain or dispose of such equipment.

        The 60-day period under Section 1110 in the Company's Chapter 11 Case expired on February 7, 2003. The Company has reached agreements with a significant number of aircraft financiers to extend the automatic stay, in exchange in certain instances for United's agreement to make specified payments. United also has made elections with respect to certain other aircraft to cure all existing defaults and to pay the contract rates as required by the Bankruptcy Code. With respect to certain aircraft, however, United has taken no action. The contracts for some of these aircraft are likely to be rejected by United under the Bankruptcy Code in the Section 1110 process, which would involve the return of the aircraft. Additionally, the financiers of such aircraft may seek to repossess the property. Although no such financiers have sought to repossess any United equipment, and although the Company believes that current market conditions for commercial aircraft make repossession unlikely, there can be no assurance that United's lenders and lessors will not repossess any of the applicable aircraft. Repossession of a significant number of aircraft could result in substantial disruptions to United's operations and could have a material adverse effect on the Company's business.

        In order to successfully exit Chapter 11, the Debtors will need to propose, and obtain confirmation by the Bankruptcy Court of, a plan of reorganization that satisfies the requirements of the Bankruptcy Code. A plan of reorganization would resolve, among other things, the Debtors' pre-petition obligations, set forth the revised capital structure of the newly reorganized entity and provide for its corporate governance subsequent to exit from bankruptcy. On March 21, 2003, the Bankruptcy Court approved the extension to October 2003 of the Company's "exclusivity period" during which it is the only party permitted to file a plan of reorganization. Under certain circumstances, the exclusivity period could be shortened by two months. The timing of filing a plan of reorganization by the Company will depend on the timing and outcome of numerous other ongoing matters in the Chapter 11 Cases. Although the Company expects to file a plan of reorganization that provides for its emergence from bankruptcy, there can be no assurance at this time that a plan of reorganization will be confirmed by the Bankruptcy Court or that any such plan will be implemented successfully.

        As required by the Bankruptcy Code, the United States Trustee for the Northern District of Illinois (the "U.S. Trustee") has appointed an official committee of unsecured creditors (the "Creditors' Committee"). The Creditors' Committee and its legal representatives have a right to be heard on all matters that come before the Bankruptcy Court with respect to the Debtors. There can be no assurance that the Creditors' Committee will support the Debtors' positions or the Debtors' plan of reorganization, and disagreements between the Debtors and the Creditors' Committee could protract the Chapter 11 Cases, could negatively impact the Debtors' ability to operate during the Chapter 11 Cases and could delay the Debtors' emergence from Chapter 11.

      Financial Statement Presentation. The accompanying consolidated financial statements have been prepared in accordance with American Institute of Certified Public Accountants' Statement of Position 90-7 ("SOP 90-7"), "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code," and on a going-concern basis, which contemplates continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business.

        SOP 90-7 requires that the financial statements for periods subsequent to the filing of a Chapter 11 petition distinguish transactions and events that are directly associated with the reorganization from the operations of the business. Accordingly, revenues, expenses (including professional fees), realized gains and losses, and provisions for losses directly associated with the reorganization and restructuring of the business are reported separately in the financial statements. The Statements of Consolidated Financial Position distinguish pre-petition liabilities subject to compromise both from those pre-petition liabilities that are not subject to compromise and from post-petition liabilities. Liabilities subject to compromise are reported at the amounts expected to be allowed, even if they may be settled for lesser amounts.

        In addition, as a result of the Chapter 11 filing, the realization of assets and satisfaction of liabilities, without substantial adjustments and/or changes in ownership, are subject to uncertainty. While operating as debtors-in-possession under the protection of Chapter 11 of the Bankruptcy Code and subject to approval of the Bankruptcy Court or otherwise as permitted in the ordinary course of business, the Debtors, or some of them, may sell or otherwise dispose of assets and liquidate or settle liabilities for some amounts other than those reflected in the consolidated financial statements. Further, a plan of reorganization could materially change the amounts and classifications in the historical consolidated financial statements.

        Pursuant to the Bankruptcy Code, the Debtors have filed schedules with the Bankruptcy Court setting forth the assets and liabilities of the Debtors as of the Petition Date. Differences between amounts recorded by the Debtors and claims filed by creditors will be investigated and resolved as part of the Chapter 11 Cases. The deadline for filing proofs of claim with the Bankruptcy Court is May 12, 2003, with a limited exception for governmental entities, which have until June 9, 2003 to file proofs of claim. Accordingly, the ultimate number and allowed amounts of such claims are not presently known.

      DIP Financing. In connection with the filing of the Chapter 11 Cases, the Company arranged a debtor-in-possession secured financing (the "DIP Financing"). The DIP Financing consists of two facilities, a $300 million facility provided by Bank One N.A. ("Bank One Facility") and a $1.2 billion facility provided by J.P. Morgan Chase Bank, Citicorp USA, Inc., Bank One, N.A. and The CIT Group/Business Credit, Inc. ("Club Facility"). The Company has received commitments of $1.0 billion under the Club Facility following the completion of the syndication process for that facility; the balance is conditioned upon the participation of one or more additional lenders approved by the existing participants. As of March 31, 2003, the Company had borrowed $300 million under the Bank One Facility and $492 million under the Club Facility.

New Accounting Pronouncements

        In the first quarter of 2003, the Company adopted Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS No. 143"), which addresses the accounting and reporting for obligations associated with the retirement of long-lived assets and associated asset retirement costs. Under SFAS No. 143, the fair value of a liability for an asset retirement obligation must be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. In addition, the associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The adoption of SFAS No. 143 was immaterial to the Company's financial statements.

Per Share Amounts

        Basic loss per share amounts were computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the year.
 

Loss Attributable to Common Stockholders (in millions)	Three Months
	Ended March 31
	2003	2002
Net loss	$(1,343)	$ (510)
Preferred stock dividend requirements	(2)	(2)
Loss attributable to common stockholders	$(1,345)	$ (512)
Shares (in millions)
Weighted average shares outstanding	95.0	55.5
Loss Per Share	$(14.16)	$(9.22)

        At March 31, 2003 and 2002, respectively, stock options to purchase approximately 14 million and 15 million shares of common stock were outstanding but were not included in the computation of earnings per share because inclusion of such shares would be antidilutive; approximately 17 million and 60 million shares of convertible ESOP preferred stock were not included as the result would also be antidilutive.

Stock Option Accounting

        The Company accounts for stock-based employee compensation plans under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." No stock-based employee compensation cost pertaining to stock options is reflected in the Company's Statements of Consolidated Operations, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant.

        If compensation cost for stock-based employee compensation plans had been determined using the fair value recognition provisions of Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation," the Company's net loss and loss per share would have instead been reported as the pro forma amounts indicated below:
 

(In millions, except per share)	Three Months
	Ended March 31
	2003	2002
Net loss, as reported	$(1,343)	$ (510)
Less: Total compensation expense determined under
fair value method (net of tax in 2002)	(5)	(4)
	$(1,348)	$ (514)
Net loss per share, basic
As reported	$(14.16)	$(9.22)
Pro forma	$(14.21)	$(9.30)

Income Taxes

        For 2003, the Company has a zero percent effective tax rate. Beginning in the third quarter of 2002, the Company established a valuation allowance against its net deferred tax asset.

        The Company has determined that it is more likely than not that the gross deferred tax assets, net of valuation allowances at March 31, 2003, will be realized through the reversals of existing deferred tax credits.

Restricted Cash

        At March 31, 2003, the Company had $644 million in restricted cash, including $140 million in long-term restricted cash. The cash largely represents security for worker compensation obligations, security deposits for airport leases and reserves with institutions which process the Company's sales.

Liabilities Subject to Compromise

         Liabilities subject to compromise refers to liabilities incurred prior to the Petition Date. These amounts represent the Company's estimate of known or potential pre-petition claims to be resolved in connection with the Chapter 11 Cases. Such claims remain subject to future adjustments. Adjustments may result from negotiations, actions of the Bankruptcy Court, rejection of executory contracts and unexpired leases, the determination as to the value of any collateral securing claims, proofs of claim or other events. It is anticipated that such adjustments, if any, would be material. Payment terms for these amounts will be established in connection with the Chapter 11 Cases.

         At March 31, 2003, the Company had liabilities subject to compromise of approximately $14.0 billion which consisted of the following:
 

	(In millions)
	Long-term debt, including accrued interest	$ 8,265
	Aircraft-related accruals and deferred gains	2,469
	Capital lease obligations, including accrued interest	2,168
	Accounts payable	332
	Company-obligated mandatorily redeemable
	preferred securities of a subsidiary trust	97
	Other	681
		$ 14,012

United Express

         United has marketing agreements under which independent regional carriers, flying under the United Express name, feed passengers to United owned and operated flights. United pays these carriers on a fee-per-departure basis and includes the revenues derived from the carriers in passenger revenue, net of expenses. United Express revenues (net of expenses) included in passenger revenues were $(95) million and $(77) million for the three months ended March 31, 2003 and 2002, respectively.

         While the effect on United's results, taking into account only the United Express flights, is negative, the Company realizes a significant benefit (not included in the results shown above) from the traffic provided to United's operations as a result of these agreements.

Segment Information

         UAL has five reportable segments that reflect the management of its business: North America, the Pacific, the Atlantic and Latin America, each of which is part of United, and UAL Loyalty Services, Inc. ("ULS").

         A reconciliation of the total amounts reported by reportable segments to the applicable amounts in the financial statements follows:
 

(In Millions)	Three Months Ended March 31, 2003
	United Air Lines, Inc.						Inter-	UAL
	North			Latin			segment	Consolidated
	America	Pacific	Atlantic	America	ULS	Other	Elimination	Total
Revenue	$ 1,944	$556	$397	$  110	$ 174	$ 3	$ - -	$ 3,184
Intersegment revenue	$ 61	$ 21	$ 14	$ 4	$ 11	$ - -	$ (111)	$ - -
Earnings (loss) before
income taxes, gains on
sales, reorganization
items and special charges	$ (687)	$(150)	$(117)	$ (45)	$ 30	$ 11	$ - -	$ (958)

 

(In Millions)	Three Months Ended March 31, 2002
	United Air Lines, Inc.						Inter-	UAL
	North			Latin			segment	Consolidated
	America	Pacific	Atlantic	America	ULS	Other	Elimination	Total
Revenue	$2,077	$  534	$  373	$  131	$ 166	$ 7	$ - -	$ 3,288
Intersegment revenue	$ 54	$ 14	$ 10	$ 3	$ 23	$ 1	$ (105)	$ - -
Earnings (loss) before
income taxes, gains on
sales and special charges	$ (509)	$(146)	$(117)	$ (50)	$ 60	$ 3	$ - -	$ (759)

 

	Three Months Ended
	March 31
(In Millions)	2003	2002
Total loss for reportable segments	$ (969)	$ (762)
Special charges	(137)	(82)
Reorganization items, net	(248)	-
Gain on sale	-	46
Other UAL subsidiary earnings	11	3
Total loss before income taxes and
distributions on preferred securities	$(1,343)	$ (795)

         United's dedicated revenue-producing assets generally can be deployed in any of its reportable segments, while ULS has $469 million in total assets.

Other Comprehensive Income

         Total comprehensive income (loss) for the three months ended March 31, 2003 was $(1.3) billion compared to $(508) million for the first quarter 2002. Other comprehensive income consisted of net unrealized gains of $4 million in 2003 and $2 million in 2002.

Reorganization items

        In connection with the Company's bankruptcy filing, UAL recorded $248 million in reorganization expenses in the first quarter 2003. This amount consisted of the following:
 

	(In millions)
	Write-off of lease certificates	$ 215
	Professional fees	34
	Interest income	(3)
	Other	2
		$ 248

        In the first quarter 2003, United renegotiated certain off-balance sheet leases as part of the Section 1110 process. Under the terms of the revised leases, United surrendered its investment in the junior portion of the original lease debt to the original equity participant. Accordingly, the Company's investment in the corresponding lease certificates was reduced to zero and the Company recognized a $215 million non-cash charge in reorganization items.

Special Charges

        Air Canada. On April 1, 2003, Air Canada filed for protection under the Companies' Creditors Arrangement Act ("CCAA") of the Canada Business Corporation Act. During the first quarter of 2003, the Company recorded a special charge of $137 million in connection with Air Canada's CCAA filing. The charge included $46 million for the impairment of the Company's investment in Air Canada preferred stock and $91 million to record a liability for the Company's guarantee of Air Canada debt. The Company considers this liability to be a pre-petition obligation and accordingly, has classified it in liabilities subject to compromise.

        In addition, UAL is the equity holder on three Airbus A330 aircraft that are leased to Air Canada via a leveraged lease transaction. The Company's net investment in the leveraged lease transaction is approximately $88 million. Although Air Canada has not indicated an intent to reject these leases, should they choose to reject or renegotiate these leases under the provisions of the CCAA, UAL would most likely incur a write-off of most or all of the transaction's value.

        Avolar. On March 22, 2002, UAL announced the orderly shutdown of its wholly owned subsidiary Avolar, which was formed in early 2001 to operate and sell fractional ownership interests in premium business aircraft. In connection with the closing of Avolar, UAL recorded a special charge of $82 million in the first quarter 2002 which included aircraft deposits and termination fees ($55 million), operating related expenses ($18 million), severance related costs ($7 million) and other costs ($2 million).

Contingencies and Commitments

         UAL has certain contingencies resulting from litigation and claims (including environmental issues) incident to the ordinary course of business. Management believes, after considering a number of factors, including (but not limited to) the views of legal counsel, the nature of contingencies to which UAL is subject and its prior experience, that the ultimate disposition of these contingencies is not expected to materially affect UAL's consolidated financial position or results of operations.

         At March 31, 2003, commitments for the purchase of property and equipment, principally aircraft, approximated $1.6 billion, after deducting advance payments. An estimated $0.1 billion will be spent during the remainder of 2003, $0.3 billion in 2004 and $0.4 billion in each of 2005, 2006 and 2007. The major commitments are for the purchase of A319, A320 and B777 aircraft. The Company is evaluating the contracts for these aircraft in light of its financial condition and operational requirements.
 
 
 

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

Chapter 11 Reorganization

        Bankruptcy Proceedings. On December 9, 2002, the Debtors filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. For further details regarding the Chapter 11 Cases, see "Voluntary Reorganization Under Chapter 11" in the Notes to Consolidated Financial Statements.

        The Debtors continue to operate their businesses as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and applicable court orders. All vendors are being paid for all goods furnished and services provided after the Petition Date. However, under Section 362 of the Bankruptcy Code, the filing of the bankruptcy petition automatically stays most actions against a debtor, including most actions to collect pre-petition indebtedness or to exercise control over the property of the debtor's estate. Absent an order of the Bankruptcy Court, substantially all pre-petition liabilities are subject to settlement under a plan of reorganization to be approved by the Bankruptcy Court. Notwithstanding the foregoing, the Debtors' rights to possess and operate certain qualifying aircraft, aircraft engines and other aircraft-related equipment that are leased or subject to a security interest or conditional sale contract are governed by Section 1110 of the Bankruptcy Code, which specifies different treatment. For further information on Section 1110 and its impact on the Company, see "Voluntary Reorganization Under Chapter 11" in the Notes to Consolidated Financial Statements.

        In order to successfully exit Chapter 11, the Debtors will need to propose, and obtain confirmation by the Bankruptcy Court of, a plan of reorganization that satisfies the requirements of the Bankruptcy Code. A plan of reorganization would resolve, among other things, the Debtors' pre-petition obligations, set forth the revised capital structure of the newly reorganized entity and provide for its corporate governance subsequent to exit from bankruptcy. The timing of filing a plan of reorganization by the Company will depend on the timing and outcome of numerous other ongoing matters in the Chapter 11 Cases. Although the Company expects to file a plan of reorganization that provides for its emergence from bankruptcy, there can be no assurance at this time that a plan of reorganization will be confirmed by the Bankruptcy Court, or that any such plan will be implemented successfully.

        At this time, it is not possible to predict accurately the effect of the Chapter 11 reorganization process on the Company's business or when it may emerge from Chapter 11.  The Company's future results depend on the timely and successful confirmation and implementation of a plan of reorganization. The rights and claims of various creditors and security holders will be determined by the plan as well.  No assurance can be given as to what values, if any, will be ascribed in the bankruptcy proceedings to each of these constituencies, and it is possible that UAL's equity or other securities will be restructured in a manner that will reduce substantially or eliminate any remaining value. Accordingly, the Company urges that appropriate caution be exercised with respect to existing and future investments in any of such securities and claims.
 

Results of Operations

        Summary of Results. The air travel business is subject to seasonal fluctuations. United's operations are often adversely impacted by winter weather and United's first- and fourth-quarter results normally reflect reduced travel demand. Historically, operating results are better in the second and third quarters. However, as a result of the U.S. war with Iraq and the outbreak of Severe Acute Respiratory Syndrome ("SARS"), the typical seasonal fluctuations are likely to be disrupted in 2003.

       For the past two years, the Company has seen fluctuations in unit revenue relative to the rest of the industry. Immediately following the September 11 terrorist attacks, the Company experienced a significant decline in unit revenue relative to the rest of the industry. In early 2002, year-over-year unit revenues began improving each month from a 14% decline in January to a 4% decline in May, improving its position relative to the industry. However, unit revenue growth stalled in the third and fourth quarters as demand continued to be weak and yields declined. As is typical with a company in bankruptcy, UAL anticipated a decline in revenues following the filing of the Chapter 11 Cases in December of 2002. This effect accelerated in the first quarter of 2003. Overall weak economic conditions, the outbreak of war in Iraq and the Company's significant exposure to low cost competition resulted in the Company's 9% drop in passenger unit revenue in the first quarter of 2003 as compared to the same period of 2002.

        UAL's loss from operations was $(813) million in the first quarter of 2003, compared to $(711) million in the first quarter of 2002. UAL's net loss was $(1.3) billion ($(14.16) per share), compared to $(510) million in the same period of 2002 ($(9.22) per share).

        The 2003 results include $248 million in reorganization items recorded in connection with the Company's bankruptcy proceedings and $137 million in non-operating special charges related to the Company's investment in Air Canada. See "Special Charges" in the Notes to Consolidated Financial Statements.

        The 2002 loss includes a charge of $82 million for costs incurred in connection with the Company's closing of its Avolar subsidiary. See "Special Charges" in the Notes to Consolidated Financial Statements. In addition, the 2002 loss includes a gain of $46 million on the sale of the Company's remaining investment in Cendant Corporation.

        Specific factors affecting UAL's consolidated operations for the first quarter of 2003 are described below.

        First Quarter 2003 Compared with First Quarter 2002.  Operating revenues decreased $104 million (3%) and United's revenue per available seat mile (unit revenue) decreased 4% to 8.97 cents. Passenger revenues decreased $210 million (8%) primarily due to a 9% decrease in yield to 10.16 cents. United's available seat miles across the system increased 1% over the first quarter of 2002; however, passenger load factor decreased 0.5 points to 71.7%. The following analysis by market is based on information reported to the U.S. Department of Transportation:
 

	Increase (Decrease)
	Available Seat	Revenue Passenger Miles	Revenue Per Revenue
	Miles (Capacity)	(Traffic)	Passenger Mile (Yield)
Domestic	2%	4%	(14%)
Pacific	5%	(5%)	-%
Atlantic	(2%)	(5%)	(1%)
Latin America	(13%)	(10%)	(13%)
System	1%	1%	(9%)

        Cargo revenues increased $23 million (16%) due to a 3% increase in cargo ton miles and a 13% increase in yield. Other operating revenues increased $83 million (21%) primarily due to a $92 million increase in fuel sales to third parties.

        Operating expenses decreased $2 million (0.1%) and United's cost per available seat mile (unit cost) increased 1%, from 11.41 cents to 11.47 cents. Salaries and related costs decreased $53 million (3%) as decreases in employee headcount as a result of furloughs and interim wage reductions implemented in the first quarter of 2003 were partially offset by increases to pension and postretirement expenses. Aircraft fuel increased $173 million (44%) due primarily to a 46% increase in the average cost of fuel from 70.6 cents to 103.2 cents a gallon. Commissions decreased $62 million (49%) primarily as a result of United discontinuing the payment of base commissions on all tickets issued in the U.S. and Canada effective March 20, 2002, as well as a decrease in commissionable revenues. Cost of sales increased $94 million (34%) primarily due to increased costs associated with fuel sales to third parties. Aircraft maintenance decreased $27 million (19%) due to decreases in engine and aircraft repair volumes as a result of reduced flying.

        Other non-operating expense amounted to $145 million in the first quarter of 2003, compared to $130 million in the first quarter of 2002, excluding reorganization items, non-operating special charges and the gain on sale of the Company's investment in Cendant. Interest expense decreased $11 million (8%) as the Company has discontinued recording interest expense on all unsecured pre-petition debt. Interest capitalized decreased $10 million (91%) as a result of lower advance payments on the acquisition of aircraft. Interest income decreased $14 million (74%) due to lower investment balances and decreased interest rates.

Liquidity and Capital Resources

        UAL's total of cash, cash equivalents and short-term investments, including restricted cash (both short- and long-term), was $1.6 billion at March 31, 2003, compared to $1.9 billion at December 31, 2002.

        Property additions, including aircraft and aircraft spare parts, amounted to $36 million. In the first quarter of 2003, United acquired one B757 aircraft off lease.

        Financing activities included principal payments under debt and capital lease obligations of $65 million and $53 million, respectively. These amounts represent payments made under Section 1110 elections for liabilities included in liabilities subject to compromise. During the first quarter of 2003, the Company drew down $92 million in cash through letter of credit arrangements under its DIP Financing.

        In April 2003, the Company received $365 million from the Internal Revenue Service ("IRS") as a result of the resolution of certain income tax refund claims filed with the IRS.

        On April 16, 2003, the Emergency Wartime Supplemental Appropriations Act ("Wartime Act") was signed into law. The legislation includes approximately $3 billion of financial aid for U.S. air carriers, including United, as follows: $2.4 billion to compensate air carriers for expenses and forgone revenues related to aviation security, including $100 million for reinforcing cockpit doors; suspension of the passenger and air carrier security fees from June 1, 2003 through September 30, 2003; and a one-year extension of government-provided war-risk insurance to August 2004.

        In addition, the Wartime Act requires that the total compensation of the two most highly compensated executives of certain airlines' (including the Company's) be limited, during the period between April 1, 2003 and April 1, 2004, to the annual salary paid to those officers with respect to the air carrier's fiscal year 2002. Any violation of this provision will require the Company to repay the government the amount of its compensation for airline security fees described above.

        Compensation under the legislation is expected to be received in May 2003 and will be distributed to carriers proportionately, based on the amounts collected by each carrier in passenger security and aircraft security fees. While UAL is still evaluating the provisions of the bill, the Company currently expects to receive approximately $300 million in compensation.

        As of March 31, 2003, the Company had $644 million in restricted cash (including $140 million in long-term restricted cash) on deposit with various state and local governments. The cash largely represents security for worker compensation obligations, security deposits for airport leases and reserves with institutions which process the Company's sales. Prior to 2002, United met many of these obligations through surety bonds or a secured letter of credit facility; however, many of the bonds have been cancelled and the letter of credit facility expired in August of 2002. As a result, United has been and may, in the future, be required to post additional collateral in the form of cash deposits to support these types of obligations.

        At March 31, 2003, commitments for the purchase of property and equipment, principally aircraft, approximated $1.6 billion, after deducting advance payments. Of this amount, an estimated $0.1 billion is expected to be spent during the remainder of 2003. For further details, see "Contingencies and Commitments" in the Notes to Consolidated Financial Statements.

Labor Agreements

        During the first quarter of 2003, the Company presented to its Board of Directors and employees information regarding its plan for transformation (the "Plan"), which outlines the fundamental changes to United's strategic direction. The Plan, which the Company is working to refine through further collaboration with its employees and others, seeks to develop a durable and sustainable business model that will lay the foundation for a company that is successful and competitive in the long run. Critical to this transformation are the reduction of costs, the improvement of labor productivity and asset efficiency, and the enhancement of the Company's customer value proposition.  The agreements the Company and its unions were able to reach in March and April 2003 allow for these kinds of transformational changes.

        In April 2003, United employees represented by various unions ratified tentative agreements between the Company and their unions to modify their respective collective bargaining agreements ("CBAs"). All of these agreements became effective on May 1, 2003 and are six years in duration. When combined with expected savings of approximately $300 million per year to salaried and management costs (achieved through wage and headcount reductions and benefit changes), these agreements are expected to reduce the Company's costs by an average of approximately $2.5 billion per year versus the current contracts (based on the size of the airline in the first quarter 2003). In addition to reductions in pay, all of the contracts allow for improving productivity (through changes to work rules) and changes to employees' medical plans (including increases to co-payments). The savings are anticipated to increase as these changes are implemented and the Company is able to achieve expected productivity improvements. The Company has developed a robust oversight process to ensure these significant changes are achieved in a seamless and timely manner.

        Other work-group specific changes are described below:

        On April 11, 2003, the Air Line Pilots Association, International ("ALPA") ratified a previously announced tentative agreement on a restructured CBA. The CBA reduces pay and benefits and improves productivity (through work-rule changes) by an average of approximately $1.1 billion per year versus the current contract. As part of these changes, retirement benefits for pilots have been reduced through a decrease in the Company's contribution to the pilot defined contribution plan and a reduction in the formula for their defined benefit plan. The agreement also provides for significantly enhanced flexibility with respect to regional jets, code share arrangements and a low-cost product offering. Additionally, the agreement provides for ALPA to retain a seat on the Company's Board of Directors.

        On April 11, 2003, the Company's dispatchers represented by the Professional Airline Flight Control Association ("PAFCA") ratified a tentative agreement between PAFCA and the Company on a restructured CBA, which is expected to reduce costs by an average of approximately $4.5 million per year versus the previous CBA. The restructured CBA also changes dispatchers to the Salaried, Management and Public Contact pension plan.

        On April 29, 2003, the flight attendants ratified a tentative agreement between the Company and the Association of Flight Attendants, AFL-CIO ("AFA") on a restructured CBA, which is expected to reduce United's costs by an average of approximately $300 million per year versus the parties' previous CBA. As part of these changes, retirement benefits for flight attendants are reduced through changes in the AFA pension plan.

         On April 29, 2003, employees represented by the International Association of Machinists and Aerospace Workers ("IAM") District Lodge 141 ratified an agreement between the Company and IAM District Lodge 141 on four restructured CBA's as well as on a restructured CBA for employees of United's subsidiary Mileage Plus, Inc. The agreements with IAM District Lodge 141 reduce costs by an average of approximately $450 million per year versus the parties' previous CBA's. On April 29, 2003, employees represented by IAM District Lodge 141M ratified agreements between the Company and IAM District Lodge 141M on three restructured CBA's. The agreements with District Lodge 141M will reduce costs by an average of approximately $350 million per year versus the previous CBA's. These agreements also provide the Company increased flexibility with respect to outsourcing and for the IAM to retain a seat on the Company's Board of Directors.

        In addition, all of the agreements provide for various common features. These include a Company-wide success-sharing program that provides the opportunity for annual payouts tied to the Company's level of profitability and performance. The agreements all also provide the Company with an opportunity to introduce a low-cost product offering. The Company also has agreed to include in its plan of reorganization provisions that each relevant employee group will receive a distribution of the equity, securities or other consideration provided to the general unsecured creditors. In addition, the Company has agreed, in all of the contracts, that any plan of reorganization it proposes or supports will provide the relevant employee group with a distribution of the above-described equity, securities or other consideration (as compared to the total distribution provided to all employee groups) that matches the proportion of each employee groups' contribution to total employee cost reductions.

Facilities

        At March 31, 2003, approximately $1.7 billion in special facilities revenue bonds ("municipal bonds") originally issued on behalf of United to build or improve airport-related facilities were outstanding. The Company leases facilities at airports pursuant to lease agreements where municipal bonds funded at least some of its airport-related projects. Pursuant to the financing agreements entered into by United in connection with such issuance of municipal bonds, the Company is required to make payments in amounts sufficient to pay the interest semi-annually with principal payable upon maturity.

         United is not permitted under the Bankruptcy Code to make payments on unsecured pre-petition debt without providing notice to its creditors and receiving the approval of the Bankruptcy Court. As United has been advised its municipal bonds are unsecured (or in certain instances, partially secured) pre-petition debt, United cannot make payments thereon without first meeting the requirements outlined above. Accordingly, the Company has classified all of its on-balance sheet municipal bonds as liabilities subject to compromise.

         Section 365 of the Bankruptcy Code requires that the Company timely perform all of its post-petition obligations under unexpired leases of non-residential real property. The Company believes that it is in compliance with all payment obligations under its lease agreements relating to those airports where it has municipal bonds outstanding. However, the Company has not made and does not intend to make debt service payments or any other payment on any of the municipal bond issuances issued on behalf of the Company and relating to domestic airport financings. As a result, under certain of the airport lease agreements, the Company may be considered in default due to the non-payment of the debt and therefore subject to the default provisions of the lease agreements with the airports. Possible consequences could include loss of the Company's status as a signatory airline (resulting in increased rents and landing fees) and loss of the Company's exclusive space agreements.

        The Company has taken a number of steps to mitigate the risks associated with this issue.  On March 21, 2003, the Company filed four separate and additional Complaints of Debtor-Plaintiff for Declaratory Judgment and, in connection therewith, corresponding Motions for Temporary Restraining Order with respect to the municipal bonds issuances relating to the facilities at the Denver International Airport, the New York City - John F. Kennedy International Airport, the San Francisco International Airport, and the Los Angeles International Airport, each seeking a clarification of the Company's obligations under the applicable municipal bonds, and the protection of its rights under its underlying airport lease agreements at the applicable airport until the Bankruptcy Court decides the merits of each of the above complaints. On March 31, 2003, the Bankruptcy Court entered an order that requires each of the above-mentioned actions to give the Company a 15-day notice and cure period before taking any action to terminate any rights of United with respect to leases at those airports until such time as the Bankruptcy Court enters final orders on United's declaratory judgment actions with respect to the payment of bonds at those airports. The Company is unable to predict what, if any, action might be taken in the future by either the bondholders or the airport authorities as a result of its failure to pay these obligations as contractually required. However, the Company believes that the March 31, 2003 order substantially mitigates the risk associated with any deemed default by providing the Company an opportunity to make any required payments and thus preserve its rights under its leases.

        In connection with the April 6, 2003 schedule reduction, the Company decided to close temporarily the Indianapolis Maintenance Center ("IMC"). On May 2, 2003, UAL filed a motion in the Bankruptcy Court to reject its lease at IMC in order to make permanent the closing of the facility. At the same time, UAL filed a motion to reject its lease at the Oakland Maintenance Center, thus allowing the Company to close that facility as well.

Outlook for 2003

        The Company expects future quarterly results to more substantially reflect lower salary and benefit costs, as well as the added flexibility and productivity enhancements associated with the new wage and work-rule agreements. The new agreements, along with capacity reductions, are expected to reduce second quarter 2003 salaries and related costs by $400 million to $500 million as compared to the second quarter of 2002. In addition to these labor cost savings, United expects to see significant savings in aircraft ownership costs, beginning in the second quarter.

        With the initiation of military action between the U.S. and Iraq on March 19, 2003 the Company immediately began the implementation of its contingency plan, which involved reducing the schedule by an additional 8% effective April 6, 2003 and the implementation of associated reductions in employment levels through placing a number of employees on temporary unpaid leave.

        As a result of the continued decline in bookings due to the conflict in Iraq and decreased travel demand due to SARS, the Company further reduced its May schedule by another 3.7%. This resulted in an overall decrease of 12% below what had been planned for May and, consequently, the Company will continue to reduce its employment levels through temporary unpaid leave. While a number of uncertainties remain regarding capacity plans for the balance of the year, the Company expects capacity to be lower than previously announced.

        Going forward, domestic bookings have shown solid recovery, with May and June currently booked about three to four points ahead of last year. Atlantic bookings are also improving. However, bookings in the Pacific remain weak due to SARS, which is expected to negatively affect revenues. Additionally, while booking trends are improving, the unit revenue environment continues to be depressed.

        Certain statements included in the above "Outlook" paragraphs, as well as elsewhere throughout Management's Discussion and Analysis of Financial Condition and Results of Operations, are forward-looking and thus reflect the Company's current expectations and beliefs with respect to certain current and future events and financial performance. Such forward-looking statements are and will be, as the case may be, subject to many risks and uncertainties relating to the operations and business environments of the Company that may cause actual results to differ materially from any future results expressed or implied in such forward-looking statements. Factors that could significantly affect net earnings, revenues, expenses, unit costs, fuel, load factor and capacity include, without limitation, the following: the Company's ability to continue as a going concern; the Company's ability to operate pursuant to the terms of the DIP Financing; the Company's ability to obtain court approval with respect to motions in the Chapter 11 proceeding prosecuted by it from time to time; the Company's ability to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the Chapter 11 Cases; risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for the Company to propose and confirm one or more plans of reorganization, for the appointment of a Chapter 11 trustee or to convert the cases to Chapter 7 cases; the Company's ability to achieve necessary reductions in labor costs; the Company's ability to obtain and maintain normal terms with vendors and service providers; the Company's ability to maintain contracts that are critical to its operations; the potential adverse impact of the Chapter 11 Cases on the Company's liquidity or results of operations; the costs and availability of financing; the Company's ability to execute its business plan; the Company's ability to attract, motivate and/or retain key employees; the Company's ability to attract and retain customers; demand for transportation in the markets in which the Company operates; general economic conditions; the effects of the war in Iraq and any other hostilities or act of war (in the Middle East or elsewhere) or any terrorist attack; the continued impact of SARS on the demand for travel; the ability of other air carriers with whom the Company has alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; the costs and availability of aircraft insurance; the costs of aviation fuel; the costs associated with existing or future security measures and practices; competitive pressures on pricing (particularly from lower-cost competitors); government legislation and regulation; consumer perceptions of the Company's products; weather conditions; and other risks and uncertainties set forth from time to time in UAL's reports to the United States Securities and Exchange Commission. Consequently, the forward-looking statements should not be regarded as representations or warranties by the Company that such matters will be realized. The Company disclaims any intent or obligation to update or revise any of the forward-looking statements, whether in response to new information, unforeseen events, changed circumstances or otherwise.
 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For information regarding the Company's exposure to certain market risks, see Item 7A. Quantitative and Qualitative Disclosures About Market Risk in UAL's Annual Report on Form 10-K for the year 2002.

Interest Rate Risk -

(In millions, except average contract rates)	Notional	Average	Estimated
	Amount	Contract Rate	Fair Value
			(Pay)/Receive*
Interest rate swap	$ 130	7.56%	$ (28)

*Estimated fair values represent the amount United would pay/receive on March 31, 2003 to terminate the contracts.
 
 

Item 4.  Controls and Procedures

         Within the 90-day period prior to the filing of this report, an evaluation was carried out under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of our disclosure controls and procedures.  Based on that evaluation, the CEO and CFO have concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.  Subsequent to the date of their evaluation, there were no significant changes in the Company's internal controls or in other factors that could significantly affect the disclosure controls, including any corrective actions with regard to significant deficiencies and material weaknesses.
 
 

PART II.  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K.

(a)     Exhibits

A list of exhibits included as part of this Form 10-Q is set forth in an Exhibit Index that immediately precedes such exhibits.

(b)     Form 8-K dated February 7, 2003 attaching the Company's Monthly Operating Report for the period December 9, 2002 through December 31, 2002.

Form 8-K dated February 14, 2003 to report materials presented to employees on February 11, 2003.

Form 8-K dated March 4, 2003 attaching the Company's Monthly Operating Report for the period January 1, 2003 through January 31, 2003.

Form 8-K dated March 26, 2003 attaching the Company's Monthly Operating Report for the period February 1, 2003 through February 28, 2003.
 
 
 
 
 
 

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 thereunto duly authorized on the 2nd day of May, 2003.

	UAL CORPORATION
	By:  /s/ Frederic F. Brace
	Frederic F. Brace
	Executive Vice President and
	Chief Financial Officer
	(principal financial and
	accounting officer)

 
 
 
 
 
 

Exhibit Index
Exhibit No.	Description
3.1	Restated Certificate of Incorporation of UAL Corporation, as amended April 16, 2003
3.2	Bylaws of UAL Corporation as amended April 16, 2003
10.1	Director Emeritus Benefits Policy amended January 30, 2003 and further amended May 2, 2003
10.2	2003 Agreement between United Air Lines, Inc. and the Air Line Pilots in the service of United Air Lines, Inc. represented by the Air Line Pilots Association, International
12.1	Computation of Ratio of Earnings to Fixed Charges
12.2	Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements
99.1	Certification of the Principal Executive Officer Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002)
99.2	Certification of the Principal Financial Officer Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002)
99.3	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
99.4	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

     RESTATED CERTIFICATE OF INCORPORATION

OF

UAL CORPORATION

                The present name of the corporation is UAL Corporation (the "Corporation"). The Corporation was incorporated under the name of UAL, Inc., the original Certificate of Incorporation having been filed with the Secretary of State of the State of Delaware on December 30, 1968. This Restated Certificate of Incorporation of the Corporation only restates and integrates and does not further amend the provisions of the Corporation's Certificate of Incorporation as heretofore amended, restated or supplemented, and there is no discrepancy between the provisions of this Restated Certificate of Incorporation of the Corporation and the provisions of the Corporation's Certificate of Incorporation as heretofore amended, restated or supplemented. This Restated Certificate of Incorporation of the Corporation was duly adopted in accordance with the provisions of Section 245 of the General Corporation Law of the State of Delaware.

                FIRST. The name of the Corporation is UAL CORPORATION

                SECOND. The registered office of the Corporation in the State of Delaware is located at 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, Inc., 2711 Centerville Road, Suite 400, in the City of Wilmington, County of Newcastle, Delaware 19808.

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

                FOURTH. The total number of shares of capital stock of all classes of which the Corporation shall have authority to issue is 291,100,022, divided into eleven (11) classes, as follows: 16,000,000 shares of Preferred Stock, without par value (hereinafter referred to as ''Serial Preferred Stock''), 25,000,000 shares of Class 1 ESOP Convertible Preferred Stock, of the par value of $0.01 per share (hereinafter referred to as ''Class 1 ESOP Convertible Preferred Stock''), 25,000,000 shares of Class 2 ESOP Convertible Preferred Stock, of the par value of $0.01 per share (hereinafter referred to as ''Class 2 ESOP Convertible Preferred Stock''), 11,600,000 shares of Class P ESOP Voting Junior Preferred Stock, of the par value of $0.01 per share (hereinafter referred to as ''Class P Voting Preferred Stock''), 9,300,000 shares of Class M ESOP Voting Junior Preferred Stock, of the par value of $0.01 per share (hereinafter referred to as ''Class M Voting Preferred Stock''), 4,200,000 shares of Class S ESOP Voting Junior Preferred Stock, of the par value of $0.01 per share (hereinafter referred to as ''Class S Voting Preferred Stock''), one (1) share of Class Pilot MEC Junior Preferred Stock, of the par value of $0.01 per share (hereinafter referred to as ''Class Pilot MEC Preferred Stock''), one (1) share of Class IAM Junior Preferred Stock, of the par value of $0.01 per share (hereinafter referred to as ''Class IAM Preferred Stock''), ten (10) shares of Class SAM Junior Preferred Stock, of the par value of $0.01 per share (hereinafter referred to as ''Class SAM Preferred Stock''), ten (10) shares of Class I Junior Preferred Stock, of the par value of $0.01 per share (hereinafter referred to as ''Class I Preferred Stock'' and, together with the Serial Preferred Stock, the Class 1 ESOP Convertible Preferred Stock, the Class 2 ESOP Convertible Preferred Stock, the Class P Voting Preferred Stock, the Class M Voting Preferred Stock, the Class S Voting Preferred Stock, the Class Pilot MEC Preferred Stock, the Class IAM Preferred Stock, and the Class SAM Preferred Stock, collectively, as ''Preferred Stock'') and 200,000,000 shares of Common Stock, of the par value of $0.01 per share (hereinafter referred to as ''Common Stock'').

PART I

Serial Preferred Stock

                The Board of Directors is expressly authorized to adopt, from time to time, a resolution or resolutions providing for the issue of Serial Preferred Stock in one or more series, to fix the number of shares in each such series and to fix the designations and the powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof, of each such series. The authority of the Board of Directors with respect to each such series shall include a determination of the following (which may vary as between the different series of Serial Preferred Stock):

(a)          The number of shares constituting the series and the distinctive designation of the series;

(b)          The dividend rate on the shares of the series, the conditions and dates upon which dividends thereon shall be payable, the extent, if any, to which dividends thereon shall be cumulative, and the relative rights of preference, if any, of payment of dividends thereon;

(c)           Whether or not the shares of the series are redeemable and, if redeemable, the time or times during which they shall be redeemable and the amount per share payable on redemption thereof, which amount may, but need not, vary according to the time and circumstances of such redemption;

(d)           The amount payable in respect of the shares of the series, in the event of any liquidation, dissolution or winding up of the Corporation, which amount may, but need not, vary according to the time or circumstances of such action, and the relative rights of preference, if any, of payment of such amount;

(e)           Any requirement as to a sinking fund for the shares of the series, or any requirement as to the redemption, purchase or other retirement by the Corporation of the shares of the series;

(f)            The right, if any, to exchange or convert shares of the series into other securities or property, and the rate or basis, time, manner and condition of exchange or conversion;

(g)           The voting rights, if any, to which the holders of shares of the series shall be entitled in addition to the voting rights provided by law; and

(h)          Any other term, condition or provision with respect to the series not inconsistent with the provisions of this Article Fourth or any resolution adopted by the Board of Directors pursuant thereto.
 

                A. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES A CONVERTIBLE PREFERRED STOCK

                Unless otherwise indicated, any reference in this Article FOURTH, Part I.A to ''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall refer to a Section, Subsection, paragraph, subparagraph or clause of this Article FOURTH, Part I.A.

        Section 1.       Number of Shares and Designations. Six million (6,000,000) shares of the Serial Preferred Stock, without par value, of the Corporation are constituted as a series thereof designated as Series A Convertible Preferred Stock (the ''Series A Preferred Stock'').

        Section 2.       Definitions. For purposes of the Series A Preferred Stock, the following terms shall have the meanings indicated:

        2.1   ''Accrued Dividends'' shall have the meaning set forth in Section 4.1 hereof.

        2.2   ''Aggregate Involuntary Liquidation Amount'' shall mean the limitation on the aggregate amount payable upon an involuntary liquidation, dissolution or winding up in respect of all shares of Serial Preferred Stock outstanding at any one time contained in Article FOURTH, Part I, paragraph (h) of the Corporation's Restated Certificate of Incorporation, as the same may be increased or eliminated from time to time.

        2.3   ''Board of Directors'' shall mean the board of directors of the Corporation or any committee authorized by such board of directors to perform any of its responsibilities with respect to the Series A Preferred Stock.

        2.4   ''Business Day'' shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.

        2.5   ''Common Stock'' shall mean the common stock of the Corporation, par value $0.01 per share.

        2.6   ''Constituent Person'' shall have the meaning set forth in Section 7.5 hereof.

        2.7   ''Conversion Price'' shall mean the conversion price per share of Common Stock for which the Series A Preferred Stock is convertible, as such Conversion Price may be adjusted pursuant to Section 7. The initial conversion price will be $156.50.

        2.8   ''Current Market Price'' of publicly traded shares of Common Stock or any other class of capital stock or other security of the Corporation or any other issuer for any day shall mean the last reported sales price, regular way on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices on such day, regular way, in either case as reported on the New York Stock Exchange Composite Tape or, if such security is not listed or admitted for trading on the New York Stock Exchange (''NYSE''), on the principal national securities exchange on which such security is listed or admitted for trading or, if not listed or admitted for trading on any national securities exchange, on the National Market System of the National Association of Securities Dealers, Inc. Automated Quotations System (''NASDAQ'') or, if such security is not quoted on such National Market System, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for such security on such day shall not have been reported through NASDAQ, the average of the bid and asked prices on such day as furnished by any NYSE member firm regularly making a market in such security selected for such purpose by the Board of Directors.

        2.9   ''Dividend Payment Date'' shall mean May 1, August 1, November 1 and February 1 in each year, commencing on May 1, 1993; provided, however, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment due on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date.

        2.10   ''Dividend Periods'' shall mean quarterly dividend periods commencing on May 1, August 1, November 1 and February 1 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period (other than the initial Dividend Period, which shall commence on the Issue Date and end on and include April 30, 1993).

        2.11   ''Fair Market Value'' shall mean the average of the daily Current Market Prices of a share of Common Stock during the five (5) consecutive Trading Days selected by the Corporation commencing not more than 20 Trading Days before, and ending not later than, the earlier of the day in question and the day before the ''ex'' date with respect to the issuance or distribution requiring such computation. The term '' 'ex' date,'' when used with respect to any issuance or distribution, means the first day on which the Common Stock trades regular way, without the right to receive such issuance or distribution, on the exchange or in the market, as the case may be, used to determine that day's Current Market Price.

        2.12   ''Involuntary Liquidation Preference'' shall have the meaning set forth in Section 4.1 hereof.

        2.13   ''Issue Date'' shall mean the first date on which shares of Series A Preferred Stock are issued and sold.

        2.14   ''Junior Stock'' shall mean the Common Stock, the Series C Preferred Stock and any other class or series of shares of the Corporation over which the Series A Preferred Stock has preference or priority in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Corporation. The Common Stock shall be deemed Junior Stock notwithstanding that it may participate in distributions upon an involuntary liquidation, dissolution or winding up without the Series A Preferred Stock receiving the Voluntary Liquidation Preference.

        2.15   ''non-electing share'' shall have the meaning set forth in Section 7.5 hereof.

        2.16   ''Person'' shall mean any individual, firm, partnership, corporation or other entity, and shall include any successor (by merger or otherwise) of such entity.

        2.17   ''Redemption Date'' shall have the meaning set forth in Section 5.3 hereof.

        2.18   ''Restated Certificate'' or ''Certificate of Incorporation'' shall mean the Restated Certificate of Incorporation of the Corporation, as amended from time to time.

        2.19   ''Rights'' shall mean the rights of the Corporation which are issuable under the Corporation's Rights Agreement dated as of December 11, 1986, and as amended from time to time, or rights to purchase any capital stock of the Corporation under any successor shareholder rights plan or plans adopted in replacement of the Corporation's Rights Agreement.

        2.20   ''Securities'' shall have the meaning set forth in Section 7.4(c) hereof.

        2.21   ''Series A Preferred Stock'' shall have the meaning set forth in Section 1 hereof.

        2.22   ''Series C Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series C Junior Participating Preferred Stock in Article FOURTH, Part I.B of this Certificate.

        2.23   ''set apart for payment'' shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of stock ranking on a parity with the Series A Preferred Stock as to the payment of dividends are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then ''set apart for payment'' with respect to the Series A Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.

        2.24   ''Stated Value'' shall have the meaning set forth in Section 4.1 hereof.

        2.25   ''Trading Day'' shall mean any day on which the securities in question are traded on the NYSE, or if such securities are not listed or admitted for trading on the NYSE, on the principal national securities exchange on which such securities are listed or admitted, or if not listed or admitted for trading on any national securities exchange, on the National Market System of the NASDAQ, or if such securities are not quoted on such National Market System, in the applicable securities market in which the securities are traded.

        2.26   ''Transaction'' shall have the meaning set forth in Section 7.5 hereof.

        2.27   ''Transfer Agent'' means First Chicago Trust Company of New York or such other agent or agents of the Corporation as may be designated by the Board of Directors as the transfer agent for the Series A Preferred Stock.

        2.28   ''Voluntary Liquidation Preference'' shall have the meaning set forth in Section 4.1 hereof.

        Section 3. Dividends.

        3.1     The holders of shares of the Series A Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of assets legally available for that purpose, dividends payable in cash at the rate per annum of $6.25 per share of Series A Preferred Stock. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods there shall be assets of the Corporation legally available for the payment of such dividends, and shall be payable quarterly, when, as and if declared by the Board of Directors, in arrears on Dividend Payment Dates, commencing on May 1, 1993. Each such dividend shall be payable in arrears to the holders of record of shares of the Series A Preferred Stock, as they appear on the stock records of the Corporation at the close of business on such record dates, which shall not be more than 60 days nor less than 10 days preceding the payment dates thereof, as shall be fixed by the Board of Directors or a duly authorized committee thereof. Accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any Dividend Payment Date, to holders of record on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed by the Board of Directors.

        3.2     The amount of dividends payable for each full Dividend Period for the Series A Preferred Stock shall be computed by dividing the annual dividend rate by four. The amount of dividends payable for the initial Dividend Period, or any other period shorter or longer than a full Dividend Period, on the Series A Preferred Stock shall be computed on the basis of twelve 30-day months and a 360-day year. Holders of shares of Series A Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the Series A Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Series A Preferred Stock that may be in arrears.

        3.3     So long as any shares of the Series A Preferred Stock are outstanding, no dividends, except as described in the next succeeding sentence, shall be declared or paid or set apart for payment on any class or series of stock of the Corporation ranking, as to dividends and amounts distributable upon liquidation, dissolution or winding up, on a parity with the Series A Preferred Stock, for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Series A Preferred Stock for all Dividend Periods terminating on or prior to the date of payment of the dividend on such class or series of parity stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon shares of the Series A Preferred Stock and all dividends declared upon any other class or series of stock ranking on a parity as to dividends and amounts distributable upon liquidation, dissolution or winding up shall be declared ratably in proportion to the respective amounts of dividends accumulated and unpaid on the Series A Preferred Stock and accumulated and unpaid on such parity stock.

        3.4     So long as any shares of the Series A Preferred Stock are outstanding, no dividends (other than (i) the Rights and (ii) dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment or other distribution declared or made upon Junior Stock, nor shall any Junior Stock or any series of stock of the Corporation ranking, as to dividends and amounts distributable upon liquidation, dissolution or winding up, on a parity with Series A Preferred Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of shares of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation, directly or indirectly (except by conversion into or exchange for Junior Stock), unless in each case the full cumulative dividends on all outstanding shares of the Series A Preferred Stock and any other stock of the Corporation ranking on a parity with the Series A Preferred Stock, as to dividends and amounts distributable upon liquidation, dissolution or winding up shall have been paid or set apart for payment for all past Dividend Periods with respect to the Series A Preferred Stock and all past dividend periods with respect to such parity stock.

        Section 4.   Payments upon Liquidation.

        4.1     In the event of any voluntary liquidation, dissolution or winding up of the Corporation before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of Junior Stock, the holders of the shares of Series A Preferred Stock shall be entitled to receive One Hundred Dollars ($100) per share of Series A Preferred Stock (the ''Stated Value'') plus an amount equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders (the ''Voluntary Liquidation Preference''); but such holders shall not be entitled to any further payment. In the event of any involuntary liquidation, dissolution or winding up of the Corporation, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of Junior Stock, the holders of the shares of Series A Preferred Stock shall be entitled to receive an amount per share of Series A Preferred Stock (the ''Involuntary Liquidation Preference'') equal to the Voluntary Liquidation Preference or, in the event the Corporation's Restated Certificate of Incorporation contains an Aggregate Involuntary Liquidation Amount, the lesser of (i) the Voluntary Liquidation Preference or (ii) an amount equal to the product of (a) the Voluntary Liquidation Preference and (b) a fraction, the numerator of which is the Aggregate Involuntary Liquidation Amount less the aggregate maximum amounts distributable upon liquidation of all classes or series of stock of the Corporation ranking, as to dividends and amounts distributable upon liquidation, dissolution or winding up, prior to the Series A Preferred Stock and the denominator of which is the aggregate amount of the voluntary liquidation preference (including accrued dividends) of all shares of the Series A Preferred Stock and any other stock of the Corporation ranking, as to dividends and amounts distributable upon liquidation, dissolution or winding up, on a parity with the Series A Preferred Stock; but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of Series A Preferred Stock shall be insufficient to pay in full the Voluntary Liquidation Preference or the Involuntary Liquidation Preference, as the case may be, and the liquidation preference on all other shares of any class or series of stock ranking, as to dividends and amounts distributable upon liquidation, dissolution or winding up, on a parity with the Series A Preferred Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Series A Preferred Stock and any such other parity stock ratably in accordance with the respective amounts that would be payable on such shares of Series A Preferred Stock and any such other stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, or (ii) a sale or transfer of all or substantially all of the Corporation's assets, shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation.

        4.2     Subject to the rights of the holders of shares of any series or class or classes of stock ranking on a parity with or prior to the Series A Preferred Stock as to dividends and amounts distributable upon liquidation, dissolution or winding up of the Corporation, after payment shall have been made to the holders of the Series A Preferred Stock, as and to the fullest extent provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series A Preferred Stock shall not be entitled to share therein.

        Section 5.   Redemption at the Option of the Corporation.

        5.1     The shares of Series A Preferred Stock will be redeemable at the option of the Corporation by resolution of its Board of Directors, in whole, or, from time to time, in part, at any time on or after May 1, 1996, at the following redemption prices per share, if redeemed during the twelve-month period beginning May 1 of the year indicated below, plus, in each case, all dividends accrued and unpaid on the shares of Series A Preferred Stock up to the date fixed for the redemption, upon giving notice as provided hereinbelow:
 
 

	Price
1996	$104.375
1997	103.750
1998	103.125
1999	102.500
2000	101.875
2001	101.250
2002	100.625
2003 and thereafter	100.000

        5.2     If fewer than all of the outstanding shares of Series A Preferred Stock are to be redeemed, the number of shares to be redeemed shall be determined by the Board of Directors and the shares to be redeemed shall be determined pro rata or by lot or in such other manner and subject to such regulations as the Board of Directors in its sole discretion shall prescribe.

        5.3     At least 30 days, but not more than 60 days, prior to the date fixed for the redemption of shares of Series A Preferred Stock, a written notice shall be mailed in a postage prepaid envelope to each holder of record of the shares of Series A Preferred Stock to be redeemed, addressed to such holder at his post office address as shown on the records of the Corporation, notifying such holder of the election of the Corporation to redeem such shares, stating the date fixed for redemption thereof (the ''Redemption Date''), and calling upon such holder to surrender to the Corporation, on the Redemption Date at the place designated in such notice, his certificate or certificates representing the number of shares specified in such notice of redemption.

        On or after the Redemption Date, each holder of shares of Series A Preferred Stock to be redeemed shall present and surrender his certificate or certificates for such shares to the Corporation at the place designated in such notice and thereupon the redemption price of such shares shall be paid to or on the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be cancelled. In case less than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares.

        From and after the Redemption Date (unless default shall be made by the Corporation in payment of the redemption price), all dividends on the shares of Series A Preferred Stock designated for redemption in such notice shall cease to accrue, and all rights of the holders thereof as stockholders of the Corporation, except the right to receive the redemption price of such shares (including all accrued and unpaid dividends up to the Redemption Date) upon the surrender of certificates representing the same, shall cease and terminate and such shares shall not thereafter be transferred (except with the consent of the Corporation) on the books of the Corporation, and such shares shall not be deemed to be outstanding for any purpose whatsoever. At its election, the Corporation, prior to the Redemption Date, may deposit the redemption price (including all accrued and unpaid dividends up to the Redemption Date) of shares of Series A Preferred Stock so called for redemption in trust for the holders thereof with a bank or trust company (having a capital surplus and undivided profits aggregating not less than $50,000,000) in the Borough of Manhattan, City and State of New York, or in any other city in which the Corporation at the time shall maintain a transfer agency with respect to such shares, in which case the aforesaid notice to holders of shares of Series A Preferred Stock to be redeemed shall state the date of such deposit, shall specify the office of such bank or trust company as the place of payment of the redemption price, and shall call upon such holders to surrender the certificates representing such shares at such place on or after the date fixed in such redemption notice (which shall not be later than the Redemption Date) against payment of the redemption price (including all accrued and unpaid dividends up to the Redemption Date). Any interest accrued on such funds shall be paid to the Corporation from time to time. Any moneys so deposited which shall remain unclaimed by the holders of such shares of Series A Preferred Stock at the end of two years after the Redemption Date shall be returned by such bank or trust company to the Corporation.

        If a notice of redemption has been given pursuant to this Section 5 and any holder of shares of Series A Preferred Stock shall, prior to the close of business on the day preceding the Redemption Date, give written notice to the Corporation pursuant to Section 7 below of the conversion of any or all of the shares to be redeemed held by such holder (accompanied by a certificate or certificates for such shares, duly endorsed or assigned to the Corporation, and any necessary transfer tax payment, as required by Section 7 below), then such redemption shall not become effective as to such shares to be converted, such conversion shall become effective as provided in Section 7 below, and any moneys set aside by the Corporation for the redemption of such shares of converted Series A Preferred Stock shall revert to the general funds of the Corporation.

        Section 6.   Shares to be Retired. All shares of Series A Preferred Stock which shall have been issued and reacquired in any manner by the Corporation (excluding, until the Corporation elects to retire them, shares which are held as treasury shares) shall be restored to the status of authorized but unissued shares of Serial Preferred Stock, without designation as to series.

        Section 7.   Conversion. Holders of shares of Series A Preferred Stock shall have the right to convert all or a portion of such shares into shares of Common Stock, as follows:

        7.1     Subject to and upon compliance with the provisions of this Section 7, a holder of shares of Series A Preferred Stock shall have the right, at his or her option, at any time after 40 days after the Issue Date, to convert such shares into the number of fully paid and nonassessable shares of Common Stock obtained by dividing the aggregate Stated Value of such shares by the Conversion Price (as in effect on the date provided for in the last paragraph of Section 7.2) by surrendering such shares to be converted, such surrender to be made in the manner provided in Section 7.2; provided, however, that the right to convert shares called for redemption pursuant to Section 5 shall terminate at the close of business on the day preceding the Redemption Date, unless the Corporation shall default in making payment of the cash payable upon such redemption under Section 5 hereof. Certificates will be issued for the remaining shares of Series A Preferred Stock in any case in which fewer than all of the shares of Series A Preferred Stock represented by a certificate are converted.

        7.2     In order to exercise the conversion right, the holder of shares of Series A Preferred Stock to be converted shall surrender the certificate or certificates representing such shares, duly endorsed or assigned to the Corporation or in blank, at the office of the Transfer Agent in the Borough of Manhattan, City of New York, accompanied by written notice to the Corporation that the holder thereof elects to convert Series A Preferred Stock. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Series A Preferred Stock is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid).

        Holders of shares of Series A Preferred Stock at the close of business on a dividend payment record date shall be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion thereof following such dividend payment record date and prior to such Dividend Payment Date. However, shares of Series A Preferred Stock surrendered for conversion during the period between the close of business on any dividend payment record date and the opening of business on the corresponding Dividend Payment Date (except shares converted after the issuance of a notice of redemption with respect to a Redemption Date during such period, which shall be entitled to such dividend on the Dividend Payment Date) must be accompanied by payment of an amount equal to the dividend payable on such shares on such Dividend Payment Date. A holder of shares of Series A Preferred Stock on a dividend payment record date who (or whose transferee) tenders any such shares for conversion into shares of Common Stock on such Dividend Payment Date will receive the dividend payable by the Corporation on such shares of Series A Preferred Stock on such date, and the converting holder need not include payment of the amount of such dividend upon surrender of shares of Series A Preferred Stock for conversion. Except as provided above, the Corporation shall make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends on the shares of Common Stock issued upon such conversion.

        As promptly as practicable after the surrender of certificates for shares of Series A Preferred Stock as aforesaid, the Corporation shall issue and shall deliver at such office to such holder, or on his or her written order, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of such shares in accordance with provisions of this Section 7, and any fractional interest in respect of a share of Common Stock arising upon such conversion shall be settled as provided in Section 7.3.

        Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for shares of Series A Preferred Stock shall have been surrendered and such notice (and if applicable, payment of an amount equal to the dividend payable on such shares) received by the Corporation as aforesaid, and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date and such conversion shall be at the Conversion Price in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date upon which such shares shall have been surrendered and such notice received by the Corporation.

        7.3     No fractional shares or scrip representing fractions of shares of Common Stock shall be issued upon conversion of the Series A Preferred Stock. Instead of any fractional interest in a share of Common Stock that would otherwise be deliverable upon the conversion of a share of Series A Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash based upon the Current Market Price of Common Stock on the Trading Day immediately preceding the date of conversion. If more than one share shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Series A Preferred Stock so surrendered.

        7.4     The Conversion Price shall be adjusted from time to time as follows:

(a)     If the Corporation shall after the Issue Date (A) pay a dividend or make a distribution on its capital stock in shares of its Common Stock, (B) subdivide its outstanding Common Stock into a greater number of shares, (C) combine its outstanding Common Stock into a smaller number of shares or (D) issue any shares of capital stock by reclassification of its Common Stock, the Conversion Price in effect at the opening of business on the day next following the date fixed for the determination of stockholders entitled to receive such dividend or distribution or at the opening of business on the day next following the day on which such subdivision, combination or reclassification becomes effective, as the case may be, shall be adjusted so that the holder of any share of Series A Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock that such holder would have owned or have been entitled to receive after the happening of any of the events described above had such share been converted immediately prior to the record date in the case of a dividend or distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this subparagraph (a) shall become effective immediately after the opening of business on the day next following the record date (except as provided in Section 7.8 below) in the case of a dividend or distribution and shall become effective immediately after the opening of business on the day next following the effective date in the case of a subdivision, combination or reclassification.

(b)     If the Corporation shall issue after the Issue Date rights or warrants (in each case, other than the Rights) to all holders of Common Stock entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase Common Stock at a price per share less than the Fair Market Value per share of Common Stock on the record date for the determination of stockholders entitled to receive such rights or warrants, then the Conversion Price in effect at the opening of business on the day next following such record date shall be adjusted to equal the price determined by multiplying (I) the Conversion Price in effect immediately prior to the opening of business on the day next following the date fixed for such determination by (II) a fraction, the numerator of which shall be the sum of (A) the number of shares of Common Stock outstanding on the close of business on the date fixed for such determination and (B) the number of shares that the aggregate proceeds to the Corporation from the exercise of such rights or warrants for Common Stock would purchase at such Fair Market Value, and the denominator of which shall be the sum of (A) the number of shares of Common Stock outstanding on the close of business on the date fixed for such determination and (B) the number of additional shares of Common Stock offered for subscription or purchase pursuant to such rights or warrants. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided in Section 7.8 below). In determining whether any rights or warrants entitle the holders of Common Stock to subscribe for or purchase shares of Common Stock at less than such Fair Market Value, there shall be taken into account any consideration received by the Corporation upon issuance and upon exercise of such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors.

(c)     If the Corporation shall distribute to all holders of its Common Stock any shares of capital stock of the Corporation (other than Common Stock) or evidence of its indebtedness or assets (excluding cash dividends or distributions paid from profits or surplus of the Corporation) or rights or warrants (in each case, other than the Rights) to subscribe for or purchase any of its securities (excluding those rights and warrants issued to all holders of Common Stock entitling them for a period expiring within 45 days after the record date referred to in subparagraph (b) above to subscribe for or purchase Common Stock, which rights and warrants are referred to in and treated under subparagraph (b) above (any of the foregoing being hereinafter in this subparagraph (c) called the ''Securities''), then in each such case the Conversion Price shall be adjusted so that it shall equal the price determined by multiplying (I) the Conversion Price in effect immediately prior to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution by (II) a fraction, the numerator of which shall be the Fair Market Value per share of the Common Stock on the record date mentioned below less the then fair market value (as determined by the Board of Directors, whose determination shall be conclusive) of the portion of the capital stock or assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock, and the denominator of which shall be the Fair Market Value per share of the Common Stock on the record date mentioned below. Such adjustment shall become effective immediately at the opening of business on the Business Day next following (except as provided in Section 7.8 below) the record date for the determination of shareholders entitled to receive such distribution. For the purposes of this clause (c), the distribution of a Security, which is distributed not only to the holders of the Common Stock on the date fixed for the determination of stockholders entitled to such distribution of such security, but also is distributed with each share of Common Stock delivered to a person converting a share of Series A Preferred Stock after such determination date, shall not require an adjustment of the Conversion Price pursuant to this clause (c); provided that on the date, if any, on which a Person converting a share of Series A Preferred Stock would no longer be entitled to receive such Security with a share of Common Stock (other than as a result of the termination of all such Securities), a distribution of such Securities shall be deemed to have occurred and the Conversion Price shall be adjusted as provided in this clause (c) (and such day shall be deemed to be ''the date fixed for the determination of the stockholders entitled to receive such distribution'' and ''the record date'' within the meaning of the two preceding sentences).

(d)     No adjustment in the Conversion Price shall be required unless such adjustment would require a cumulative increase or decrease of at least 1% in such price; provided, however, that any adjustments that by reason of this subparagraph (d) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided, further, that any adjustment shall be required and made in accordance with the provisions of this Section 7 (other than this subparagraph (d)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of shares of Common Stock. Notwithstanding any other provisions of this Section 7, the Corporation shall not be required to make any adjustment of the Conversion Price for the issuance of any shares of Common Stock pursuant to any plan providing for the reinvestment of dividends on securities of the Corporation. All calculations under this Section 7 shall be made to the nearest cent (with $.005 being rounded upward) or to the nearest ¹/10 of a share (with .05 of a share being rounded upward), as the case may be. Anything in this Section 7.4 to the contrary notwithstanding, the Corporation shall be entitled, to the extent permitted by law, to make such reductions in the Conversion Price, in addition to those required by this Section 7.4, as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, reclassification or combination of shares, distribution of rights or warrants to purchase stock or securities, or a distribution of other assets (other than cash dividends) hereafter made by the Corporation to its stockholders shall not be taxable.

        7.5     If the Corporation shall be a party to any transaction (including without limitation a merger, consolidation, sale of all or substantially all of the Corporation's assets or recapitalization of the Common Stock and excluding any transaction as to which Section 7.4(a) applies) (each of the foregoing being referred to herein as a ''Transaction''), in each case as a result of which shares of Common Stock shall be converted into the right to receive stock, securities or other property (including cash or any combination thereof), each share of Series A Preferred Stock which is not converted into the right to receive stock, securities or other property in connection with such Transaction shall thereafter be convertible into the kind and amount of shares of stock, securities and other property (including cash or any combination thereof) receivable upon the consummation of such Transaction by a holder of that number of shares or fraction thereof of Common Stock into which one share of Series A Preferred Stock was convertible immediately prior to such Transaction, assuming such holder of Common Stock (i) is not a Person with which the Corporation consolidated or into which the Corporation merged or which merged into the Corporation or to which such sale or transfer was made, as the case may be (''Constituent Person''), or an affiliate of a Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of stock, securities and other property (including cash) receivable upon such Transaction (provided that if the kind or amount of stock, securities and other property (including cash) receivable upon such Transaction is not the same for each share of Common Stock of the Corporation held immediately prior to such Transaction by other than a Constituent Person or an affiliate thereof and in respect of which such rights of election shall not have been exercised (''non-electing share''), then for the purpose of this Section 7.5 the kind and amount of stock, securities and other property (including cash) receivable upon such Transaction by each non-electing share shall be deemed to be the kind and amount so receivable per share by the plurality of the non-electing shares). The Corporation shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this Section 7.5 and it shall not consent or agree to the occurrence of any Transaction until the Corporation has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Series A Preferred Stock that will contain provisions enabling the holders of the Series A Preferred Stock that remains outstanding after such Transaction to convert into the consideration received by holders of Common Stock at the Conversion Price in effect immediately prior to such Transaction. The provisions of this Section 7.5 shall similarly apply to successive Transactions.

        7.6 If:

(a) the Corporation shall declare a dividend (or any other distribution) on the Common Stock (other than in cash out of profits or surplus and other than the Rights); or

(b) the Corporation shall authorize the granting to the holders of the Common Stock of rights or warrants (other than the Rights) to subscribe for or purchase any shares of any class or any other rights or warrants (other than the Rights); or

(c) there shall be any reclassification of the Common Stock (other than an event to which Section 7.4(a) applies) or any consolidation or merger to which the Corporation is a party and for which approval of any stockholders of the Corporation is required, or the sale or transfer of all or substantially all of the assets of the Corporation as an entirety; or

(d) there shall occur the voluntary or involuntary liquidation, dissolution or winding up of the Corporation,

then the Corporation shall cause to be filed with the Transfer Agent and shall cause to be mailed to the holders of shares of the Series A Preferred Stock at their addresses as shown on the stock records of the Corporation, as promptly as possible, but at least 15 days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights or warrants are to be determined or (B) the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7.

        7.7     Whenever the Conversion Price is adjusted as herein provided, the Corporation shall promptly file with the Transfer Agent an officer's certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment which certificate shall be prima facie evidence of the correctness of such adjustment. Promptly after delivery of such certificate, the Corporation shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the effective date of such adjustment and shall mail such notice of such adjustment of the Conversion Price to the holder of each share of Series A Preferred Stock at such holder's last address as shown on the stock records of the Corporation.

        7.8     In any case in which Section 7.4 provides that an adjustment shall become effective on the day next following a record date for an event, the Corporation may defer until the occurrence of such event

(A)     issuing to the holder of any share of Series A Preferred Stock converted after such record date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount in cash in lieu of any fraction pursuant to Section 7.3.

        7.9     For purposes of this Section 7, the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then owned or held by or for the account of the Corporation. The Corporation shall not pay a dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation.

        7.10     There shall be no adjustment of the Conversion Price in case of the issuance of any stock of the Corporation in a reorganization, acquisition or other similar transaction except as specifically set forth in this Section 7. If any action or transaction would require adjustment of the Conversion Price pursuant to more than one paragraph of this Section 7, only one adjustment shall be made and such adjustment shall be the amount of adjustment that has the highest absolute value.

        7.11     If the Corporation shall take any action affecting the Common Stock, other than action described in this Section 7, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of the shares of Series A Preferred Stock, the Conversion Price for the Series A Preferred Stock may be adjusted, to the extent permitted by law, in such manner, if any, and at such time, as the Board of Directors may determine to be equitable in the circumstances.

        7.12     The Corporation covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock or its issued shares of Common Stock held in its treasury, or both, for the purpose of effecting conversion of the Series A Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Series A Preferred Stock not theretofore converted. For purposes of this Section 7.12, the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of Series A Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single holder.

        The Corporation covenants that any shares of Common Stock issued upon conversion of the Series A Preferred Stock shall be validly issued, fully paid and non-assessable. Before taking any action that would cause an adjustment reducing the Conversion Price below the then-par value of the shares of Common Stock deliverable upon conversion of the Series A Preferred Stock, the Corporation will take any corporate action that, in the opinion of its counsel, may be necessary in order that the Corporation may validly and legally issue fully-paid and nonassessable shares of Common Stock at such adjusted Conversion Price.

        The Corporation shall endeavor to list the shares of Common Stock required to be delivered upon conversion of the Series A Preferred Stock, prior to such delivery, upon each national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery.

        Prior to the delivery of any securities that the Corporation shall be obligated to deliver upon conversion of the Series A Preferred Stock, the Corporation shall endeavor to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority.

        7.13     The Corporation will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock or other securities or property on conversion of the Series A Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock or other securities or property in a name other than that of the holder of the Series A Preferred Stock to be converted and no such issue or delivery shall be made unless and until the person requesting any issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid.

        Section 8.   Ranking. Any class or series of stock of the Corporation shall be deemed to rank:

(A) prior to the Series A Preferred Stock, as to the payment of dividends and as to distributions of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of Series A Preferred Stock;

(B) on a parity with the Series A Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Series A Preferred Stock if the holders of such class of stock or series and the Series A Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other; and

(C) junior to the Series A Preferred Stock, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if such stock or series shall be Common Stock or Series C Preferred Stock or if the holders of Series A Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of shares of such stock or series. Common Stock shall be deemed junior to the Series A Preferred Stock notwithstanding that it may participate in distributions upon an involuntary liquidation, dissolution or winding up without the Series A Preferred Stock receiving the Voluntary Liquidation Preference.

        Section 9.   Voting.

        9.1     Unless the affirmative vote or consent of the holders of a greater number of shares shall then be required by law, the consent of the holders of at least 66 ²/3 % of all of the outstanding shares of Series A Preferred Stock and all other affected series of Serial Preferred Stock ranking on a parity with the Series A Preferred Stock as to dividends and amounts distributable upon liquidation, dissolution and winding up, given in person or by proxy, either in writing or by a vote at a meeting called for the purpose, at which the holders of shares of Series A Preferred Stock and such other series of Serial Preferred Stock shall vote together as a single class without regard to series, shall be necessary for authorizing, effecting or validating the amendment, alteration or repeal of any of the provisions of this Restated Certificate or of any certificate amendatory thereof or supplemental thereto (including any Certificate of Designations, Preferences and Rights or any similar document relating to any series of Serial Preferred Stock) which would materially adversely affect the preferences, rights, powers or privileges of the Series A Preferred Stock; provided, however, that the amendment of the provisions of this Restated Certificate so as to authorize or create, or to increase the authorized amount of, any Junior Stock or any shares of any class ranking on a parity with the Series A Preferred Stock shall not be deemed to materially adversely affect the preferences, rights, powers or privileges of Series A Preferred Stock; and provided, further, that the amendment of the provisions of the Restated Certificate of Incorporation so as to increase or eliminate the Aggregate Involuntary Liquidation Amount shall not be deemed to materially adversely affect the preferences, rights, powers or privileges of Series A Preferred Stock.

        9.2     Unless the affirmative vote or consent of the holders of a greater number of shares shall then be required by law, the consent of the holders of at least 66 ²/3 % of all of the outstanding shares of Series A Preferred Stock and all other series of Serial Preferred Stock ranking on a parity with the Series A Preferred Stock as to dividends and amounts distributable upon liquidation, dissolution or winding up, given in person or by proxy, either in writing or by a vote at a meeting called for the purpose at which the holders of shares of Series A Preferred Stock and such other series of Serial Preferred Stock shall vote together as a single class without regard to series, shall be necessary for authorizing, effecting or validating the creation, authorization or issue of any shares of any class of stock of the Corporation ranking prior to the Series A Preferred Stock as to dividends or upon liquidation, dissolution or winding up, or the reclassification of any authorized stock of the Corporation into any such prior shares, or the creation, authorization or issuance of any obligation or security convertible into or evidencing the right to purchase any such prior shares.

        9.3     If at the time of any annual meeting of stockholders for the election of directors a default in preference dividends (as defined below) on the Series A Preferred Stock and any other series of Serial Preferred Stock with respect to which such a default exists shall exist, the number of directors constituting the Board of Directors of the Corporation shall be increased by two, and the holders of the Series A Preferred Stock and such other series shall have the right at such meeting, voting together as a single class without regard to series, to the exclusion of the holders of common stock, to elect two directors of the Corporation to fill such newly created directorships. Such right shall continue until there are no dividends in arrears upon the Serial Preferred Stock. Any Preferred Director may be removed by, and shall not be removed except by, the vote of the holders of record of the outstanding shares of Serial Preferred Stock, voting together as a single class without regard to series, at a meeting of the stockholders, or of the holders of shares of Serial Preferred Stock as to which a default exists, called for the purpose. So long as a default in any preference dividends on the Serial Preferred Stock shall exist, (a) any vacancy in the office of a Preferred Director may be filled (except as provided in the following clause (b)) by an instrument in writing signed by the remaining Preferred Director and filed with the Corporation and (b) in the case of the removal of any Preferred Director, the vacancy may be filled by the vote of the holders of the outstanding shares of Serial Preferred Stock as to which a default exists, voting together as a single class without regard to series, at the same meeting at which such removal shall be voted. Each director appointed as aforesaid by the remaining Preferred Director shall be deemed, for all purposes hereof, to be a Preferred Director. Whenever a default in preference dividends shall no longer exist, the term of office of each Preferred Director shall terminate and the number of directors constituting the Board of Directors of the Corporation shall be reduced by two. For the purposes hereof, a ''default in preference dividends'' on any series of Serial Preferred Stock shall be deemed to exist whenever the equivalent of six quarterly dividends have not been declared and paid or set apart for payment, whether or not consecutive, and, having so occurred, such default shall be deemed to exist thereafter until, but only until, all accrued dividends on all shares of Serial Preferred Stock of each and every series then outstanding shall have been declared and paid or set apart for payment to the end of the last preceding dividend period.

        For purposes of the foregoing provisions of this Section 9, each share of Series A Preferred Stock shall have one (1) vote per share. Except as otherwise required by applicable law or as set forth herein, the shares of Series A Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers and the consent of the holders thereof shall not be required for the taking of any corporate action.

        Section 10.   Record Holders. The Corporation and the Transfer Agent may deem and treat the record holder of any shares of Series A Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary.
 
 

B. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES B PREFERRED STOCK

        Unless otherwise indicated, any reference in this Article FOURTH, Part I.B to ''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall refer to a Section, Subsection, paragraph, subparagraph or clause of this Article FOURTH, Part I.B.

        Section 1.   Number of Shares and Designations. Fifty thousand (50,000) shares of the Serial Preferred Stock, without par value, of the Corporation are hereby constituted as a series designated as Series B Preferred Stock (the ''Series B Preferred Stock'').

        Section 2.   Definitions. For purposes of the Series B Preferred Stock, the following terms shall have the meanings indicated:

        2.1   ''Board of Directors'' shall mean the board of directors of the Corporation or any committee of such board of directors authorized to perform any of its responsibilities with respect to the Series B Preferred Stock.

        2.2   ''Business Day'' shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.

        2.3   ''Common Stock'' shall mean the common stock of the Corporation, par value $0.01 per share.

        2.4   ''default in preference dividends'' shall have the meaning set forth in Section 8.3 hereof.

        2.5   ''Dividend Payment Date'' shall mean February 1, May 1, August 1 and November 1 in each year, commencing on August 1, 1994; provided that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment due on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date.

        2.6   ''Dividend Periods'' shall mean quarterly dividend periods commencing on February 1, May 1, August 1 and November 1 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period (other than the initial Dividend Period, which shall commence on the Issue Date and end on and include July 31, 1994.)

        2.7   ''Issue Date'' shall mean the first date on which shares of Series B Preferred Stock are issued.

        2.8   ''Liquidation Preference'' shall have the meaning set forth in Section 4.1 hereof.

        2.9   ''Preferred Director'' shall mean any director of the Corporation elected or appointed pursuant to Section 8.3 hereof.

        2.10 ''Redemption Date'' shall have the meaning set forth in Section 5.3 hereof.

        2.11 ''Restated Certificate'' shall mean this Restated Certificate of Incorporation of the Corporation, as amended from time to time.

        2.12 ''Rights'' shall mean the rights of the Corporation that are issuable under the Corporation's Rights Agreement dated as of December 11, 1986, and as amended from time to time, or rights to purchase any capital stock of the Corporation under any successor shareholder rights plan or plans adopted in replacement of the Corporation's Rights Agreement.

        2.13 ''set apart for payment'' shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry that indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided that if any funds for any class or series of stock ranking on a parity with or junior to the Series B Preferred Stock as to the payment of dividends are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then ''set apart for payment'' with respect to the Series B Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.

        2.14 ''Transfer Agent'' means the Corporation or such agent or agents of the Corporation as may be designated by the Board of Directors as the transfer agent for the Series B Preferred Stock.

        Section 3.   Dividends.

        3.1     The holders of shares of the Series B Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of assets legally available for that purpose, dividends payable in cash at the rate per annum of $3,062.50 per share of Series B Preferred Stock. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods there shall be assets of the Corporation legally available for the payment of such dividends, and shall be payable quarterly, when, as and if declared by the Board of Directors, in arrears on Dividend Payment Dates, commencing on August 1, 1994. Each such dividend shall be payable in arrears to the holders of record of shares of the Series B Preferred Stock, as they appear on the stock records of the Corporation at the close of business on such record dates, which shall not be more than 60 days nor less than 10 days preceding the payment dates thereof, as shall be fixed by the Board of Directors or a duly authorized committee thereof. Accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any Dividend Payment Date, to holders of record on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed by the Board of Directors.

        3.2     The amount of dividends payable for each full Dividend Period for the Series B Preferred Stock shall be computed by dividing the annual dividend rate by four. The amount of dividends payable for the initial Dividend Period, or any other period shorter or longer than a full Dividend Period, on the Series B Preferred Stock shall be computed on the basis of twelve-30-day months and a 360-day year. Holders of shares of Series B Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the Series B Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Series B Preferred Stock that may be in arrears.

        3.3     So long as any shares of the Series B Preferred Stock are outstanding, no dividends, except as described in the next succeeding sentence, shall be declared or paid or set apart for payment on any class or series of stock of the Corporation ranking, as to dividends and amounts distributable upon liquidation, dissolution or winding up, on a parity with the Series B Preferred Stock, for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Series B Preferred Stock for all Dividend Periods terminating on or prior to the date of payment of the dividend on such class or series of parity stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon shares of the Series B Preferred Stock and all dividends declared upon any other class or series of stock ranking on a parity as to dividends and amounts distributable upon liquidation, dissolution or winding up shall be declared ratably in proportion to the respective amounts of dividends accumulated and unpaid on the Series B Preferred Stock and accumulated and unpaid on such parity stock.

        3.4     So long as any shares of the Series B Preferred Stock are outstanding, no dividends (other than (i) the Rights and (ii) dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, any class or series of stock of the Corporation that is junior to the Series B Preferred Stock as to the payment of dividends and as to distributions upon liquidation, dissolution or winding up of the Corporation) shall be declared or paid or set apart for payment or other distribution declared or made upon any class or series of stock of the Corporation that is junior to the Series B Preferred Stock as to the payment of dividends, nor shall any class or series of stock of the Corporation ranking, as to dividends and amounts distributable upon liquidation, dissolution or winding up, on a parity with or junior to the Series B Preferred Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of shares of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation, directly or indirectly (except by conversion into or exchange for any class or series of stock of the Corporation that is junior to the Series B Preferred Stock as to payment of dividends and as to distributions upon liquidation, dissolution or winding up of the Corporation), unless in each case the full cumulative dividends on all outstanding shares of the Series B Preferred Stock and any other stock of the Corporation ranking on a parity with the Series B Preferred Stock, as to dividends and amounts distributable upon liquidation, dissolution or winding up shall have been paid or set apart for payment for all past Dividend Periods with respect to the Series B Preferred Stock and all past dividend periods with respect to such parity stock.

        Section 4.   Payments upon Liquidation.

        4.1     In the event of any liquidation, dissolution or winding up of the Corporation before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of any class or series of stock of the Corporation that ranks junior to the Series B Preferred Stock as to the receipt of amounts distributable upon liquidation, dissolution or winding up of the Corporation, the holders of the shares of Series B Preferred Stock shall be entitled to receive Twenty-Five Thousand Dollars ($25,000) per share of Series B Preferred Stock plus an amount equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders (the ''Liquidation Preference''); but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of Series B Preferred Stock shall be insufficient to pay in full the Liquidation Preference and the liquidation preference on all other shares of any class or series of stock ranking, as to dividends and amounts distributable upon liquidation, dissolution or winding up, on a parity with the Series B Preferred Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Series B Preferred Stock and any such other parity stock ratably in accordance with the respective amounts that would be payable on such shares of Series B Preferred Stock and any such other parity stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, neither (i) a consolidation or merger of the Corporation with or into one or more corporations nor (ii) a sale, lease, exchange or transfer of all or substantially all of the Corporation's assets shall be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation.

        4.2     Subject to the rights of the holders of shares of any series or class or classes of stock ranking on a parity with or prior to the Series B Preferred Stock as to dividends and amounts distributable upon liquidation, dissolution or winding up of the Corporation, after payment shall have been made to the holders of the Series B Preferred Stock, as and to the fullest extent provided in this Section 4, any other class or series of stock of the Corporation that ranks junior to the Series B Preferred Stock as to amounts distributable upon dissolution, liquidation or winding up of the Corporation shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series B Preferred Stock shall not be entitled to share therein.

        Section 5.   Redemption at the Option of the Corporation.

        5.1     The shares of Series B Preferred Stock shall be redeemable at the option of the Corporation by resolution of its Board of Directors, in whole, or, from time to time, in part, at any time on or after July 12, 2004, at the redemption price of $25,000.00 per share plus all dividends accrued and unpaid on the shares of Series B Preferred Stock up to the date fixed for the redemption, upon giving notice as provided herein below.

        5.2     If fewer than all of the outstanding shares of Series B Preferred Stock are to be redeemed, the number of shares to be redeemed shall be determined by the Board of Directors and the shares to be redeemed shall be determined pro rata or by lot or in such other manner and subject to such regulations as the Board of Directors in its sole discretion shall prescribe.

        5.3     At least 30 days, but not more than 60 days, prior to the date fixed for the redemption of shares of Series B Preferred Stock, a written notice shall be mailed in a postage prepaid envelope to each holder of record of the shares of Series B Preferred Stock to be redeemed, addressed to such holder at his post office address as shown on the records of the Corporation, notifying such holder of the election of the Corporation to redeem such shares, stating the date fixed for redemption thereof (the ''Redemption Date'') and calling upon such holder to surrender to the Corporation, on the Redemption Date at the place designated in such notice, the certificate or certificates representing the number of shares specified in such notice of redemption. On or after the Redemption Date, each holder of shares of Series B Preferred Stock to be redeemed shall present and surrender such certificate or certificates for such shares to the Corporation at the place designated in such notice and thereupon the redemption price of such shares shall be paid to or on the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be cancelled. In case less than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the shares not redeemed.

        From and after the Redemption Date (unless default shall be made by the Corporation in payment of the redemption price), all dividends on the shares of Series B Preferred Stock designated for redemption in such notice shall cease to accrue, and all rights of the holders thereof as stockholders of the Corporation, except the right to receive the redemption price of such shares (including all accrued and unpaid dividends up to the Redemption Date) upon the surrender of certificates representing the same, shall cease and terminate and such shares shall not thereafter be transferred (except with the consent of the Corporation) on the books of the Corporation, and such shares shall not be deemed to be outstanding for any purpose whatsoever. At its election, the Corporation, prior to the Redemption Date, may deposit the redemption price (including all accrued and unpaid dividends up to the Redemption Date) of shares of Series B Preferred Stock called for redemption in trust for the holders thereof with a bank or trust company (having a capital surplus and undivided profits aggregating not less than $50,000,000) in the Borough of Manhattan, City and State of New York, or in any other city in which the Corporation at the time shall maintain a transfer agency with respect to such shares, in which case the aforesaid notice to holders of shares of Series B Preferred Stock to be redeemed shall state the date of such deposit, shall specify the office of such bank or trust company as the place of payment of the redemption price, and shall call upon such holders to surrender the certificates representing such shares at such place on or after the date fixed in such redemption notice (which shall not be later than the Redemption Date). Any interest accrued on such funds shall be paid to the Corporation from time to time. Any moneys so deposited that shall remain unclaimed by the holders of such shares of Series B Preferred Stock at the end of two years after the Redemption Date shall be returned by such bank or trust company to the Corporation.

        Section 6.   Shares to be Retired.

        All shares of Series B Preferred Stock that have been issued and reacquired in any manner by the Corporation (excluding, until the Corporation elects to retire them, shares that are held as treasury shares) shall be restored to the status of authorized but unissued shares of Serial Preferred Stock, without designation as to series.

        Section 7.   Ranking.

        7.1     Any class or series of stock of the Corporation shall be deemed to rank:

(a) prior to the Series B Preferred Stock, as to the payment of dividends and as to distributions of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of Series B Preferred Stock;

(b) on a parity with the Series B Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Series B Preferred Stock, if the holders of such class of stock or series and the Series B Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other; and

(c) junior to the Series B Preferred Stock, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of Series B Preferred Stock shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of shares of such class or series.

        7.2     The Series A Convertible Preferred Stock and the Series D Redeemable Preferred Stock shall each be deemed to rank on a parity with the Series B Preferred Stock. The Class 1 ESOP Convertible Preferred Stock, the Class 2 ESOP Convertible Preferred Stock, the Class M ESOP Voting Junior Preferred Stock, the Class P ESOP Voting Junior Preferred Stock, the Class S ESOP Voting Junior Preferred Stock, the Class I Junior Preferred Stock, the Class IAM Junior Preferred Stock, the Class Pilot MEC Junior Preferred Stock, the Class SAM Junior Preferred Stock, the Series C Junior Participating Preferred Stock and the Common Stock shall each be deemed to rank junior to the Series B Preferred Stock as to receipt of dividends and as to amounts distributable upon liquidation, dissolution or winding up.

        Section 8.   Voting.

        8.1     Unless the affirmative vote or consent of the holders of a greater number of shares shall then be required by law, the consent of the holders of at least 66 ²/3 % of all of the outstanding shares of Series B Preferred Stock, given in person or by proxy, either in writing or by a vote at a meeting called for the purpose shall be necessary for authorizing, effecting or validating the amendment, alteration or repeal of any of the provisions of this Restated Certificate or of any certificate amendatory thereof or supplemental thereto (including any Certificate of Designations, Preferences and Rights or any similar document relating to any series of Serial Preferred Stock) that would materially adversely affect the preferences, rights, powers or privileges of the Series B Preferred Stock; provided that the amendment of the provisions of this Restated Certificate so as to authorize or create, or to increase the authorized amount of, any shares of any class or series ranking on a parity with or junior to the Series B Preferred Stock shall not be deemed to materially adversely affect the preferences, rights, powers or privileges of Series B Preferred Stock.

        8.2     Unless the affirmative vote or consent of the holders of a greater number of shares shall then be required by law, the consent of the holders of at least 66 ²/3 % of all of the outstanding shares of Series B Preferred Stock, given in person or by proxy, either in writing or by a vote at a meeting called for the purpose shall be necessary for authorizing, effecting or validating the creation, authorization or issue of any shares of any class or series of stock of the Corporation ranking prior to the Series B Preferred Stock as to dividends or upon liquidation, dissolution or winding up, or the reclassification of any authorized stock of the Corporation into any such prior shares, or the creation, authorization or issuance of any obligation or security convertible into or evidencing the right to purchase any such prior shares.

        8.3     If at the time of any annual meeting of stockholders for the election of directors a default in preference dividends (as defined below) on the Series B Preferred Stock and any other series of Serial Preferred Stock with respect to which such a default exists shall exist, then (without duplication of the provisions of Article FOURTH, Part 1.A, Section 9.3 of this Restated Certificate) the number of directors constituting the Board of Directors of the Corporation shall be increased by two, and the holders of the Series B Preferred Stock and such other series shall have the right at such meeting, voting together as a single class without regard to series, to the exclusion of the holders of common stock, to elect two directors of the Corporation to fill such newly created directorships. Such right shall continue until there are no dividends in arrears upon the Serial Preferred Stock. Any Preferred Director may be removed by, and shall not be removed except by, the vote of the holders of record of the outstanding shares of Serial Preferred Stock, voting together as a single class without regard to series, at a meeting of the stockholders, or of the holders of shares of Serial Preferred Stock as to which a default exists, called for the purpose. So long as a default in any preference dividends on the Serial Preferred Stock shall exist, (a) any vacancy in the office of a Preferred Director may be filled (except as provided in the following clause (b)) by an instrument in writing signed by the remaining Preferred Director and filed with the Corporation and (b) in the case of the removal of any Preferred Director, the vacancy may be filled by the vote of the holders of the outstanding shares of Serial Preferred Stock as to which a default exist, voting together as a single class without regard to series, at the same meeting at which such removal shall be voted. Each director appointed as aforesaid by the remaining Preferred Director shall be deemed, for all purposes hereof, to be a Preferred Director. Whenever a default in preference dividends shall no longer exist, the term of office of each Preferred Director shall terminate and the number of directors constituting the Board of Directors of the Corporation shall be reduced by two. For the purposes hereof, a ''default in preference dividends'' on any series of Serial Preferred Stock shall be deemed to exist whenever the equivalent of six quarterly dividends have not been declared and paid or set apart for payment, whether or not consecutive, and, having so occurred, such default shall be deemed to exist thereafter until, but only until, all accrued dividends on all shares of Serial Preferred Stock of each and every series then outstanding shall have been declared and paid or set apart for payment to the end of the last preceding dividend period.

        8.4     For purposes of the foregoing provisions of this Section 8, each share of Series B Preferred Stock shall have one thousand (1,000) votes per share. Except as otherwise required by applicable law or as set forth herein, the shares of Series B Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers and the consent of the holders thereof shall not be required for the taking of any corporate action.

        Section 9.   Record Holders. The Corporation and the Transfer Agent may deem and treat the record holder of any shares of Series B Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary.
 

        C. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES C JUNIOR PARTICIPATING PREFERRED STOCK

        Unless otherwise indicated, any reference in this Article FOURTH, Part I.C to ''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall refer to a Section, Subsection, paragraph, subparagraph or clause of this Article FOURTH, Part I.C.

        Section 1.   Designation and Amount. The shares of such series shall be designated as ''Series C Junior Participating Preferred Stock'' (the ''Series C Preferred Stock'') and the number of shares constituting such series shall be 1,250,000.

        Section 2.   Dividends and Distributions. The holders of shares of Series C Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the fifteenth day of January, April, July and October in each year (each such date being referred to herein as a ''Quarterly Dividend Payment Date''), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series C Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $10 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock, par value $0.01 per share, of the Corporation (the ''Common Stock'') since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series C Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series C Preferred Stock then outstanding were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

        The Corporation shall declare a dividend or distribution on the Series C Preferred Stock as provided in this Section 2 immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per share on the Series C Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

        Dividends shall begin to accrue and be cumulative on outstanding shares of Series C Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series C Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series C Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series C Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series C Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 60 days prior to the date fixed for the payment thereof.

        Section 3.   Voting Rights. The holders of shares of Series C Preferred Stock shall have the following voting rights:

        3.1     Subject to the provision for adjustment hereinafter set forth, each share of Series C Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series C Preferred Stock then outstanding were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

        3.2     Except as otherwise provided herein or by law, the holders of shares of Series C Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

        3.3     If the equivalent of six quarterly dividends payable on the Series C Preferred Stock or any other series of Serial Preferred Stock of the Corporation are in default, the number of directors of the Corporation shall be increased by two and the holders of all such series in respect of which such a default exists, voting as a class without regard to series, will be entitled to elect two additional directors at the next annual meeting and each subsequent meeting, until all cumulative dividends have been paid in full or until noncumulative dividends have been paid regularly for at least one year.

        3.4     Except as set forth herein, holders of Series C Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

        Section 4.   Certain Restrictions.

        4.1     Whenever quarterly dividends or other dividends or distributions payable on the Series C Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series C Preferred Stock outstanding shall have been paid in full, the Corporation shall not

(a) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Preferred Stock;

(b) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series C Preferred Stock, except dividends paid ratably on the Series C Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(c) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series C Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior as to dividends and as to distributions upon dissolution, liquidation or winding up to the Series C Preferred Stock; or

(d) purchase or otherwise acquire for consideration any shares of Series C Preferred Stock, or any shares of stock ranking on a parity with the Series C Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

        4.2     The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under Section 4.1, purchase or otherwise acquire such shares at such time and in such manner.

        Section 5.   Reacquired Shares. Any shares of Series C Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Serial Preferred Stock and may be reissued as part of a new series of the Serial Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.

        Section 6.   Liquidation, Dissolution or Winding Up. Subject to (a) the rights of the holders of preferred stock of the Corporation ranking senior to the Series C Preferred Stock as to dividends and amounts payable upon any voluntary or involuntary liquidation, dissolution or winding up and (b) any other provision of the Restated Certificate of Incorporation of the Corporation (as amended from time to time, the ''Restated Certificate''), upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon any voluntary or involuntary liquidation, dissolution or winding up) to the Series C Preferred Stock unless, prior thereto, the holders of shares of the Series C Preferred Stock shall have received $100.00 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series C Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of Common Stock, or (2) to the holders of stock ranking on a parity (either as to dividends or upon any voluntary or involuntary liquidation, dissolution or winding up) with the Series C Preferred Stock, except distributions made ratably on the Series C Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such voluntary or involuntary liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series C Preferred Stock then outstanding were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

        Section 7.   Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series C Preferred Stock then outstanding shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series C Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

        Section 8.   No Redemption. The shares of Series C Preferred Stock shall not be redeemable.

        Section 9.   Ranking. The Series C Preferred Stock shall rank junior to all other series of the Corporation's preferred stock, whether now or hereafter outstanding, as to dividends and amounts payable upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, unless the terms of any such series shall provide otherwise.

        Section 10.   Amendment. The Restated Certificate shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series C Preferred Stock so as to affect them adversely without the affirmative vote of the holders of two-thirds or more of the outstanding shares of Series C Preferred Stock, voting together as a single class.
 

        D. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES D REDEEMABLE PREFERRED STOCK

        Unless otherwise indicated, any reference in this Article FOURTH, Part I.D to ''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall refer to a Section, Subsection, paragraph, subparagraph or clause of this Article FOURTH, Part I.D.

        Section 1.   Number of Shares and Designations.

        Fifty thousand (50,000) shares of the Serial Preferred Stock, without par value, of the Corporation are hereby constituted as a series designated as Series D Redeemable Preferred Stock (the ''Series D Preferred Stock'').

        Section 2.   Definitions. For purposes of the Series D Preferred Stock, the following terms shall have the meanings indicated:

        2.1   ''Common Stock'' shall mean the common stock of the Corporation, par value $0.01 per share.

        2.2   ''Redemption Consideration'' shall mean (subject to Section 6 hereof) $84.81 in cash, such Redemption Consideration to be distributed by the Corporation in respect of each 1/1,000th of a share of Series D Preferred Stock to the holder thereof upon the redemption of such fraction of a share as provided in Section 6 hereof and as adjusted as provided in Section 6 hereof.

        2.3   ''Series D Preferred Stock'' shall have the meaning set forth in Section 1 hereof.

        2.4   ''Transfer Agent'' means the Corporation or such agent or agents of the Corporation as may be designated by the Board of Directors of the Corporation (or any committee of such board of directors authorized to perform any of its responsibilities with respect to the Series D Preferred Stock) as the transfer agent for the Series D Preferred Stock.

        Section 3.   Dividends. The holders of shares of the Series D Preferred Stock or fractions thereof shall not be entitled to receive any dividends.

        Section 4.   Payments upon Liquidation.

        4.1     In the event of any liquidation, dissolution or winding up of the Corporation before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of any class or series of stock of the Corporation that ranks junior to the Series D Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, the holders of the shares of Series D Preferred Stock or fractions thereof shall be entitled to receive the Redemption Consideration per 1/1,000th of a share of Series D Preferred Stock (the ''Liquidation Preference''); but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of Series D Preferred Stock and fractions thereof shall be insufficient to pay in full the Liquidation Preference, and the liquidation preference on all other shares of any class or series of stock ranking, as to dividends and amounts distributable upon liquidation, dissolution or winding up, on a parity with the Series D Preferred Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Series D Preferred Stock or fractions thereof and any such other parity stock ratably in accordance with the respective amounts that would be payable on such shares of Series D Preferred Stock or fractions thereof and any such other parity stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, neither (i) a consolidation or merger of the Corporation with or into one or more corporations nor (ii) a sale, lease, exchange or transfer of all or substantially all of the Corporation's assets shall be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation.

        4.2     Subject to the rights of the holders of shares of any series or class or classes of stock ranking on a parity with or prior to the Series D Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, after payment shall have been made to the holders of the Series D Preferred Stock, as and to the fullest extent provided in this Section 4, any other series or class or classes of stock of the Corporation that ranks junior to the Series D Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series D Preferred Stock shall not be entitled to share therein.

        Section 5.   Shares to be Retired. All shares of Series D Preferred Stock and fractions thereof that shall have been issued and reacquired in any manner by the Corporation (excluding, until the Corporation elects to retire them, shares that are held as treasury shares) shall be restored to the status of authorized but unissued shares of Serial Preferred Stock, without designation as to series.

        Section 6.   Redemption. Each 1/1,000th of a share of Series D Preferred Stock is redeemable, and immediately following the issuance thereof, the Corporation, to the extent that it may legally do so and subject to the other provisions of this Restated Certificate, shall redeem each 1/1,000th of a share of Series D Preferred Stock, for the Redemption Consideration. If for any reason the Corporation is not able to redeem any portion of the Series D Preferred Stock so issued, such shares and fractions thereof that remain outstanding shall continue to exist and remain outstanding and shall thereafter represent the right to receive the Redemption Consideration as soon as the Corporation is legally and hereunder permitted to redeem such shares and fractions thereof.

        At the time of the redemption pursuant to this Section 6, the rights of holders of Series D Preferred Stock so redeemed shall cease with respect to such shares or fractions thereof (except the right to receive cash as provided above), and the person entitled to receive the cash upon redemption shall be treated for all purposes as the owner of such cash as of the date of such redemption.

        With respect to any shares of the Series D Preferred Stock or fractions thereof that are redeemed by the Corporation immediately following the issuance thereof, the Corporation need not distribute a certificate to the person otherwise entitled to receive such shares or fractions thereof but may instead distribute the Redemption Consideration to such person or persons directly. If certificates representing shares of the Series D Preferred Stock or fractions thereof are issued, the Corporation may require the surrender of such certificates as a condition precedent to the issuance of the Redemption Consideration.

        Section 7.   Ranking.

        7.1     Any class or series of stock of the Corporation shall be deemed to rank:

(a) prior to the Series D Preferred Stock, as to distributions of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of Series D Preferred Stock;

(b) on a parity with the Series D Preferred Stock, as to distribution of assets upon liquidation, dissolution or winding up, whether or not the redemption or liquidation prices per share thereof be different from those of the Series D Preferred Stock, if the holders of such class of stock or series and the Series D Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective liquidation preferences, without preference or priority one over the other; and

(c) junior to the Series D Preferred Stock, as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of Series D Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of shares of such class or series.

        7.2     The Series A Convertible Preferred Stock and the Series B Preferred Stock shall each be deemed to rank on a parity with the Series D Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up. The Class 1 ESOP Convertible Preferred Stock, the Class 2 ESOP Convertible Preferred Stock, the Class M ESOP Voting Junior Preferred Stock, the Class P ESOP Voting Junior Preferred Stock, the Class S ESOP Voting Junior Preferred Stock, the Class I Junior Preferred Stock, the Class IAM Junior Preferred Stock, the Class Pilot MEC Junior Preferred Stock, the Class SAM Junior Preferred Stock, the Series C Junior Participating Preferred Stock and the Common Stock shall each be deemed to rank junior to the Series D Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up.

        Section 8.   Voting. Except as otherwise required by applicable law, the shares of Series D Preferred Stock shall not have any voting rights and the consent of the holders thereof shall not be required for the taking of any corporate action. For each matter as to which shares of the Series D Preferred Stock shall have voting rights, each share of Series D Preferred Stock shall have one (1) vote per share.

        Section 9.   Record Holders. The Corporation and the Transfer Agent may deem and treat the record holder of any shares of Series D Preferred Stock as the true and lawful owner thereof for all purposes, and except as otherwise provided by law, neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary.

PART II

Class 1 ESOP Convertible Preferred Stock

        Unless otherwise indicated, any reference in this Article FOURTH, Part II to ''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall refer to a Section, Subsection, paragraph, subparagraph or clause of this Article FOURTH, Part II.

        Section 1.   Number of Shares; Designation; Issuance and Automatic Conversion.

        1.1     The Class 1 ESOP Convertible Preferred Stock of the Corporation (the ''Class 1 ESOP Preferred Stock'') shall consist of 25,000,000 shares, par value $0.01 per share.

        1.2     Shares of Class 1 ESOP Preferred Stock shall be issued only to a trustee or trustees acting on behalf of the UAL Corporation Employee Stock Ownership Plan (the ''ESOP''). In the event of any sale, transfer or other disposition (including, without limitation, upon a foreclosure or other realization upon shares of Class 1 ESOP Preferred Stock pledged as security for any loan or loans made to the ESOP or to the trustee or the trustees acting on behalf of the ESOP) (hereinafter a ''transfer'') of shares of Class 1 ESOP Preferred Stock to any person (including, without limitation, any participant in the ESOP) other than (x) any trustee or trustees of the ESOP or (y) any pledgee of such shares acquiring such shares as security for any loan or loans made to the ESOP or to any trustee or trustees acting on behalf of the ESOP, the shares of Class 1 ESOP Preferred Stock so transferred, upon such transfer and without any further action by the Corporation or the transferee, shall be automatically converted into shares of Common Stock at the applicable Conversion Rate in accordance with Section 6 hereof and thereafter such transferee shall not have any of the voting powers, preferences or relative, participating, optional or special rights ascribed to shares of Class 1 ESOP Preferred Stock hereunder, but, rather, shall have only the powers and rights pertaining to the Common Stock into which such shares of Class 1 ESOP Preferred Stock shall have been so converted. In the event of any such automatic conversion provided for in this Section 1.2, such transferee shall be treated for all purposes as the record holder of the shares of Common Stock into which the Class 1 ESOP Preferred Stock shall have been converted as of the date of such conversion. Certificates representing shares of Class 1 ESOP Preferred Stock shall be legended to reflect such consequences of a transfer. Notwithstanding the foregoing provisions of this Section 1, shares of Class 1 ESOP Preferred Stock may be converted into shares of Common Stock as provided by Section 6 hereof and the shares of Common Stock issued upon any conversion in accordance with Section 6 hereof or this Section 1.2 may be transferred by the holder thereof as permitted by law.

        Section 2.   Definitions. For purposes of the Class 1 ESOP Preferred Stock, the following terms shall have the meanings indicated:

        2.1   ''Affiliate'' shall have the meaning defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended, or any successor thereto.

        2.2   ''Board of Directors'' shall mean the board of directors of the Corporation or any committee authorized by such board of directors to perform any of its responsibilities with respect to the Class 1 ESOP Preferred Stock.

        2.3   ''Business Day'' shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.

        2.4   ''Class 1 ESOP Preferred Stock'' shall have the meaning set forth in Section 1 hereof.

        2.5   ''Class 2 ESOP Preferred Stock'' shall mean the Class 2 ESOP Convertible Preferred Stock, par value $0.01 per share, of the Corporation.

        2.6   ''Class I Preferred Stock'' shall mean the Class I Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.7   ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.8   ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.9   ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.10 ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.11 ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.12 ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.13 ''Code'' shall mean the Internal Revenue Code of 1986, as amended from time to time.

        2.14 ''Common Stock'' shall mean the common stock of the Corporation, par value $0.01 per share.

        2.15 ''Conversion Rate'' shall have the meaning set forth in Section 6.1 hereof.

        2.16 ''Current Market Price'' of publicly traded shares of Common Stock or any other class or series of capital stock or other security of the Corporation or any other issuer for any day shall mean the last reported sales price, regular way, on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices on such day, regular way, in either case as reported on the New York Stock Exchange Composite Tape or, if such security is not listed or admitted for trading on the New York Stock Exchange, Inc. (''NYSE''), on the principal national securities exchange on which such security is listed or admitted for trading or quoted or, if not listed or admitted for trading or quoted on any national securities exchange, on the Nasdaq National Market, or, if such security is not quoted on such National Market, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by the National Association of Securities Dealers, Inc. Automated Quotation System (''NASDAQ'') or, if bid and asked prices for such security on such day shall not have been reported through NASDAQ, the average of the bid and asked prices on such day as furnished by any NYSE member firm regularly making a market in such security selected for such purpose by the Board of Directors.

        2.17 ''Director Preferred Stocks'' shall mean collectively, the Class I Preferred Stock, the Class IAM Preferred Stock, the Class Pilot MEC Preferred Stock and the Class SAM Preferred Stock.

        2.18   ''Dividend Payment Date'' means a date on which Participating Dividends are paid on the Class 1 ESOP Preferred Stock or on the Common Stock.

        2.19 ''Dividend Period'' shall mean the period commencing March 31, 2000 or, if later, the most recent Dividend Payment Date of the Class 1 ESOP Preferred Stock.

        2.20 ''Equity Securities'' shall mean the Common Stock or any debt, equity or other security or contractual right convertible into or exercisable or exchangeable for, or based on the value of, the Common Stock or any warrants, options or other rights to purchase the Common Stock or other Equity Securities (other than the Rights).

        2.21 ''ESOP Preferred Stocks'' shall mean, collectively, the Class 1 ESOP Preferred Stock and the Class 2 ESOP Preferred Stock.

        2.22 ''Extraordinary Distribution'' shall mean any single dividend or other distribution (including by reclassification of shares or recapitalization of the Corporation, as well as any such dividend or distribution made in connection with a merger or consolidation in which the Corporation is the continuing corporation and the Common Stock is not changed or exchanged) to holders of Common Stock (effected while any of the shares of Class 1 ESOP Preferred Stock are outstanding) (i) of cash, where the aggregate amount of such single cash dividend or distribution together with the amount of all cash dividends and distributions made to holders of Common Stock during the period from the most recent Extraordinary Distribution Measuring Date until the payment date for such cash dividend or distribution to holders of Common Stock, when combined with the aggregate amount of all previous Pro Rata Repurchases during such period (for this purpose, including only that portion of the aggregate purchase price of each such Pro Rata Repurchase which is in excess of the Fair Market Value of the Common Stock repurchased as determined on the Business Day prior to the public announcement of such Pro Rata Repurchase made during such period), exceeds twelve and one-half percent (12 1/2%) of the aggregate Fair Market Value of all shares of Common Stock outstanding on the record date for determining the shareholders entitled to receive such Extraordinary Distribution and (ii) of any shares of capital stock of the Corporation (other than shares of Common Stock), other securities of the Corporation (other than securities of the type referred to in Sections 6.4(b) and 6.4(c) hereof), evidences of indebtedness of the Corporation or any other person or any other property (including, without limitation, shares of capital stock of any subsidiary of the Corporation), or any combination thereof. The Fair Market Value of any such single dividend or other distribution that, pursuant to clause (i), constitutes an Extraordinary Distribution shall for purposes of the first paragraph of Section 6.4(d) hereof be the sum of the Fair Market Value of such Extraordinary Distribution plus the amount of any other cash dividends and distributions made within the relevant period referred to above to holders of Common Stock to the extent such other dividends and distributions were not previously included in the calculation of an adjustment pursuant to the first paragraph of Section 6.4(d) hereof within such period.

        2.22.1   "Extraordinary Distribution Measuring Date" shall mean the penultimate Business Day in each year, commencing on such penultimate Business Day in 1999.

        2.23 ''Fair Market Value'' shall mean the average of the daily Current Market Prices of the security in question during the five (5) consecutive Trading Days before the earlier of the day in question and the ''ex'' date with respect to the issuance or distribution requiring such computation. The term '''ex' date,'' when used with respect to any issuance or distribution, means the first day on which the Common Stock trades regular way, without the right to receive such issuance or distribution, on the exchange or in the market, as the case may be, used to determine that day's Current Market Price. With respect to any asset or security for which there is no Current Market Price, the Fair Market Value of such asset or security shall be determined in good faith by the Board of Directors.

        2.24 ''Issue Date'' shall mean the first date on which shares of Class 1 ESOP Preferred Stock are issued.

        2.25 ''Liquidation Preference'' shall have the meaning set forth in Section 4.1 hereof.

        2.26 ''Measuring Date'' shall mean that date which is the 365th day following the Issue Date.

        2.27 ''Non-Dilutive Amount'' in respect of an issuance, sale or exchange by the Corporation of any Equity Securities (other than Common Stock) shall mean the excess of (i) the product of the Fair Market Value of a share of Common Stock on the day preceding the first public announcement of such issuance, sale or exchange multiplied by the maximum number of shares of Common Stock which could be acquired on such date upon the exercise, conversion or exchange in full of such Equity Securities (and any Equity Securities receivable upon exercise, conversion or exchange thereof), whether or not then exercisable, convertible or exchangeable at such date, over (ii) the aggregate amount payable pursuant to the exercise, conversion or exchange of such Equity Securities, whether or not then exercisable, convertible or exchangeable, to purchase or acquire such maximum number of shares of Common Stock (and any Equity Securities receivable upon exercise, conversion or exchange thereof); provided, however, that in no event shall the Non-Dilutive Amount be less than zero. For purposes of the foregoing sentence, the amount payable pursuant to the exercise, conversion or exchange of such Equity Securities to purchase or acquire shares of Common Stock shall be deemed to be the Fair Market Value of the consideration payable pursuant to the exercise, conversion or exchange of such Equity Securities on the date of the issuance, sale or exchange of such Equity Securities by the Corporation (excluding for that purpose the Fair Market Value of the Equity Security to be so exercised, converted or exchanged).

        2.28 ''Pro Rata Repurchase'' shall mean any purchase of shares of Common Stock by the Corporation or any Affiliate thereof, whether for cash, shares of capital stock of the Corporation, other securities of the Corporation, evidences of indebtedness of the Corporation or any other person or any other property (including, without limitation, shares of capital stock, other securities or evidences of indebtedness of a subsidiary of the Corporation), or any combination thereof, effected while any of the shares of Class 1 ESOP Preferred Stock are outstanding, pursuant to any tender offer or exchange offer subject to Section 13(e) of the Securities Exchange Act of 1934, as amended (the ''Exchange Act''), or any successor provision of law, or pursuant to any other offer available to substantially all holders of Common Stock; provided, however, that ''Pro Rata Repurchase'' shall not include any purchase of shares by the Corporation or any subsidiary thereof made in open market transactions substantially in accordance with the requirements of Rule 10b-18 as in effect under the Exchange Act or on such other terms and conditions as the Board of Directors shall have determined are reasonably designed to prevent such purchases from having a material effect on the trading market for the Common Stock. The ''Effective Date'' of a Pro Rata Repurchase shall mean the date of acceptance of shares for purchase or exchange under any tender or exchange offer which is a Pro Rata Repurchase or the date of purchase with respect to any Pro Rata Repurchase that is not a tender or exchange offer.

        2.29 ''Restated Certificate'' shall mean the Restated Certificate of Incorporation of the Corporation, as amended from time to time.

        2.30 ''Rights'' shall mean the rights of the Corporation issued or issuable under the Corporation's Rights Agreement dated as of December 11, 1986, and as amended from time to time (the ''Rights Agreement''), or rights to purchase any capital stock of the Corporation issued or issuable under any successor shareholder rights plan or plans adopted in replacement of the Rights Agreement.

        2.31 ''Series A Debentures'' shall mean the Series A Debentures due 2004 of United Air Lines, Inc.

        2.32 ''Series A Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series A Convertible Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.

        2.33 ''Series B Debentures'' shall mean the Series B Debentures due 2014 of United Air Lines, Inc.

        2.34 ''Series B Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series B Preferred Stock in Article FOURTH, Part I.B of this Restated Certificate.

        2.35 ''Series C Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series C Junior Participating Preferred Stock in Article FOURTH, Part I.C of this Restated Certificate.

        2.36 ''Series D Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series D Redeemable Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.

        2.37   [Reserved]

        2.38 ''set apart for payment'' shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of stock of the Corporation ranking on a parity with or junior to the Class 1 ESOP Preferred Stock as to the payment of dividends or distributions are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then ''set apart for payment'' with respect to the Class 1 ESOP Preferred Stock shall mean, with respect to such dividends or distributions, placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.

        2.39 ''Trading Day'' shall mean any day on which the securities in question are traded on the NYSE, or if such securities are not listed or admitted for trading or quoted on the NYSE, on the principal national securities exchange on which such securities are listed or admitted, or if not listed or admitted for trading or quoted on any national securities exchange, on the Nasdaq National Market, or if such securities are not quoted on such National Market, in the applicable securities market in which the securities are traded.

        2.40 ''Transfer Agent'' means the Corporation or such agent or agents of the Corporation as may be designated from time to time by the Board of Directors as the transfer agent for the Class 1 ESOP Preferred Stock.

        2.41 ''Voting Preferred Stocks'' shall mean collectively, the Class M Voting Preferred Stock, the Class P Voting Preferred Stock and the Class S Voting Preferred Stock.

        Section 3.   Dividends.

        3.1     The holders of shares of the Class 1 ESOP Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of assets legally available for that purpose, dividends payable in cash at the rate (per outstanding share of Common Stock) equal to the dividends which would have been received during the applicable Dividend Period with respect to the shares of Common Stock which would have been issued upon conversion of the Class 1 ESOP Preferred Stock had the Class 1 ESOP Preferred Stock been outstanding as Common Stock at each relevant time in order to receive such dividends (but only to the extent such dividends do not constitute an Extraordinary Distribution under clause (i) of the definition thereof), which dividends (hereinafter referred to as "Participating Dividends") shall be paid in cash, pro-rata to each holder of Class 1 ESOP Preferred Stock. Such Participating Dividends shall be cumulative from March 31, 2000, whether or not in any Dividend Period or Periods there shall be assets of the Corporation legally available for the payment of such Participating Dividends and whether or not the Board of Directors shall have declared such Participating Dividends, and shall be payable when, as and if declared by the Board of Directors, in arrears on Dividend Payment Dates. Each such Participating Dividend shall be payable in arrears to the holders of record of shares of the Class 1 ESOP Preferred Stock, as they appear on the stock records of the Corporation at the close of business on such record dates, which shall not be more than 60 days nor less than 10 days preceding the Dividend Payment Dates thereof, as shall be fixed by the Board of Directors. Accrued and unpaid Participating Dividends for any past Dividend Periods may be declared and paid at any time, without reference to any Dividend Payment Date, to holders of record on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed by the Board of Directors. Holders of the Class 1 ESOP Preferred Stock shall be entitled to the cumulative Participating Dividend provided in the Section 3.1 and shall not be entitled to any other dividends in excess thereof. In the event that an adjustment is made pursuant to the second paragraph of Section 6.4(d) with respect to shares of Class 1 ESOP Preferred Stock converted during the applicable Dividend Period, the amount of Participating Dividend to be paid in accordance with the preceding sentence shall be reduced by an amount equal to the product of the (x) the number of shares of Common Stock into which such converted shares of Class 1 ESOP Preferred Stock would have been converted in the absence of such adjustment and (y) the amount of the cash dividend or distributions per share of Common Stock in respect of which such adjustment was made.

        3.2     Except as provided in Section 3.1, holders of shares of Class 1 ESOP Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative Participating Dividends, as herein provided, on the Class 1 ESOP Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any Participating Dividend payment or payments on the Class 1 ESOP Preferred Stock that may be in arrears.

        3.3     So long as any shares of the Class 1 ESOP Preferred Stock are outstanding, no dividends, except as described in the next succeeding sentence, shall be declared or paid or set apart for payment on any other class or series of stock of the Corporation ranking on a parity with the Class 1 ESOP Preferred Stock as to the payment of dividends for any period unless full cumulative Participating Dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Class 1 ESOP Preferred Stock for all Dividend Periods terminating on or prior to the date of payment of the dividends on such class or series of parity stock. When Participating Dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class 1 ESOP Preferred Stock and such parity stock shall be declared ratably in proportion to the respective amounts of Participating Dividends accumulated and unpaid on the Class 1 ESOP Preferred Stock and dividends accumulated and unpaid on such parity stock.

        3.4     So long as any shares of the Class 1 ESOP Preferred Stock are outstanding, no dividends (other than (i) the Rights and (ii) dividends or distributions paid in shares of, or options, warrants, or rights to subscribe for or purchase shares of, any class or series of stock of the Corporation that is junior to the Class 1 ESOP Preferred Stock as to the payment of dividends) shall be declared or paid or set apart for payment or other distribution declared or made upon any class or series of stock of the Corporation that is junior to the Class 1 ESOP Preferred Stock as to the payment of dividends, nor shall any other class or series of stock of the Corporation ranking on a parity with or junior to the Class 1 ESOP Preferred Stock as to the payment of dividends or as to distributions upon liquidation, dissolution or winding up of the Corporation, be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of shares of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation, directly to the Class 1 ESOP Preferred Stock as to the payment of dividends and as to distributions upon liquidation, dissolution or winding up of the Corporation), unless in each case the full cumulative Participating Dividends on all outstanding shares of the Class 1 ESOP Preferred Stock shall have been paid or set apart for payment for all past Dividend Periods with respect to the Class 1 ESOP Preferred Stock and such parity stock.

        Section 4.     Payments upon Liquidation.

        4.1     In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for payment to the holders of any class or series of stock of the Corporation that ranks junior to the Class 1 ESOP Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, the holders of the shares of Class 1 ESOP Preferred Stock shall be entitled to receive an amount per share of Class 1 ESOP Preferred Stock equal to the sum of (a) the result of dividing (i) the Purchase Price (as defined in and determined pursuant to Section 1 of the Preferred Stock Purchase Agreement, dated as of March 25, 1994, as amended, between the Corporation and State Street Bank and Trust Company as trustee for the UAL Corporation Employee Stock Ownership Plan Trust (the ''Agreement''), a copy of which is on file in the office of the Secretary of the Corporation) of the shares of Class 1 ESOP Preferred Stock purchased pursuant to Section 1 of the Agreement by (ii) the number of shares of Class 1 ESOP Preferred Stock purchased pursuant to Section 1 of the Agreement and (b) an amount equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders (collectively, the ''Liquidation Preference''), but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of Class 1 ESOP Preferred Stock shall be insufficient to pay in full the Liquidation Preference and the liquidation preference on all other shares of any class or series of stock of the Corporation that ranks on a parity with the Class 1 ESOP Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Class 1 ESOP Preferred Stock and any such other parity stock ratably in accordance with the respective amounts that would be payable on such shares of Class 1 ESOP Preferred Stock and any such other parity stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with or into one or more corporations, or (ii) a sale, lease, exchange or transfer of all or substantially all of the Corporation's assets, shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation.

        4.2     Subject to the rights of the holders of shares of any class or series of stock ranking prior to or on a parity with the Class 1 ESOP Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, after payment shall have been made to the holders of the Class 1 ESOP Preferred Stock, as and to the fullest extent provided in this Section 4, any other class or series of stock of the Corporation that ranks junior to the Class 1 ESOP Preferred Stock as to amounts distributable upon dissolution, liquidation or winding up of the Corporation shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class 1 ESOP Preferred Stock shall not be entitled to share therein.

        Section 5.     Shares to be Retired. All shares of Class 1 ESOP Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be retired and shall not be reissued.

        Section 6.     Conversion. Holders of shares of Class 1 ESOP Preferred Stock shall have the right to convert all or a portion of such shares into shares of Common Stock as follows:

        6.1     Subject to and upon compliance with the provisions of this Section 6, a holder of shares of Class 1 ESOP Preferred Stock shall have the right, at such holder's option, at any time and from time to time, to convert all or any of such shares into fully paid and nonassessable shares of Common Stock at a rate of one share of Common Stock for one share of Class 1 ESOP Preferred Stock subject to adjustment as provided in this Section 6 (as so adjusted, the ''Conversion Rate'') by surrendering such shares to be converted, such surrender to be made in the manner provided in Section 6.2. Certificates shall be issued for the remaining shares of Class 1 ESOP Preferred Stock if fewer than all of the shares of Class 1 ESOP Preferred Stock represented by a certificate are converted.

        6.2     In order to exercise the conversion right, the holder of shares of Class 1 ESOP Preferred Stock to be converted shall surrender the certificate or certificates representing such shares, duly endorsed or assigned to the Corporation or in blank, at the office of the Transfer Agent in the Borough of Manhattan, City of New York, accompanied by written notice to the Corporation that the holder thereof elects to convert Class 1 ESOP Preferred Stock. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Class 1 ESOP Preferred Stock is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid or that no such taxes are payable).

        Holders of shares of Class 1 ESOP Preferred Stock at the close of business on a dividend payment record date shall be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion thereof following such dividend payment record date. The Corporation shall make no payment or allowance for unpaid dividends on the shares of Common Stock issued upon such conversion.

        As promptly as practicable after the surrender of certificates for shares of Class 1 ESOP Preferred Stock as aforesaid, the Corporation shall issue and shall deliver at such office to such holder, or on such holder's written order, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of such shares in accordance with provisions of this Section 6, and any fractional interest in respect of a share of Common Stock arising upon such conversion shall be settled as provided in Section 6.3.

        Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for shares of Class 1 ESOP Preferred Stock shall have been surrendered and such notice (and if applicable, payment of an amount equal to the dividend payable on such shares) received by the Corporation as aforesaid, and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date and such conversion shall be at the Conversion Rate in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Rate in effect on the date upon which such shares shall have been surrendered and such notice received by the Corporation.

        6.3     No fractional shares or scrip representing fractions of shares of Common Stock shall be issued upon conversion of the Class 1 ESOP Preferred Stock. Instead of any fractional interest in a share of Common Stock that would otherwise be deliverable upon the conversion of a share of Class 1 ESOP Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash based upon the Current Market Price of Common Stock on the Trading Day immediately preceding the date of conversion. If more than one certificate shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Class 1 ESOP Preferred Stock so surrendered.

        6.4     The Conversion Rate shall be adjusted from time to time as follows:

(a) In case the Corporation shall, at any time or from time to time while any of the shares of Class 1 ESOP Preferred Stock are outstanding, (i) pay a dividend or make a distribution on its capital stock in shares of its Common Stock, (ii) subdivide its outstanding Common Stock into a greater number of shares, (iii) combine its outstanding Common Stock into a smaller number of shares or (iv) issue any shares of capital stock by reclassification of its Common Stock, the Conversion Rate in effect at the opening of business on the day next following the date fixed for the determination of stockholders entitled to receive such dividend or distribution or at the opening of business on the day next following the day on which such subdivision, combination or reclassification becomes effective, as the case may be, shall be adjusted so that the holder of any share of Class 1 ESOP Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other capital stock that such holder would have owned or have been entitled to receive after the happening of any of the events described above had such share been converted immediately prior to the record date in the case of a dividend or distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this subparagraph (a) shall become effective immediately after the opening of business on the day next following the record date (except as provided in Section 6.7 below) in the case of a dividend or distribution and shall become effective immediately after the opening of business on the day next following the effective date in the case of a subdivision, combination or reclassification.

(b) In case the Corporation shall, at any time or from time to time while any of the shares of Class 1 ESOP Preferred Stock are outstanding, issue Equity Securities (other than Common Stock and the Rights) (the ''Issued Equity Securities'') to all holders of shares of its Common Stock entitling them (for a period expiring within 45 days after the record date for such issuance) to subscribe for or purchase (whether by exercise, conversion, exchange or otherwise) shares of Common Stock (or other Equity Securities) at a price per share less than the Fair Market Value of the Common Stock (or the other Equity Security to be acquired) at such record date (treating the price per share of the Equity Securities to be acquired as equal to (x) the sum of (i) the Fair Market Value of the consideration payable for a unit of the Equity Security plus (ii) the Fair Market Value of any additional consideration initially payable upon the exercise, conversion or exchange of such security into Common Stock divided by (y) the number of shares of Common Stock initially underlying or that may be acquired upon the exercise, conversion or exchange of such Equity Security), the Conversion Rate shall be adjusted so that it shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the date of issuance of such Issued Equity Securities by a fraction, the numerator of which shall be the sum of (A) the number of shares of Common Stock outstanding on the date of issuance of such Issued Equity Securities plus (B) the number of additional shares of Common Stock offered for subscription or purchase (including, without limitation, the security underlying or that may be acquired upon the exercise, conversion or exchange of the Equity Securities so offered) and the denominator of which shall be the sum of (A) the number of shares of Common Stock outstanding on the date of issuance of such Issued Equity Securities plus (B) the number of shares of Common Stock that the aggregate offering price of the total number of shares so offered for subscription or purchase (including, without limitation, the Fair Market Value of the consideration payable for a unit of the Equity Securities so offered plus the Fair Market Value of any additional consideration payable upon exercise, conversion or exchange of such Equity Securities) would purchase at such Fair Market Value of the Common Stock as of the record date for such issuance. Such adjustment shall become effective as of the record date for the determination of stockholders entitled to receive such Issued Equity Securities (except as provided in Section 6.6 below).

(c) In case the Corporation shall, at any time or from time to time while any of the shares of Class 1 ESOP Preferred Stock are outstanding, issue, sell or exchange shares of Common Stock (other than pursuant to any Rights, Equity Securities issued in connection with any employee or director incentive or benefit plan or arrangement of the Corporation or any subsidiary or any Equity Security theretofore outstanding entitling the holder to purchase or acquire shares of Common Stock) for a consideration having a Fair Market Value on the date of such issuance, sale or exchange less than the Fair Market Value of such shares of Common Stock on the date of such issuance, sale or exchange, then the Conversion Rate in effect immediately prior to such issuance, sale or exchange shall be adjusted by multiplying such Conversion Rate by a fraction, the numerator of which shall be the product of (i) the Fair Market Value of a share of Common Stock on the Trading Day immediately preceding the first public announcement of such issuance, sale or exchange multiplied by (ii) the sum of the number of shares of Common Stock outstanding on such day plus the number of shares of Common Stock so issued, sold or exchanged by the Corporation, and the denominator of which shall be the sum of (i) the Fair Market Value of all the shares of Common Stock outstanding on the Trading Day immediately preceding the first public announcement of such issuance, sale or exchange plus (ii) the Fair Market Value of the consideration received by the Corporation in respect of such issuance, sale or exchange of shares of Common Stock. In case the Corporation shall, at any time or from time to time while any of the shares of Class 1 ESOP Preferred Stock are outstanding, issue, sell or exchange any Equity Security (other than any Rights, Equity Securities issued in connection with any employee or director incentive or benefit plan or arrangement of the Corporation or any subsidiary or Common Stock) other than any such issuance to all holders of shares of Common Stock as a dividend or distribution (including by way of a reclassification of shares or a recapitalization of the Corporation) for a consideration having a Fair Market Value on the date of such issuance, sale or exchange less than the Non-Dilutive Amount, then the Conversion Rate shall be adjusted by multiplying such Conversion Rate by a fraction, the numerator of which shall be the product of (i) the Fair Market Value of a share of Common Stock on the Trading Day immediately preceding the first public announcement of such issuance, sale or exchange multiplied by (ii) the sum of the number of shares of Common Stock outstanding on such day plus the maximum number of shares of Common Stock underlying or which could be acquired pursuant to such Equity Security at the time of the issuance, sale or exchange of such Equity Security (assuming shares of Common Stock could be acquired pursuant to such Equity Security at such time), and the denominator of which shall be the sum of (i) the Fair Market Value of all the shares of Common Stock outstanding on the Trading Day immediately preceding the first public announcement of such issuance, sale or exchange plus (ii) the Fair Market Value of the consideration received by the Corporation in respect of such issuance, sale or exchange of such Equity Security plus (iii) the Fair Market Value as of the time of such issuance of the consideration which the Corporation would receive upon exercise, conversion or exchange in full of all such Equity Securities.

(d) In case the Corporation shall, at any time or from time to time while any of the shares of Class 1 ESOP Preferred Stock are outstanding, make an Extraordinary Distribution in respect of the Common Stock or effect a Pro Rata Repurchase of Common Stock, the Conversion Rate in effect immediately prior to such Extraordinary Distribution or Pro Rata Repurchase shall be adjusted by multiplying such Conversion Rate by a fraction, the numerator of which shall be the product of (i) the number of shares of Common Stock outstanding immediately before such Extraordinary Dividend or Pro Rata Repurchase (minus, in the case of a Pro Rata Repurchase, the number of shares of Common Stock repurchased by the Corporation) multiplied by (ii) the Fair Market Value of a share of Common Stock on the record date with respect to such Extraordinary Distribution or on the Trading Day immediately preceding the first public announcement by the Corporation or any of its Affiliates of the intent to effect a Pro Rata Repurchase, as the case may be, and the denominator of which shall be (i) the product of (x) the number of shares of Common Stock outstanding immediately before such Extraordinary Distribution or Pro Rata Repurchase multiplied by (y) the Fair Market Value of a share of Common Stock on the record date with respect to such Extraordinary Distribution, or on the Trading Day immediately preceding the first public announcement by the Corporation or any of its Affiliates of the intent to effect a Pro Rata Repurchase, as the case may be, minus (ii) the Fair Market Value of the Extraordinary Distribution or the aggregate purchase price of the Pro Rata Repurchase, as the case may be (provided that such denominator shall never be less than 1.0); provided, however, that no Pro Rata Repurchase shall cause an adjustment to the Conversion Rate unless the amount of all case dividends and distributions made to holders of Common Stock during the period from the most recent Extraordinary Distribution Measuring Date preceding the Effective Date of such Pro Rata Repurchase, when combined with the aggregate amount of all Pro Rata Repurchases, including such Pro Rata Repurchase (for all purposes of this Section 7.4(d), including only that portion of the Fair Market Value of the aggregate purchase price of each Pro Rata Repurchase which is in excess of the Fair Market Value of the Common Stock repurchased as determined on the Trading Day immediately preceding the first public announcement by the Corporation or any of its Affiliates of the intent to effect each such Pro Rata Repurchase), the Effective Dates of which fall within such period, exceeds twelve and one-half percent (12 1/2%) of the aggregate Fair Market Value of all shares of Common Stock outstanding on the Trading Day immediately preceding the first public announcement by the Corporation or any of its Affiliates of the intent to effect such Pro Rata Repurchase. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such Extraordinary Distribution or immediately after the Effective Date of such Pro Rata Repurchase.

Solely as an adjustment applicable to shares of Class 1 ESOP Preferred Stock that are being converted into Common Stock as of a given date, and not as a permanent adjustment to the Conversion Rate, the Conversion Rate in effect immediately prior to such conversion shall be adjusted by multiplying such Conversion Rate by a fraction, the numerator of which shall be the product of (i) the number of shares of Common Stock outstanding immediately before such conversion multiplied by (ii) the Fair Market Value of a share of Common Stock on the date of such conversion, and the denominator of which shall be (i) the product of (x) the number of shares of Common Stock outstanding immediately before such conversion multiplied by (y) the Fair Market Value of a share of Common Stock on the date of such conversion minus (ii) the Fair Market Value of the cash dividends and distributions made on or before the date of such conversion with a record date after the most recent Extraordinary Distribution Measuring Date upon which Participating Dividends were paid in full, but only to the extent that such cash dividends and distributions (a) would entitle the holders of the shares of Class 1 ESOP Preferred Stock outstanding on such conversion date to a dividend under Section 3.1 that has not been paid and (b) would not constitute an Extraordinary Distribution (provided that such denominator shall never be less than 1.0).

(e) No adjustment in the Conversion Rate shall be required unless such adjustment would require a cumulative increase or decrease of at least 0.01% in such rate; provided that any adjustments that by reason of this subparagraph (e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided further that any adjustment shall be required and made in accordance with the provisions of this Section 6.4 (other than this subparagraph (e)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of shares of Common Stock. Notwithstanding any other provisions of this Section 6, the Corporation shall not be required to make any adjustments of the Conversion Rate for the issuance of any shares of Common Stock pursuant to any plan providing for the reinvestment of dividends on securities of the Corporation so long as the holders of the Class 1 ESOP Preferred Stock shall be entitled to participate therein on substantially the same terms as holders of Common Stock. All calculations under this Section 6 shall be made to the nearest cent (with $.005 being rounded upward), one-tenth of a share (with .05 of a share being rounded upward) or, in the case of the Conversion Rate, one hundred millionth of a share (with .000000005 being rounded upward), as the case may be. Anything in this Section 6.4 to the contrary notwithstanding, the Corporation shall be entitled, to the extent permitted by law, to make such reductions in the Conversion Rate, in addition to those required by this Section 6.4, as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, reclassification or combination of shares, distribution of rights or warrants to purchase stock or securities, or a distribution of other assets (other than cash dividends) hereafter made by the Corporation to its stockholders shall not be taxable.

        6.5 If: (a) the Corporation shall declare a dividend or any other distribution on the Common Stock (other than the Rights); or

(b) the Corporation shall authorize the granting to the holders of the Common Stock of Equity Securities (other than Common Stock) to subscribe for or purchase any Equity Security; or

(c) there shall be any reclassification of the Common Stock (other than an event to which Section 6.4(a) applies) or any consolidation or merger to which the Corporation is a party and for which approval of any stockholders of the Corporation is required, or the sale or transfer of all or substantially all of the assets of the Corporation as an entirety; or

(d) there shall occur the voluntary or involuntary liquidation, dissolution or winding up of the Corporation; or

(e) there shall occur any Pro Rata Repurchase,

 then the Corporation shall cause to be filed with the Transfer Agent and shall cause to be mailed to the holders of shares of the Class 1 ESOP Preferred Stock at their addresses as shown on the stock records of the Corporation, as promptly as possible, but at least 10 days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution or granting of Equity Securities, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or granting of Equity Securities are to be determined, (B) the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up or (C) the number of shares subject to such offer for a Pro Rata Repurchase and the purchase price payable by the Corporation pursuant to such offer. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 6.

        6.6     Whenever the Conversion Rate is adjusted as herein provided, the Corporation shall promptly file with the Transfer Agent an officer's certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring and the manner of effecting such adjustment which certificate shall be prima facie evidence of the correctness of such adjustment. Promptly after delivery of such certificate, the Corporation shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the effective date of such adjustment or adjustments and shall mail such notice of such adjustment or adjustments to the holder of each share of Class 1 ESOP Preferred Stock at such holder's last address as shown on the stock records of the Corporation.

        6.7     In any case in which Section 6.4 provides that an adjustment shall become effective on the day next following a record date for an event, the Corporation may defer until the occurrence of such event (A) issuing to the holder of any share of Class 1 ESOP Preferred Stock converted after such record date and before the occurrence of such event the additional shares of Common Stock or other securities issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock or other securities issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount in cash in lieu of any fraction pursuant to Section 6.3.

        6.8     For purposes of this Section 6, the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then owned or held by or for the account of the Corporation or any subsidiary. The Corporation shall not pay a dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation.

        6.9     There shall be no adjustment of the Conversion Rate in case of the issuance of any stock of the Corporation in a reorganization, acquisition or other similar transaction except as specifically set forth in Section 6 or Section 7. If any action or transaction would require adjustment of the Conversion Rate pursuant to more than one paragraph of this Section 6, only one adjustment shall be made and such adjustment shall be the amount of adjustment that has the highest absolute value.

        6.10     If the Corporation shall take any action affecting the Common Stock, other than action described in this Section 6, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of the shares of Class 1 ESOP Preferred Stock, the Conversion Rate for the Class 1 ESOP Preferred Stock may be adjusted, to the extent permitted by law, in such manner, if any, and at such time, as the Board of Directors may determine to be equitable in the circumstances.

        6.11     The Corporation covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock or its issued shares of Common Stock held in its treasury, or both, for the purpose of effecting conversion of the Class 1 ESOP Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Class 1 ESOP Preferred Stock not theretofore converted. For purposes of this Section 6.11, the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of Class 1 ESOP Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single holder.

        The Corporation covenants that any shares of Common Stock issued upon conversion of the Class 1 ESOP Preferred Stock shall be validly issued, fully paid and non-assessable.

        The Corporation shall endeavor to list the shares of Common Stock (or other securities) required to be delivered upon conversion of the Class 1 ESOP Preferred Stock, prior to such delivery, upon each national securities exchange, if any, upon which the outstanding Common Stock (or other securities) is listed at the time of such delivery.

        Prior to the delivery of any securities that the Corporation shall be obligated to deliver upon conversion of the Class 1 ESOP Preferred Stock, the Corporation shall endeavor to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority.

        6.12     The Corporation shall pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock or other securities or property on conversion of the Class 1 ESOP Preferred Stock pursuant hereto; provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock or other securities or property in a name other than that of the holder of the Class 1 ESOP Preferred Stock to be converted and no such issue or delivery shall be made unless and until the person requesting any such issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid.

        6.13     If, prior to the Distribution Date (as defined for purposes of the Rights), the Corporation shall issue shares of Common Stock upon conversion of shares of Class 1 ESOP Preferred Stock as contemplated by this Section 6, the Corporation shall issue together with each such share of Common Stock that number of Rights as are then issuable, pursuant to the Rights Agreement (or any successor rights plan or plans adopted in replacement of the Rights Agreement), per share of such Common Stock so issued, but only if at such time such Rights or rights are, pursuant to the relevant Rights Agreement, to be represented by certificates representing shares of Common Stock and have not expired.

        Section 7.   Consolidation, Merger, etc.

        7.1     In case the Corporation shall enter into any consolidation, merger, share exchange or similar transaction, however named, pursuant to which the outstanding shares of Common Stock are to be exchanged solely for or changed, reclassified or converted solely into stock of any successor or resulting or other company (including the Corporation) that constitutes ''qualifying employer securities'' with respect to holders of Class 1 ESOP Preferred Stock within the meaning of Section 409(l) of the Code and Section 407(d)(5) of the Employee Retirement Income Security Act of 1974, as amended, or any successor provisions of law, and, if applicable, for a cash payment in lieu of fractional shares, if any, proper provisions shall be made so that upon consummation of such transaction, the shares of Class 1 ESOP Preferred Stock shall be converted into or exchanged for preferred stock of such successor or resulting or other company, having in respect of such company, the same powers, preferences and relative, participating, optional or other special rights (including the rights provided by this Section 7), and the qualifications, limitations or restrictions thereof, that the Class 1 ESOP Preferred Stock had, in respect of the Corporation, immediately prior to such transaction, except that after such transaction each share of preferred stock of the surviving or resulting or other company so received in such transaction upon conversion or exchange of the Class 1 ESOP Preferred Stock shall be convertible, otherwise on the terms and conditions provided by Section 6 hereof, into the number and kind of ''qualifying employer securities'' receivable in such transaction by a holder of the number of shares of Common Stock into which a share of Class 1 ESOP Preferred Stock could have been converted immediately prior to such transaction; provided, however, that if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by the holders of the Class 1 ESOP Preferred Stock, then the shares of preferred stock of the surviving or resulting or other company received in such transaction upon conversion or exchange of Class 1 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be convertible into or exchangeable solely for ''qualifying employer securities'' (together, if applicable, with a cash payment in lieu of fractional shares) with the effect provided above on the basis of the number and kind of qualifying employer securities receivable in such transaction by a holder of the number of shares of Common Stock into which such shares of Class 1 ESOP Preferred Stock could have been converted immediately prior to such transaction (provided that if the kind or amount of qualifying employer securities receivable in such transaction is not the same for each such share of Common Stock, then the kind and amount so receivable in such transaction for each share of Common Stock for this purpose shall be deemed to be the kind and amount so receivable per share by the plurality of such shares of Common Stock). The rights of the preferred stock of such successor or resulting or other company so received in such transaction upon conversion or exchange of the Class 1 ESOP Preferred Stock shall successively be subject to adjustments pursuant to Section 6 hereof following such transaction as nearly equivalent to the adjustments provided for by such Sections prior to such transaction.

        7.2     In case the Corporation shall enter into any consolidation, merger, share exchange or similar transaction, however named, pursuant to which the outstanding shares of Common Stock are to be exchanged for or changed, reclassified or converted into other stock or securities or cash or any other property, or any combination thereof, other than any such consideration which is constituted solely of ''qualifying employer securities'' (as referred to in Section 7.1) and cash payments, if applicable, in lieu of fractional shares, proper provisions shall be made so that upon consummation of such transaction the outstanding shares of Class 1 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as are applicable to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in like kind) receivable by holders of the number of shares of Common Stock into which such shares of Class 1 ESOP Preferred Stock could have been converted immediately prior to such transaction; provided, however, that if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by holders of the Class 1 ESOP Preferred Stock, then the shares of Class 1 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in kind) receivable by a holder of the number of shares of Common Stock into which such shares of Class 1 ESOP Preferred Stock could have been converted immediately prior to such transaction if such holder of Common Stock failed to exercise any rights of election to receive any kind or amount of stock, securities, cash or other property receivable in such transaction (provided that if the kind or amount of stock, securities, cash or other property receivable in such transaction are not the same for each non-electing share, then the kind and amount of stock, securities, cash or other property so receivable upon such transaction for each non-electing share shall be the kind and amount so receivable per share by the plurality of the non-electing shares).

        7.3     In case the Corporation shall enter into any agreement providing for any consolidation, merger, share exchange or similar transaction described in this Section 7, then the Corporation shall as soon as practicable thereafter (and in any event at least fifteen (15) Business Days before consummation of such transaction) give notice of such agreement and the material terms thereof to each holder of Class 1 ESOP Preferred Stock. The Corporation shall not consummate any consolidation, merger, share exchange or similar transaction unless all of the terms of this Section 7 have been complied with.

        Section 8.   Ranking.

        8.1     Any class or series of stock of the Corporation shall be deemed to rank:

(a) prior to the Class 1 ESOP Preferred Stock, as to the payment of dividends or as to distributions of assets upon liquidation, dissolution or winding up, as the case may be, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class 1 ESOP Preferred Stock;

(b) on a parity with the Class 1 ESOP Preferred Stock as to the payment of dividends, whether or not the dividend rates or dividend payment dates thereof be different from those of the Class 1 ESOP Preferred Stock, if the holders of such class or series of stock and the Class 1 ESOP Preferred Stock shall be entitled to the receipt of dividends in proportion to their respective amounts of accrued and unpaid dividends per share, without preference or priority one over the other, and on a parity with the Class 1 ESOP Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the liquidation prices per share thereof be different from those of the Class 1 ESOP Preferred Stock, if the holder of such class or series of stock and the Class 1 ESOP Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective liquidation preferences, without preference or priority one over the other; and

(c) junior to the Class 1 ESOP Preferred Stock, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, as the case may be, if the holders of Class 1 ESOP Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series.

        8.2     The Series A Preferred Stock and the Series B Preferred Stock shall each be deemed to rank prior to the Class 1 ESOP Preferred Stock both as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up. The Series D Preferred Stock shall be deemed to rank prior to the Class 1 ESOP Preferred Stock as to the distribution of assets upon liquidation, dissolution, or winding up. The Class 2 ESOP Preferred Stock shall be deemed to rank on a parity with the Class 1 ESOP Preferred Stock as to the payment of dividends and as to amounts distributable upon liquidation, dissolution or winding up. The Common Stock, the Director Preferred Stocks, the Voting Preferred Stocks and the Series C Preferred Stock shall each be deemed to rank junior to the Class 1 ESOP Preferred Stock both as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up.

        Section 9.   Voting. The holders of shares of Class 1 ESOP Preferred Stock shall have the following voting rights:

        9.1     Unless the affirmative vote or consent of the holders of a greater number of shares of Class 1 ESOP Preferred Stock shall then be required by law or this Restated Certificate, and in addition to any other vote required by law or this Restated Certificate, the affirmative vote or written consent of the holders of at least a majority of all of the outstanding shares of Class 1 ESOP Preferred Stock, voting separately as a class, shall be necessary for authorizing, effecting or validating the amendment, alteration or repeal (including any amendment, alteration or repeal by operation of merger or consolidation) of any of the provisions of this Restated Certificate or of any certificate amendatory thereof or supplemental thereto (including any Certificate of Designation, Preferences and Rights or any similar document relating to any series of Serial Preferred Stock) that would adversely affect the preferences, rights, powers or privileges of the Class 1 ESOP Preferred Stock; provided, however, that the amendment of the provisions of this Restated Certificate so as to authorize or create, or to increase the authorized amount of, any class or series of stock of the Corporation ranking on a parity with or junior to the Class 1 ESOP Preferred Stock both as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up of the Corporation shall not be deemed to adversely affect the preferences, rights, powers or privileges of Class 1 ESOP Preferred Stock.

        9.2     Unless the affirmative vote or consent of the holders of a greater number of shares of Class 1 ESOP Voting Preferred Stock shall then be required by law or this Restated Certificate, and in addition to any other vote required by law or this Restated Certificate, the affirmative vote or written consent of the holders of at least a majority of all of the outstanding shares of Class 1 ESOP Preferred Stock, voting separately as a class, shall be necessary for authorizing, effecting or validating the creation, authorization or issuance of any shares of any class or series of stock of the Corporation ranking prior to the Class 1 ESOP Preferred Stock either as to payment of dividends or as to distributions upon liquidation, dissolution or winding up, or the reclassification of any authorized stock of the Corporation into any such prior shares, or the creation, authorization or issuance of any obligation or security convertible into or evidencing the right to purchase any such prior shares.

        9.3     For purposes of the foregoing provisions of Sections 9.1 and 9.2, each share of Class 1 ESOP Preferred Stock shall have one (1) vote per share. Except as otherwise required by applicable law or as set forth herein, the shares of Class 1 ESOP Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers and the consent of the holders thereof shall not be required for the taking of any corporate action.

        Section 10.   No Redemption. The Class 1 ESOP Preferred Stock shall not be redeemable in whole or in part.

        Section 11.   Record Holders. The Corporation and the Transfer Agent (if other than the Corporation) may deem and treat the record holder of any shares of Class 1 ESOP Preferred Stock as the true and lawful owner thereof for all purposes, and, except as otherwise provided by law, neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary.
 
 

PART III

Class 2 ESOP Convertible Preferred Stock

        Unless otherwise indicated, any reference in this Article FOURTH, Part III to ''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall refer to a Section, Subsection, paragraph, subparagraph or clause of this Article FOURTH, Part III.

        Section 1.   Number of Shares; Designation; Issuance and Automatic Conversion.

        1.1     The Class 2 ESOP Convertible Preferred Stock of the Corporation (the ''Class 2 ESOP Preferred Stock'') shall consist of 25,000,000 shares, par value $0.01 per share.

        1.2     Shares of Class 2 ESOP Preferred Stock shall be issued only to a trustee or trustees acting on behalf of (i) the UAL Corporation Employee Stock Ownership Plan, or (ii) the UAL Corporation Supplemental ESOP (either of (i) or (ii), a ''Plan''). In the event of any sale, transfer or other disposition (including, without limitation, upon a foreclosure or other realization upon shares of Class 2 ESOP Preferred Stock pledged as security for any loan or loans made to a Plan or to the trustee or the trustees acting on behalf of a Plan) (hereinafter a ''transfer'') of shares of Class 2 ESOP Preferred Stock to any person (including, without limitation, any participant in a Plan) other than (x) any trustee or trustees of a Plan or (y) any pledgee of such shares acquiring such shares as security for any loan or loans made to a Plan or to any trustee or trustees acting on behalf of a Plan, the shares of Class 2 ESOP Preferred Stock so transferred, upon such transfer and without any further action by the Corporation or the transferee, shall be automatically converted into shares of Common Stock at the applicable Conversion Rate in accordance with Section 6 hereof and thereafter such transferee shall not have any of the voting powers, preferences or relative, participating, optional or special rights ascribed to shares of Class 2 ESOP Preferred Stock hereunder, but, rather, shall have only the powers and rights pertaining to the Common Stock into which such shares of Class 2 ESOP Preferred Stock shall have been so converted. In the event of any such automatic conversion provided for in this Section 1.2, such transferee shall be treated for all purposes as the record holder of the shares of Common Stock into which the Class 2 ESOP Preferred Stock shall have been converted as of the date of such conversion. Certificates representing shares of Class 2 ESOP Preferred Stock shall be legended to reflect such consequences of a transfer. Notwithstanding the foregoing provisions of this Section 1, shares of Class 2 ESOP Preferred Stock may be converted into shares of Common Stock as provided by Section 6 hereof and the shares of Common Stock issued upon any conversion in accordance with Section 6 hereof or this Section 1.2 may be transferred by the holder thereof as permitted by law.

        Section 2.   Definitions. For purposes of the Class 2 ESOP Preferred Stock, the following terms shall have the meanings indicated:

        2.1   ''Affiliate'' shall have the meaning defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended, or any successor thereto.

        2.2   ''Board of Directors'' shall mean the board of directors of the Corporation or any committee authorized by such board of directors to perform any of its responsibilities with respect to the Class 2 ESOP Preferred Stock.

        2.3   ''Business Day'' shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.

        2.4   ''Class 1 ESOP Preferred Stock'' shall mean the Class 1 ESOP Convertible Preferred Stock, par value $0.01 per share, of the Corporation.

        2.5   ''Class 2 ESOP Preferred Stock'' shall have the meaning set forth in Section 1 hereof.

        2.6   ''Class I Preferred Stock'' shall mean the Class I Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.7   ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.8   ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.9   ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.10 ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.11 ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.12 ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.13 ''Code'' shall mean the Internal Revenue Code of 1986, as amended from time to time.

        2.14 ''Common Stock'' shall mean the common stock of the Corporation, par value $0.01 per share.

        2.15 ''Conversion Rate'' shall have the meaning set forth in Section 6.1 hereof.

        2.16 ''Current Market Price'' of publicly traded shares of Common Stock or any other class or series of capital stock or other security of the Corporation or any other issuer for any day shall mean the last reported sales price, regular way, on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices on such day, regular way, in either case as reported on the New York Stock Exchange Composite Tape or, if such security is not listed or admitted for trading on the New York Stock Exchange, Inc. (''NYSE''), on the principal national securities exchange on which such security is listed or admitted for trading or quoted or, if not listed or admitted for trading or quoted on any national securities exchange, on the Nasdaq National Market, or, if such security is not quoted on such National Market, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by the National Association of Securities Dealers, Inc. Automated Quotation System (''NASDAQ'') or, if bid and asked prices for such security on such day shall not have been reported through NASDAQ, the average of the bid and asked prices on such day as furnished by any NYSE member firm regularly making a market in such security selected for such purpose by the Board of Directors.

        2.17 ''Director Preferred Stocks'' shall mean collectively, the Class I Preferred Stock, the Class IAM Preferred Stock, the Class Pilot MEC Preferred Stock and the Class SAM Preferred Stock.

        2.18   ''Dividend Payment Date" means a date on which Participating Dividends are paid on the Class 2 ESOP Preferred Stock or on the Common Stock.

        2.19 ''Dividend Period'' shall mean the period commencing March 31, 2000 or, if later, the most recent Dividend Payment Date of the Class 2 ESOP Preferred Stock.

        2.20 ''Equity Securities'' shall mean the Common Stock or any debt, equity or other security or contractual right convertible into or exercisable or exchangeable for, or based on the value of, the Common Stock or any warrants, options or other rights to purchase the Common Stock or other Equity Securities (other than the Rights).

        2.21 ''ESOP Preferred Stocks'' shall mean, collectively, the Class 2 ESOP Preferred Stock and the Class 1 ESOP Preferred Stock.

        2.22   ''Extraordinary Distribution'' shall mean any single dividend or other distribution (including by reclassification of shares or recapitalization of the Corporation, as well as any such dividend or distribution made in connection with a merger or consolidation in which the Corporation is the continuing corporation and the Common Stock is not changed or exchanged) to holders of Common Stock (effected while any of the shares of Class 2 ESOP Preferred Stock are outstanding) (i) of cash, where the aggregate shares of Class 2 ESOP Preferred Stock are outstanding) (i) of cash where the aggregate amount of such single cash dividend or distribution together with the amount of all cash dividends and distributions made to holders of Common Stock during the period from the most recent Extraordinary Distribution Measuring Date until the payment date for such cash dividend or distribution to holders of Common Stock, when combined with the aggregate amount of all previous Pro Rata Repurchases during such period (for this purpose, including only that portion of the aggregate purchase price of each such Pro Rata Repurchase which is in excess of the Fair Market Value of the Common Stock repurchased as determined on the Business Day prior to the public announcement of such Pro Rata Repurchase made during such period), exceeds twelve and one-half percent (12 1/2%) of the aggregate Fair Market Value of all shares of Common Stock outstanding on the record date for determining the shareholders entitled to receive such Extraordinary Distribution and (ii) of any shares of capital stock of the Corporation (other than shares of Common Stock), other securities of the Corporation (other than securities of the type referred to in Sections 6.4(b) and 6.4(c) hereof), evidences of indebtedness of the Corporation or any other person or any other property (including, without limitation, shares of capital stock of any subsidiary of the Corporation), or any combination thereof. The Fair Market Value of any such single dividend or other distribution that, pursuant to clause (i), constitutes an Extraordinary Distribution shall for purposes of the first paragraph of Section 6.4(d) hereof be the sum of the Fair Market Value of such Extraordinary Distribution plus the amount of any other cash dividends and distributions made within the relevant period referred to above to holders of Common Stock to the extent such other dividends and distributions were not previously included in the calculation of an adjustment pursuant to the first paragraph of Section 6.4(d) hereof within such period.

        2.22.1   "Extraordinary Distribution Measuring Date" shall mean the penultimate Business Day in each year, commencing on such penultimate Business Day in 1999.

        2.23 ''Fair Market Value'' shall mean the average of the daily Current Market Prices of the security in question during the five (5) consecutive Trading Days before the earlier of the day in question and the ''ex'' date with respect to the issuance or distribution requiring such computation. The term '' 'ex' date,'' when used with respect to any issuance or distribution, means the first day on which the Common Stock trades regular way, without the right to receive such issuance or distribution, on the exchange or in the market, as the case may be, used to determine that day's Current Market Price. With respect to any asset or security for which there is no Current Market Price, the Fair Market Value of such asset or security shall be determined in good faith by the Board of Directors.

        2.24 ''Issue Date'' shall mean the first date on which shares of Class 2 ESOP Preferred Stock are issued.

        2.25 ''Liquidation Preference'' shall have the meaning set forth in Section 4.1 hereof.

        2.26 ''Measuring Date'' shall mean that date which is the 365th day following the Issue Date.

        2.27 ''Non-Dilutive Amount'' in respect of an issuance, sale or exchange by the Corporation of any Equity Securities (other than Common Stock) shall mean the excess of (i) the product of the Fair Market Value of a share of Common Stock on the day preceding the first public announcement of such issuance, sale or exchange multiplied by the maximum number of shares of Common Stock which could be acquired on such date upon the exercise, conversion or exchange in full of such Equity Securities (and any Equity Securities receivable upon exercise, conversion or exchange thereof), whether or not then exercisable, convertible or exchangeable at such date, over (ii) the aggregate amount payable pursuant to the exercise, conversion or exchange of such Equity Securities, whether or not then exercisable, convertible or exchangeable, to purchase or acquire such maximum number of shares of Common Stock (and any Equity Securities receivable upon exercise, conversion or exchange thereof); provided, however, that in no event shall the Non-Dilutive Amount be less than zero. For purposes of the foregoing sentence, the amount payable pursuant to the exercise, conversion or exchange of such Equity Securities to purchase or acquire shares of Common Stock shall be deemed to be the Fair Market Value of the consideration payable pursuant to the exercise, conversion or exchange of such Equity Securities on the date of the issuance, sale or exchange of such Equity Securities by the Corporation (excluding for that purpose the Fair Market Value of the Equity Security to be so exercised, converted or exchanged).

        2.28 ''Pro Rata Repurchase'' shall mean any purchase of shares of Common Stock by the Corporation or any Affiliate thereof, whether for cash, shares of capital stock of the Corporation, other securities of the Corporation, evidences of indebtedness of the Corporation or any other person or any other property (including, without limitation, shares of capital stock, other securities or evidences of indebtedness of a subsidiary of the Corporation), or any combination thereof, effected while any of the shares of Class 2 ESOP Preferred Stock are outstanding, pursuant to any tender offer or exchange offer subject to Section 13(e) of the Securities Exchange Act of 1934, as amended (the ''Exchange Act''), or any successor provision of law, or pursuant to any other offer available to substantially all holders of Common Stock; provided, however, that ''Pro Rata Repurchase'' shall not include any purchase of shares by the Corporation or any subsidiary thereof made in open market transactions substantially in accordance with the requirements of Rule 10b-18 as in effect under the Exchange Act or on such other terms and conditions as the Board of Directors shall have determined are reasonably designed to prevent such purchases from having a material effect on the trading market for the Common Stock. The ''Effective Date'' of a Pro Rata Repurchase shall mean the date of acceptance of shares for purchase or exchange under any tender or exchange offer which is a Pro Rata Repurchase or the date of purchase with respect to any Pro Rata Repurchase that is not a tender or exchange offer.

        2.29 ''Restated Certificate'' shall mean the Restated Certificate of Incorporation of the Corporation, as amended from time to time.

        2.30 ''Rights'' shall mean the rights of the Corporation issued or issuable under the Corporation's Rights Agreement dated as of December 11, 1986, and as amended from time to time (the ''Rights Agreement''), or rights to purchase any capital stock of the Corporation issued or issuable under any successor shareholder rights plan or plans adopted in replacement of the Rights Agreement.

        2.31 ''Series A Debentures'' shall mean the Series A Debentures due 2004 of United Air Lines, Inc.

        2.32 ''Series A Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series A Convertible Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.

        2.33 ''Series B Debentures'' shall mean the Series B Debentures due 2014 of United Air Lines, Inc.

        2.34 ''Series B Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series B Preferred Stock in Article FOURTH, Part I.B of this Restated Certificate.

        2.35 ''Series C Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series C Junior Participating Preferred Stock in Article FOURTH, Part I.C of this Restated Certificate.

        2.36 ''Series D Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series D Redeemable Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.

        2.37     [Reserved]

        2.38 ''set apart for payment'' shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of stock of the Corporation ranking on a parity with or junior to the Class 2 ESOP Preferred Stock as to the payment of dividends or distributions are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then ''set apart for payment'' with respect to the Class 2 ESOP Preferred Stock shall mean, with respect to such dividends or distributions, placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.

        2.39 ''Trading Day'' shall mean any day on which the securities in question are traded on the NYSE, or if such securities are not listed or admitted for trading or quoted on the NYSE, on the principal national securities exchange on which such securities are listed or admitted, or if not listed or admitted for trading or quoted on any national securities exchange, on the Nasdaq National Market, or if such securities are not quoted on such National Market, in the applicable securities market in which the securities are traded.

        2.40 ''Transfer Agent'' means the Corporation or such agent or agents of the Corporation as may be designated from time to time by the Board of Directors as the transfer agent for the Class 2 ESOP Preferred Stock.

        2.41 ''Voting Preferred Stocks'' shall mean collectively, the Class M Voting Preferred Stock, the Class P Voting Preferred Stock and the Class S Voting Preferred Stock.

        Section 3.   Dividends.

        3.1     The holders of shares of the Class 2 ESOP Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of assets legally available for that purpose, dividends payable in cash at the rate (per outstanding share of Common Stock) equal to the dividends which would have been received during the applicable Dividend Period with respect to the shares of Common Stock which would have been issued upon conversion of the Class 2 ESOP Preferred Stock had the Class 2 ESOP Preferred Stock been outstanding as Common Stock at each relevant time in order to receive such dividends (but only to the extent such dividends do not constitute an Extraordinary Distribution under clause (i) of the definition thereof), which dividends (hereinafter referred to as "Participating Dividends") shall be paid in cash, pro-rata to each holder of Class 2 ESOP Preferred Stock. Such Participating Dividends shall be cumulative from March 31, 2000, whether or not in any Dividend Period or Periods there shall be assets of the Corporation legally available for the payment of such Participating Dividends and whether or not the Board of Directors shall have declared such Participating Dividends, and shall be payable when, as and if declared by the Board of Directors, in arrears on Dividend Payment Dates. Each such Participating Dividend shall be payable in arrears to the holders of record of shares of the Class 2 ESOP Preferred Stock, as they appear on the stock records of the Corporation at the close of business on such record dates, which shall not be more than 60 days nor less than 10 days preceding the Dividend Payment Dates thereof, as shall be fixed by the Board of Directors. Accrued and unpaid Participating Dividends for any past Dividend Periods may be declared and paid at any time, without reference to any Dividend Payment Date, to holders of record on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed by the Board of Directors. Holders of the Class 2 ESOP Preferred Stock shall be entitled to the cumulative Participating Dividend provided in this Section 3.1 and shall not be entitled to any other dividends in excess thereof. In the event that an adjustment is made pursuant to the second paragraph of Section 6.4(d) with respect to shares of Class 2 ESOP Preferred Stock converted during the applicable Dividend Period, the amount of Participating Dividend to be paid in accordance with the preceding sentence shall be reduced by an amount equal to the product of (x) the number of shares of Common Stock into which such converted shares of Class 2 ESOP Preferred Stock would have been converted in the absence of such adjustment and (y) the amount of the cash dividend or distributions per share of Common Stock in respect of which such adjustment was made.

        3.2     Except as provided in Section 3.1, holders of shares of Class 2 ESOP Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative Participating Dividends, as herein provided, on the Class 2 ESOP Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any Participating Dividend payment or payments on the Class 2 ESOP Preferred Stock that may be in arrears.

        3.3     So long as any shares of the Class 2 ESOP Preferred Stock are outstanding, no dividends, except as described in the next succeeding sentence, shall be declared or paid or set apart for payment on any other class or series of stock of the Corporation ranking on a parity with the Class 2 ESOP Preferred Stock as to the payment of dividends for any period unless full cumulative Participating Dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Class 2 ESOP Preferred Stock for all Dividend Periods terminating on or prior to the date of payment of the dividends on such class or series or parity stock. When Participating Dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class 2 ESOP Preferred Stock and such parity stock shall be declared ratably in proportion to the respective amounts of Participating Dividends accumulated and unpaid on the Class 2 ESOP Preferred Stock and dividends accumulated and unpaid on such parity stock.

        3.4     So long as any shares of the Class 2 ESOP Preferred Stock are outstanding, no dividends (other than (i) the Rights and (ii) dividends or distributions paid in shares of, or options, warrants, or rights to subscribe for or purchase shares of, any class or series of stock of the Corporation that is junior to the Class 2 ESOP Preferred Stock as to the payment of dividends) shall be declared or paid or set apart for payment or other distribution declared or made upon any class or series of stock of the Corporation that is junior to the Class 2 ESOP Preferred Stock as to the payment of dividends, nor shall any other class or series of stock of the Corporation ranking on a parity with or junior to the Class 2 ESOP Preferred Stock as to the payment of dividends or as to distributions upon liquidation, dissolution or winding up of the Corporation, be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of shares of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation, directly to the Class 2 ESOP Preferred Stock as to the payment of dividends and as to distributions upon liquidation, dissolution or winding up of the Corporation), unless in each case the full cumulative Participating Dividends on all outstanding shares of the Class 2 ESOP Preferred Stock shall have been paid or set apart for payment for all past Dividend Periods with respect to the Class 2 ESOP Preferred Stock and such parity stock.

        Section 4.   Payments upon Liquidation.

        4.1     In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for payment to the holders of any class or series of stock of the Corporation that ranks junior to the Class 2 ESOP Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, the holders of the shares of Class 2 ESOP Preferred Stock shall be entitled to receive an amount per share of Class 2 ESOP Preferred Stock equal to the sum of (a) the result of dividing (i) the Purchase Price (as defined in and determined pursuant to Section 1 of the Preferred Stock Purchase Agreement, dated as of March 25, 1994, as amended, between the Corporation and State Street Bank and Trust Company as trustee for the UAL Corporation Employee Stock Ownership Plan Trust (the ''Agreement''), a copy of which is on file in the office of the Secretary of the Corporation) of the shares of Class 1 ESOP Preferred Stock purchased pursuant to Section 1 of the Agreement by (ii) the number of shares of Class 1 ESOP Preferred Stock purchased pursuant to Section 1 of the Agreement and (b) an amount equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders (collectively, the ''Liquidation Preference''), but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of Class 2 ESOP Preferred Stock shall be insufficient to pay in full the Liquidation Preference and the liquidation preference on all other shares of any class or series of stock of the Corporation that ranks on a parity with the Class 2 ESOP Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Class 2 ESOP Preferred Stock and any such other parity stock ratably in accordance with the respective amounts that would be payable on such shares of Class 2 ESOP Preferred Stock and any such other parity stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with or into one or more corporations, or (ii) a sale, lease, exchange or transfer of all or substantially all of the Corporation's assets, shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation.

        4.2     Subject to the rights of the holders of shares of any class or series of stock ranking prior to or on a parity with the Class 2 ESOP Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, after payment shall have been made to the holders of the Class 2 ESOP Preferred Stock, as and to the fullest extent provided in this Section 4, any other class or series of stock of the Corporation that ranks junior to the Class 2 ESOP Preferred Stock as to amounts distributable upon dissolution, liquidation or winding up of the Corporation shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class 2 ESOP Preferred Stock shall not be entitled to share therein.

        Section 5.   Shares to be Retired. All shares of Class 2 ESOP Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be retired and shall not be reissued.

        Section 6.     Conversion. Holders of shares of Class 2 ESOP Preferred Stock shall have the right to convert all or a portion of such shares into shares of Common Stock as follows:

        6.1     Subject to and upon compliance with the provisions of this Section 6, a holder of shares of Class 2 ESOP Preferred Stock shall have the right, at such holder's option, at any time and from time to time, to convert all or any of such shares into fully paid and nonassessable shares of Common Stock at a rate of one share of Common Stock for one share of Class 2 ESOP Preferred Stock, subject to adjustment as provided in this Section 6 (as so adjusted, the ''Conversion Rate'') by surrendering such shares to be converted, such surrender to be made in the manner provided in Section 6.2. Certificates shall be issued for the remaining shares of Class 2 ESOP Preferred Stock if fewer than all of the shares of Class 2 ESOP Preferred Stock represented by a certificate are converted.

        6.2     In order to exercise the conversion right, the holder of shares of Class 2 ESOP Preferred Stock to be converted shall surrender the certificate or certificates representing such shares, duly endorsed or assigned to the Corporation or in blank, at the office of the Transfer Agent in the Borough of Manhattan, City of New York, accompanied by written notice to the Corporation that the holder thereof elects to convert Class 2 ESOP Preferred Stock. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Class 2 ESOP Preferred Stock is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid or that no such taxes are payable).

        Holders of shares of Class 2 ESOP Preferred Stock at the close of business on a dividend payment record date shall be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion thereof following such dividend payment record date. The Corporation shall make no payment or allowance for unpaid dividends on the shares of Common Stock issued upon such conversion.

        As promptly as practicable after the surrender of certificates for shares of Class 2 ESOP Preferred Stock as aforesaid, the Corporation shall issue and shall deliver at such office to such holder, or on such holder's written order, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of such shares in accordance with provisions of this Section 6, and any fractional interest in respect of a share of Common Stock arising upon such conversion shall be settled as provided in Section 6.3.

        Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for shares of Class 2 ESOP Preferred Stock shall have been surrendered and such notice (and if applicable, payment of an amount equal to the dividend payable on such shares) received by the Corporation as aforesaid, and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date and such conversion shall be at the Conversion Rate in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Rate in effect on the date upon which such shares shall have been surrendered and such notice received by the Corporation.

        6.3     No fractional shares or scrip representing fractions of shares of Common Stock shall be issued upon conversion of the Class 2 ESOP Preferred Stock. Instead of any fractional interest in a share of Common Stock that would otherwise be deliverable upon the conversion of a share of Class 2 ESOP Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash based upon the Current Market Price of Common Stock on the Trading Day immediately preceding the date of conversion. If more than one certificate shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Class 2 ESOP Preferred Stock so surrendered.

        6.4     The Conversion Rate shall be adjusted from time to time as follows:

(a) In case the Corporation shall, at any time or from time to time while any of the shares of Class 2 ESOP Preferred Stock are outstanding, (i) pay a dividend or make a distribution on its capital stock in shares of its Common Stock, (ii) subdivide its outstanding Common Stock into a greater number of shares, (iii) combine its outstanding Common Stock into a smaller number of shares or (iv) issue any shares of capital stock by reclassification of its Common Stock, the Conversion Rate in effect at the opening of business on the day next following the date fixed for the determination of stockholders entitled to receive such dividend or distribution or at the opening of business on the day next following the day on which such subdivision, combination or reclassification becomes effective, as the case may be, shall be adjusted so that the holder of any share of Class 2 ESOP Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other capital stock that such holder would have owned or have been entitled to receive after the happening of any of the events described above had such share been converted immediately prior to the record date in the case of a dividend or distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this subparagraph (a) shall become effective immediately after the opening of business on the day next following the record date (except as provided in Section 6.7 below) in the case of a dividend or distribution and shall become effective immediately after the opening of business on the day next following the effective date in the case of a subdivision, combination or reclassification.

(b) In case the Corporation shall, at any time or from time to time while any of the shares of Class 2 ESOP Preferred Stock are outstanding, issue Equity Securities (other than Common Stock and the Rights) (the ''Issued Equity Securities'') to all holders of shares of its Common Stock entitling them (for a period expiring within 45 days after the record date for such issuance) to subscribe for or purchase (whether by exercise, conversion, exchange or otherwise) shares of Common Stock (or other Equity Securities) at a price per share less than the Fair Market Value of the Common Stock (or the other Equity Security to be acquired) at such record date (treating the price per share of the Equity Securities to be acquired as equal to (x) the sum of (i) the Fair Market Value of the consideration payable for a unit of the Equity Security plus (ii) the Fair Market Value of any additional consideration initially payable upon the exercise, conversion or exchange of such security into Common Stock divided by (y) the number of shares of Common Stock initially underlying or that may be acquired upon the exercise, conversion or exchange of such Equity Security), the Conversion Rate shall be adjusted so that it shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the date of issuance of such Issued Equity Securities by a fraction, the numerator of which shall be the sum of (A) the number of shares of Common Stock outstanding on the date of issuance of such Issued Equity Securities plus (B) the number of additional shares of Common Stock offered for subscription or purchase (including, without limitation, the security underlying or that may be acquired upon the exercise, conversion or exchange of the Equity Securities so offered) and the denominator of which shall be the sum of (A) the number of shares of Common Stock outstanding on the date of issuance of such Issued Equity Securities plus (B) the number of shares of Common Stock that the aggregate offering price of the total number of shares so offered for subscription or purchase (including, without limitation, the Fair Market Value of the consideration payable for a unit of the Equity Securities so offered plus the Fair Market Value of any additional consideration payable upon exercise, conversion or exchange of such Equity Securities) would purchase at such Fair Market Value of the Common Stock as of the record date for such issuance. Such adjustment shall become effective as of the record date for the determination of stockholders entitled to receive such Issued Equity Securities (except as provided in Section 6.6 below).

(c) In case the Corporation shall, at any time or from time to time while any of the shares of Class 2 ESOP Preferred Stock are outstanding, issue, sell or exchange shares of Common Stock (other than pursuant to any Rights, Equity Securities issued in connection with any employee or director incentive or benefit plan or arrangement of the Corporation or any subsidiary or any Equity Security theretofore outstanding entitling the holder to purchase or acquire shares of Common Stock) for a consideration having a Fair Market Value on the date of such issuance, sale or exchange less than the Fair Market Value of such shares of Common Stock on the date of such issuance, sale or exchange, then the Conversion Rate in effect immediately prior to such issuance, sale or exchange shall be adjusted by multiplying such Conversion Rate by a fraction, the numerator of which shall be the product of (i) the Fair Market Value of a share of Common Stock on the Trading Day immediately preceding the first public announcement of such issuance, sale or exchange multiplied by (ii) the sum of the number of shares of Common Stock outstanding on such day plus the number of shares of Common Stock so issued, sold or exchanged by the Corporation, and the denominator of which shall be the sum of (i) the Fair Market Value of all the shares of Common Stock outstanding on the Trading Day immediately preceding the first public announcement of such issuance, sale or exchange plus (ii) the Fair Market Value of the consideration received by the Corporation in respect of such issuance, sale or exchange of shares of Common Stock. In case the Corporation shall, at any time or from time to time while any of the shares of Class 2 ESOP Preferred Stock are outstanding, issue, sell or exchange any Equity Security (other than any Rights, Equity Securities issued in connection with any employee or director incentive or benefit plan or arrangement of the Corporation or any subsidiary or Common Stock) other than any such issuance to all holders of shares of Common Stock as a dividend or distribution (including by way of a reclassification of shares or a recapitalization of the Corporation) for a consideration having a Fair Market Value on the date of such issuance, sale or exchange less than the Non-Dilutive Amount, then the Conversion Rate shall be adjusted by multiplying such Conversion Rate by a fraction, the numerator of which shall be the product of (i) the Fair Market Value of a share of Common Stock on the Trading Day immediately preceding the first public announcement of such issuance, sale or exchange multiplied by (ii) the sum of the number of shares of Common Stock outstanding on such day plus the maximum number of shares of Common Stock underlying or which could be acquired pursuant to such Equity Security at the time of the issuance, sale or exchange of such Equity Security (assuming shares of Common Stock could be acquired pursuant to such Equity Security at such time), and the denominator of which shall be the sum of (i) the Fair Market Value of all the shares of Common Stock outstanding on the Trading Day immediately preceding the first public announcement of such issuance, sale or exchange plus (ii) the Fair Market Value of the consideration received by the Corporation in respect of such issuance, sale or exchange of such Equity Security plus (iii) the Fair Market Value as of the time of such issuance of the consideration which the Corporation would receive upon exercise, conversion or exchange in full of all such Equity Securities.
 

a. In case the Corporation shall, at any time or from time to time while any of the shares of Class 2 ESOP Preferred Stock are outstanding, make an Extraordinary Distribution in respect of the Common Stock or effect a Pro Rata Repurchase of Common Stock, the Conversion Rate in effect immediately prior to such Extraordinary Distribution or Pro Rata Repurchase shall be adjusted by multiplying such Conversion Rate by a fraction, the numerator of which shall be the product of (i) the number of shares of Common Stock outstanding immediately before such Extraordinary Dividend or Pro Rata Repurchase (minus, in the case of a Pro Rata Repurchase, the number of shares of Common Stock repurchased by the Corporation) multiplied by (ii) the Fair Market Value of a share of Common Stock on the record date with respect to such Extraordinary Distribution or on the Trading Day immediately preceding the first public announcement by the Corporation or any of its Affiliates of the intent to effect a Pro Rata Repurchase, as the case may be, and the denominator of which shall be (i) the product of (x) the number of shares of Common Stock outstanding immediately before such Extraordinary Distribution or Pro Rata Repurchase multiplied by (y) the Fair Market Value of a share of Common Stock on the record date with respect to such Extraordinary Distribution, or on the Trading Day immediately preceding the first public announcement by the Corporation or any of its Affiliates of the intent to effect a Pro Rata Repurchase, as the case may be, minus (ii) the Fair Market Value of the Extraordinary Distribution or the aggregate purchase price of the Pro Rata Repurchase, as the case may be (provided that such denominator shall never be less than 1.0); provided, however, that no Pro Rata Repurchase shall cause an adjustment to the Conversion Rate unless the amount of all cash dividends and distributions made to holders of Common Stock during the period from the most recent Extraordinary Distribution Measuring Date preceding the Effective Date of such Pro Rata Repurchase, when combined with the aggregate amount of all Pro Rata Repurchases, including such Pro Rata Repurchase (for all purposes of this Section 7.4(d), including only that portion of the Fair Market Value of the aggregate purchase price of each Pro Rata Repurchase which is in excess of the Fair Market Value of the Common Stock repurchased as determined on the Trading Day immediately preceding the first public announcement by the Corporation or any of its Affiliates of the intent to effect each such Pro Rata Repurchase), the Effective Dates of which fall within such period, exceeds twelve and one-half percent (12 1/2%) of the aggregate Fair Market Value of all shares of Common Stock outstanding on the Trading Day immediately preceding the first public announcement by the Corporation or any of its Affiliates of the intent to effect such Pro Rata Repurchase. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such Extraordinary Distribution or immediately after the Effective Date of such Pro Rata Repurchase. Solely as an adjustment applicable to shares of Class 2 ESOP Preferred Stock that are being converted into Common Stock as of a given date, and not as a permanent adjustment to the Conversion Rate, the Conversion Rate in effect immediately prior to such conversion shall be adjusted by multiplying such Conversion Rate by a fraction, the numerator of which shall be the product of (i) the number of shares of Common Stock outstanding immediately before such conversion multiplied by (ii) the Fair Market Value of a share of Common Stock on the date of such conversion, and the denominator of which shall be (i) the product of (x) the number of shares of Common Stock outstanding immediately before such conversion multiplied by (y) the Fair Market Value of a share of Common Stock on the date of such conversion minus (ii) the Fair Market Value of the cash dividend and distributions made on or before the date of such conversion with a record date after the most recent Extraordinary Distribution Measuring Date upon which Participating Dividends were paid in full, but only to the extent that such cash dividends and distributions (a) would entitle the holders of the shares of Class 2 ESOP Preferred Stock outstanding on such conversion date to a dividend under Section 3.1 that has not been paid and (b) would not constitute an Extraordinary Distribution (provided that such denominator shall never be less than 1.0).

(e) No adjustment in the Conversion Rate shall be required unless such adjustment would require a cumulative increase or decrease of at least 0.01% in such rate; provided that any adjustments that by reason of this subparagraph (e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided further that any adjustment shall be required and made in accordance with the provisions of this Section 6.4 (other than this subparagraph (e)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of shares of Common Stock. Notwithstanding any other provisions of this Section 6, the Corporation shall not be required to make any adjustments of the Conversion Rate for the issuance of any shares of Common Stock pursuant to any plan providing for the reinvestment of dividends on securities of the Corporation so long as the holders of the Class 2 ESOP Preferred Stock shall be entitled to participate therein on substantially the same terms as holders of Common Stock. All calculations under this Section 6 shall be made to the nearest cent (with $.005 being rounded upward), one-tenth of a share (with .05 of a share being rounded upward) or, in the case of the Conversion Rate, one hundred millionth of a share (with .000000005 being rounded upward), as the case may be. Anything in this Section 6.4 to the contrary notwithstanding, the Corporation shall be entitled, to the extent permitted by law, to make such reductions in the Conversion Rate, in addition to those required by this Section 6.4, as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, reclassification or combination of shares, distribution of rights or warrants to purchase stock or securities, or a distribution of other assets (other than cash dividends) hereafter made by the Corporation to its stockholders shall not be taxable.

        6.5 If: (a) the Corporation shall declare a dividend or any other distribution on the Common Stock (other than the Rights); or

(b) the Corporation shall authorize the granting to the holders of the Common Stock of Equity Securities (other than Common Stock) to subscribe for or purchase any Equity Security; or

(c) there shall be any reclassification of the Common Stock (other than an event to which Section 6.4(a) applies) or any consolidation or merger to which the Corporation is a party and for which approval of any stockholders of the Corporation is required, or the sale or transfer of all or substantially all of the assets of the Corporation as an entirety; or

(d) there shall occur the voluntary or involuntary liquidation, dissolution or winding up of the Corporation; or

(e) there shall occur any Pro Rata Repurchase,

then the Corporation shall cause to be filed with the Transfer Agent and shall cause to be mailed to the holders of shares of the Class 2 ESOP Preferred Stock at their addresses as shown on the stock records of the Corporation, as promptly as possible, but at least 10 days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution or granting of Equity Securities, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or granting of Equity Securities are to be determined, (B) the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up or (C) the number of shares subject to such offer for a Pro Rata Repurchase and the purchase price payable by the Corporation pursuant to such offer. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 6.

        6.6     Whenever the Conversion Rate is adjusted as herein provided, the Corporation shall promptly file with the Transfer Agent an officer's certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring and the manner of effecting such adjustment which certificate shall be prima facie evidence of the correctness of such adjustment. Promptly after delivery of such certificate, the Corporation shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the effective date of such adjustment or adjustments and shall mail such notice of such adjustment or adjustments to the holder of each share of Class 2 ESOP Preferred Stock at such holder's last address as shown on the stock records of the Corporation.

        6.7     In any case in which Section 6.4 provides that an adjustment shall become effective on the day next following a record date for an event, the Corporation may defer until the occurrence of such event (A) issuing to the holder of any share of Class 2 ESOP Preferred Stock converted after such record date and before the occurrence of such event the additional shares of Common Stock or other securities issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock or other securities issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount in cash in lieu of any fraction pursuant to Section 6.3.

        6.8     For purposes of this Section 6, the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then owned or held by or for the account of the Corporation or any subsidiary. The Corporation shall not pay a dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation.

        6.9     There shall be no adjustment of the Conversion Rate in case of the issuance of any stock of the Corporation in a reorganization, acquisition or other similar transaction except as specifically set forth in Section 6 or Section 7. If any action or transaction would require adjustment of the Conversion Rate pursuant to more than one paragraph of this Section 6, only one adjustment shall be made and such adjustment shall be the amount of adjustment that has the highest absolute value.

        6.10     If the Corporation shall take any action affecting the Common Stock, other than action described in this Section 6, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of the shares of Class 2 ESOP Preferred Stock, the Conversion Rate for the Class 2 ESOP Preferred Stock may be adjusted, to the extent permitted by law, in such manner, if any, and at such time, as the Board of Directors may determine to be equitable in the circumstances.

        6.11     The Corporation covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock or its issued shares of Common Stock held in its treasury, or both, for the purpose of effecting conversion of the Class 2 ESOP Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Class 2 ESOP Preferred Stock not theretofore converted. For purposes of this Section 6.11, the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of Class 2 ESOP Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single holder.

        The Corporation covenants that any shares of Common Stock issued upon conversion of the Class 2 ESOP Preferred Stock shall be validly issued, fully paid and non-assessable.

        The Corporation shall endeavor to list the shares of Common Stock (or other securities) required to be delivered upon conversion of the Class 2 ESOP Preferred Stock, prior to such delivery, upon each national securities exchange, if any, upon which the outstanding Common Stock (or other securities) is listed at the time of such delivery.

        Prior to the delivery of any securities that the Corporation shall be obligated to deliver upon conversion of the Class 2 ESOP Preferred Stock, the Corporation shall endeavor to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority.

        6.12     The Corporation shall pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock or other securities or property on conversion of the Class 2 ESOP Preferred Stock pursuant hereto; provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock or other securities or property in a name other than that of the holder of the Class 2 ESOP Preferred Stock to be converted and no such issue or delivery shall be made unless and until the person requesting any such issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid.

        6.13     If, prior to the Distribution Date (as defined for purposes of the Rights), the Corporation shall issue shares of Common Stock upon conversion of shares of Class 2 ESOP Preferred Stock as contemplated by this Section 6, the Corporation shall issue together with each such share of Common Stock that number of Rights as are then issuable, pursuant to the Rights Agreement (or any successor rights plan or plans adopted in replacement of the Rights Agreement), per share of such Common Stock so issued, but only if at such time such Rights or rights are, pursuant to the relevant rights agreement, to be represented by certificates representing shares of Common Stock and have not expired.

        Section 7.   Consolidation, Merger, etc.

        7.1     In case the Corporation shall enter into any consolidation, merger, share exchange or similar transaction, however named, pursuant to which the outstanding shares of Common Stock are to be exchanged solely for or changed, reclassified or converted solely into stock of any successor or resulting or other company (including the Corporation) that constitutes ''qualifying employer securities'' with respect to holders of Class 2 ESOP Preferred Stock within the meaning of Section 409(l) of the Code and Section 407(d)(5) of the Employee Retirement Income Security Act of 1974, as amended, or any successor provisions of law, and, if applicable, for a cash payment in lieu of fractional shares, if any, proper provisions shall be made so that upon consummation of such transaction, the shares of Class 2 ESOP Preferred Stock shall be converted into or exchanged for preferred stock of such successor or resulting or other company, having in respect of such company, the same powers, preferences and relative, participating, optional or other special rights (including the rights provided by this Section 7), and the qualifications, limitations or restrictions thereof, that the Class 2 ESOP Preferred Stock had, in respect of the Corporation, immediately prior to such transaction, except that after such transaction each share of preferred stock of the surviving or resulting or other company so received in such transaction upon conversion or exchange of the Class 2 ESOP Preferred Stock shall be convertible, otherwise on the terms and conditions provided by Section 6 hereof, into the number and kind of ''qualifying employer securities'' receivable in such transaction by a holder of the number of shares of Common Stock into which a share of Class 2 ESOP Preferred Stock could have been converted immediately prior to such transaction; provided, however, that if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by the holders of the Class 2 ESOP Preferred Stock, then the shares of preferred stock of the surviving or resulting or other company received in such transaction upon conversion or exchange of Class 2 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be convertible into or exchangeable solely for ''qualifying employer securities'' (together, if applicable, with a cash payment in lieu of fractional shares) with the effect provided above on the basis of the number and kind of qualifying employer securities receivable in such transaction by a holder of the number of shares of Common Stock into which such shares of Class 2 ESOP Preferred Stock could have been converted immediately prior to such transaction (provided that if the kind or amount of qualifying employer securities receivable in such transaction is not the same for each such share of Common Stock, then the kind and amount so receivable in such transaction for each share of Common Stock for this purpose shall be deemed to be the kind and amount so receivable per share by the plurality of such shares of Common Stock). The rights of the preferred stock of such successor or resulting or other company so received in such transaction upon conversion or exchange of the Class 2 ESOP Preferred Stock shall successively be subject to adjustments pursuant to Section 6 hereof following such transaction as nearly equivalent to the adjustments provided for by such Sections prior to such transaction.

        7.2     In case the Corporation shall enter into any consolidation, merger, share exchange or similar transaction, however named, pursuant to which the outstanding shares of Common Stock are to be exchanged for or changed, reclassified or converted into other stock or securities or cash or any other property, or any combination thereof, other than any such consideration which is constituted solely of ''qualifying employer securities'' (as referred to in Section 7.1) and cash payments, if applicable, in lieu of fractional shares, proper provisions shall be made so that upon consummation of such transaction the outstanding shares of Class 2 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as are applicable to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in like kind) receivable by holders of the number of shares of Common Stock into which such shares of Class 2 ESOP Common Stock Preferred Stock could have been converted immediately prior to such transaction; provided, however, that if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by holders of the Class 2 ESOP Preferred Stock, then the shares of Class 2 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in kind) receivable by a holder of the number of shares of Common Stock into which such shares of Class 2 ESOP Preferred Stock could have been converted immediately prior to such transaction if such holder of Common Stock failed to exercise any rights of election to receive any kind or amount of stock, securities, cash or other property receivable in such transaction (provided that if the kind or amount of stock, securities, cash or other property receivable in such transaction are not the same for each non-electing share, then the kind and amount of stock, securities, cash or other property so receivable upon such transaction for each non-electing share shall be the kind and amount so receivable per share by the plurality of the non-electing shares).

        7.3     In case the Corporation shall enter into any agreement providing for any consolidation, merger, share exchange or similar transaction described in this Section 7, then the Corporation shall as soon as practicable thereafter (and in any event at least fifteen (15) Business Days before consummation of such transaction) give notice of such agreement and the material terms thereof to each holder of Class 2 ESOP Preferred Stock. The Corporation shall not consummate any consolidation, merger, share exchange or similar transaction unless all of the terms of this Section 7 have been complied with.

        Section 8.   Ranking.

        8.1     Any class or series of stock of the Corporation shall be deemed to rank:

(a) prior to the Class 2 ESOP Preferred Stock, as to the payment of dividends or as to distributions of assets upon liquidation, dissolution or winding up, as the case may be, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class 2 ESOP Preferred Stock;

(b) on a parity with the Class 2 ESOP Preferred Stock as to the payment of dividends, whether or not the dividend rates or dividend payment dates thereof be different from those of the Class 2 ESOP Preferred Stock, if the holders of such class or series of stock and the Class 2 ESOP Preferred Stock shall be entitled to the receipt of dividends in proportion to their respective amounts of accrued and unpaid dividends per share, without preference or priority one over the other, and on a parity with the Class 2 ESOP Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the liquidation prices per share thereof be different from those of the Class 2 ESOP Preferred Stock, if the holder of such class or series of stock and the Class 2 ESOP Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective liquidation preferences, without preference or priority one over the other; and

(c) junior to the Class 2 ESOP Preferred Stock, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, as the case may be, if the holders of Class 2 ESOP Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series.

        8.2     The Series A Preferred Stock and the Series B Preferred Stock, shall each be deemed to rank prior to the Class 2 ESOP Preferred Stock both as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up. The Series D Preferred Stock shall be deemed to rank prior to the Class 2 ESOP Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up. The Class 1 ESOP Preferred Stock shall be deemed to rank on a parity with the Class 2 ESOP Preferred Stock as to the payment of dividends and as to amounts distributable upon liquidation, dissolution or winding up. The Common Stock, the Director Preferred Stocks, the Voting Preferred Stocks and the Series C Preferred Stock shall each be deemed to rank junior to the Class 2 ESOP Preferred Stock both as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up.

        Section 9.   Voting. The holders of shares of Class 2 ESOP Preferred Stock shall have the following voting rights:

        9.1     Unless the affirmative vote or consent of the holders of a greater number of shares of Class 2 ESOP Preferred Stock shall then be required by law or this Restated Certificate, and in addition to any other vote required by law or this Restated Certificate, the affirmative vote or written consent of the holders of at least a majority of all of the outstanding shares of Class 2 ESOP Preferred Stock, voting separately as a class, shall be necessary for authorizing, effecting or validating the amendment, alteration or repeal (including any amendment, alteration or repeal by operation of merger or consolidation) of any of the provisions of this Restated Certificate or of any certificate amendatory thereof or supplemental thereto (including any Certificate of Designation, Preferences and Rights or any similar document relating to any series of Serial Preferred Stock) that would adversely affect the preferences, rights, powers or privileges of the Class 2 ESOP Preferred Stock; provided, however, that the amendment of the provisions of this Restated Certificate so as to authorize or create, or to increase the authorized amount of, any class or series of stock of the Corporation ranking on a parity with or junior to the Class 2 ESOP Preferred Stock both as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up of the Corporation shall not be deemed to adversely affect the preferences, rights, powers or privileges of Class 2 ESOP Preferred Stock.

        9.2     Unless the affirmative vote or consent of the holders of a greater number of shares of Class 2 ESOP Voting Preferred Stock shall then be required by law or this Restated Certificate, and in addition to any other vote required by law or this Restated Certificate, the affirmative vote or written consent of the holders of at least a majority of all of the outstanding shares of Class 2 ESOP Preferred Stock, voting separately as a class, shall be necessary for authorizing, effecting or validating the creation, authorization or issuance of any shares of any class or series of stock of the Corporation ranking prior to the Class 2 ESOP Preferred Stock either as to payment of dividends or as to distributions upon liquidation, dissolution or winding up, or the reclassification of any authorized stock of the Corporation into any such prior shares, or the creation, authorization or issuance of any obligation or security convertible into or evidencing the right to purchase any such prior shares.

        9.3     For purposes of the foregoing provisions of Sections 9.1 and 9.2, each share of Class 2 ESOP Preferred Stock shall have one (1) vote per share. Except as otherwise required by applicable law or as set forth herein, the shares of Class 2 ESOP Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers and the consent of the holders thereof shall not be required for the taking of any corporate action.

        Section 10.   No Redemption. The Class 2 ESOP Preferred Stock shall not be redeemable in whole or in part.

        Section 11.   Record Holders. The Corporation and the Transfer Agent (if other than the Corporation) may deem and treat the record holder of any shares of Class 2 ESOP Preferred Stock as the true and lawful owner thereof for all purposes, and, except as otherwise provided by law, neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary.

PART IV

Class P ESOP Voting Junior Preferred Stock

        Unless otherwise indicated, any reference in this Article FOURTH, Part IV to ''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall refer to a Section, Subsection, paragraph, subparagraph or clause of this Article FOURTH, Part IV.

        Section 1.   Number of Shares; Designation; Issuances; Automatic Conversion.

        1.1     The Class P ESOP Voting Junior Preferred Stock of the Corporation (the ''Class P Voting Preferred Stock'') shall consist of 11,600,000 shares, par value $0.01 per share.

        1.2     Shares of Class P Voting Preferred Stock shall be issued only to a trustee or trustees acting on behalf of (i) the UAL Corporation Employee Stock Ownership Plan (the ''ESOP''), (ii) the UAL Corporation Supplemental ESOP (the ''Supplemental ESOP'') or (iii) any other employee stock ownership trust or plan or other employee benefit plan of the Corporation or any of its subsidiaries (each, a ''Plan''). In the event of any sale, transfer or other disposition (including, without limitation, upon a foreclosure or other realization upon shares of Class P Voting Preferred Stock pledged as security for any loan or loans made to a Plan or to the trustee or the trustees acting on behalf of a Plan) (hereinafter a ''transfer'') of shares of Class P Voting Preferred Stock to any person (including, without limitation, any participant in a Plan) other than (x) any Plan or trustee or trustees of a Plan or (y) any pledgee of such shares acquiring such shares as security for any loan or loans made to the Plan or to any trustee or trustees acting on behalf of the Plan, the shares of Class P Voting Preferred Stock so transferred, upon such transfer and without any further action by the Corporation or the holder, shall be automatically converted into shares of Common Stock at the applicable Conversion Rate in accordance with Section 9 hereof and thereafter such transferee shall not have any of the voting powers, preferences or relative, participating, optional or special rights ascribed to shares of Class P Voting Preferred Stock hereunder, but, rather, shall have only the powers and rights pertaining to the Common Stock into which such shares of Class P Voting Preferred Stock shall be so converted. In the event of any such automatic conversion provided for in this Section 1.2, such transferee shall be treated for all purposes as the record holder of the shares of Common Stock into which the Class P Voting Preferred Stock shall have been converted as of the date of such conversion. Certificates representing shares of Class P Voting Preferred Stock shall be legended to reflect such consequences of a transfer. The shares of Common Stock issued upon any conversion in accordance with Section 9 hereof or this Section 1.2 may be transferred by the holder thereof as permitted by law.

        Section 2.   Definitions. For purposes of the Class P Voting Preferred Stock, the following terms shall have the meanings indicated:

        2.1   ''Available Unissued ESOP Shares'' shall have the meaning set forth in Article FIFTH, Section 1.5 of this Restated Certificate.

        2.2   ''Board of Directors'' shall mean the board of directors of the Corporation or any committee of such board of directors authorized by such board of directors to perform any of its responsibilities with respect to the Class P Voting Preferred Stock.

        2.3   ''Business Day'' shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.

        2.4   ''Class 1 ESOP Convertible Preferred Stock'' shall mean the Class 1 ESOP Convertible Preferred Stock, par value $0.01 per share, of the Corporation.

        2.5   ''Class 2 ESOP Convertible Preferred Stock'' shall mean the Class 2 ESOP Convertible Preferred Stock, par value $0.01 per share, of the Corporation.

        2.6   ''Class I Preferred Stock'' shall mean the Class I Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.7   ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.8   ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.9   ''Class P Voting Preferred Stock'' shall have the meaning set forth in Section 1 hereof.

        2.10 ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.11 ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.12 ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.13 ''Common Stock'' shall mean the common stock, par value $0.01 per share, of the Corporation.

        2.14 ''Conversion Rate'' shall have the meaning set forth in Section 9.1 hereof.

        2.15 ''Current Market Price'' of publicly traded shares of Common Stock or any other class or series of capital stock or other security of the Corporation or any other issuer for any day shall mean the last reported sales price, regular way, on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices on such day, regular way, in either case as reported on the New York Stock Exchange Composite Tape or, if such security is not listed or admitted for trading on the New York Stock Exchange, Inc. (''NYSE''), on the principal national securities exchange on which such security is listed or admitted for trading or quoted or, if not listed or admitted for trading or quoted on any national securities exchange, on the Nasdaq National Market or, if such security is not quoted on such National Market, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by the National Association of Securities Dealers, Inc. Automated Quotation System (''NASDAQ'') or, if bid and asked prices for such security on such day shall not have been reported through NASDAQ, the average of the bid and asked prices on such day as furnished by any NYSE member firm regularly making a market in such security selected for such purpose by the Board of Directors.

        2.16 ''Director Preferred Stocks'' shall mean, collectively, the Class I Preferred Stock, the Class Pilot MEC Preferred Stock, the Class IAM Preferred Stock and the Class SAM Preferred Stock.

        2.17 ''ESOP Convertible Preferred Stocks'' shall mean, collectively, the Class 1 ESOP Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred Stock.

        2.18 ''Issue Date'' shall mean the first date on which shares of Class P Voting Preferred Stock are issued.

        2.19 ''Liquidation Preference'' shall have the meaning set forth in Section 4.1 hereof.

        2.20 ''Measuring Date'' shall mean that date which is the 365th day following the Issue Date.

        2.21 ''Pilot Fraction'' shall mean 0.4623.

        2.22 ''Restated Certificate'' shall mean the Restated Certificate of Incorporation of the Corporation, as amended from time to time.

        2.23 ''Series A Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series A Convertible Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.

        2.24 ''Series B Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series B Preferred Stock in Article FOURTH, Part I.B of this Restated Certificate.

        2.25 ''Series C Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series C Junior Participating Preferred Stock in Article FOURTH, Part I.C of this Restated Certificate.

        2.26 ''Series D Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series D Redeemable Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.

        2.27     [Reserved]

        2.28 ''set apart for payment'' shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of stock of the Corporation ranking on a parity with or junior to the Class P Voting Preferred Stock as to distributions upon liquidation, dissolution or winding up of the Corporation are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then ''set apart for payment'' with respect to the Class P Voting Preferred Stock shall mean, with respect to such distributions, placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.

        2.29 ''Termination Date'' shall have the meaning set forth in Article FIFTH, Section 1.72 of this Restated Certificate.

        2.30 ''Trading Day'' shall mean any day on which the securities in question are traded on the NYSE, or if such securities are not listed or admitted for trading or quoted on the NYSE, on the principal national securities exchange on which such securities are listed or admitted, or if not listed or admitted for trading or quoted on any national securities exchange, on the Nasdaq National Market, or if such securities are not quoted on such National Market, in the applicable securities market in which the securities are traded.

        2.31 ''Transfer Agent'' means the Corporation or such agent or agents of the Corporation as may be designated from time to time by the Board of Directors as the transfer agent for the Class P Voting Preferred Stock.

        2.32     [Reserved]

        2.33 ''Voting Preferred Stocks'' shall mean, collectively, the Class P Voting Preferred Stock, the Class M Voting Preferred Stock and the Class S Voting Preferred Stock.

        Section 3.   Dividends. The holders of shares of the Class P Voting Preferred Stock as such shall not be entitled to receive any dividends or other distributions (except as provided in Section 4 below).

        Section 4.     Payments upon Liquidation.

        4.1     In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for payment to the holders of any class or series of stock of the Corporation that ranks junior to the Class P Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, the holders of the shares of Class P Voting Preferred Stock shall be entitled to receive $0.01 per share of Class P Voting Preferred Stock (the ''Liquidation Preference''), but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of Class P Voting Preferred Stock shall be insufficient to pay in full the Liquidation Preference and the liquidation preference on all other shares of any class or series of stock of the Corporation that ranks on a parity with the Class P Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Class P Voting Preferred Stock and any such other parity stock ratably in accordance with the respective amounts that would be payable on such shares of Class P Voting Preferred Stock and any such other parity stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with or into one or more corporations, or (ii) a sale, lease, exchange or transfer of all or substantially all of the Corporation's assets, shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation.

        4.2     Subject to the rights of the holders of shares of any series or class of stock ranking prior to or on a parity with the Class P Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, after payment shall have been made to the holders of the Class P Voting Preferred Stock, as and to the fullest extent provided in this Section 4, any other series or class of stock of the Corporation that ranks junior to the Class P Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class P Voting Preferred Stock shall not be entitled to share therein.

        Section 5.   Shares to be Retired. All shares of Class P Voting Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be retired and shall not be reissued.

        Section 6.   Ranking.

        6.1     Any class or series of stock of the Corporation shall be deemed to rank:

(a) prior to the Class P Voting Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of Class P Voting Preferred Stock;

(b) on a parity with the Class P Voting Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the liquidation prices per share thereof be different from those of the Class P Voting Preferred Stock, if the holders of such class or series and the Class P Voting Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective liquidation preferences, without preference or priority one over the other; and

(c) junior to the Class P Voting Preferred Stock, as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of Class P Voting Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of shares of such class or series.

        6.2     The Series A Preferred Stock, the Series B Preferred Stock, the Series D Preferred Stock and the ESOP Convertible Preferred Stocks shall be deemed to rank prior to the Class P Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up. The other Voting Preferred Stocks and the Director Preferred Stocks shall each be deemed to rank on a parity with the Class P Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up. The Common Stock and the Series C Preferred Stock shall each be deemed to rank junior to the Class P Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up.

        Section 7.   Consolidation, Merger, etc.

        7.1     In case the Corporation shall enter into any consolidation, merger, share exchange or similar transaction, however named, pursuant to which the outstanding shares of Common Stock are to be exchanged solely for or changed, reclassified or converted solely into stock of any successor, resulting or other company (including the Corporation) (each of the foregoing is referred to herein as ''Merger Transaction'') that constitutes ''qualifying employer securities'' with respect to holders of Class P Voting Preferred Stock within the meaning of Section 409(l) of the Code and Section 407(d)(5) of the Employee Retirement Income Security Act of 1974, as amended, or any successor provisions of law, and, if applicable, for a cash payment in lieu of fractional shares, if any, proper provisions shall be made so that upon consummation of such transaction, the shares of Class P Voting Preferred Stock shall be converted into or exchanged for preferred stock of such successor, resulting or other company (the ''New Pilot Voting Preferred Stock''), having in respect of such company, except as provided below, the same powers, preferences and relative, participating, optional or other special rights (including the rights provided by this Section 7), and the qualifications, limitations or restrictions thereof, that the Class P Voting Preferred Stock had, in respect of the Corporation, immediately prior to such transaction, except that after such transaction each share of such New Pilot Voting Preferred Stock so received in such transaction upon conversion or exchange of the Class P Voting Preferred Stock shall be convertible, otherwise on the terms and conditions provided by Section 9 hereof, into the number and kind of ''qualifying employer securities'' receivable in such transaction by a holder of the number of shares of Common Stock into which a share of Class P Voting Preferred Stock could have been converted immediately prior to such transaction; provided, however, that the holder of each share of New Pilot Voting Preferred Stock shall be entitled to a number of votes per share equal to a fraction, the numerator of which is the product of (x) the Pilot Fraction and (y) the aggregate number of votes that would be entitled to be cast by the holders of the securities of the surviving, resulting or other corporation into which the ESOP Convertible Preferred Stocks are changed, reclassified or converted (collectively, the ''New ESOP Convertible Preferred Stocks'') upon consummation of such transaction (assuming for such purpose the conversion of the New ESOP Convertible Preferred Stocks), and the denominator of which is the aggregate number of shares of New Pilot Voting Preferred Stock then outstanding; provided, further that if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by the holders of the Class P Voting Preferred Stock, then the shares of New Pilot Voting Preferred Stock received in such transaction upon conversion or exchange of Class P Voting Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be convertible into or exchangeable solely for ''qualifying employer securities'' (together, if applicable, with a cash payment in lieu of fractional shares) with the effect provided above on the basis of the number and kind of qualifying employer securities receivable in such transaction by a holder of the number of shares of Common Stock into which such shares of Class P Voting Preferred Stock could have been converted immediately prior to such transaction (provided that if the kind or amount of qualifying employer securities receivable in such transaction is not the same for each such share of Common Stock, then the kind and amount so receivable in such transaction for each share of Common Stock for this purpose shall be deemed to be the kind and amount so receivable per share by the plurality of such shares of Common Stock). The rights of the New Pilot Voting Preferred Stock so received in such transaction upon conversion or exchange of the Class P Voting Preferred Stock shall successively be subject to adjustment pursuant to Section 9 hereof following such transaction as nearly equivalent to the adjustments provided for by such Section prior to such transaction.

        7.2     In case the Corporation shall enter into any Merger Transaction, however named, pursuant to which the outstanding shares of Common Stock are exchanged for or changed, reclassified or converted into other stock or securities or cash or any other property, or any combination thereof, other than any such consideration which is constituted solely of ''qualifying employer securities'' (as referred to in Section 7.1) and cash payments, if applicable, in lieu of fractional shares, proper provisions shall be made so that each outstanding share of Class P Voting Preferred Stock shall, by virtue of and upon consummation of such transaction, on the same terms as are applicable to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in like kind) receivable by holders of the number of shares of Common Stock into which such shares of Class P Voting Preferred Stock could have been converted immediately prior to such transaction; provided, however, that if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by holders of the Class P Voting Preferred Stock, then the shares of Class P Voting Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in kind) receivable by a holder of the number of shares of Common Stock into which such shares of Class P Voting

        Preferred Stock could have been converted immediately prior to such transaction if such holder of Common Stock failed to exercise any rights of election to receive any kind or amount of stock, securities, cash or other property receivable in such transaction (provided that if the kind or amount of stock, securities, cash or other property receivable in such transaction are not the same for each non-electing share, then the kind and amount of stock, securities, cash or other property so receivable upon such transaction for each non-electing share shall be the kind and amount so receivable per share by the plurality of the non-electing shares).

        7.3     In case the Corporation shall enter into any agreement providing for any Merger Transaction described in Section 7.1 or 7.2, then the Corporation shall as soon as practicable thereafter (and in any event at least fifteen (15) Business Days before consummation of such transaction) give notice of such agreement and the material terms thereof to each holder of Class P Voting Preferred Stock. The Corporation shall not consummate any such Merger Transaction unless all of the terms of this Section 7 have been complied with.

        Section 8.   Voting. The holders of shares of Class P Voting Preferred Stock shall have the following voting rights:

        8.1     Except as otherwise required by law or provided in this Restated Certificate, the holders of Class P Voting Preferred Stock shall be entitled to vote on all matters submitted to a vote of the holders of Common Stock of the Corporation, voting together as a single class with the holders of Common Stock and the holders of such other classes and series of stock that vote together with the Common Stock as a single class. For purposes of this Section 8.1, with respect to each vote or consent with a record date occurring on or after the Termination Date, each share of Class P Voting Preferred Stock then outstanding shall be entitled to the number of votes per share (rounded to the nearest one hundred millionth of a vote) equal to a fraction, the numerator of which is the product of (i) the sum of (x) the number of shares of Common Stock into which the ESOP Convertible Preferred Stocks then outstanding can be converted as of the record date with respect to such vote or consent and (y) the number of Available Unissued ESOP Shares as of such record date and (ii) the Pilot Fraction, and the denominator of which is the number of shares of Class P Voting Preferred Stock outstanding as of such record date. For purposes of this Section 8.1, the Corporation shall certify to the holders of Class P Voting Preferred Stock and to the judges or similar officials appointed for the purpose of tabulating votes at any meeting of stockholders as soon as practicable following the record date for the determination of stockholders entitled to notice of or to vote at any meeting of stockholders, but in no event less than five Trading Days before such meeting, with respect to record dates from and after the Termination Date, the number of shares of Common Stock into which a share of ESOP Convertible Preferred Stock was convertible as of the record date for such vote or votes. The Corporation shall be deemed to satisfy the requirements of the preceding sentence if such matters are specified in any proxy statement mailed to all stockholders entitled to vote on such matter or matters.

        8.2     Unless the affirmative vote or consent of the holders of a greater number of shares of Class P Voting Preferred Stock shall then be required by law or this Restated Certificate, and in addition to any other vote required by law or this Restated Certificate, the affirmative vote or written consent of the holders of at least a majority of all of the outstanding shares of Class P Voting Preferred Stock, voting separately as a class, shall be necessary for authorizing, effecting or validating the amendment, alteration or repeal (including any amendment, alteration or repeal by operation of merger or consolidation) of any of the provisions of this Restated Certificate or of any certificate amendatory thereof or supplemental thereto (including any Certificate of Designation, Preferences and Rights or any similar document relating to any series of Serial Preferred Stock) which would adversely affect the preferences, rights, powers or privileges of the Class P Voting Preferred Stock or of either of the ESOP Convertible Preferred Stocks.

        8.3     For purposes of the foregoing provisions of Section 8.2, each share of Class P Voting Preferred Stock shall have one (1) vote per share.

        Section 9.   Automatic Conversion.

        9.1     Shares of Class P Voting Preferred Stock shall, as provided in Section 1.2, be automatically converted, from time to time, in part or in whole, respectively, upon any transfer thereof other than a transfer described in clauses (x) and (y) of Section 1.2 at a rate of one ten thousandth of a share of Common Stock per share of Class P Voting Preferred Stock to be converted (the ''Conversion Rate'').

        9.2     At the time that all of the shares of the ESOP Convertible Preferred Stocks cease to be outstanding for any reason whatsoever, including, without limitation, their conversion in full into Common Stock (the ''Final Conversion Date''), all outstanding shares of Class P Voting Preferred Stock shall be automatically converted, in full, into shares of Common Stock at the Conversion Rate then in effect.

        9.3     Following any conversion in accordance with Sections 9.1 and 9.2, (i) no holder of Class P Voting Preferred Stock shall have any of the voting powers, preferences, relative, participating, optional or special rights ascribed to shares of Class P Voting Preferred Stock hereunder, but, rather, shall have only the powers and rights pertaining to the Common Stock into which such shares of Class P Voting Preferred Stock have been so converted, and (ii) any holder of Class P Voting Preferred Stock shall be treated for all purposes as the record holder of the shares of Common Stock into which the Class P Voting Preferred Stock shall have been converted as of the date of the conversion of the shares of Class P Voting Preferred Stock.

        9.4     On or after the date of (i) a transfer of shares of Class P Voting Preferred Stock (other than as described in clauses (x) and (y) of Section 1.2) or (ii) the Final Conversion Date, each holder of a certificate or certificates formerly representing shares of Class P Voting Preferred Stock converted in accordance with Sections 9.1 and 9.2 shall surrender such certificate or certificates, duly endorsed or assigned to the Corporation or in blank, at the office of the Transfer Agent (if other than the Corporation) in the Borough of Manhattan, City of New York. Unless the shares issuable on conversion are to be issued in the same name as the name in which such certificate is registered, each such certificate shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid or that no such taxes are payable).

        9.5     No fractional shares or scrip representing fractions of shares of Common Stock shall be issued upon conversion of the Class P Voting Preferred Stock. Instead of any fractional interest in a share of Common Stock that would otherwise be deliverable upon the conversion of a share of Class P Voting Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash based upon the Current Market Price of Common Stock on the Trading Day immediately preceding the date of conversion. If more than one certificate shall be surrendered in respect of such conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion shall be computed on the basis of the aggregate number of shares of Class P Voting Preferred Stock formerly represented by the certificates so surrendered.

        9.6     In the event of an adjustment to the ''Conversion Rate'' in effect with respect to the ESOP Convertible Preferred Stocks, a corresponding adjustment shall be made to the Conversion Rate with respect to the Class P Voting Preferred Stock.

        Section 10.   Record Holders. The Corporation and the Transfer Agent (if other than the Corporation) may deem and treat the record holder of any shares of Class P Voting Preferred Stock as the true and lawful owner thereof for all purposes, and, except as otherwise provided by law, neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary.
 
 

PART V

Class M ESOP Voting Junior Preferred Stock

        Unless otherwise indicated, any reference in this Article FOURTH, Part V to ''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall refer to a Section, Subsection, paragraph, subparagraph or clause of this Article FOURTH, Part V.

        Section 1.     Number of Shares; Designation; Issuances; Automatic Conversion.

        1.1     The Class M ESOP Voting Junior Preferred Stock of the Corporation (the ''Class M Voting Preferred Stock'') shall consist of 9,300,000 shares, par value $0.01 per share.

        1.2     Shares of Class M Voting Preferred Stock shall be issued only to a trustee or trustees acting on behalf of (i) the UAL Corporation Employee Stock Ownership Plan (the ''ESOP''), (ii) the UAL Corporation Supplemental ESOP (the ''Supplemental ESOP'') or (iii) any other employee stock ownership trust or plan or other employee benefit plan of the Corporation or any of its subsidiaries (each, a ''Plan''). In the event of any sale, transfer or other disposition (including, without limitation, upon a foreclosure or other realization upon shares of Class M Voting Preferred Stock pledged as security for any loan or loans made to a Plan or to the trustee or the trustees acting on behalf of a Plan) (hereinafter a ''transfer'') of shares of Class M Voting Preferred Stock to any person (including, without limitation, any participant in a Plan) other than (x) any Plan or trustee or trustees of a Plan or (y) any pledgee of such shares acquiring such shares as security for any loan or loans made to the Plan or to any trustee or trustees acting on behalf of the Plan, the shares of Class M Voting Preferred Stock so transferred, upon such transfer and without any further action by the Corporation or the holder, shall be automatically converted into shares of Common Stock at the applicable Conversion Rate in accordance with Section 9 hereof and thereafter such transferee shall not have any of the voting powers, preferences or relative, participating, optional or special rights ascribed to shares of Class M Voting Preferred Stock hereunder, but, rather, shall have only the powers and rights pertaining to the Common Stock into which such shares of Class M Voting Preferred Stock shall be so converted. In the event of any such automatic conversion provided for in this Section 1.2, such transferee shall be treated for all purposes as the record holder of the shares of Common Stock into which the Class M Voting Preferred Stock shall have been converted as of the date of such conversion. Certificates representing shares of Class M Voting Preferred Stock shall be legended to reflect such consequences of a transfer. The shares of Common Stock issued upon any conversion in accordance with Section 9 hereof or this Section 1.2 may be transferred by the holder thereof as permitted by law.

        Section 2.   Definitions. For purposes of the Class M Voting Preferred Stock, the following terms shall have the meanings indicated:

        2.1   ''Available Unissued ESOP Shares'' shall have the meaning set forth in Article FIFTH, Section 1.5 of this Restated Certificate.

        2.2   ''Board of Directors'' shall mean the board of directors of the Corporation or any committee of such board of directors authorized by such board of directors to perform any of its responsibilities with respect to the Class M Voting Preferred Stock.

        2.3   ''Business Day'' shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.

        2.4   ''Class 1 ESOP Convertible Preferred Stock'' shall mean the Class 1 ESOP Convertible Preferred Stock, par value $0.01 per share, of the Corporation.

        2.5   ''Class 2 ESOP Convertible Preferred Stock'' shall mean the Class 2 ESOP Convertible Preferred Stock, par value $0.01 per share, of the Corporation.

        2.6   ''Class I Preferred Stock'' shall mean the Class I Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.7   ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.8   ''Class M Voting Preferred Stock'' shall have the meaning set forth in Section 1 hereof.

        2.9   ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.10 ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.11 ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.12 ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.13 ''Common Stock'' shall mean the common stock, par value $0.01 per share, of the Corporation.

        2.14 ''Conversion Rate'' shall have the meaning set forth in Section 9.1 hereof.

        2.15 ''Current Market Price'' of publicly traded shares of Common Stock or any other class or series of capital stock or other security of the Corporation or any other issuer for any day shall mean the last reported sales price, regular way on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices on such day, regular way, in either case as reported on the New York Stock Exchange Composite Tape or, if such security is not listed or admitted for trading on the New York Stock Exchange, Inc. (''NYSE''), on the principal national securities exchange on which such security is listed or admitted for trading or quoted or, if not listed or admitted for trading or quoted on any national securities exchange, on the Nasdaq National Market or, if such security is not quoted on such National Market, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by the National Association of Securities Dealers, Inc. Automated Quotation System (''NASDAQ'') or, if bid and asked prices for such security on such day shall not have been reported through NASDAQ, the average of the bid and asked prices on such day as furnished by any NYSE member firm regularly making a market in such security selected for such purpose by the Board of Directors.

        2.16 ''Director Preferred Stocks'' shall mean, collectively, the Class I Preferred Stock, the Class Pilot MEC Preferred Stock, the Class IAM Preferred Stock and the Class SAM Preferred Stock.

        2.17 ''ESOP Convertible Preferred Stocks'' shall mean, collectively, the Class 1 ESOP Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred Stock.

        2.18 ''Issue Date'' shall mean the first date on which shares of Class M Voting Preferred Stock are issued.

        2.19 ''Liquidation Preference'' shall have the meaning set forth in Section 4.1 hereof.

        2.20 ''Machinist Fraction" shall mean 0.3713.

        2.21 ''Measuring Date'' shall mean that date which is the 365th day following the Issue Date.

        2.22 ''Restated Certificate'' shall mean the Restated Certificate of Incorporation of the Corporation, as amended from time to time.

        2.23 ''Series A Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series A Convertible Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.

        2.24 ''Series B Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series B Preferred Stock in Article FOURTH, Part I.B of this Restated Certificate.

        2.25 ''Series C Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series C Junior Participating Preferred Stock in Article FOURTH, Part I.C of this Restated Certificate.

        2.26 ''Series D Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series D Redeemable Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.

        2.27 ''Set apart for payment'' shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of stock of the Corporation ranking on a parity with or junior to the Class M Voting Preferred Stock as to distributions upon liquidation, dissolution or winding up of the Corporation are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then ''set apart for payment'' with respect to the Class M Voting Preferred Stock shall mean, with respect to such distributions, placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.

        2.28 ''Termination Date'' shall have the meaning set forth in Article FIFTH, Section 1.72 of this Restated Certificate.

        2.29 ''Trading Day'' shall mean any day on which the securities in question are traded on the NYSE, or if such securities are not listed or admitted for trading or quoted on the NYSE, on the principal national securities exchange on which such securities are listed or admitted, or if not listed or admitted for trading or quoted on any national securities exchange, on the Nasdaq National Market, or if such securities are not quoted on such National Market, in the applicable securities market in which the securities are traded.

        2.30 ''Transfer Agent'' means the Corporation or such agent or agents of the Corporation as may be designated from time to time by the Board of Directors as the transfer agent for the Class M Voting Preferred Stock.

        2.31     [Reserved]

        2.32 ''Voting Preferred Stocks'' shall mean, collectively, the Class P Voting Preferred Stock, the Class M Voting Preferred Stock and the Class S Voting Preferred Stock.

        Section 3.   Dividends. The holders of shares of the Class M Voting Preferred Stock as such shall not be entitled to receive any dividends or other distributions (except as provided in Section 4 below).

        Section 4.   Payments upon Liquidation.

        4.1     In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for payment to the holders of any class or series of stock of the Corporation that ranks junior to the Class M Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, the holders of the shares of Class M Voting Preferred Stock shall be entitled to receive $0.01 per share of Class M Voting Preferred Stock (the ''Liquidation Preference''), but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of Class M Voting Preferred Stock shall be insufficient to pay in full the Liquidation Preference and the liquidation preference on all other shares of any class or series of stock of the Corporation that ranks on a parity with the Class M Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Class M Voting Preferred Stock and any such other parity stock ratably in accordance with the respective amounts that would be payable on such shares of Class M Voting Preferred Stock and any such other parity stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with or into one or more corporations, or (ii) a sale, lease, exchange or transfer of all or substantially all of the Corporation's assets, shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation.

        4.2     Subject to the rights of the holders of shares of any series or class of stock ranking prior to or on a parity with the Class M Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, after payment shall have been made to the holders of the Class M Voting Preferred Stock, as and to the fullest extent provided in this Section 4, any other series or class of stock of the Corporation that ranks junior to the Class M Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class M Voting Preferred Stock shall not be entitled to share therein.

        Section 5.   Shares to be Retired. All shares of Class M Voting Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be retired and shall not be reissued.

        Section 6.   Ranking.

        6.1     Any class or series of stock of the Corporation shall be deemed to rank:

(a) prior to the Class M Voting Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of Class M Voting Preferred Stock;

(b) on a parity with the Class M Voting Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the liquidation prices per share thereof be different from those of the Class M Voting Preferred Stock, if the holders of such class or series and the Class M Voting Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective liquidation preferences, without preference or priority one over the other; and

(c) junior to the Class M Voting Preferred Stock, as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of Class M Voting Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of shares of such class or series.

        6.2     The Series A Preferred Stock, the Series B Preferred Stock, the Series D Preferred Stock and the ESOP Convertible Preferred Stocks shall be deemed to rank prior to the Class M Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up. The other Voting Preferred Stocks and the Director Preferred Stocks shall each be deemed to rank on a parity with the Class M Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up. The Common Stock and the Series C Preferred Stock shall each be deemed to rank junior to the Class M Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up.

        Section 7.   Consolidation, Merger, etc.

        7.1     In case the Corporation shall enter into any consolidation, merger, share exchange or similar transaction, however named, pursuant to which the outstanding shares of Common Stock are to be exchanged solely for or changed, reclassified or converted solely into stock of any successor, resulting or other company (including the Corporation) (each of the foregoing is referred to herein as ''Merger Transaction'') that constitutes ''qualifying employer securities'' with respect to holders of Class M Voting Preferred Stock within the meaning of Section 409(l) of the Code and Section 407(d)(5) of the Employee Retirement Income Security Act of 1974, as amended, or any successor provisions of law, and, if applicable, for a cash payment in lieu of fractional shares, if any, proper provisions shall be made so that upon consummation of such transaction, the shares of Class M Voting Preferred Stock shall be converted into or exchanged for preferred stock of such successor, resulting or other company (the ''New Machinist Voting Preferred Stock''), having in respect of such company, except as provided below, the same powers, preferences and relative, participating, optional or other special rights (including the rights provided by this Section 7), and the qualifications, limitations or restrictions thereof, that the Class M Voting Preferred Stock had, in respect of the Corporation, immediately prior to such transaction, except that after such transaction each share of such New Machinist Voting Preferred Stock so received in such transaction upon conversion or exchange of the Class M Voting Preferred Stock shall be convertible, otherwise on the terms and conditions provided by Section 9 hereof, into the number and kind of ''qualifying employer securities'' receivable in such transaction by a holder of the number of shares of Common Stock into which a share of Class M Voting Preferred Stock could have been converted immediately prior to such transaction; provided, however, that the holder of each share of New Machinist Voting Preferred Stock shall be entitled to a number of votes per share equal to a fraction, the numerator of which is the product of (x) the Machinist Fraction and (y) the aggregate number of votes that would be entitled to be cast by the holders of the securities of the surviving, resulting or other corporation into which the ESOP Convertible Preferred Stocks are changed, reclassified or converted (collectively, the ''New ESOP Convertible Preferred Stocks'') upon consummation of such transaction (assuming for such purpose the conversion of the New ESOP Convertible Preferred Stocks), and the denominator of which is the aggregate number of shares of New Machinist Voting Preferred Stock then outstanding; provided, further that if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by the holders of the Class M Voting Preferred Stock, then the shares of New Machinist Voting Preferred Stock received in such transaction upon conversion or exchange of Class M Voting Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be convertible into or exchangeable solely for ''qualifying employer securities'' (together, if applicable, with a cash payment in lieu of fractional shares) with the effect provided above on the basis of the number and kind of qualifying employer securities receivable in such transaction by a holder of the number of shares of Common Stock into which such shares of Class M Voting Preferred Stock could have been converted immediately prior to such transaction (provided that if the kind or amount of qualifying employer securities receivable in such transaction is not the same for each such share of Common Stock, then the kind and amount so receivable in such transaction for each share of Common Stock for this purpose shall be deemed to be the kind and amount so receivable per share by the plurality of such shares of Common Stock). The rights of the New Machinist Voting Preferred Stock so received in such transaction upon conversion or exchange of the Class M Voting Preferred Stock shall successively be subject to adjustment pursuant to Section 9 hereof following such transaction as nearly equivalent to the adjustments provided for by such Section prior to such transaction.

        7.2     In case the Corporation shall enter into any Merger Transaction, however named, pursuant to which the outstanding shares of Common Stock are exchanged for or changed, reclassified or converted into other stock or securities or cash or any other property, or any combination thereof, other than any such consideration which is constituted solely of ''qualifying employer securities'' (as referred to in Section 7.1) and cash payments, if applicable, in lieu of fractional shares, proper provisions shall be made so that each outstanding share of Class M Voting Preferred Stock shall, by virtue of and upon consummation of such transaction, on the same terms as are applicable to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in like kind) receivable by holders of the number of shares of Common Stock into which such shares of Class M Voting Preferred Stock could have been converted immediately prior to such transaction; provided, however, that if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by holders of the Class M Voting Preferred Stock, then the shares of Class M Voting Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in kind) receivable by a holder of the number of shares of Common Stock into which such shares of Class M Voting Preferred Stock could have been converted immediately prior to such transaction if such holder of Common Stock failed to exercise any rights of election to receive any kind or amount of stock, securities, cash or other property receivable in such transaction (provided that if the kind or amount of stock, securities, cash or other property receivable in such transaction are not the same for each non-electing share, then the kind and amount of stock, securities, cash or other property so receivable upon such transaction for each non-electing share shall be the kind and amount so receivable per share by the plurality of the non-electing shares).

        7.3     In case the Corporation shall enter into any agreement providing for any Merger Transaction described in Section 7.1 or 7.2, then the Corporation shall as soon as practicable thereafter (and in any event at least fifteen (15) Business Days before consummation of such transaction) give notice of such agreement and the material terms thereof to each holder of Class M Voting Preferred Stock. The Corporation shall not consummate any such Merger Transaction unless all of the terms of this Section 7 have been complied with.

        Section 8.   Voting. The holders of shares of Class M Voting Preferred Stock shall have the following voting rights:

        8.1     Except as otherwise required by law or provided in this Restated Certificate, the holders of Class M Voting Preferred Stock shall be entitled to vote on all matters submitted to a vote of the holders of Common Stock of the Corporation, voting together as a single class with the holders of Common Stock and the holders of such other classes and series of stock that vote together with the Common Stock as a single class. For purposes of this Section 8.1, with respect to each vote or consent with a record date occurring on or after the Termination Date, each share of Class M Voting Preferred Stock then outstanding shall be entitled to the number of votes per share (rounded to the nearest one hundred millionth of a vote) equal to a fraction, the numerator of which is the product of (i) the sum of (x) the number of shares of Common Stock into which the ESOP Convertible Preferred Stocks then outstanding can be converted as of the record date with respect to such vote or consent and (y) the number of Available Unissued ESOP Shares as of such record date and (ii) the Machinist Fraction, and the denominator of which is the number of shares of Class M Voting Preferred Stock outstanding as of such record date. For purposes of this Section 8.1, the Corporation shall certify to the holders of Class M Voting Preferred Stock and to the judges or similar officials appointed for the purpose of tabulating votes at any meeting of stockholders as soon as practicable following the record date for the determination of stockholders entitled to notice of or to vote at any meeting of stockholders, but in no event less than five Trading Days before such meeting, with respect to record dates from and after the Termination Date, the number of shares of Common Stock into which a share of ESOP Convertible Preferred Stock was convertible as of the record date for such vote or votes. The Corporation shall be deemed to satisfy the requirements of the preceding sentence if such matters are specified in any proxy statement mailed to all stockholders entitled to vote on such matter or matters.

        8.2     Unless the affirmative vote or consent of the holders of a greater number of shares of Class M Voting Preferred Stock shall then be required by law or this Restated Certificate, and in addition to any other vote required by law or this Restated Certificate, the affirmative vote or written consent of the holders of at least a majority of all of the outstanding shares of Class M Voting Preferred Stock, voting separately as a class, shall be necessary for authorizing, effecting or validating the amendment, alteration or repeal (including any amendment, alteration or repeal by operation of merger or consolidation) of any of the provisions of this Restated Certificate or of any certificate amendatory thereof or supplemental thereto (including any Certificate of Designation, Preferences and Rights or any similar document relating to any series of Serial Preferred Stock) which would adversely affect the preferences, rights, powers or privileges of the Class M Voting Preferred Stock or of either of the ESOP Convertible Preferred Stocks.

        8.3     For purposes of the foregoing provisions of Section 8.2, each share of Class M Voting Preferred Stock shall have one (1) vote per share.

        Section 9.   Automatic Conversion.

        9.1     Shares of Class M Voting Preferred Stock shall, as provided in Section 1.2, be automatically converted, from time to time, in part or in whole, respectively, upon any transfer thereof other than a transfer described in clauses (x) and (y) of Section 1.2, at a rate of one ten thousandth of a share of Common Stock per share of Class M Voting Preferred Stock to be converted (the ''Conversion Rate'').

        9.2     At the time that all of the shares of the ESOP Convertible Preferred Stocks cease to be outstanding for any reason whatsoever, including, without limitation, their conversion in full into Common Stock (the ''Final Conversion Date''), all outstanding shares of Class M Voting Preferred Stock shall be automatically converted, in full, into shares of Common Stock at the Conversion Rate then in effect.

        9.3     Following any conversion in accordance with Sections 9.1 and 9.2, (i) no holder of Class M Voting Preferred Stock shall have any of the voting powers, preferences, relative, participating, optional or special rights ascribed to shares of Class M Voting Preferred Stock hereunder, but, rather, shall have only the powers and rights pertaining to the Common Stock into which such shares of Class M Voting Preferred Stock have been so converted, and (ii) any holder of Class M Voting Preferred Stock shall be treated for all purposes as the record holder of the shares of Common Stock into which the Class M Voting Preferred Stock shall have been converted as of the date of the conversion of the shares of Class M Voting Preferred Stock.

        9.4     On or after the date of (i) a transfer of shares of Class M Voting Preferred Stock (other than as described in clauses (x) and (y) of Section 1.2) or (ii) the Final Conversion Date, each holder of a certificate or certificates formerly representing shares of Class M Voting Preferred Stock converted in accordance with Sections 9.1 and 9.2 shall surrender such certificate or certificates, duly endorsed or assigned to the Corporation or in blank, at the office of the Transfer Agent (if other than the Corporation) in the Borough of Manhattan, City of New York. Unless the shares issuable on conversion are to be issued in the same name as the name in which such certificate is registered, each such certificate shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid or that no such taxes are payable).

        9.5     No fractional shares or scrip representing fractions of shares of Common Stock shall be issued upon conversion of the Class M Voting Preferred Stock. Instead of any fractional interest in a share of Common Stock that would otherwise be deliverable upon the conversion of a share of Class M Voting Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash based upon the Current Market Price of Common Stock on the Trading Day immediately preceding the date of conversion. If more than one certificate shall be surrendered in respect of such conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion shall be computed on the basis of the aggregate number of shares of Class M Voting Preferred Stock formerly represented by the certificates so surrendered.

        9.6     In the event of an adjustment to the ''Conversion Rate'' in effect with respect to the ESOP Convertible Preferred Stocks, a corresponding adjustment shall be made to the Conversion Rate with respect to the Class M Voting Preferred Stock.

        Section 10.   Record Holders. The Corporation and the Transfer Agent (if other than the Corporation) may deem and treat the record holder of any shares of Class M Voting Preferred Stock as the true and lawful owner thereof for all purposes, and, except as otherwise provided by law, neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary.
 
 

PART VI

Class S ESOP Voting Junior Preferred Stock

        Unless otherwise indicated, any reference in this Article FOURTH, Part VI to ''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall refer to a Section, Subsection, paragraph, subparagraph or clause of this Article FOURTH, Part VI.

        Section 1.   Number of Shares; Designation; Issuances; Automatic Conversion.

        1.1     The Class S ESOP Voting Junior Preferred Stock of the Corporation (the ''Class S Voting Preferred Stock'') shall consist of 4,200,000 shares, par value $0.01 per share.

        1.2     Shares of Class S Voting Preferred Stock shall be issued only to a trustee or trustees acting on behalf of (i) the UAL Corporation Employee Stock Ownership Plan (the ''ESOP''), (ii) the UAL Corporation Supplemental ESOP (the ''Supplemental ESOP'') or (iii) any other employee stock ownership trust or plan or other employee benefit plan of the Corporation or any of its subsidiaries (each, a ''Plan''). In the event of any sale, transfer or other disposition (including, without limitation, upon a foreclosure or other realization upon shares of Class S Voting Preferred Stock pledged as security for any loan or loans made to a Plan or to the trustee or the trustees acting on behalf of a Plan) (hereinafter a ''transfer'') of shares of Class S Voting Preferred Stock to any person (including, without limitation, any participant in a Plan) other than (x) any Plan or trustee or trustees of a Plan or (y) any pledgee of such shares acquiring such shares as security for any loan or loans made to the Plan or to any trustee or trustees acting on behalf of the Plan, the shares of Class S Voting Preferred Stock so transferred, upon such transfer and without any further action by the Corporation or the holder, shall be automatically converted into shares of Common Stock at the applicable Conversion Rate in accordance with Section 9 hereof and thereafter such transferee shall not have any of the voting powers, preferences or relative, participating, optional or special rights ascribed to shares of Class S Voting Preferred Stock hereunder, but, rather, shall have only the powers and rights pertaining to the Common Stock into which such shares of Class S Voting Preferred Stock shall be so converted. In the event of any such automatic conversion provided for in this Section 1.2, such transferee shall be treated for all purposes as the record holder of the shares of Common Stock into which the Class S Voting Preferred Stock shall have been converted as of the date of such conversion. Certificates representing shares of Class S Voting Preferred Stock shall be legended to reflect such consequences of a transfer. The shares of Common Stock issued upon any conversion in accordance with Section 9 hereof or this Section 1.2 may be transferred by the holder thereof as permitted by law.

        Section 2.   Definitions. For purposes of the Class S Voting Preferred Stock, the following terms shall have the meanings indicated:

        2.1   ''Available Unissued ESOP Shares'' shall have the meaning set forth in Article FIFTH, Section 1.5 of this Restated Certificate.

        2.2   ''Board of Directors'' shall mean the board of directors of the Corporation or any committee of such board of directors authorized by such board of directors to perform any of its responsibilities with respect to the Class S Voting Preferred Stock.

        2.3   ''Business Day'' shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.

        2.4   ''Class 1 ESOP Convertible Preferred Stock'' shall mean the Class 1 ESOP Convertible Preferred Stock, par value $0.01 per share, of the Corporation.

        2.5   ''Class 2 ESOP Convertible Preferred Stock'' shall mean the Class 2 ESOP Convertible Preferred Stock, par value $0.01 per share, of the Corporation.

        2.6   ''Class I Preferred Stock'' shall mean the Class I Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.7   ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.8   ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.9   ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.10 ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.11 ''Class S Voting Preferred Stock'' shall have the meaning set forth in Section 1 hereof.

        2.12 ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.13 ''Common Stock'' shall mean the common stock, par value $0.01 per share, of the Corporation.

        2.14 ''Conversion Rate'' shall have the meaning set forth in Section 9.1 hereof.

        2.15 ''Current Market Price'' of publicly traded shares of Common Stock or any other class or series of capital stock or other security of the Corporation or any other issuer for any day shall mean the last reported sales price, regular way on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices on such day, regular way, in either case as reported on the New York Stock Exchange Composite Tape or, if such security is not listed or admitted for trading on the New York Stock Exchange, Inc. (''NYSE''), on the principal national securities exchange on which such security is listed or admitted for trading or quoted or, if not listed or admitted for trading or quoted on any national securities exchange, on the Nasdaq National Market or, if such security is not quoted on such National Market, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by the National Association of Securities Dealers, Inc. Automated Quotation System (''NASDAQ'') or, if bid and asked prices for such security on such day shall not have been reported through NASDAQ, the average of the bid and asked prices on such day as furnished by any NYSE member firm regularly making a market in such security selected for such purpose by the Board of Directors.

        2.16 ''Director Preferred Stocks'' shall mean, collectively, the Class I Preferred Stock, the Class Pilot MEC Preferred Stock, the Class IAM Preferred Stock and the Class SAM Preferred Stock.

        2.17 ''ESOP Convertible Preferred Stocks'' shall mean, collectively, the Class 1 ESOP Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred Stock.

        2.18 ''Issue Date'' shall mean the first date on which shares of Class S Voting Preferred Stock are issued.

        2.19 ''Liquidation Preference'' shall have the meaning set forth in Section 4.1 hereof.

        2.20 ''Measuring Date'' shall mean that date which is the 365th day following the Issue Date.

        2.21 ''Restated Certificate'' shall mean the Restated Certificate of Incorporation of the Corporation, as amended from time to time.

        2.22 ''Salaried/Management Fraction'' shall mean 0.1664.

        2.23 ''Series A Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series A Convertible Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.

        2.24 ''Series B Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series B Preferred Stock in Article FOURTH, Part I.B of this Restated Certificate.

        2.25 ''Series C Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series C Junior Participating Preferred Stock in Article FOURTH, Part I.C of this Restated Certificate.

        2.26 ''Series D Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series D Redeemable Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.

        2.27     [Reserved]

        2.28 ''Set apart for payment'' shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of stock of the Corporation ranking on a parity with or junior to the Class S Voting Preferred Stock as to distributions upon liquidation, dissolution or winding up of the Corporation are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then ''set apart for payment'' with respect to the Class S Voting Preferred Stock shall mean, with respect to such distributions, placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.

        2.29 ''Termination Date'' shall have the meaning set forth in Article FIFTH, Section 1.72 of this Restated Certificate.

        2.30 ''Trading Day'' shall mean any day on which the securities in question are traded on the NYSE, or if such securities are not listed or admitted for trading or quoted on the NYSE, on the principal national securities exchange on which such securities are listed or admitted, or if not listed or admitted for trading or quoted on any national securities exchange, on the Nasdaq National Market, or if such securities are not quoted on such National Market, in the applicable securities market in which the securities are traded.

        2.31 ''Transfer Agent'' means the Corporation or such agent or agents of the Corporation as may be designated from time to time by the Board of Directors as the transfer agent for the Class S Voting Preferred Stock.

        2.32     [Reserved]

        2.33 ''Voting Preferred Stocks'' shall mean, collectively, the Class P Voting Preferred Stock, the Class M Voting Preferred Stock and the Class S Voting Preferred Stock.

        Section 3.   Dividends. The holders of shares of the Class S Voting Preferred Stock as such shall not be entitled to receive any dividends or other distributions (except as provided in Section 4 below).

        Section 4.   Payments upon Liquidation.

        4.1     In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for payment to the holders of any class or series of stock of the Corporation that ranks junior to the Class S Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, the holders of the shares of Class S Voting Preferred Stock shall be entitled to receive $0.01 per share of Class S Voting Preferred Stock (the ''Liquidation Preference''), but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of Class S Voting Preferred Stock shall be insufficient to pay in full the Liquidation Preference and the liquidation preference on all other shares of any class or series of stock of the Corporation that ranks on a parity with the Class S Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Class S Voting Preferred Stock and any such other parity stock ratably in accordance with the respective amounts that would be payable on such shares of Class S Voting Preferred Stock and any such other parity stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with or into one or more corporations, or (ii) a sale, lease, exchange or transfer of all or substantially all of the Corporation's assets, shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation.

        4.2     Subject to the rights of the holders of shares of any series or class of stock ranking prior to or on a parity with the Class S Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, after payment shall have been made to the holders of the Class S Voting Preferred Stock, as and to the fullest extent provided in this Section 4, any other series or class of stock of the Corporation that ranks junior to the Class S Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class S Voting Preferred Stock shall not be entitled to share therein.

        Section 5.   Shares to be Retired. All shares of Class S Voting Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be retired and shall not be reissued.

        Section 6.   Ranking.

        6.1     Any class or series of stock of the Corporation shall be deemed to rank:

(a) prior to the Class S Voting Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of Class S Voting Preferred Stock;

(b) on a parity with the Class S Voting Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the liquidation prices per share thereof be different from those of the Class S Voting Preferred Stock, if the holders of such class or series and the Class S Voting Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective liquidation preferences, without preference or priority one over the other; and

(c) junior to the Class S Voting Preferred Stock, as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of Class S Voting Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of shares of such class or series.

        6.2     The Series A Preferred Stock, the Series B Preferred Stock, the Series D Preferred Stock and the ESOP Convertible Preferred Stocks shall be deemed to rank prior to the Class S Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up. The other Voting Preferred Stocks and the Director Preferred Stocks shall each be deemed to rank on a parity with the Class S Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up. The Common Stock and the Series C Preferred Stock shall each be deemed to rank junior to the Class S Voting Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up.

        Section 7.   Consolidation, Merger, etc.

        7.1     In case the Corporation shall enter into any consolidation, merger, share exchange or similar transaction, however named, pursuant to which the outstanding shares of Common Stock are to be exchanged solely for or changed, reclassified or converted solely into stock of any successor, resulting or other company (including the Corporation) (each of the foregoing is referred to herein as ''Merger Transaction'') that constitutes ''qualifying employer securities'' with respect to holders of Class S Voting Preferred Stock within the meaning of Section 409(l) of the Code and Section 407(d)(5) of the Employee Retirement Income Security Act of 1974, as amended, or any successor provisions of law, and, if applicable, for a cash payment in lieu of fractional shares, if any, proper provisions shall be made so that upon consummation of such transaction, the shares of Class S Voting Preferred Stock shall be converted into or exchanged for preferred stock of such successor, resulting or other company (the ''New Salaried/Management Voting Preferred Stock''), having in respect of such company, except as provided below, the same powers, preferences and relative, participating, optional or other special rights (including the rights provided by this Section 7), and the qualifications, limitations or restrictions thereof, that the Class S Voting Preferred Stock had, in respect of the Corporation, immediately prior to such transaction, except that after such transaction each share of such New Salaried/Management Voting Preferred Stock so received in such transaction upon conversion or exchange of the Class S Voting Preferred Stock shall be convertible, otherwise on the terms and conditions provided by Section 9 hereof, into the number and kind of ''qualifying employer securities'' receivable in such transaction by a holder of the number of shares of Common Stock into which a share of Class S Voting Preferred Stock could have been converted immediately prior to such transaction; provided, however, that the holder of each share of New Salaried/Management Voting Preferred Stock shall be entitled to a number of votes per share equal to a fraction, the numerator of which is the product of (x) the Salaried/Management Fraction and (y) the aggregate number of votes that would be entitled to be cast by the holders of the securities of the surviving, resulting or other corporation into which the ESOP Convertible Preferred Stocks are changed, reclassified or converted (collectively, the ''New ESOP Convertible Preferred Stocks'') upon consummation of such transaction (assuming for such purpose the conversion of the New ESOP Convertible Preferred Stocks), and the denominator of which is the aggregate number of shares of New Salaried/Management Voting Preferred Stock then outstanding; provided, further that if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by the holders of the Class S Voting Preferred Stock, then the shares of New Salaried/Management Voting Preferred Stock received in such transaction upon conversion or exchange of Class S Voting Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be convertible into or exchangeable solely for ''qualifying employer securities'' (together, if applicable, with a cash payment in lieu of fractional shares) with the effect provided above on the basis of the number and kind of qualifying employer securities receivable in such transaction by a holder of the number of shares of Common Stock into which such shares of Class S Voting Preferred Stock could have been converted immediately prior to such transaction (provided that if the kind or amount of qualifying employer securities receivable in such transaction is not the same for each such share of Common Stock, then the kind and amount so receivable in such transaction for each share of Common Stock for this purpose shall be deemed to be the kind and amount so receivable per share by the plurality of such shares of Common Stock). The rights of the New Salaried/Management Voting Preferred Stock so received in such transaction upon conversion or exchange of the Class S Voting Preferred Stock shall successively be subject to adjustment pursuant to Section 9 hereof following such transaction as nearly equivalent to the adjustments provided for by such Section prior to such transaction.

        7.2     In case the Corporation shall enter into any Merger Transaction, however named, pursuant to which the outstanding shares of Common Stock are exchanged for or changed, reclassified or converted into other stock or securities or cash or any other property, or any combination thereof, other than any such consideration which is constituted solely of ''qualifying employer securities'' (as referred to in Section 7.1) and cash payments, if applicable, in lieu of fractional shares, proper provisions shall be made so that each outstanding share of Class S Voting Preferred Stock shall, by virtue of and upon consummation of such transaction, on the same terms as are applicable to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in like kind) receivable by holders of the number of shares of Common Stock into which such shares of Class S Voting Preferred Stock could have been converted immediately prior to such transaction; provided, however, that if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by holders of the Class S Voting Preferred Stock, then the shares of Class S Voting Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in kind) receivable by a holder of the number of shares of Common Stock into which such shares of Class S Voting Preferred Stock could have been converted immediately prior to such transaction if such holder of Common Stock failed to exercise any rights of election to receive any kind or amount of stock, securities, cash or other property receivable in such transaction (provided that if the kind or amount of stock, securities, cash or other property receivable in such transaction are not the same for each non-electing share, then the kind and amount of stock, securities, cash or other property so receivable upon such transaction for each non-electing share shall be the kind and amount so receivable per share by the plurality of the non-electing shares).

        7.3     In case the Corporation shall enter into any agreement providing for any Merger Transaction described in Sections 7.1 or 7.2, then the Corporation shall as soon as practicable thereafter (and in any event at least fifteen (15) Business Days before consummation of such transaction) give notice of such agreement and the material terms thereof to each holder of Class S Voting Preferred Stock. The Corporation shall not consummate any such Merger Transaction unless all of the terms of this Section 7 have been complied with.

        Section 8.   Voting. The holders of shares of Class S Voting Preferred Stock shall have the following voting rights:

        8.1     Except as otherwise required by law or provided in this Restated Certificate, the holders of Class S Voting Preferred Stock shall be entitled to vote on all matters submitted to a vote of the holders of Common Stock of the Corporation, voting together as a single class with the holders of Common Stock and the holders of such other classes and series of stock that vote together with the Common Stock as a single class. For purposes of this Section 8.1, with respect to each vote or consent with a record date occurring on or after the Termination Date, each share of Class S Voting Preferred Stock then outstanding shall be entitled to the number of votes per share (rounded to the nearest one hundred millionth of a vote) equal to a fraction, the numerator of which is the product of (i) the sum of (x) the number of shares of Common Stock into which the ESOP Convertible Preferred Stocks then outstanding can be converted as of the record date with respect to such vote or consent and (y) the number of Available Unissued ESOP Shares as of such record date and (ii) the Salaried/Management Fraction, and the denominator of which is the number of shares of Class S Voting Preferred Stock outstanding as of such record date. For purposes of this Section 8.1, the Corporation shall certify to the holders of Class S Voting Preferred Stock and to the judges or similar officials appointed for the purpose of tabulating votes at any meeting of stockholders as soon as practicable following the record date for the determination of stockholders entitled to notice of or to vote at any meeting of stockholders, but in no event less than five Trading Days before such meeting, with respect to record dates from and after the Termination Date, the number of shares of Common Stock into which a share of ESOP Convertible Preferred Stock was convertible as of the record date for such vote or votes. The Corporation shall be deemed to satisfy the requirements of the preceding sentence if such matters are specified in any proxy statement mailed to all stockholders entitled to vote on such matter or matters.

        8.2     Unless the affirmative vote or consent of the holders of a greater number of shares of Class S Voting Preferred Stock shall then be required by law or this Restated Certificate, and in addition to any other vote required by law or this Restated Certificate, the affirmative vote or written consent of the holders of at least a majority of all of the outstanding shares of Class S Voting Preferred Stock, voting separately as a class, shall be necessary for authorizing, effecting or validating the amendment, alteration or repeal (including any amendment, alteration or repeal by operation of merger or consolidation) of any of the provisions of this Restated Certificate or of any certificate amendatory thereof or supplemental thereto (including any Certificate of Designation, Preferences and Rights or any similar document relating to any series of Serial Preferred Stock) which would adversely affect the preferences, rights, powers or privileges of the Class S Voting Preferred Stock or of either of the ESOP Convertible Preferred Stocks.

        8.3     For purposes of the foregoing provisions of Section 8.2, each share of Class S Voting Preferred Stock shall have one (1) vote per share.

        Section 9.   Automatic Conversion.

        9.1     Shares of Class S Voting Preferred Stock shall, as provided in Section 1.2, be automatically converted, from time to time, in part or in whole, respectively, upon any transfer thereof other than a transfer described in clauses (x) and (y) of Section 1.2 at a rate of one ten thousandth of a share of Common Stock per share of Class S Voting Preferred Stock to be converted (the ''Conversion Rate'').

        9.2     At the time that all of the shares of the ESOP Convertible Preferred Stocks cease to be outstanding for any reason whatsoever, including, without limitation, their conversion in full into Common Stock (the ''Final Conversion Date''), all outstanding shares of Class S Voting Preferred Stock shall be automatically converted, in full, into shares of Common Stock at the Conversion Rate then in effect.

        9.3     Following any conversion in accordance with Sections 9.1 and 9.2, (i) no holder of Class S Voting Preferred Stock shall have any of the voting powers, preferences, relative, participating, optional or special rights ascribed to shares of Class S Voting Preferred Stock hereunder, but, rather, shall have only the powers and rights pertaining to the Common Stock into which such shares of Class S Voting Preferred Stock have been so converted, and (ii) any holder of Class S Voting Preferred Stock shall be treated for all purposes as the record holder of the shares of Common Stock into which the Class S Voting Preferred Stock shall have been converted as of the date of the conversion of the shares of Class S Voting Preferred Stock.

        9.4     On or after the date of (i) a transfer of shares of Class S Voting Preferred Stock (other than as described in clauses (x) and (y) of Section 1.2) or (ii) the Final Conversion Date, each holder of a certificate or certificates formerly representing shares of Class S Voting Preferred Stock converted in accordance with Sections 9.1 and 9.2 shall surrender such certificate or certificates, duly endorsed or assigned to the Corporation or in blank, at the office of the Transfer Agent (if other than the Corporation) in the Borough of Manhattan, City of New York. Unless the shares issuable on conversion are to be issued in the same name as the name in which such certificate is registered, each such certificate shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid or that no such taxes are payable).

        9.5     No fractional shares or scrip representing fractions of shares of Common Stock shall be issued upon conversion of the Class S Voting Preferred Stock. Instead of any fractional interest in a share of Common Stock that would otherwise be deliverable upon the conversion of a share of Class S Voting Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash based upon the Current Market Price of Common Stock on the Trading Day immediately preceding the date of conversion. If more than one certificate shall be surrendered in respect of such conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion shall be computed on the basis of the aggregate number of shares of Class S Voting Preferred Stock formerly represented by the certificates so surrendered.

        9.6     In the event of an adjustment to the ''Conversion Rate'' in effect with respect to the ESOP Convertible Preferred Stocks, a corresponding adjustment shall be made to the Conversion Rate with respect to the Class S Voting Preferred Stock.

        Section 10.   Record Holders. The Corporation and the Transfer Agent (if other than the Corporation) may deem and treat the record holder of any shares of Class S Voting Preferred Stock as the true and lawful owner thereof for all purposes, and, except as otherwise provided by law, neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary.
 
 

PART VII

Class Pilot MEC Junior Preferred Stock

        Unless otherwise indicated, any reference in this Article FOURTH, Part VII to ''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall refer to a Section, Subsection, paragraph, subparagraph or clause of this Article FOURTH, Part VII.

        Section 1.   Number of Shares; Designation; Issuance; Restrictions on Transfer.

        1.1     The Class Pilot MEC Junior Preferred Stock of the Corporation (the ''Class Pilot MEC Preferred Stock'') shall consist of one (1) share, par value $0.01.

        1.2     The share of Class Pilot MEC Preferred Stock shall be issued only to (i) the United Airlines Pilots Master Executive Council of the Air Line Pilots Association, International (''ALPA'') pursuant to ALPA's authority as the collective bargaining representative for the crafts or class of pilots employed by United Air Lines, Inc. (the ''MEC'') or (ii) a duly authorized agent acting for the benefit of the MEC. Any purported sale, transfer, pledge or other disposition (hereinafter a ''transfer'') of the share of Class Pilot MEC Preferred Stock to any person, other than a successor to the MEC or a duly authorized agent acting for the benefit of such successor, shall be null and void and of no force and effect. Upon any purported transfer of the share of Class Pilot MEC Preferred Stock by the holder thereof other than as expressly permitted above, and without any further action by the Corporation or such holder, such share shall, to the extent of funds legally available therefor and subject to the other provisions of this Restated Certificate, be automatically redeemed by the Corporation in accordance with Section 9 hereof, and thereupon such share shall no longer be deemed outstanding, and neither such holder nor any purported transferee thereof shall have in respect thereof any of the voting powers, preferences or relative, participating, optional or special rights ascribed to the share of Class Pilot MEC Preferred Stock hereunder, but rather such holder thereafter shall only be entitled to receive the amount payable upon redemption in accordance with Section 9. The certificate representing the share of Class Pilot MEC Preferred Stock shall be legended to reflect the restrictions on transfer and automatic redemption provided for herein.

        Section 2.   Definitions. For purposes of the Class Pilot MEC Preferred Stock, the following terms shall have the meanings indicated:

        2.1   ''Affiliate'' shall have the meaning defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or any successor thereto.

        2.2   ''ALPA Termination Date'' shall have the meaning set forth in Section 8 hereof.

        2.3   ''Board of Directors'' shall mean the board of directors of the Corporation or any committee thereof authorized by such board of directors to perform any of its responsibilities with respect to the Class Pilot MEC Preferred Stock.

        2.4   ''Business Day'' shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.

        2.5   ''Class I Preferred Stock'' shall mean the Class I Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.6   ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.7   ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.8   ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.9   ''Class Pilot MEC Preferred Stock'' shall have the meaning set forth in Section 1 hereof.

        2.10 ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.11 ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.12 ''Common Stock'' shall mean the common stock, par value $0.01 per share, of the Corporation.

        2.13 ''Director Preferred Stocks'' shall mean, collectively, the Class I Preferred Stock, the Class IAM Preferred Stock, the Class Pilot MEC Preferred Stock and the Class SAM Preferred Stock.

        2.14 ''ESOP Convertible Preferred Stocks'' shall mean, collectively, the Class 1 ESOP Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred Stock, each of the par value of $0.01 per share, of the Corporation.

        2.15 ''Issue Date'' shall mean the first date on which shares of Class Pilot MEC Preferred Stock are issued.

        2.16 ''Liquidation Preference'' shall have the meaning set forth in Section 4.1 hereof.

        2.17 ''Measuring Date'' shall mean that date which is the 365th day following the Issue Date.

        2.18     [Reserved].

        2.19 ''Restated Certificate'' shall mean the Restated Certificate of Incorporation of the Corporation, as amended from time to time.

        2.20 ''Series A Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series A Convertible Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.

        2.21 ''Series B Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series B Preferred Stock in Article FOURTH, Part I.B of this Restated Certificate.

        2.22 ''Series C Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series C Junior Participating Preferred Stock in Article FOURTH, Part I.C of this Restated Certificate.

        2.23 ''Series D Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series D Redeemable Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.

        2.24     [Reserved]

        2.25 ''set apart for payment'' shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of stock of the Corporation ranking on a parity with or junior to the Class Pilot MEC Preferred Stock as to distributions upon liquidation, dissolution or winding up of the Corporation are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then ''set apart for payment'' with respect to the Class Pilot MEC Preferred Stock shall mean, with respect to such distributions, placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.

        2.26 ''Termination Date'' shall have the meaning set forth in Article FIFTH, Section 1.72 of this Restated Certificate.

        2.27 ''Trading Day'' shall mean any day on which the securities in question are traded on the New York Stock Exchange, Inc. (the ''NYSE''), or if such securities are not listed or admitted for trading or quoted on the NYSE, on the principal national securities exchange on which such securities are listed or admitted, or if not listed or admitted for trading or quoted on any national securities exchange, on the Nasdaq National Market, or if such securities are not quoted on such National Market, in the applicable securities market in which the securities are traded.

        2.28 ''Transfer Agent'' means the Corporation or such agent or agents of the Corporation as may be designated from time to time by the Board of Directors as the transfer agent for the Class Pilot MEC Preferred Stock.

        2.29     [Reserved].

        2.30 ''Voting Preferred Stocks'' shall mean, collectively, the Class P Voting Preferred Stock, the Class M Voting Preferred Stock and the Class S Voting Preferred Stock.

        Section 3.   Dividends. The holder of the share of Class Pilot MEC Preferred Stock as such shall not be entitled to receive any dividends or other distributions (except as provided in Section 4).

        Section 4.   Payments upon Liquidation.

        4.1     In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for payment to the holders of any class or series of stock of the Corporation that ranks junior to the Class Pilot MEC Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, the holder of the share of Class Pilot MEC Preferred Stock shall be entitled to receive $0.01 per share of Class Pilot MEC Preferred Stock (the ''Liquidation Preference''), but such holder shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable to the holder of the share of Class Pilot MEC Preferred Stock shall be insufficient to pay in full the Liquidation Preference and the liquidation preference on all other shares of any class or series of stock of the Corporation that ranks on a parity with the Class Pilot MEC Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, then such assets, or the proceeds thereof, shall be distributed among the holder of the share of Class Pilot MEC Preferred Stock and any such other parity stock ratably in accordance with the respective amounts that would be payable on such share of Class Pilot MEC Preferred Stock and any such other parity stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with or into one or more corporations, or (ii) a sale, lease, exchange or transfer of all or substantially all of the Corporation's assets, shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation.

        4.2     Subject to the rights of the holders of shares of any series or class of stock ranking prior to or on a parity with the Class Pilot MEC Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, after payment shall have been made to the holder of the share of Class Pilot MEC Preferred Stock, as and to the fullest extent provided in this Section 4, any series or class of stock of the Corporation that ranks junior to the Class Pilot MEC Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holder of the share of Class Pilot MEC Preferred Stock shall not be entitled to share therein.

        Section 5.   Shares to be Retired. The share of Class Pilot MEC Preferred Stock which shall have been issued and reacquired in any manner (other than redemption pursuant to Section 9.1) by the Corporation shall be retired and restored to the status of an authorized but unissued share of Class Pilot MEC Preferred Stock and, in the event of the redemption of such share pursuant to Section 9.1 hereof, shall not be reissued.

        Section 6.   Ranking.

        6.1     Any class or series of stock of the Corporation shall be deemed to rank:

(a) prior to the Class Pilot MEC Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holder of Class Pilot MEC Preferred Stock;

(b) on a parity with the Class Pilot MEC Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the liquidation prices per share thereof be different from those of the Class Pilot MEC Preferred Stock, if the holders of such class or series and the Class Pilot MEC Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective liquidation preferences, without preference or priority one over the other; and

(c) junior to the Class Pilot MEC Preferred Stock, as to the distribution of assets upon liquidation, dissolution or winding up, if the holder of Class Pilot MEC Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of shares of such class or series.

        6.2     The Series A Preferred Stock, the Series B Preferred Stock, the Series D Preferred Stock and the ESOP Convertible Preferred Stocks shall be deemed to rank prior to the Class Pilot MEC Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up. The other Director Preferred Stocks and the Voting Preferred Stocks shall each be deemed to rank on a parity with the Class Pilot MEC Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up. The Common Stock and the Series C Preferred Stock shall each be deemed to rank junior to the Class Pilot MEC Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up.

        Section 7.   Consolidation, Merger, etc.

        7.1     In case the Corporation enters into any consolidation, merger, share exchange or similar transaction, however named, involving the Corporation or its subsidiary, United Air Lines, Inc. (''United'') (or any successor to all or substantially all the assets or business of United), pursuant to which the outstanding shares of Common Stock are to be exchanged for or changed, reclassified or converted into securities of any successor or resulting or other company (including the Corporation), or cash or other property (each of the foregoing transactions is referred to herein as a ''Merger Transaction''), proper provision shall be made so that, upon consummation of such transaction, the share of Class Pilot MEC Preferred Stock shall be converted, reclassified or changed into or exchanged for preferred stock of such successor or resulting or other company having, in respect of such company, the same powers, preferences and relative, participating, optional or other special rights (including the rights provided by this Section 7), and the qualifications, limitations or restrictions thereof, that the Class Pilot MEC Preferred Stock had, in respect of the Corporation, immediately prior to such transaction; specifically including, without limitation, the right, until the ALPA Termination Date, to elect one member of the board of directors (or similar governing body) of such company.

        7.2     In case the Corporation shall enter into any agreement providing for any Merger Transaction, then the Corporation shall as soon as practicable thereafter (and in any event at least fifteen (15) Business Days before consummation of such transaction) give notice of such agreement and the material terms thereof to the holder of the share of Class Pilot MEC Preferred Stock. The Corporation shall not consummate any such Merger Transaction unless all of the terms of this Section 7 and Section 8 have been complied with.

        Section 8.   Voting. The holder of the share of Class Pilot MEC Preferred Stock shall have the following voting rights:

        8.1     Until the later of (i) the Termination Date and (ii) such time as there are no longer any persons represented by the Air Line Pilots Association, International (or any successor organization) employed by the Corporation or any of its Affiliates (the ''ALPA Termination Date''), the holder of the share of Class Pilot MEC Preferred Stock shall have the right (a) voting as a separate class, to elect one Class Pilot MEC Director (as defined in Article FIFTH, Section 1.20 of this Restated Certificate) to the Board of Directors and (b) voting together as a single class with the holders of Common Stock and the holders of such other classes or series of stock that vote together with the Common Stock as a single class, to vote on all matters submitted to a vote of the holders of Common Stock of the Corporation (other than the election of Directors), except as otherwise required by law.

        8.2     [Reserved].

        8.3     [Reserved].

        8.4     The affirmative vote or written consent of the holder of the share of Class Pilot MEC Preferred Stock, voting separately as a class, shall be necessary for authorizing, effecting or validating the amendment, alteration or repeal (including any amendment, alteration or repeal by operation of merger or consolidation) of any of the provisions of this Restated Certificate or of any certificate amendatory thereof or supplemental thereto (including any Certificate of Designation, Preferences and Rights or any similar document relating to any series of Serial Preferred Stock) which would adversely affect the preferences, rights, powers or privileges of the Class Pilot MEC Preferred Stock.

        8.5     For purposes of the foregoing provisions of Sections 8.1 and 8.4, each share of Class Pilot MEC Preferred Stock shall have one (1) vote per share.

        Section 9.   Redemption.

        9.1     The share of Class Pilot MEC Preferred Stock shall, to the extent of funds legally available therefor and subject to the other provisions of this Restated Certificate, be automatically redeemed on the ALPA Termination Date, at a price of $0.01 per share of Class Pilot MEC Preferred Stock, as provided hereinbelow. As promptly as reasonably possible following the occurrence of the ALPA Termination Date, the Corporation shall give notice thereof and of the redemption under this Section 9 to the record holder of the Class Pilot MEC Preferred Stock. From and after the redemption provided for in this Section 9.1, all rights of the holder of the Class Pilot MEC Preferred Stock as such, except the right to receive the redemption price of such shares upon the surrender of the certificate formerly representing the same, shall cease and terminate and such share shall not thereafter be deemed to be outstanding for any purpose whatsoever.

        9.2     The share of Class Pilot MEC Preferred Stock shall, to the extent of funds legally available therefor and subject to the other provisions of this Restated Certificate, be automatically redeemed upon any purported transfer thereof other than as expressly permitted under Section 1.2. The redemption price to be paid in connection with any redemption shall be $0.01 per share of Class Pilot MEC Preferred Stock. Upon any such redemption, all rights of the holder of Class Pilot MEC Preferred Stock as such, except the right to receive the redemption price of such share upon the surrender of the certificate formerly representing the same, shall cease and terminate and such share shall not thereafter be deemed to be outstanding for any purpose whatsoever.

        9.3     The holder of the share of Class Pilot MEC Preferred Stock so redeemed pursuant to Section 9.1 or 9.2 shall present and surrender his certificate formerly representing such share to the Corporation and thereupon the redemption price of such share shall be paid to or on the order of the person whose name appears on such certificate as the owner thereof and the surrendered certificate shall be cancelled.

        Section 10.   Record Holders. The Corporation and the Transfer Agent (if other than the Corporation) may deem and treat the record holder of the share of Class Pilot MEC Preferred Stock as the true and lawful owner thereof for all purposes, and, except as otherwise provided by law, neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary.

PART VIII

Class IAM Junior Preferred Stock

        Unless otherwise indicated, any reference in this Article FOURTH, Part VIII to ''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall refer to a Section, Subsection, paragraph, subparagraph or clause of this Article FOURTH, Part VIII.

        Section 1.   Number of Shares; Designation; Issuance; Restrictions on Transfer.

        1.1     The Class IAM Junior Preferred Stock of the Corporation (the ''Class IAM Preferred Stock'') shall consist of one (1) share, par value $0.01.

        1.2     The share of Class IAM Preferred Stock shall be issued only to (i) the International Association of Machinists and Aerospace Workers (the ''IAM'') pursuant to the IAM's authority as the collective bargaining representative for the crafts or classes of mechanics and related employees, ramp and stores employees, food service employees, dispatchers and security officers employed by United Air Lines, Inc. or (ii) a duly authorized agent acting for the benefit of the IAM. Any purported sale, transfer, pledge or other disposition (hereinafter a ''transfer'') of the share of Class IAM Preferred Stock to any person, other than a successor to the IAM or a duly authorized agent acting for the benefit of such successor, shall be null and void and of no force and effect. Upon any purported transfer of the share of Class IAM Preferred Stock by the holder thereof other than as expressly permitted above, and without any further action by the Corporation or such holder, such share shall, to the extent of funds legally available therefor and subject to the other provisions of this Restated Certificate, be automatically redeemed by the Corporation in accordance with Section 9 hereof, and thereupon such share shall no longer be deemed outstanding, and neither such holder nor any purported transferee thereof shall have in respect thereof any of the voting powers, preferences or relative, participating, optional or special rights ascribed to the share of Class IAM Preferred Stock hereunder, but rather such holder thereafter shall only be entitled to receive the amount payable upon redemption in accordance with Section 9. The certificate representing the share of Class IAM Preferred Stock shall be legended to reflect the restrictions on transfer and automatic redemption provided for herein.

        Section 2.   Definitions. For purposes of the Class IAM Preferred Stock, the following terms shall have the meanings indicated:

        2.1   ''Affiliate'' shall have the meaning defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or any successor thereto.

        2.2   ''Board of Directors'' shall mean the board of directors of the Corporation or any committee thereof authorized by such board of directors to perform any of its responsibilities with respect to the Class IAM Preferred Stock.

        2.3   ''Business Day'' shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.

        2.4   ''Class I Preferred Stock'' shall mean the Class I Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.5   ''Class IAM Preferred Stock'' shall have the meaning set forth in Section 1 hereof.

        2.6   ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.7   ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.8   ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.9   ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.10 ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.11 ''Common Stock'' shall mean the common stock, par value $0.01 per share, of the Corporation.

        2.12 ''Director Preferred Stocks'' shall mean, collectively, the Class I Preferred Stock, the Class IAM Preferred Stock, the Class Pilot MEC Preferred Stock and the Class SAM Preferred Stock.

        2.13 ''ESOP Convertible Preferred Stocks'' shall mean, collectively, the Class 1 ESOP Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred Stock, each of the par value of $0.01 per share, of the Corporation.

        2.14     [Reserved].

        2.15 ''IAM Termination Date'' shall have the meaning set forth in Section 8 hereof.

        2.16 ''Issue Date'' shall mean the first date on which shares of Class IAM Preferred Stock are issued.

        2.17 ''Liquidation Preference'' shall have the meaning set forth in Section 4.1 hereof.

        2.18 ''Measuring Date'' shall mean that date which is the 365th day following the Issue Date.

        2.19 ''Restated Certificate'' shall mean the Restated Certificate of Incorporation of the Corporation, as amended from time to time.

        2.20 ''Series A Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series A Convertible Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.

        2.21 ''Series B Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series B Preferred Stock in Article FOURTH, Part I.B of this Restated Certificate.

        2.22 ''Series C Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series C Junior Participating Preferred Stock in Article FOURTH, Part I.C of this Restated Certificate.

        2.23 ''Series D Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series D Redeemable Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.

        2.24     [Reserved]

        2.25 ''set apart for payment'' shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of stock of the Corporation ranking on a parity with or junior to the Class IAM Preferred Stock as to distributions upon liquidation, dissolution or winding up of the Corporation are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then ''set apart for payment'' with respect to the Class IAM Preferred Stock shall mean, with respect to such distributions, placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.

        2.26 ''Termination Date'' shall have the meaning set forth in Article FIFTH, Section 1.72 of this Restated Certificate.

        2.27 ''Trading Day'' shall mean any day on which the securities in question are traded on the New York Stock Exchange, Inc. (the ''NYSE''), or if such securities are not listed or admitted for trading or quoted on the NYSE, on the principal national securities exchange on which such securities are listed or admitted, or if not listed or admitted for trading or quoted on any national securities exchange, on the Nasdaq National Market, or if such securities are not quoted on such National Market, in the applicable securities market in which the securities are traded.

        2.28 ''Transfer Agent'' means the Corporation or such agent or agents of the Corporation as may be designated from time to time by the Board of Directors as the transfer agent for the Class IAM Preferred Stock.

        2.29     [Reserved].

        2.30 ''Voting Preferred Stocks'' shall mean, collectively, the Class P Voting Preferred Stock, the Class M Voting Preferred Stock and the Class S Voting Preferred Stock.

        Section 3.   Dividends. The holder of the share of Class IAM Preferred Stock as such shall not be entitled to receive any dividends or other distributions (except as provided in Section 4).

        Section 4.   Payments upon Liquidation.

        4.1     In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for payment to the holders of any class or series of stock of the Corporation that ranks junior to the Class IAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, the holder of the share of Class IAM Preferred Stock shall be entitled to receive $0.01 per share of Class IAM Preferred Stock (the ''Liquidation Preference''), but such holder shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable to the holder of the share of Class IAM Preferred Stock shall be insufficient to pay in full the Liquidation Preference and the liquidation preference on all other shares of any class or series of stock of the Corporation that ranks on a parity with the Class IAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, then such assets, or the proceeds thereof, shall be distributed among the holder of the share of Class IAM Preferred Stock and any such other parity stock ratably in accordance with the respective amounts that would be payable on such share of Class IAM Preferred Stock and any such other parity stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with or into one or more corporations, or (ii) a sale, lease, exchange or transfer of all or substantially all of the Corporation's assets, shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation.

        4.2     Subject to the rights of the holders of shares of any series or class of stock ranking prior to or on a parity with the Class IAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, after payment shall have been made to the holder of the share of Class IAM Preferred Stock, as and to the fullest extent provided in this Section 4, any series or class of stock of the Corporation that ranks junior to the Class IAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holder of the share of Class IAM Preferred Stock shall not be entitled to share therein.

        Section 5.   Shares to be Retired. The share of Class IAM Preferred Stock which shall have been issued and reacquired in any manner (other than redemption pursuant to Section 9.1) by the Corporation shall be retired and restored to the status of an authorized but unissued share of Class IAM Preferred Stock and, in the event of the redemption of such share pursuant to Section 9.1 hereof, shall not be reissued.

        Section 6.   Ranking.

        6.1     Any class or series of stock of the Corporation shall be deemed to rank:

(a) prior to the Class IAM Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holder of Class IAM Preferred Stock;

(b) on a parity with the Class IAM Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the liquidation prices per share thereof be different from those of the Class IAM Preferred Stock, if the holders of such class or series and the Class IAM Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective liquidation preferences, without preference or priority one over the other; and

(c) junior to the Class IAM Preferred Stock, as to the distribution of assets upon liquidation, dissolution or winding up, if the holder of Class IAM Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of shares of such class or series.

        6.2     The Series A Preferred Stock, the Series B Preferred Stock, the Series D Preferred Stock and the ESOP Convertible Preferred Stocks shall be deemed to rank prior to the Class IAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up. The other Director Preferred Stocks and the Voting Preferred Stocks shall each be deemed to rank on a parity with the Class IAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up. The Common Stock and the Series C Preferred Stock shall each be deemed to rank junior to the Class IAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up.

        Section 7.   Consolidation, Merger, etc.

        7.1     In case the Corporation enters into any consolidation, merger, share exchange or similar transaction, however named, involving the Corporation or its subsidiary, United Air Lines, Inc. (''United'') (or any successor to all or substantially all the assets or business of United), pursuant to which the outstanding shares of Common Stock are to be exchanged for or changed, reclassified or converted into securities of any successor or resulting or other company (including the Corporation), or cash or other property (each of the foregoing transactions is referred to herein as a ''Merger Transaction''), proper provision shall be made so that, upon consummation of such transaction, the share of Class IAM Preferred Stock shall be converted, reclassified or changed into or exchanged for preferred stock of such successor or resulting or other company having, in respect of such company, the same powers, preferences and relative, participating, optional or other special rights (including the rights provided by this Section 7), and the qualifications, limitations or restrictions thereof, that the Class IAM Preferred Stock had, in respect of the Corporation, immediately prior to such transaction; specifically including, without limitation, the right, until the IAM Termination Date, to elect one member of the board of directors (or similar governing body) of such company.

        7.2     In case the Corporation shall enter into any agreement providing for any Merger Transaction, then the Corporation shall as soon as practicable thereafter (and in any event at least fifteen (15) Business Days before consummation of such transaction) give notice of such agreement and the material terms thereof to the holder of the share of Class IAM Preferred Stock. The Corporation shall not consummate any such Merger Transaction unless all of the terms of this Section 7 and Section 8 have been complied with.

        Section 8.   Voting. The holder of the share of Class IAM Preferred Stock shall have the following voting rights:

        8.1     Until the later of (i) the Termination Date and (ii) such time as there are no longer any persons represented by the IAM (or any successor organization) employed by the Corporation or any of its Affiliates (the ''IAM Termination Date''), the holder of the share of Class IAM Preferred Stock shall have the right (a) voting as a separate class, to elect one Class IAM Director (as defined in Article FIFTH, Section 1.16 of this Restated Certificate) to the Board of Directors and (b) voting together as a single class with the holders of Common Stock and the holders of such other classes or series of stock that vote together with the Common Stock as a single class, to vote on all matters submitted to a vote of the holders of Common Stock of the Corporation (other than the election of Directors), except as otherwise required by law.

        8.2     [Reserved].

        8.3     [Reserved].

        8.4     The affirmative vote or written consent of the holder of the share of Class IAM Preferred Stock, voting separately as a class, shall be necessary for authorizing, effecting or validating the amendment, alteration or repeal (including any amendment, alteration or repeal by operation of merger or consolidation) of any of the provisions of this Restated Certificate or of any certificate amendatory thereof or supplemental thereto (including any Certificate of Designation, Preferences and Rights or any similar document relating to any series of Serial Preferred Stock) which would adversely affect the preferences, rights, powers or privileges of the Class IAM Preferred Stock.

        8.5     For purposes of the foregoing provisions of Sections 8.1 and 8.4, each share of Class IAM Preferred Stock shall have one (1) vote per share.

        Section 9.   Redemption.

        9.1     The share of Class IAM Preferred Stock shall, to the extent of funds legally available therefor and subject to the other provisions of this Restated Certificate, be automatically redeemed on the IAM Termination Date, at a price of $0.01 per share of Class IAM Preferred Stock, as provided hereinbelow. As promptly as reasonably possible following the occurrence of the IAM Termination Date, the Corporation shall give notice thereof and of the redemption under this Section 9 to the record holder of the Class IAM Preferred Stock. From and after the redemption provided for in this Section 9.1, all rights of the holder of the Class IAM Preferred Stock as such, except the right to receive the redemption price of such shares upon the surrender of the certificate formerly representing the same, shall cease and terminate and such share shall not thereafter be deemed to be outstanding for any purpose whatsoever.

        9.2     The share of Class IAM Preferred Stock shall, to the extent of funds legally available therefor and subject to the other provisions of this Restated Certificate, be automatically redeemed upon any purported transfer thereof other than as expressly permitted under Section 1.2. The redemption price to be paid in connection with any redemption shall be $0.01 per share of Class IAM Preferred Stock. Upon any such redemption, all rights of the holder of Class IAM Preferred Stock as such, except the right to receive the redemption price of such share upon the surrender of the certificate formerly representing the same, shall cease and terminate and such share shall not thereafter be deemed to be outstanding for any purpose whatsoever.

        9.3     The holder of the share of Class IAM Preferred Stock so redeemed pursuant to Sections 9.1 or 9.2 shall present and surrender his certificate formerly representing such share to the Corporation and thereupon the redemption price of such share shall be paid to or on the order of the person whose name appears on such certificate as the owner thereof and the surrendered certificate shall be cancelled.

        Section 10.   Record Holders. The Corporation and the Transfer Agent (if other than the Corporation) may deem and treat the record holder of the share of Class IAM Preferred Stock as the true and lawful owner thereof for all purposes, and, except as otherwise provided by law, neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary.

PART IX

Class SAM Junior Preferred Stock

        Unless otherwise indicated, any reference in this Article FOURTH, Part IX, to ''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall refer to a Section, Subsection, paragraph, subparagraph or clause of this Article FOURTH, Part IX.

        Section 1.   Number of Shares; Designation; Issuance; Restrictions on Transfer.

        1.1     The Class SAM Junior Preferred Stock of the Corporation (the ''Class SAM Preferred Stock'') shall consist of ten shares, par value $0.01 per share.

        1.2     Shares of Class SAM Preferred Stock shall be issued only to the persons who are designated, pursuant to Section 8 of the Class SAM Preferred Stock Stockholders' Agreement, to be the nominee for election pursuant to Article FIFTH, Section 2.2 of this Restated Certificate as the Salaried/Management Employee Director (the ''Salaried/Management Director'') or as a Designated Stockholder (as defined in the Class SAM Stockholders' Agreement, the ''Designated Stockholder''). Any purported sale, transfer, pledge (other than a pledge made in accordance with the Class SAM Stockholders' Agreement) or other disposition (hereinafter a ''transfer'') of shares of Class SAM Preferred Stock by a holder thereof other than to (x) any person to whom shares of Class SAM Preferred Stock may be issued in accordance with the immediately prior sentence, (y) another person designated pursuant to Section 8 of the Class SAM Stockholders' Agreement or (z) in the case where no successor Salaried/Management Director (the ''Successor Salaried/Management Director'') has been elected concurrently with the Salaried/Management Director's removal, resignation, failure to remain qualified, failure to be re-elected or otherwise ceasing to serve as Salaried/Management Director, to the Corporation (to be held in escrow pending transfer to the Successor Salaried/Management Director when such successor is duly elected) shall be null and void and of no force and effect. Upon any purported transfer other than as expressly permitted above, and without any further action by the Corporation or such holder, such share of Class SAM Preferred Stock so purported to be transferred shall, to the extent of funds legally available therefor and subject to the other provisions of this Restated Certificate, be automatically redeemed by the Corporation in accordance with Section 9 hereof, and thereupon such share shall no longer be deemed outstanding and neither such holder nor any purported transferee thereof shall have in respect thereof any of the voting powers, preferences or relative, participating, optional or special rights ascribed to the shares of Class SAM Preferred Stock hereunder, but rather such holder thereafter shall only be entitled to receive the amount payable upon redemption in accordance with Section 9. Certificates representing the shares of Class SAM Preferred Stock shall be legended to reflect the restrictions on transfer and automatic redemption provided for herein.

        Section 2.   Definitions. For purposes of the Class SAM Preferred Stock, the following terms shall have the meanings indicated:

        2.1     ''ALPA Termination Date'' shall have the meaning set forth in Article FOURTH, Part VII, Section 8.1 of this Restated Certificate.

        2.2     ''Board of Directors'' shall mean the board of directors of the Corporation or any committee thereof authorized by such board of directors to perform any of its responsibilities with respect to the Class SAM Preferred Stock.

        2.3   ''Business Day'' shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.

        2.4   ''Class I Preferred Stock'' shall mean the Class I Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.5   ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.6   ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.7   ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.8   ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.9   ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.10 ''Class SAM Preferred Stock'' shall have the meaning set forth in Section 1 hereof.

        2.11 ''Class SAM Stockholders' Agreement'' shall mean the Class SAM Preferred Stockholders' Agreement dated as of July 12, 1994 among the Corporation and the individuals named therein, a copy of which is on file at the office of the Secretary of the Corporation.

        2.12 ''Common Stock'' shall mean the common stock of the Corporation, par value $0.01 per share.

        2.13 ''Director Preferred Stocks'' shall mean collectively, the Class I Preferred Stock, the Class IAM Preferred Stock, the Class Pilot MEC Preferred Stock and the Class SAM Preferred Stock.

        2.14 ''ESOP Convertible Preferred Stocks'' shall mean, collectively, the Class 1 ESOP Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred Stock, each of the par value of $0.01 per share, of the Corporation.

        2.15 ''IAM Termination Date'' shall have the meaning set forth in Article FOURTH, Part VIII, Section 8.1 of this Restated Certificate.

        2.16 ''Issue Date'' shall mean the first date on which shares of Class SAM Preferred Stock are issued.

        2.17 ''Liquidation Preference'' shall have the meaning set forth in Section 4.1 hereof.

        2.18 ''Measuring Date'' shall mean that date which is the 365th day following the Issue Date.

        2.19 ''Restated Certificate'' shall mean the Restated Certificate of Incorporation of the Corporation, as amended from time to time.

        2.20 ''Salaried/Management Employee Director'' shall have the meaning set forth in Section 1.2 hereof.

        2.21     [Reserved].

        2.22 ''Series A Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series A Convertible Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.

        2.23 ''Series B Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series B Preferred Stock in Article FOURTH, Part I.B of this Restated Certificate.

        2.24 ''Series C Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series C Junior Participating Preferred Stock in Article FOURTH, Part I.C of this Restated Certificate.

        2.25 ''Series D Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series D Redeemable Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.

        2.26     [Reserved]

        2.27 ''set apart for payment'' shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of stock of the Corporation ranking on a parity with or junior to the Class SAM Preferred Stock as to distributions upon liquidation, dissolution or winding up of the Corporation are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then ''set apart for payment'' with respect to the Class SAM Preferred Stock shall mean, with respect to such distributions, placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.

        2.28 ''Termination Date'' shall have the meaning set forth in Article FIFTH, Section 1.72 of this Restated Certificate.

        2.29 ''Trading Day'' shall mean any day on which the securities in question are traded on the New York Stock Exchange, Inc. (the ''NYSE''), or if such securities are not listed or admitted for trading or quoted on the NYSE, on the principal national securities exchange on which such securities are listed or admitted, or if not listed or admitted for trading or quoted on any national securities exchange, on the Nasdaq National Market, or if such securities are not quoted on such National Market, in the applicable securities market in which the securities are traded.

        2.30 ''Transfer Agent'' means the Corporation or such agent or agents of the Corporation as may be designated from time to time by the Board of Directors as the transfer agent for the Class SAM Preferred Stock.

        2.31     [Reserved].

        2.32 ''Voting Preferred Stocks'' shall mean, collectively, the Class P Voting Preferred Stock, the Class M Voting Preferred Stock and the Class S Voting Preferred Stock.

        Section 3.   Dividends. The holders of shares of the Class SAM Preferred Stock as such shall not be entitled to receive any dividends or other distributions (except as provided in Section 4).

        Section 4.   Payments upon Liquidation.

        4.1     In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for payment to the holders of any class or series of stock of the Corporation that ranks junior to the Class SAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, the holders of the shares of Class SAM Preferred Stock shall be entitled to receive $0.01 per share of Class SAM Preferred Stock (the ''Liquidation Preference''), but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable to the holders of the shares of Class SAM Preferred Stock shall be insufficient to pay in full the Liquidation Preference and the liquidation preference on all other shares of any class or series of stock of the Corporation that ranks on a parity with the Class SAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Class SAM Preferred Stock and any such other parity stock ratably in accordance with the respective amounts that would be payable on such shares of Class SAM Preferred Stock and any such other parity stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with or into one or more corporations, or (ii) a sale, lease, exchange or transfer of all or substantially all of the Corporation's assets, shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation.

        4.2     Subject to the rights of the holders of shares of any series or class of stock ranking prior to or on a parity with the Class SAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, after payment shall have been made to the holders of the Class SAM Preferred Stock, as and to the fullest extent provided in this Section 4, any series or other class of stock of the Corporation that ranks junior to the Class SAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class SAM Preferred Stock shall not be entitled to share therein.

        Section 5.   Shares to be Retired. All shares of Class SAM Preferred Stock which shall have been issued and reacquired in any manner (other than redemption pursuant to Section 9.1) by the Corporation, other than in its capacity as escrow agent in accordance with Section 1.2 hereof, shall be retired and restored to the status of authorized but unissued shares of Class SAM Preferred Stock and, in the event of redemption of such shares pursuant to Section 9.1 hereof, shall not be reissued.

        Section 6.   Ranking.

        6.1     Any class or series of stock of the Corporation shall be deemed to rank:

(a) prior to the Class SAM Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of Class SAM Preferred Stock;

(b) on a parity with the Class SAM Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the liquidation prices per share thereof be different from those of the Class SAM Preferred Stock, if the holders of such class or series and the Class SAM Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective liquidation preferences, without preference or priority one over the other; and

(c) junior to the Class SAM Preferred Stock, as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of Class SAM Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of shares of such class or series.

        6.2     The Series A Preferred Stock, the Series B Preferred Stock, the Series D Preferred Stock and the ESOP Convertible Preferred Stocks shall each be deemed to rank prior to the Class SAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up. The other Director Preferred Stocks and the Voting Preferred Stocks shall each be deemed to rank on a parity with the Class SAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up. The Common Stock and the Series C Preferred Stock shall each be deemed to rank junior to the Class SAM Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up.

        Section 7.   Consolidation, Merger, etc.

        7.1     In case the Corporation enters into any consolidation, merger, share exchange or similar transaction, however named, involving the Corporation or its subsidiary, United Air Lines, Inc. (''United'') (or any successor to all or substantially all the assets or business of United), pursuant to which the outstanding shares of Common Stock are to be exchanged for or changed, reclassified or converted into securities of any successor or resulting or other company (including the Corporation), or cash or other property (each of the foregoing transactions is referred to herein as a ''Merger Transaction''), proper provision shall be made so that, upon consummation of such transaction, the shares of Class SAM Preferred Stock shall be converted, reclassified or changed into or exchanged for preferred stock of such successor or resulting or other company having, in respect of such company, the same powers, preferences and relative, participating, optional or other special rights (including the rights provided by this Section 7), and the qualifications, limitations or restrictions thereof, that the Class SAM Preferred Stock had, in respect of the Corporation, immediately prior to such transaction; specifically including, without limitation, the right, until the Class SAM Preferred Stock Termination Date (as defined in Section 9.1), to elect one member of the board of directors (or similar governing body) of such company.

        7.2     In case the Corporation shall enter into any agreement providing for any Merger Transaction, then the Corporation shall as soon as practicable thereafter (and in any event at least fifteen (15) Business Days before consummation of such transaction) give notice of such agreement and the material terms thereof to the holders of the shares of Class SAM Preferred Stock. The Corporation shall not consummate any such Merger Transaction unless all of the terms of this Section 7 and Section 8 have been complied with.

        Section 8.   Voting. The holders of shares of Class SAM Preferred Stock shall have the following voting rights; provided, however, that no holder of shares of Class SAM Preferred Stock shall have any right to vote unless at such time such person is the Salaried/Management Director or the Designated Stockholder under the Class SAM Stockholders' Agreement:

        8.1     Until the Class SAM Preferred Stock Termination Date, the holders of the Class SAM Preferred Stock shall have the right (i) voting separately as a class, to elect one Salaried/Management Employee Director to the Board of Directors and (ii) voting together as a single class with the holders of Common Stock and the holders of such other classes or series of stock that vote together with the Common Stock as a single class, to vote on all matters submitted to a vote of the holders of Common Stock of the Corporation (other than the election of Directors), except as otherwise required by law.

        8.2     [Reserved].

        8.3     [Reserved].

        8.4     The affirmative vote or written consent of the holders of a majority of the outstanding shares of Class SAM Preferred Stock, voting separately as a class, shall be necessary for authorizing, effecting or validating the amendment, alteration or repeal (including any amendment, alteration or repeal by operation of merger or consolidation) of any of the provisions of this Restated Certificate or of any certificate amendatory thereof or supplemental thereto (including any Certificate of Designation, Preferences and Rights or any similar document relating to any series of Serial Preferred Stock) which would adversely affect the preferences, rights, powers or privileges of the Class SAM Preferred Stock.

        8.5     For purposes of the foregoing provisions of Sections 8.1 and 8.4, each share of Class SAM Preferred Stock shall have one (1) vote per share.

        Section 9.   Redemption.

        9.1     All outstanding shares of Class SAM Preferred Stock shall, to the extent of funds legally available therefor and subject to the other provisions of this Restated Certificate, be automatically redeemed on the earlier of the ALPA Termination Date and the IAM Termination Date (the ''Class SAM Preferred Stock Termination Date''), at a price of $0.01 per share of Class SAM Preferred Stock, as provided below. As promptly as reasonably possible following the occurrence of the Class SAM Preferred Stock Termination Date, the Corporation shall give notice thereof and of the redemption under this Section 9 to all record holders of the Class SAM Preferred Stock. From and after the redemption provided for in this Section 9.1, all rights of the holder of Class SAM Preferred Stock as such, except the right to receive the redemption price of such shares upon the surrender of certificates formerly representing the same, shall cease and terminate and such shares shall not thereafter be deemed to be outstanding for any purpose whatsoever.

        9.2     The shares of Class SAM Preferred Stock shall, to the extent of funds legally available therefor and subject to the other provisions of this Restated Certificate, be automatically redeemed from time to time, in part, concurrently with any purported transfer of shares of Class SAM Preferred Stock other than as expressly permitted under Section 1.2, and the number of shares so redeemed shall be equal to the number of shares purported to be transferred. The redemption price to be paid in connection with any redemption shall be $0.01 per share of Class SAM Preferred Stock. From and after the redemption provided for in this Section 9.2, all rights of the holders of the shares of Class SAM Preferred Stock so redeemed, except the right to receive the redemption price of such shares upon the surrender of certificates formerly representing the same, shall cease and terminate and such shares shall not thereafter be deemed to be outstanding for any purpose whatsoever.

        9.3     Upon any such redemption provided for in Sections 9.1 or 9.2 above, each holder of a certificate formerly representing the shares of Class SAM Preferred Stock so redeemed shall present and surrender such certificate to the Corporation and thereupon the redemption price of such shares shall be paid to or on the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be cancelled.

        Section 10.   Record Holders. The Corporation and the Transfer Agent (if other than the Corporation) may deem and treat the record holder of any shares of Class SAM Preferred Stock as the true and lawful owner thereof for all purposes, and, except as otherwise provided by law, neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary.

PART X

Class I Junior Preferred Stock

        Unless otherwise indicated, any reference in this Article FOURTH, Part X, to ''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall refer to a Section, Subsection, paragraph, subparagraph or clause of this Article FOURTH, Part X.

        Section 1.   Number of Shares; Designations; Issuance; Restrictions on Transfer.

        1.1     The Class I Junior Preferred Stock of the Corporation (the ''Class I Preferred Stock'') shall consist of ten shares, par value $0.01 per share.

        1.2     Each share of Class I Preferred Stock shall be issued only to a person who serves as an Independent Director of the Corporation meeting the requirements set forth in Article FIFTH, Section 2.4 of this Restated Certificate or to the initial ''Individual Parties'' under the Class I Stockholders' Agreement (as such term is defined in Article FIFTH, Section 1.15 of this Restated Certificate) (the ''Class I Stockholders' Agreement'') (each such person, an ''Independent Director'') and may be held by such person only so long as such person shall continue to serve as an Independent Director. Any purported sale, transfer, pledge (other than a pledge made in accordance with the Class I Stockholders' Agreement), or other disposition (hereinafter a ''transfer'') of shares of Class I Preferred Stock by a holder thereof to any person other than to (x) such holder's successor as an Independent Director (any such individual, a ''Successor Independent Director'') or (y) in the case where no such Successor Independent Director has been elected concurrently with such holder's removal, resignation, failure to remain qualified, failure to be re-elected or otherwise ceasing to serve as an Independent Director, to any Independent Director then in office, or if there are no Independent Directors then in office, to the Corporation (to be held in escrow by such Independent Director or the Corporation, as the case may be, pending transfer to such holder's Successor Independent Director when such successor is duly elected) shall be null and void and of no force and effect. Upon any purported transfer of a share of Class I Preferred Stock by the holder thereof other than as expressly permitted above, without any further action by the Corporation or such holder, such share of Class I Preferred Stock so purported to be transferred shall, to the extent of funds legally available therefor and subject to the other provisions of this Restated Certificate, be automatically redeemed by the Corporation in accordance with Section 8 hereof, and thereupon such share shall no longer be deemed outstanding, and neither such holder nor any purported transferee thereof shall have in respect thereof any of the voting powers, preferences or relative, participating, optional or special rights ascribed to the shares of Class I Preferred Stock hereunder, but rather such holder thereafter shall only be entitled to receive the amount payable upon redemption in accordance with Section 8. Certificates representing shares of Class I Preferred Stock shall be legended to reflect the restrictions on transfer and automatic redemption provided for herein.

        Section 2.   Definitions. For purposes of the Class I Preferred Stock, the following terms shall have the meanings indicated:

        2.1   ''Board of Directors'' shall mean the board of directors of the Corporation or any committee thereof authorized by such board of directors to perform any of its responsibilities with respect to the Class I Preferred Stock.

        2.2   ''Class I Preferred Stock'' shall have the meaning set forth in Section 1 hereof.

        2.3   ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.4   ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.5   ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.6   ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.7   ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.8   ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        2.9   ''Common Stock'' shall mean the common stock of the Corporation, par value $0.01 per share.

        2.10 ''Director Preferred Stocks'' shall mean collectively, the Class I Preferred Stock, the Class IAM Preferred Stock, the Class Pilot MEC Preferred Stock and the Class SAM Preferred Stock.

        2.11 ''ESOP Convertible Preferred Stocks'' shall mean, collectively, the Class 1 ESOP Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred Stock, each of the par value of $0.01 per share, of the Corporation.

        2.12 ''Issue Date'' shall mean the first date on which shares of Class I Preferred Stock are issued.

        2.13 ''Liquidation Preference'' shall have the meaning set forth in Section 4.1 hereof.

        2.14 ''Restated Certificate'' shall mean the Restated Certificate of Incorporation of the Corporation, as amended from time to time.

        2.15 ''Series A Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series A Convertible Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.

        2.16 ''Series B Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series B Preferred Stock in Article FOURTH, Part I.B of this Restated Certificate.

        2.17 ''Series C Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series C Junior Participating Preferred Stock in Article FOURTH, Part I.C of this Restated Certificate.

        2.18 ''Series D Preferred Stock'' shall mean the series of Serial Preferred Stock of the Corporation, without par value, designated Series D Redeemable Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.

        2.19     [Reserved]

        2.20 ''set apart for payment'' shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of stock of the Corporation ranking on a parity with or junior to the Class I Preferred Stock as to distributions upon liquidation, dissolution or winding up of the Corporation are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then ''set apart for payment'' with respect to the Class I Preferred Stock shall mean, with respect to such distributions, placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.

        2.20 ''Termination Date'' shall have the meaning set forth in Article FIFTH, Section 1.72 of this Restated Certificate.

        2.21 ''Transfer Agent'' means the Corporation or such agent or agents of the Corporation as may be designated from time to time by the Board of Directors as the transfer agent for the Class I Preferred Stock.

        2.22 ''Voting Preferred Stocks'' shall mean, collectively, the Class M Voting Preferred Stock, the Class P Voting Preferred Stock and the Class S Voting Preferred Stock.

        Section 3.   Dividends. The holders of shares of the Class I Preferred Stock as such shall not be entitled to receive any dividends or other distributions (except as provided in Section 4).

        Section 4.   Payments upon Liquidation.

        4.1     In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for payment to the holders of any class or series of stock of the Corporation that ranks junior to the Class I Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, the holders of the shares of Class I Preferred Stock shall be entitled to receive $0.01 per share of Class I Preferred Stock (the ''Liquidation Preference''), but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of Class I Preferred Stock shall be insufficient to pay in full the Liquidation Preference and the liquidation preference on all other shares of any class or series of stock of the Corporation that ranks on a parity with the Class I Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, then such assets, or the proceeds thereof, shall be distributed to the holders of shares of Class I Preferred Stock and any such other parity stock ratably in accordance with the respective amounts that would be payable on such shares of Class I Preferred Stock and any such other parity stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with or into one or more corporations, or (ii) a sale, lease, exchange or transfer of all or substantially all of the Corporation's assets, shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation.

        4.2     Subject to the rights of the holders of shares of any series or class of stock ranking prior to or on a parity with the Class I Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, after payment shall have been made to the holders of the Class I Preferred Stock, as and to the fullest extent provided in this Section 4, any series or other class of stock of the Corporation that ranks junior to the Class I Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up of the Corporation, shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class I Preferred Stock shall not be entitled to share therein.

        Section 5.   Shares to be Retired. All shares of Class I Preferred Stock which shall have been issued and reacquired in any manner (other than pursuant to Section 8.1) by the Corporation, other than in its capacity as escrow agent in accordance with Section 1.2 hereof, shall be retired and restored to the status of authorized but unissued shares of Class I Preferred Stock and, in the case of shares redeemed pursuant to Section 8.1 hereof, shall not be reissued.

        Section 6.   Ranking.

        6.1     Any class or series of stock of the Corporation shall be deemed to rank:

(a) prior to the Class I Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up if the holders of such class or series shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up, in preference or priority to the holders of Class I Preferred Stock;

(b) on a parity with the Class I Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the liquidation prices per share thereof be different from those of the Class I Preferred Stock, if the holders of such class or series and the Class I Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective liquidation preferences, without preference or priority one over the other; and

(c) junior to the Class I Preferred Stock, as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of Class I Preferred Stock shall be entitled to the receipt of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of shares of such class or series.

        6.2     The Series A Preferred Stock, the Series B Preferred Stock, the Series D Preferred Stock and the ESOP Convertible Preferred Stocks shall each be deemed to rank prior to the Class I Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up. The other Director Preferred Stocks and the Voting Preferred Stocks shall each be deemed to rank on a parity with the Class I Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up. The Common Stock and the Series C Preferred Stock shall each be deemed to rank junior to the Class I Preferred Stock as to amounts distributable upon liquidation, dissolution or winding up.

        Section 7.   Voting. The holders of shares of Class I Preferred Stock shall have the following voting rights; provided, however, that no holder of shares of Class I Preferred Stock shall have any right to vote unless at such time such person is an Independent Director or an initial ''Individual Party'' under the Class I Stockholders' Agreement:

        7.1     [Reserved]

        7.2     Unless the affirmative vote or consent of the holders of a greater number of shares of Class I Preferred Stock shall then be required by law or this Restated Certificate, and in addition to any other vote required by law or this Restated Certificate, the affirmative vote or written consent of the holders of at least a majority of all of the outstanding shares of Class I Preferred Stock, voting separately as a class, shall be necessary for authorizing, effecting or validating the amendment, alteration or repeal (including any amendment, alteration or repeal by operation of merger or consolidation) of any of the provisions of this Restated Certificate or of any certificate amendatory thereof or supplemental thereto (including any Certificate of Designation, Preferences and Rights or any similar document relating to any series of Serial Preferred Stock) which would adversely affect the preferences, rights, powers or privileges of the Class I Preferred Stock.

        7.3     For purposes of the foregoing provisions of Section 7.2, each share of Class I Preferred Stock shall have one (1) vote per share. Except as otherwise required by applicable law or as set forth herein, the shares of Class I Preferred Stock shall not have any relative participating, optional or other special voting rights and powers and the consent of the holder thereof shall not be required for the taking of any corporate action.

        Section 8.   Redemption.

        8.1     All outstanding shares of Class I Preferred Stock shall, to the extent of funds legally available therefor and subject to the other provisions of this Restated Certificate, be automatically redeemed on the Termination Date, at a price of $0.01 per share of Class I Preferred Stock, as provided below. As promptly as reasonably possible following the occurrence of the Termination Date, the Corporation shall give notice thereof and of the redemption under this Section 8 to all record holders of the Class I Preferred Stock.

        From and after the redemption provided for in this Section 8.1, all rights of the holders of Class I Preferred Stock as such, except the right to receive the redemption price of such shares upon the surrender of certificates therefor, shall cease and terminate and such shares shall not thereafter be deemed to be outstanding for any purpose whatsoever.

        8.2     The shares of Class I Preferred Stock shall, to the extent of funds legally available therefor and subject to the other provisions of this Restated Certificate, be automatically redeemed from time to time, in part, concurrently with any purported transfer of shares of Class I Preferred Stock other than as expressly permitted under Section 1.2 and the number of shares so redeemed shall be equal to the number of shares so purported to be transferred. The redemption price to be paid in connection with any redemption shall be $0.01 per share of Class I Preferred Stock. From and after the redemption provided for in this Section 8.2, all rights of such holder of Class I Preferred Stock as such, except the right to receive the redemption price of such shares upon the surrender of certificates representing the same, shall cease and terminate and such share(s) shall not thereafter be deemed to be outstanding for any purpose whatsoever.

        8.3     Upon any such redemption provided for in Sections 8.1 or 8.2 above, each holder of a certificate formerly representing the share(s) of Class I Preferred Stock so redeemed shall present and surrender such certificate to the Corporation and thereupon the redemption price of such share(s) shall be paid to or on the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be cancelled.

        Section 9.   Record Holders.

        The Corporation and the Transfer Agent (if other than the Corporation) may deem and treat the record holder of any share(s) of Class I Preferred Stock as the true and lawful owner thereof for all purposes, and, except as otherwise provided by law, neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary.

PART XI

Common Stock

        Unless otherwise indicated, any reference in this Article FOURTH, Part XI to ''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall refer to a Section, Subsection, paragraph, subparagraph or clause of this Article FOURTH, Part XI. Capitalized terms used and not otherwise defined in this Article FOURTH, Part XI, shall have the respective meanings given those terms in the introductory sentence of Article FOURTH.

        Section 1.   Dividends. Subject to any rights to receive dividends to which the holders of the shares of any other class or series of stock may be entitled, the holders of shares of Common Stock shall be entitled to receive dividends, if and when declared payable from time to time by the Board of Directors, from any funds legally available therefor.

        Section 2.   Liquidation. In the event of any dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, after there shall have been paid to the holders of shares of any other class or series of stock ranking prior to the Common Stock in respect thereof the full amounts to which they shall be entitled, and subject to any rights of the holders of any other class or series of stock to participate therein, the holders of the then outstanding shares of Common Stock shall be entitled to receive, pro rata, any remaining assets of the Corporation available for distribution to its stockholders. Subject to the foregoing, the Board of Directors may distribute in kind to the holders of the shares of Common Stock such remaining assets of the Corporation, or may sell, transfer or otherwise dispose of all or any part of such remaining assets to any other corporation, trust or other entity and receive payment therefor in cash, stock or obligations of such, other corporations, trust or entity or any combination thereof, and may sell all or any part of the consideration so received, and may distribute the consideration so received or any balance thereof in kind to holders of the shares of Common Stock. The voluntary sale, conveyance, lease, exchange or transfer of all or substantially all the property or assets of the Corporation (unless in connection therewith the dissolution, liquidation or winding up of the Corporation is specifically approved), or the merger or consolidation of the Corporation into or with any other corporation, or the merger of any other corporation into it, or any purchase or redemption of shares of stock of the Corporation of any class, shall not be deemed to be a dissolution, liquidation or winding up of the corporation for the purpose of this Section 2.

        Section 3.   Voting. Except as provided by law or this Restated Certificate of Incorporation, 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 XII

General Provisions

        No Preemptive Rights, Etc. Except as otherwise provided herein, no holder of stock of the Corporation of any class shall have any preemptive, preferential or other right to purchase or subscribe for any shares of stock, whether now or hereafter authorized, of the Corporation of any class, or any obligations convertible into, or any options or warrants to purchase, any shares of stock, whether now or hereafter authorized, of the Corporation of any class, other than such, if any, as the Board of Directors may from time to time determine, and at such price as the Board of Directors may from time to time fix; and any shares of stock or any obligations, options or warrants which the Board of Directors may determine to offer for subscription to holders of any shares of stock of the Corporation may, as the Board of Directors shall determine, be offered to holders of shares of stock of the Corporation of any class or classes or series, and if offered to holders of shares of stock of more than one class or series, in such proportions as between such classes and series as the Board of Directors may determine.

FIFTH. GOVERNANCE. Unless otherwise expressly indicated, references in this Article FIFTH to any ''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall refer to such Section, Subsection, paragraph, subparagraph or clause of this Article FIFTH.

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

        1.1     [Reserved]

        1.2     [Reserved]

        1.3     [Reserved]

        1.4   ''ALPA'' means the Air Line Pilots Association, International.

        1.5   ''Available Unissued ESOP Shares'' shall mean as of the date of determination and without duplication, (a) the number of shares of Common Stock that would be issuable upon conversion of that portion of (w) 17,675,345 shares of ESOP Convertible Preferred Stock plus (x) an aggregate of 17,675,345 shares of Class P Voting Preferred Stock, Class M Voting Preferred Stock and Class S Voting Preferred Stock plus (y) the number of Additional Shares (as defined in Section 1.10 of the Recapitalization Agreement) plus (z) an aggregate number of shares of Class P Voting Preferred Stock, Class M Voting Preferred Stock and Class S Voting Preferred Stock that is equal to the number of Additional Shares that, in the case of each of clause (w), (x), (y) and (z), as of the date of determination of Available Unissued ESOP Shares, have not been issued pursuant to Section 1.6 or 1.10 of the Recapitalization Agreement as ESOP Convertible Preferred Stock, Class P Voting Preferred Stock, Class M Voting Preferred Stock, Class S Voting Preferred Stock or Common Stock, plus (b) the number of shares of Common Stock that have been credited to the Supplemental ESOP (other than pursuant to Section 1.6 or 1.10 of the Recapitalization Agreement) and that have not been issued.

        1.6     [Reserved]

        1.7     [Reserved]

        1.8   ''Board'' means the Board of Directors of the Corporation.

        1.9     [Reserved]

        1.10   [Reserved]

        1.11 ''Chief Executive Officer'' means the Chief Executive Officer of the Corporation.

        1.12 ''Class 1 ESOP Convertible Preferred Stock'' means the Class 1 ESOP Convertible Preferred Stock, par value $0.01 per share, of the Corporation.

        1.13 ''Class 2 ESOP Convertible Preferred Stock'' means the Class 2 ESOP Convertible Preferred Stock, par value $0.01 per share, of the Corporation.

        1.14 ''Class I Preferred Stock'' means the Class I Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        1.15 ''Class I Stockholders' Agreement'' means the Class I Preferred Stockholders' Agreement, dated as of the date of the Effective Time, among the Corporation, ALPA, the IAM and the holders of the Class I Preferred Stock, as amended from time to time.

        1.16 ''Class IAM Director'' means the Director elected by the holders of the Class IAM Preferred Stock, voting separately as a class.

        1.17 ''Class IAM Preferred Stock'' means the Class IAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        1.18 ''Class M Voting Preferred Stock'' means the Class M ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        1.19 ''Class P Voting Preferred Stock'' means the Class P ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        1.20 ''Class Pilot MEC Director'' means the Director elected by the holders of the Class Pilot MEC Preferred Stock, voting separately as a class.

        1.21 ''Class Pilot MEC Preferred Stock'' means the Class Pilot MEC Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        1.22 ''Class SAM Preferred Stock'' means the Class SAM Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        1.23 ''Class SAM Stockholders' Agreement'' means the Class SAM Stockholders' Agreement, dated as of the date of the Effective Time, between the Corporation and the holders of Class SAM Preferred Stock, as amended from time to time.

        1.24 ''Class S Voting Preferred Stock'' means the Class S ESOP Voting Junior Preferred Stock, par value $0.01 per share, of the Corporation.

        1.25     [Reserved]

        1.26   "Common Equity" means, in the aggregate and without double-counting:

(a) the Common Stock outstanding at the time in question that satisfies any one or more of the following clauses (i) through (vi): (i) that was issued upon conversion of ESOP Convertible Preferred Stock or Voting Stock (other than Common Stock);

(ii) that was issued upon conversion of the Series A Preferred Stock or any Pre-Closing Covered Convertible;

(iii) that was issued upon exercise of any Pre-Closing Covered Option; (iv) that constitutes Permitted Bankruptcy Equity or was issued upon conversion, exercise or exchange of any Permitted Bankruptcy Equity;

(v) that was outstanding immediately prior to the close of business on the Measuring Date (as defined in the Recapitalization Agreement), other than as a result of an issuance initially approved after the Effective Time; or

(vi) that was issued in a transaction described in Part II, Section 6.4(a) (i), (ii) or (iii), of Article FOURTH of this Restated Certificate in respect of the number of shares of Common Stock that at the time of such transaction were included in the definition of Common Equity;

(b) the Common Stock issuable upon conversion of ESOP Convertible Preferred Stock or Voting Stock (other than Common Stock) outstanding at the time in question;

(c) the Common Stock issuable upon conversion of any Series A Preferred Stock or Pre-Closing Covered Convertible outstanding at the time in question;

(d) the Common Stock issuable upon conversion, exercise or exchange of any Permitted Bankruptcy Equity outstanding at the time in question; and

(e) the Common Stock issuable upon exercise of any Pre-Closing Covered Option outstanding at the time in question.

        For purposes of the foregoing, if the Corporation reacquires any shares of outstanding Common Stock at a time that shares of Common Stock not included in the definition of Common Equity are outstanding, the Corporation shall make an assessment as to whether or not the shares so reacquired are included in the definition of Common Equity. If the Corporation cannot conclusively establish whether or not the shares so reacquired are included in the definition of Common Equity, then the number of outstanding shares of Common Stock included in the definition of Common Equity pursuant to clause (a) above shall be deemed reduced as a result of such reacquisition by the number determined by multiplying the number of shares of Common Stock so reacquired by a fraction, the numerator of which is the number of shares of Common Stock included in the definition of Common Equity outstanding immediately prior to the reacquisition and the denominator of which is the aggregate number of shares of Common Stock outstanding immediately prior to the reacquisition.

        1.27 ''Common Stock'' means the common stock, par value $0.01 per share, of the Corporation.

        1.28     [Reserved]

        1.29     [Reserved]

        1.30   ''Corporation'' means UAL Corporation.

        1.31   ''Director'' means a director of the Corporation.

        1.32     [Reserved]

        1.33     [Reserved]

        1.34 ''Effective Time'' has the meaning defined in the Recapitalization Agreement.

        1.35 ''Employee Directors'' has the meaning defined in Subsection 2.2.

        1.36 ''entire Board'' means all Directors of the Corporation who would be in office if there were no vacancies.

        1.37 ''Equity Securities'' means common stock of the Corporation or any debt, equity or other security or contractual right convertible into or exercisable or exchangeable for common stock or any warrants, options or other rights to purchase common stock or such other Equity Securities, but in no event shall the term ''Equity Securities'' include non-voting, non-convertible preferred stock.

        1.38 ''ESOP Convertible Preferred Stock'' means collectively, the Class 1 ESOP Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred Stock and any other securities into which such preferred stocks are changed or reclassified, into which they are converted or for which they are exchanged.

        1.39 ''ESOPs'' means collectively, the UAL Corporation Employee Stock Ownership Plan and the UAL Corporation Supplemental ESOP and any similar or successor plans thereto.

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

        1.41 ''Existing Plans'' means collectively, the United Air Lines, Inc. Flight Attendant Employees' Savings Plan; the United Air Lines, Inc. Management and Salaried Employees' Personal Investment Program; the United Air Lines, Inc. Union Ground Employees' Long Term Investment Program; the United Air Lines, Inc. Pilots' Directed Account Retirement Income Plan; and the Employees' Stock Purchase Plan of UAL Corporation.

        1.42     [Reserved]

        1.43     [Reserved]

        1.44 ''GCL'' means the General Corporation Law of the State of Delaware, as amended from time to time.

        1.45     [Reserved]

        1.46 ''IAM'' means the International Association of Machinists and Aerospace Workers.

        1.47     [Reserved]

        1.48     [Reserved]

        1.49     [Reserved]

        1.50     [Reserved]

        1.51     [Reserved]

        1.52     [Reserved]

        1.53     [Reserved]

        1.54     [Reserved]

        1.55     [Reserved]

        1.56 "Permitted Bankruptcy Equity" means any Equity Securities issued in accordance with Subsection 3.4(b)(vii)(B) of the Restated Certificate of Incorporation of the Corporation as amended on May 18, 2000, as in effect immediately prior to the Termination Date.

        1.57     [Reserved]

        1.58 ''Post-Termination Meeting'' has the meaning defined in Subsection 2.13(b).

        1.58.1     "Pre-Closing Covered Convertible" means any Convertible Company Securities (as defined in Section 1.8 of the Recapitalization Agreement), other than the Series A Preferred Stock, outstanding immediately prior to the Effective Time with a conversion price equal to or less than the Old Share Equivalent Price (as defined in Section 1.10 of the Recapitalization Agreement).

        1.58.2     "Pre-Closing Covered Option" means any employee stock option granted under any employee stock option or compensation plan or arrangement of the Corporation outstanding immediately prior to the Effective Time with an exercise price of less than the Old Share Equivalent Price (as defined in Section 1.10 of the Recapitalization Agreement).

        1.59     [Reserved]

        1.60     [Reserved]

        1.61 ''Recapitalization Agreement'' means the Recapitalization Agreement, dated as of March 25, 1994, among the Corporation, ALPA and the IAM, as amended from time to time.

        1.62 ''Restated Bylaws'' means the Amended and Restated Bylaws of the Corporation, as amended from time to time.

        1.63 ''Restated Certificate'' means the Restated Certificate of Incorporation of the Corporation, as amended from time to time.

        1.64 ''Rights Agreement'' means the Rights Agreement, dated as of December 11, 1986, between the Corporation and First Chicago Trust Company of New York (formerly Morgan Shareholder Services Trust Company), as amended from time to time.

        1.65     [Reserved]

        1.66 ''Salaried/Management Employee Director'' means the Director elected by the holders of the Class SAM Preferred Stock, voting separately as a class.

        1.66.1     "Series A Preferred Stock" means the series of Serial Preferred Stock of the Corporation, without par value, designated Series A Convertible Preferred Stock in Article FOURTH, Part I.A, of this Restated Certificate.

        1.67     [Reserved]

        1.68     [Reserved]

        1.69   ''Stockholders'' means the stockholders of the Corporation.

        1.70     [Reserved]

        1.71     [Reserved]

        1.72   "Termination Date" means, except as otherwise provided in this Restated Certificate, the date on which (a) the Common Equity held in the ESOPs, the Existing Plans or in any other employee trusts or pension, retirement or other employee benefit plans sponsored by the Corporation or any of its Subsidiaries for the benefit of its employees as of the close of business on such date, plus (b) the number of Available Unissued ESOP Shares, plus, but without double-counting (c) the number of other shares of Common Stock that are held in the ESOPs, the Existing Plans or in any other employee trusts or pension, retirement or other employee benefit plans sponsored by the Corporation or any of its Subsidiaries for the benefit of its employees as of the close of business on such date and that were acquired (i) in open market transactions or (ii) in privately negotiated transactions from a person other than the Corporation or one or more Subsidiaries, represent, in the aggregate, less than 20% of (x) the Common Equity of the Corporation plus (y) the number of Available Unissued ESOP Shares.

        1.73 ''Union Directors'' has the meaning defined in Subsection 2.2.

        1.74 ''United Air Lines, Inc.'' means United Air Lines, Inc., a Delaware corporation, or any successor to all or substantially all of the assets thereof.

        1.75 ''Voting Stock'' means collectively, the Common Stock, Class IAM Preferred Stock, Class M Voting Preferred Stock, Class Pilot MEC Preferred Stock, Class P Voting Preferred Stock, Class SAM Preferred Stock and Class S Voting Preferred Stock.

        Section 2.   Directors.

        2.1   General Powers. Except as otherwise provided in this Restated Certificate, the business and affairs of the Corporation shall be managed by or under the direction of the Board. The Board may adopt such rules and regulations, not inconsistent with this Restated Certificate, the Restated Bylaws or applicable law, as it may deem proper for the conduct of its meetings and the management of the Corporation. In addition to the powers conferred expressly by this Restated Certificate and the Restated Bylaws, the Board may exercise all powers and perform all acts that are not required, by this Restated Certificate, the Restated Bylaws or applicable law, to be exercised or performed by the Stockholders.

        2.2   Number and Composition. Notwithstanding any other provision in this Restated Certificate, but subject to Article FOURTH, Parts I.A and I.B, the Board shall consist of twelve members and shall be comprised as follows: nine Directors shall be elected by the holders of the outstanding Common Stock and of any other class or series of stock entitled to vote thereon together with the Common Stock, voting together as a single class; one Director shall be elected by the holders of the outstanding Class IAM Preferred Stock, voting separately as a class; one Director shall be elected by the holders of the outstanding Class Pilot MEC Preferred Stock, voting separately as a class; and one Director shall be elected by the holders of the outstanding Class SAM Preferred Stock, voting separately as a class. After the Termination Date, and until the IAM Termination Date (as defined in Article FOURTH, Part VIII of this Restated Certificate) in the case of the Director elected by the holders of the outstanding Class IAM Preferred Stock or the ALPA Termination Date (as defined in Article FOURTH, Part VII of this Restated Certificate) in the case of the Director elected by the holders of the outstanding Class Pilot MEC Preferred Stock, the Director elected by the holders of the outstanding Class IAM Preferred Stock and the Director elected by the holders of the outstanding Class Pilot MEC Preferred Stock shall each be deemed a ''Union Director,'' and collectively shall be deemed ''Union Directors,'' for purposes of this Restated Certificate. After the Termination Date, and until the IAM Termination Date in the case of the Director elected by the holders of the outstanding Class IAM Preferred Stock, until the ALPA Termination Date in the case of the Director elected by the holders of the outstanding Class Pilot MEC Preferred Stock, and until the earlier of the IAM Termination Date and the ALPA Termination Date in the case of the Director elected by the holders of the outstanding Class SAM Preferred Stock, the Director elected by the holders of the outstanding Class IAM Preferred Stock, the Director elected by the holders of the outstanding Class Pilot MEC Preferred Stock and the Director elected by the holders of the outstanding Class SAM Preferred Stock shall each be deemed an ''Employee Director,'' and collectively shall be deemed ''Employee Directors,'' for purposes of this Restated Certificate.

        2.3     [Reserved]

        2.4     [Reserved]

        2.5     [Reserved]

        2.6   Term of Office. Subject to Subsection 2.13(b), and except as otherwise provided in this Restated Certificate, each Director shall hold office until the next annual meeting of Stockholders and until his or her successor is elected and qualified, subject to such Director's earlier death, resignation or removal.

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

        2.8   Removal of Directors. (a) Any Director may be removed without cause at any time only by the affirmative vote of the holders of a majority in voting power of the shares of the class or classes or series of stock that are entitled to vote for the election of such Director, voting separately as a class or series.

                    (b) Any Director or the entire Board may be removed for cause as provided under the GCL.

        2.9   Vacancies on the Board-Vacancies of Employee Directors. In the event of a vacancy of an Employee Director, such vacancy may be filled only by a vote of the class or series of stock that elected such Director.

        2.10     [Reserved]

        2.11 Voting by Directors. Subject to any greater or additional vote of the Board or of any class of Directors required by law or by this Restated Certificate, 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.

        2.12     [Reserved]

        2.13   Events Upon the Occurrence of the Termination Date.

(a) Upon the occurrence of the Termination Date, the Board shall take all necessary and appropriate actions to cause to be filed and become effective a restated certificate of incorporation of the Corporation under Section 245 of the GCL, or any successor provision then in effect, deleting all provisions in this Restated Certificate that, by their terms, are no longer in effect and operative as a result of the occurrence of the Termination Date and integrating into a single document all other amendments to this Restated Certificate that have been adopted between the date hereof and the Termination Date.

(b) Upon the occurrence of the Termination Date, the Outside Public Director Nomination Committee shall, on behalf of the Board, subject to Section 2.2, nominate the individuals to be the Board's nominees for election as Directors (other than the Employee Directors) to be recommended for election by the Stockholders entitled to vote thereon at a meeting of Stockholders to be held promptly following the Termination Date (the ''Post-Termination Meeting''), and the officers of the Corporation shall take all necessary and appropriate actions to promptly call and hold the Post-Termination Meeting. Upon the effectiveness of the election of the Directors elected at such Post-Termination Meeting, the term of office of each Director in office immediately prior thereto (except any such Director re-elected in such election or as to whom no successor is elected in such election) shall terminate.

        Section 3.   Special Voting Provisions.

        3.1     [Reserved]

        3.2   Amendment to the Restated Bylaws. Subject to the provisions of the bylaws of the Corporation, the Board is expressly authorized to make, alter or repeal the bylaws of the Corporation.

        3.3    [Reserved]

        3.4     [Reserved]

        3.5     [Reserved]

        3.6   Special Provisions with Respect to the Appointment and Removal of Officers.

        3.6.1   Appointment of Other Officers. The officers of the Corporation shall be elected or appointed, annually or at such other time or times as the Board shall determine, by the Board or by the Chief Executive Officer pursuant to authority delegated by the Board to the Chief Executive Officer; provided, however, with respect to the initial appointment of the Chief Operating Officer following the Effective Time, such person shall be elected or appointed by the Board and shall not be found to be unacceptable by two of the three Outside Public Directors.

        3.6.2   Term of Office. Each officer of the Corporation shall hold office until such officer's successor is chosen and qualifies or until such officer's earlier death, resignation or removal. Any such officer may resign at any time upon written notice to the Corporation. Such resignation shall take effect on the date of receipt of such notice or at such later date as is therein specified, and, unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. The resignation of such officer shall be without prejudice to the contract rights of the Corporation, if any.

        3.7   Certain Provisions with Respect to (a) the Class I Preferred Stock and the Independent Directors and (b) the Class SAM Preferred Stock and the Salaried/Management Employee Director.

(a) Notwithstanding any other provision of this Restated Certificate, (i) the Corporation may issue Class I Preferred Stock only to an Independent Director or the initial ''Individual Parties'' under the Class I Stockholders' Agreement, and (ii) a holder of Class I Preferred Stock may not sell, transfer, pledge or assign any shares of Class I Preferred Stock or any interest therein, including, without limitation, by operation of law or otherwise, other than to the Corporation or to another Independent Director in accordance with the Class I Stockholders' Agreement. Any sale, transfer, pledge or assignment of any shares of Class I Preferred Stock, whether by operation of law or otherwise, in violation of this Subsection 3.7(a) shall be null and void and of no force and effect. The certificates evidencing shares of Class I Preferred Stock shall bear a legend describing the transfer restrictions set forth in this Subsection 3.7(a).

(b) Notwithstanding any other provision of this Restated Certificate, (i) the Corporation may issue Class SAM Preferred Stock only to a Salaried/Management Employee Director, a ''Designated Shareholder'' under the Class SAM Stockholders' Agreement or the initial ''Designated Nominee'' under the Class SAM Stockholders' Agreement, and (ii) a holder of Class SAM Preferred Stock may not sell, transfer, pledge or assign any shares of Class SAM Preferred Stock or any interest therein, including, without limitation, by operation of law or otherwise, other than to the Corporation or to another Salaried/Management Employee Director in accordance with the Class SAM Stockholders' Agreement. Any sale, transfer, pledge or assignment of any shares of Class SAM Preferred Stock, whether by operation of law or otherwise, in violation of this Subsection 3.7(b) shall be null and void and of no force and effect. The certificates evidencing shares of Class SAM Preferred Stock shall bear a legend describing the transfer restrictions set forth in this Subsection 3.7(b).

        3.8   Section 203 of the GCL. Notwithstanding any provision of this Restated Certificate to the contrary, if any provision of this Restated Certificate by its terms purports to require for any vote of Stockholders required by Section 203 of the GCL (or any successor section thereto) a greater vote of Stockholders than that specified in Section 203 of the GCL, then, to the fullest extent required by law, the provision of Section 203 of the GCL that requires such specific vote of the Stockholders shall govern and the provision of this Restated Certificate that would require a greater vote of the Stockholders shall not apply.

        3.9     [Reserved]

        3.10 Construction of Special Voting Provisions. Except as otherwise expressly provided in this Restated Certificate, where more than one Subsection of this Section 3 is applicable to an event, transaction or other matter, the provisions contained in each such Subsection shall apply independently to such event, transaction or other matter.

        Section 4.   Board Committees.

        4.1.1   Committees of the Board. (a) The Board may by the affirmative vote of a majority of the votes entitled to be cast by the entire Board designate one or more committees of the Board and provide in a resolution of the Board passed as aforesaid the powers and functions of such committees to the extent permitted under the GCL; provided, however, that the number of Union Directors that shall be members of each such committee shall be the same as the number of Union Directors that served immediately prior to the Termination Date on the Board committee, if any, the function of which was substantially the same as such newly designated committee.

                    (b) Unless otherwise agreed upon by both Union Directors, the Union Director membership on each committee of the Board following the Termination Date on which only one Union Director serves shall be rotated annually between the Class IAM Director and the Class Pilot MEC Director.

        4.1.2   Quorum and Voting Requirements of Board Committees. Except as otherwise provided in this Restated Certificate, at all meetings of a Board committee the presence of Directors entitled to cast at least a majority of the aggregate number of votes entitled to be cast by all Directors on such committee shall constitute a quorum for the transaction of business. Each Director serving on a Board committee shall have one vote. Except as otherwise provided in this Restated Certificate, any act of a Board committee shall require the affirmative vote of a majority of the votes entitled to be cast by the Directors present at a meeting of such Board committee (at which a quorum is present) and entitled to vote on the matter in question.

        4.1.3   Effect of Board Committee Action. Any action that is authorized pursuant to a Board resolution adopted in accordance with Subsection 4.1.1 to be taken by a Board committee and that is duly taken by such committee in accordance therewith shall have the same effect as if such action were taken by the Board.

SIXTH. (a) A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.

(b) Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a ''proceeding''), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer, of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators: provided, however, that, except as provided in paragraph (c) hereof, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Article SIXTH shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition: provided, however, that, if the Delaware General Corporation Law requires, the payment of such expense incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Article SIXTH or otherwise. The Corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers.

(c) If a claim under paragraph (b) of this Article SIXTH is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(d) The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article SIXTH shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of this Restated Certificate of Incorporation, by-law, agreement, vote of stockholders or disinterested directors or otherwise.

(e) The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

SEVENTH. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Restated Certificate, in the manner now or hereafter prescribed by the laws of Delaware and this Restated Certificate, and all rights and powers conferred herein upon stockholders and directors are granted subject to this reservation.

        I, the undersigned officer of UAL Corporation, a corporation of the State of Delaware, hereby certify that the foregoing is a true, correct and complete copy of the Restated Certificate of Incorporation of said Corporation as at present in force.

        IN WITNESS WHEREOF, I have hereunto subscribed by name and affixed the seal of this Corporation this 16th day of April, 2003.

UAL CORPORATION,
  By  /s/ Francesca M. Maher

Name:  Francesca M. Maher
Title:    Senior Vice President,
             General Counsel and Secretary

[Seal]

Attest: /s/ Mary Jo C. Georgen

Title:  Assistant Corporate Secretary

Attest:

AMENDED AND RESTATED BYLAWS

OF

UAL CORPORATION

(as amended and restated on April 16, 2003)

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      "Chief Executive Officer" means the Chief Executive Officer of the Corporation.

1.6      "Common Stock" has the meaning defined in the Restated Certificate.

1.7       "Corporation" means UAL Corporation.

1.8       "Director" means a director of the Corporation.

1.9       "Employee Directors" has the meaning defined in the Restated Certificate.

1.10     "Entire Board" means all Directors who would be in office if there were no vacancies. 1.11      "General Counsel" means the General Counsel of the Corporation. 1.12      "GCL" means the General Corporation Law of the State of Delaware, as amended from time to time. 1.13      "President" means the President of the Corporation.

1.14      "Restated Certificate" means the Restated Certificate of Incorporation of the Corporation, as amended from time to time.

1.15      "Restated Bylaws" meansthe Amended and Restated Bylaws of the Corporation, as amended from time to time.

1.16      "Secretary" means the Secretary of the Corporation.

1.17      "Stockholders" means the stockholders of the Corporation.

1.18      "Termination Date" has the meaning defined in the Restated Certificate.

1.19      "Treasurer" means the Treasurer of the Corporation.

1.20      "Union Directors" has the meaning defined in the Restated Certificate.

1.21      "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 only such business may be transacted as is related to the purpose or purposes of such meeting set forth in the notice thereof given pursuant to Section 2.4.

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 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 one-third 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 one-third 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 at least 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 place. At 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 or, failing such appointment, appointed by the affirmative vote of a majority in voting power of the Stockholders present in person or represented by proxy and entitled to vote at the meeting. 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 Stockholders at the meeting present in person or represented by proxy shall, by the affirmative vote of the holders of at least a majority in voting power of the stock present in person or represented by proxy and entitled to vote at the meeting, 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 deems fair and reasonable.

2.10      Proposing Business or Nominating Directors, other than Employee 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.

(b)      Nominations for Directors, other than Employee 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 such special meeting 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 an Employee 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) 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 made, whichever first occurs.

(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 an Employee 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 an Employee 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 consent of such person 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 (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. Such notice must be accompanied by a written consent of each proposed nominee to be named as a nominee and to serve as a Director if elected.

(3)      At a Stockholders' Meeting that is a special meeting, a Stockholder may not propose any business other than the election of Directors, other than Employee Directors, and then only if such meeting has been called for the purpose of electing Directors.

(4)      Nominations for Employee 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, Composition and Term of Office. The number of Directors on the Board, the composition of the Board and term of office of Directors shall be 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 may 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. In case the day appointed for a stated meeting shall fall upon a legal holiday, such meeting shall be held on the next following day, not a legal holiday, at the regularly appointed hour. 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 any two Directors or by the Chairman, or, in the event that the office of the Chairman is 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. The only business that may be transacted at such meeting shall be the business as described in such notice.

3.8      Notices of Board Meetings. Notice of any special meeting or, to the extent required pursuant to Section 3.6, stated 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 may be removed without cause at any time only by the affirmative vote of the holders of a majority in voting power of the shares of the class or classes or series of stock that are entitled to vote for the election of such Director, voting separately as a class or series. Any Director or the entire Board may be removed for cause as provided under the GCL.

3.13      Additional Qualification of Directors. No person shall be eligible for election as a Director if at the time of such election such person is 70 or more years of age.

3.14      Vacancies on the Board. Except as otherwise provided in the Restated Certificate, any vacancy on the Board caused by the removal, either for or without cause, of a Director may be filled by the Stockholders entitled to vote thereon at the meeting at which such Director is removed or at any subsequent meeting. Except as otherwise provided in the Restated Certificate, in case of any increase in the authorized number of Directors, unless such increase is created by reason of the failure to pay dividends on some class or classes or series of stock of the Corporation, or of any vacancy created by the death or resignation of a Director, unless such vacancy arises in any Directorship created by reason of a failure to pay dividends on some class or classes or series of stock of the Corporation, then, the additional Director or Directors may be elected, or, as the case may be, the vacancy or vacancies may be filled, either (a) by the Board by the affirmative vote of a majority of the votes entitled to be cast by the Directors then in office, although less than a quorum, or (b) by a plurality of the votes cast by the Stockholders entitled to vote thereon, either at an annual meeting or at a special meeting called for such purpose at which a quorum is present.

3.15      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.

3.16      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.

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. Each committee of the Board shall have power to appoint one of its members to act as chairman of such committee by the affirmative vote of a majority of the votes entitled to be cast by all of the members of such committee.

(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.

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. In the case the day appointed for a stated meeting shall fall upon a legal holiday, such meeting shall be held on the next following day, not a legal holiday, at the appointed hour. 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. The only business that may be transacted at such meeting shall be the business as described in such notice.

4.3      Notice of Board Committee Meetings. Notice of any special meeting of any committee of the Board or, to the extent required pursuant to Section 4.2(a), stated 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 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 the affirmative vote of a majority of the votes entitled to be cast by the entire Board.

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 (i) each of the Union Directors shall be members of the Executive Committee and (ii) 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) and a Treasurer, and shall be a Chief Executive Officer (who shall be a Director), a President, one or more Vice Presidents, a General Counsel and a Secretary. 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.

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. In the event no Treasurer is elected, the President shall also have the duties of the Treasurer specified in these Restated Bylaws.

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 hereinafter 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 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. Every Stockholder shall be entitled to a certificate 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 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 in the Borough of Manhattan, in the City of New York, State of New York, and in such other city or cities 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.

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 so 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.

(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.

7.3      Signature of NegotiableInstruments. 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.

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 present in person or represented by proxy and entitled to vote thereon, at an annual meeting of Stockholders, or at a special meeting thereof, at which a quorum is present, 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 now bylaws, or a summary thereof.

DIRECTOR EMERITUS BENEFITS POLICY

Benefits Provided. A member of the Board of Directors of UAL Corporation ("Board") who has terminated his or her service as a member of the Board (a "Former Director") shall be entitled to the following Director Emeritus Benefits if and when such individual satisfies the requirements of this policy:

1) Travel Privileges- A Director Emeritus is entitled to complimentary, lifetime, positive space pleasure travel on United Airlines, which includes first class travel. The Director Emeritus's spouse and dependent children under the age of 25 are also entitled to this benefit.

2) Red Carpet Club Membership- A Director Emeritus will be entitled to a lifetime membership in the United Airlines Red Carpet Club.

3) Cargo Privileges- A Director Emeritus will be entitled to complimentary, lifetime, cargo carriage on United Airlines (on a space available basis). The cargo carriage is limited to 2,500 pounds per year for personal goods only (not business related). The goods will be shipped as general freight.

4) Tax Gross-Up- A Director Emeritus will be entitled to an annual tax gross-up payment intended to reimburse the Director Emeritus for all additional Federal and state income taxes excluding Federal and state self-employment tax, FICA and FUTA ("Income Taxes") he or she will incur as a result of including the value of the travel or transportation in his or her income (as well as the Income Taxes due with respect to the gross-up payment in the preceding year).

Eligibility. A Former Director is eligible for Director Emeritus Benefits if the individual (A) has at least five (5) consecutive Years of Creditable Service on the Board and (B) his or her Eligibility Date has passed. A Year of Creditable Service means the lesser of 12 months of service as a member of the Board or the period between annual meetings. A member of the Board who is also an employee of United Airlines shall receive credit for one (1) Year of Creditable Service on the Board for each 12 consecutive months of employment as an employee of United Airlines immediately preceding the date Board service commences, but not to exceed a total of 24 months.

"Eligibility Date" shall mean the later of the following (A) and (B):

(A)(i) for a Former Director who has terminated employment with United Airlines after the date such employee first qualified for UA Retired Employee Status, as defined in United's Employee Policy Manual - Series 15, the date employment with United Airlines terminated; and (ii) for all other Former Directors, the Director Emeritus's sixtieth birthday; and

(B) cessation of any full-time employment by the Former Director, but in no event later than the Former Director's seventieth birthday. Cessation of full-time employment shall normally be determined by written notice by the Former Director to the Company, absent a Board determination to the contrary.

A Former Director shall not be eligible for Director Emeritus Benefits while such Former Director is an employee of United Airlines or is otherwise engaged in full-time employment. A Former Director who meets the eligibility requirements specified above and whose Director Emeritus benefits have not been denied, suspended, or cancelled as provided under "Disqualification" below is sometimes called a "Director Emeritus" in this policy.

Disqualification. The Board may deny Director Emeritus Benefits for any Board member, Former Director or Director Emeritus for "cause" or, in the case of Former Directors whose service as a member of the Board ended on or after December 9, 2002 (the Chapter 11 Filing Date), if the Board determines that a departure from the Board was not a Board retirement. Except as provided in this policy, the Board's determination of cause or non-retirement shall be conclusive and in the Board's sole discretion, provided that a Board departure at or after age 70 (age 60 for individuals serving on the Board at July 12, 1994) shall also be considered a Board retirement.

In the event a Former Director or Director Emeritus accepts a Competitive Position with a Competitor, the Director Emeritus Benefits provided to such individual may be cancelled by the Board. For purposes of this policy, "Competitor" means any airline or air carrier or any company affiliated, directly or indirectly, with another airline or air carrier and (2) "Competitive Position" means becoming employed by, a member of the board of directors of, a consultant to, or to otherwise provide services of any nature to a Competitor directly or indirectly.
 

Directors Emeriti Prior to the Chapter 11 Filing Date. A Former Director whose service as a member of the Board ended prior to the Chapter 11 Filing Date shall be subject to this policy but such individual shall be entitled only to the Director Emeritus Benefits described above under "1) Travel Privileges" and "2) Red Carpet Club Membership;" in addition such individual shall not be subject to the requirements of this policy specified under "Eligibility" above, but shall be subject to the following eligibility requirements:

1)  the Former Director was entitled to Director Emeritus Benefits immediately prior to the Chapter 11 Filing Date; and

the Former Director waives any and all claims that could otherwise be asserted against UAL Corporation and its affiliates in connection with their Chapter 11 bankruptcy cases. Policy Changes. This Director Emeritus Benefits Policy as it applies to Board members, Former Directors, and/or Directors Emeriti generally may be modified or terminated at any time in the sole discretion of the Board.

Effective Date. The amendments to this policy shall be effective May 1, 2003.

3

                                                                                                                                   Exhibit 10.2

2003 Agreement

between

UNITED AIR LINES, INC.

and

THE AIR LINE PILOTS

in the service of UNITED AIR LINES, INC.

represented by

THE AIR LINE PILOTS ASSOCIATION,

INTERNATIONAL

2003 Agreement

between

UNITED AIR LINES, INC.

and

THE AIR LINE PILOTS

in the service of UNITED AIR LINES, INC.

represented by

THE AIR LINE PILOTS ASSOCIATION,

INTERNATIONAL
 
 

PREAMBLE

THIS AGREEMENT is made and entered into in accordance with the provisions of the Railway Labor Act, as amended, by and between UNITED AIR LINES, INC., (hereinafter referred to as the "Company") and the AIR LINE PILOTS in the service of UNITED AIR LINES, INC., as represented by the AIR LINE PILOTS ASSOCIATION, INTERNATIONAL (hereinafter referred to as the "Association").

WITNESSETH:

It is hereby mutually agreed:
 
 

                                                                                                                                                                     ; Exhibit 10.2

SECTION 1
RECOGNITION, SCOPE AND CAREER SECURITY

A. RECOGNITION

The Air Line Pilots Association, International (the ''Association''), has furnished the Company evidence that a majority of the airline pilots employed by the Company have designated the Association to represent them and in their behalf negotiate and conclude an agreement with the Company as to hours of labor, wages and other employment conditions covering the pilots in the employ of the Company in accordance with the provisions of Title II of the Railway Labor Act, as amended and the certification issued by the National Mediation Board in Case No. R-3463.

B. SCOPE

The pilots on the Pilots' System Seniority List (the "United Pilots") shall have the sole and exclusive right to perform and be trained to perform Company Flying and operate Company Aircraft in accordance with the terms and conditions of this agreement or any other applicable agreement or agreements between the Company and the Association (together, the "Agreement").

1. Company Flying

Except as provided in paragraph B-2, ''Company Flying'' includes without limitation all commercial flight operations of any sort whatsoever, whether revenue, nonrevenue, scheduled or unscheduled, conducted (i) by the Company or a Company Affiliate, or (ii) by the Company or a Company Affiliate for other air carriers, or (iii) by an Entity managed by or under the Control of the Company or a Company Affiliate, or (iv) by an Entity in which the Company or a Company Affiliate owns any Equity.

2. Exceptions to Company Flying

Company Flying does not include flight operations that are (i) normally performed by the Company's engineering and test pilots (other than ferry flights that are not diagnostic test flights) or (ii) conducted by a Feeder Carrier pursuant to paragraph C-1 below, or (iii) conducted by a Domestic Air Carrier pursuant to paragraph C-2 below, or (iv) conducted by a Foreign Air Carrier pursuant to paragraph C-3 below (including Foreign Air Carriers that are subject to paragraph C-3-c below), or (v) conducted by an Air Carrier Purchaser during the operations following a Successorship Transaction but before an Operational Merger that are subject to paragraph D below, or (vi) conducted by any other air carrier in accordance with an Industry Standard Interline Agreement.

3. Pilot Training

Neither the Company nor a Company Affiliate shall enter into any agreement or arrangement with any person who is not employed by the Company to conduct or supervise United pilot training or to utilize United training facilities to train other pilots, including without limitation all United pilot training historically performed at the Pilot Training Center, except that the Company may:

a. Use retired or disability retired United pilots who perform the present duties of a flight technical instructor in the Pilot Training Center as consultants to the Company while under the Company's supervision;

b. Permit aircraft manufacturers or other qualified organizations to conduct initial training of United flight training personnel on new aircraft equipment types;

c. Sell its training services to third parties using United pilot instructors who are working as independent contractors on their days off;

d. Dry lease training assets to another airline to perform training for its pilots.

C. PERMITTED CODE SHARING, MARKETING, OWNERSHIP AND OTHER ARRANGEMENTS

1. Feeder Flying

The Company or a Company Affiliate may enter into code sharing with Feeder Carriers in conformance with the provisions of this paragraph C-1. The Company or a Company Affiliate may create, acquire, Control, manage, take an Equity interest in, enter into code sharing arrangements with, or sell, lease or transfer aircraft to Feeder Carriers that comply with the provisions of this paragraph C-1 below, without the flight operations of such air carrier being considered Company Flying or the aircraft of such air carrier being considered Company Aircraft.

a. Key Cities

(1) A Feeder Carrier shall not operate a Feeder Flying Non-Stop between current or future Company Key Cities unless the Company demonstrates that a Company Round Trip operating in that Market instead of the Feeder Flying Round Trip would not pass the BIRR Test.

(2) As an exception to the foregoing, Feeder Carriers may operate in the IAD-LGA, IAD-EWR, and IAD-JFK Markets.

b. Connecting Operations

Feeder Carriers as a group shall schedule at least ninety percent (90%) of their Feeder Flying Non-Stops into or out of the following airports: IAD, DCA, MIA, LGA, EWR, JFK, ORD, DEN, LAX, SFO, SEA, BOS, PDX, PHX, LAS, SJC, SAN, any airport within thirty miles of any of the foregoing, and any other airport that the parties later agree to add to this list. Up to five percent (5%) of Feeder Flying flights may be applied toward satisfying this requirement even if such flights include multiple stops, as long as such flights (i) originate or terminate at one of the foregoing airports, (ii) maintain a single flight number on a single aircraft for all the legs of such flight to or from such airport, and (iii) operate with scheduled intermediate stops of less than two (2) hours.

c. Feeder Flying on Company Routes

(1) A Feeder Carrier shall not initiate a new scheduled Feeder Flying Round Trip in any Market operated by the Company at any time in the preceding twenty-four (24) months, unless the Company demonstrates that a Company Round Trip that may be initiated in the Market instead of the Feeder Flying Round Trip would not pass the BIRR Test.

(2) The Company shall not remove a scheduled Company Round Trip from any Market served by Feeder Flying unless the Company demonstrates that the Round Trip to be removed would not pass the BIRR Test in the absence of a Feeder Flying Round Trip scheduled to depart within thirty (30) minutes of the Company Round Trip.

d. Number of Block Hours of Feeder Flying

In each calendar year, the number of scheduled block hours of Feeder Flying may not exceed the number of scheduled block hours of Company Flying.

e. Feeder Carrier Branding

(1) Feeder Carriers may not conduct commercial flight operations under the name United Airlines or other names used by the Company except as provided in subparagraph (2) below.

(2) Aircraft operated in Feeder Flying may bear the Company's logo or aircraft livery only if such aircraft bear the name United Express or similar name connoting a connection with United Airlines (other than the name United Airlines or other name used by the Company).

f. Feeder Carrier Operation of Small Jets Larger than 50 Seats

A Feeder Carrier may perform Feeder Flying operating Small Jets with a certificated seating capacity in excess of fifty (50) seats if it also provides job opportunities to furloughed United Pilots. [on a basis to be negotiated]

2. Other Domestic Code Sharing Agreements.

In addition to the code sharing permitted by LOA 02-11 (US Airways Code Share), the Company may enter into or maintain code sharing with Domestic Air Carriers ("Domestic Code Sharing Agreements") that permit such carriers ("Domestic Air Carrier Associates") to apply the Company's designator code to their operations. Prior to entering into such agreements the Company will meet and confer with the Association regarding the appropriateness of any labor terms relative to the particular circumstances of any proposed code share agreement. Following such discussions, the Company will negotiate with the prospective partner any labor protections that it deems appropriate to the circumstances consistent with its business judgment, which shall include a commitment to negotiate as much reciprocal code share as reasonably possible, subject however, to a reduction for circumstances and/or limitations that are beyond the Company's control.

3. International Code Sharing Agreements

In addition to the code sharing contained in any of the Company's agreements on the effective date of this Agreement, the Company may enter into or maintain code sharing agreements with Foreign Air Carriers (''International Code Sharing Agreements'') that permit such carriers to utilize the Company's designator code with the Company on such carriers' flight operations between the United States and Territories and foreign points or between two foreign points ("International Flying"). Prior to entering into such agreements the Company will meet and confer with the Association regarding the appropriateness of any labor terms relative to the particular circumstances of any proposed code share agreement. Following such discussions, the Company will negotiate with the prospective partner any labor protections that it deems appropriate to the circumstances consistent with its business judgment, which shall include a commitment to negotiate as much reciprocal code share as reasonably possible, subject however, to a reduction for circumstances and/or limitations that are beyond the Company's control.

a. Protection Against Reduction of Company Flights.

The Company shall not remove a scheduled Company Non-Stop from a Joint International Non-Stop Market unless the Company demonstrates that the Company Non-Stop to be removed does not pass the BIRR Test.

b. Cabotage

The Company will join the Association in strongly opposing any changes in U.S. law that would permit Foreign Air Carriers to engage in cabotage. However, if cabotage is permitted, the Company shall not be prohibited from code sharing with any Foreign Air Carrier code share partner who engages in it.

c. Acquisition of Equity of Foreign Air Carriers.

The Company or a Company Affiliate may acquire up to 50% of the Equity of any Foreign Air Carrier that is a member of the Star Alliance or any successor multi-airline network (the "Network") or of any other Foreign Air Carrier that, as a condition of such investment, commits within six months of the investment to become a member of the Network, without such investment by itself causing the flight operations of such air carrier to be considered Company Flying, the aircraft of such air carrier to be considered Company Aircraft or such Entity to be considered a Company Affiliate. However, the Company or its Affiliate, as the case may be, shall sell its Equity in a Foreign Air Carrier as soon as practicable if that Foreign Air Carrier ceases to be a member of the Network, or fails to become a member of the Network within eighteen months of the commitment to do so.

4. Code Sharing Agreements -General

Except as provided in paragraphs C-1, C-2, and C-3 above, neither the Company nor a Company Affiliate shall enter into any agreement or arrangement that permits any other air carrier to conduct commercial flight operations under any designator code currently or in the future used by the Company or a Company Affiliate.

5. Block Space.

The Company may enter into block space arrangements with other carriers (i.e., the advance purchase or reservation of blocks of seats on other carriers for resale by the Company) only:

a. On flights which carry the Company's designator code pursuant to paragraphs 1-C-1, 1-C-2 and 1-C-3 above;

b. On a limited number of occasions where United Vacations or Mileage Plus from time to time purchases block seats in order to provide connecting service as part of group vacation packages where such service or seats on such service are not available from the Company; or

c. On other occasions, limited in number and consistent with the Company's limited practices as of the date of this Agreement, where the Company from time to time purchases seats for connecting passengers over routes on which the Company does not maintain operating authority.

D. SUCCESSORSHIP

1. Successorship Transactions

The Company and its Parent shall require any successor, assign, assignee, transferee, administrator, executor and/or trustee of the Company or of a Parent (a ''Successor'') resulting from the transfer (in a single transaction or in multi-step transactions) to the Successor of the ownership of fifty percent (50%) or more of the Equity of the Company or Parent or fifty percent (50%) or more of the value of the assets of the Company (for the purpose of this paragraph, including the Low Cost Operation ("LCO") as described in [LOA 03-12] whether or not such operation is in a subsidiary of UAL or UA or contained within UA) (a ''Successorship Transaction''), to employ or cause the Company to continue to employ the United Pilots in accordance with the provisions of the Agreement and to assume and be bound by the Agreement, provided that, in order for a Successor to be required to employ or to cause the Company to continue to employ any of the United Pilots in accordance with the provisions of the Agreement at any air carrier other than the Company, the Successor must be engaged in the operation of an air carrier; however, if the Successorship transaction is for less than all or substantially all of the Equity of the Company or a Parent, or assets of the Company (as defined above), paragraph F-1, providing for minimum block hours, shall be modified and/or prorated to correspond to the size of the Company airline operations disposed of to the Successor and the size of the Company airline operations retained by the Company.

2. Successorship Agreements.

The Company and its Parent shall not consummate a Successorship Transaction unless the Successor agrees in writing, as an irrevocable condition of the Successorship Transaction, to assume and be bound by the Agreement, to recognize the Association as the representative of the Successor's pilots, and to guarantee that the pilots on the United Pilots' System Seniority List will be employed by the Successor in accordance with the provisions of the Agreement.

3. Air Carrier Successors.

In the event of a Successorship Transaction in which the Successor is an air carrier or Entity that Controls or is under the Control of an air carrier, the Successor shall provide the Company's pilots with the seniority integration rights provided in Sections 2, 3, and 13 of the Labor Protective Provisions specified by the Civil Aeronautics Merger Board in the Allegheny-Mohawk merger (''Allegheny-Mohawk LPPs''), except that the integration of the seniority lists of the respective pilot groups shall be governed by Association Merger Policy if both pre-transaction pilot groups are represented by the Association.

4. Competing Proposal

In the event the Company or its Parent receives a proposal (a ''Proposal'') for a transaction which would result in a Successor if completed, and the Company or its Parent determines to pursue or facilitate the Proposal, the Company or its Parent will in good faith seek to provide the Association with the opportunity to make a competing Proposal at such time and under such circumstances as the Board of Directors of UAL or the Company reasonably determines to be consistent with its or their fiduciary duties.

5. If the acquiring Entity in a Successorship Transaction is an air carrier or an Entity that Controls an air carrier ("Air Carrier Purchaser"), the flight operations of the Company and Air Carrier Purchaser shall be integrated but shall first remain separate until the implementation of an integrated seniority list pursuant to paragraph D-3 above and a single collective bargaining agreement (the "Operational Merger Date").

E. OTHER LABOR PROTECTIVE PROVISIONS

If the Company (for the purpose of this paragraph, including the Low Cost Operation ("LCO") as described in [LOA 03-12] whether or not such operation is in a subsidiary of UAL or UA or contained within UA) disposes of or transfers to an air carrier (the "Transferee") (by sale, lease or other transaction, whether directly or indirectly through an Affiliate of the Transferee) aircraft or route authority which produced twenty percent (20%) or more of the Company's operating revenues, block hours, or ASMs during the twelve (12) months immediately prior to the date of the agreement to transfer such aircraft or route authority (the "Transaction Date"), net of revenues, block hours or ASMs that are produced by aircraft or route authority that were placed into service during the same period (any such transfer, a ''Substantial Asset Sale''), then:

1. Offer of Employment to United Pilots.

The Company shall require the Transferee to offer pilot employment to eligible United Pilots. The eligibility criteria shall be determined by agreement between the Company and the Association and shall be reasonably related to the assets transferred, the interests of the United Pilots and the Company, and the nature and timing of the transaction among other issues. If the Association and the Company are unable to agree upon eligibility criteria that are consistent with the foregoing considerations, the System Board of Adjustment shall determine such eligibility criteria pursuant to the expedited procedures set forth in paragraph J-1 below (the ''Transferring Pilots''). The number of pilot employment opportunities for Transferring Pilots shall be, as measured in the twelve (12) months prior to the Transaction Date, the sum of (i) the average monthly pilot staffing actually utilized in the operation of the aircraft transferred to the Transferee in connection with the Substantial Asset Sale plus (ii) the average monthly pilot staffing actually utilized in the operation of the route authority transferred to the Transferee in connection with the Substantial Asset Sale to the extent such pilot staffing is not included in the calculation of clause (i) above. Offers of employment that are rejected by a United Pilot shall in turn be offered to other United Pilots under the eligibility criteria determined under the first sentence of this subparagraph 1, until such opportunities have been exhausted.

2. Seniority Integration.

The Company shall require the Transferee to provide the Transferring Pilots with the seniority integration rights provided in Sections 2, 3, and 13 of the Allegheny-Mohawk LPPs except that the integration of the Transferring Pilots into the Transferee's seniority list shall be governed by Association Merger Policy if both pre-transaction pilot groups are represented by the Association. The Company shall require each Transferee to provide the seniority integration rights specified in the preceding sentence in connection with a Substantial Asset Sale in a written document enforceable against the Transferee by the Association and/or the Transferring Pilots.

3. The section of the Agreement providing for minimum block hours shall be modified and/or prorated to correspond to the size of the Company airline operations following the transfer to a Transferee who offers the United Pilots the transfer rights in paragraphs E-1 and E-2 above.

F. SCHEDULED BLOCK HOURS

1. Block Hours Guarantee.

The Company shall schedule no fewer than the following specified number of block hours of Company Flying during the term of this Agreement: _______[to be determined by the parties on the basis of the Company's bankruptcy exit plan with a reasonable cushion].

2. Changed Circumstances

The following will govern the Company's obligations under this Section 1-F in the event the Company experiences changed economic circumstances beyond the Company's control:

a. Substantial Economic Change

The block hour guarantee in paragraph F-1 is based on an assumed annual operating margin [to be defined] of X%. If the operating margin in a calendar year falls below X%, then the block hour guarantee in the following calendar year may be reduced by Y% for each percentage point or partial percentage point by which the operating margin fell below X%.

b. Circumstances beyond the Company's Control

In addition to the Company's ability to reduce flight operations under the terms and conditions described in paragraph F-2-a (Substantial Economic Change), the commitments and protections described in paragraph F-1 (Block Hours Guarantee) above may be modified if and only to the extent that the Company demonstrates that any such modification is a direct result of a circumstance beyond the Company's control. The phrase "circumstance beyond the Company's control" means only a natural disaster, a labor dispute within the Company involving a cessation of work, the grounding of a substantial number of Company Aircraft by a government agency, a reduction in flight operations directly caused by a supplier's inability to provide sufficient aircraft, fuel or other critical materials for the Company's operations, revocation of the Company's operating certificate(s), a declared or undeclared war emergency or terrorist act that causes the Company to cease conducting a substantial portion of its flight operations, compulsion by a domestic or foreign government agency, or court or legislative action. For purposes of clarification, the phrase "circumstance beyond the Company's control" does not include any economic or financial considerations including, but not limited to, the price of fuel, aircraft or other supplies, the cost of labor, the level of revenues, the state of the economy, the financial state of the Company, or the relative profitability or unprofitability of the Company's then-current operations in the absence of the circumstances described in the preceding sentence.

G. LABOR DISPUTES

1. The Agreement contains no contractual prohibition whatsoever on the ability of ALPA and the United Pilots to honor lawful picket lines.

2. ALPA and/or the United Pilots are not prohibited from:

a. Refusing to layover at a struck hotel or other struck facility;

b. Refusing to deadhead on carriers whose employees are engaged in a lawful strike, as long as alternatives are reasonably available; and

c. Engaging in a concerted refusal, called by the Association, to perform pilot work or services on flights where the Company, pursuant to an agreement or arrangement with another air carrier, is performing that air carrier's flying in response to a labor dispute and that air carrier's employees are engaged in a lawful strike.

H. FOREIGN OWNERSHIP AND DOMICILES

1. The Company shall continue to be a Domestic Air Carrier subject to the Railway Labor Act, as amended.

2. The Company shall maintain its world headquarters, executive offices, and offices for senior Flight Operations personnel in the fifty United States.

3. In the event the Company opens a pilot domicile outside of the United States and Territories, United Pilots assigned to such domicile shall be afforded all rights under this Agreement and the Railway Labor Act.

I. REVIEW COMMITTEE

1. A standing committee, consisting of two (2) Association representatives and two (2) Company representatives (plus additional representatives if deemed appropriate by the Association and the Company) (the "Related Carrier Review Committee" or "RCRC") shall be maintained by the parties. The RCRC may establish such subcommittees as it deems appropriate. The RCRC and its subcommittees will meet as often as they deem necessary, but no less than quarterly, in order to implement and monitor compliance with this Section 1.

2. The Company shall provide the RCRC, on a monthly basis, all information necessary to monitor and enforce the terms and conditions established in Section 1 of the Agreement. When this information involves proprietary, sensitive or confidential information concerning either the Company or any other carrier, the RCRC will review such information under a confidentiality agreement with the same terms as the confidentiality agreement currently in effect between the Company and the Association with such modifications, if any, as are acceptable to the Association and Company.

3. The RCRC shall review all new and modified agreements concerning the Company's relationships with other air carriers as governed by this Section 1 in order to ensure compliance with the terms of this Section 1. In reviewing agreements with Feeder Carriers, the RCRC shall make such recommendations to the Company as the RCRC deems appropriate for the purpose of strengthening the Company's contractual relationships with Feeder Carriers and protecting the Company's feed.

4. The parties will utilize appropriate aspects of the NPDM procedures currently utilized by the System Schedule Committee in connection with a review of the Feeder Carriers aimed at ensuring that all Feeder Carriers maintain the highest possible quality assurance and flight safety programs and provide a product that meets the Company's high quality standards.

J. REMEDIES

1. A grievance filed by the Association alleging a violation of Section 1 of the Agreement, shall, at the request of either party, bypass the initial steps of the grievance process and shall be submitted and heard on an expedited basis directly before the System Board of Adjustment sitting with a neutral arbitrator. The dispute shall be heard by the System Board of Adjustment no later than fifteen (15) days following the submission of the grievance to the System Board and decided no later than twenty-one (21) days after such submission, unless the parties agree otherwise in writing.

2. If the System Board decides that the Company has violated any part of Section 1, the System Board will direct the Company to comply with the Agreement and will fashion an appropriate remedy for the harm caused by the Company's failure to comply with the Agreement.

K. DEFINITIONS

The following definitions shall apply to the capitalized terms in Section 1 of the Agreement:

1. "Affiliate" of Entity A means, any other Entity which directly or indirectly Controls, is Controlled by or is under common Control with Entity A.

2. "Base Internal Rate of Return" or "BIRR" means the discount rate at which the net present value of the stream of Cash Flows generated by the Capital Resources measured by the Company's customary methods and time periods, equals zero:

a. "Cash Flow" means the after-tax difference between:

(1) The actual or reasonably projected revenues generated by operating the applicable Round Trip (including the point to point segment revenues and all beyond revenues not otherwise carried by the Company's flight operations); and

(2) The fully allocated expenses incurred to produce those revenues (including the actual or reasonably projected cost of operating the Round Trip and a reasonably allocated portion of the beyond expenses attributable to the applicable Round Trip including flight variable, overhead, ownership and variable beyond traffic costs).

b. "Capital Resources" means the assets necessary to operate the Round Trip consisting of the cost of the aircraft and all supporting infrastructure such as gates, slots, ground equipment, spare parts and spare aircraft that are reasonably allocated to the Round Trip.

c. When measuring the rate of return of a Round Trip, revenues and costs associated with connecting traffic will be allocated to the Company Round Trip using the established Company prorate method. Further, where appropriate the revenues and costs for operating the aircraft used in the Round Trip over the course of the aircraft day or international flight cycle as applicable may be utilized as part of determining the Cash Flow for that Round Trip. This would include applying the BIRR Test to a Non-Stop where no Round Trip exists for the operation to be measured.

3. "Base Internal Rate of Return Test" or "BIRR Test" means a comparison of the BIRR to the Hurdle Rate. If the BIRR is less than the Hurdle Rate on the operation to be measured, the BIRR Test is failed.

4. "Company" means United Air Lines, Inc.

5. "Company Aircraft" includes all aircraft owned or leased by the Company or a Company Affiliate. Company Aircraft do not include aircraft that have been sold, leased or transferred.

6. "Control": Entity A shall be deemed to ''Control'' Entity B if Entity A, whether directly or indirectly,

a. owns securities that constitute, are exercisable for or are exchangeable into thirty (30%) or more of (i) Entity B's outstanding common stock or (ii) securities entitled to vote on the election of directors of Entity B; or otherwise owns thirty percent (30%) or more of the Equity of Entity B; or

b. maintains the power, right, or authority--by contract or otherwise--to direct, manage or direct the management of all or substantially all of Entity B's operations or provides all or substantially all of the controlling management personnel of Entity B; or

c. maintains the power, right or authority to appoint or prevent the appointment of a majority of Entity B's Board of Directors or similar governing body; or

d. maintains the power, right or authority to appoint a minority of Entity B's Board of Directors or similar governing body, if such minority maintains the power, right or authority to appoint or remove any of Entity B's executive officers or any committee of Entity B's Board of Directors or similar governing body, to approve a material part of Entity B's business or operating plans or to approve a substantial part of Entity B's debt or equity offerings.

7. "Domestic Air Carrier" means an Air Carrier as defined in 49 U.S.C. Section 40102(a)(2).

8. "Entity" means any business form of any kind including without limitation any natural person, corporation, company, unincorporated association, division, partnership, group of Affiliated Entities acting in concert, trustee, trust, receivership, debtor-in-possession, administrator or executor.

9. "Equity" means: (i) common stock or other securities that carry the right to vote for one or more members of a board of directors or similar governing body, or shares or interests in a partnership or limited partnership which shares or interests have general voting rights (all of the foregoing being collectively referred to as "Common Equity") and (ii) securities that are then currently or in the future exchangeable into, exercisable for, or convertible into Common Equity.

10. "Feeder Carrier" means a Domestic Air Carrier that, when engaged in code sharing with the Company:

a. Does not operate any aircraft that utilizes an engine with an external propeller ("Turbo/Prop Aircraft") other than Turbo/Prop Aircraft that are certificated for seventy-eight (78) or fewer seats and have a maximum permitted gross takeoff weight of less than seventy-five thousand (75,000) pounds; and

b. Does not operate any aircraft that utilizes a turbine-driven engine without an external propeller ("Jet Aircraft"), other than Small Jets.

11. "Feeder Flying" means flight operations conducted by a Feeder Carrier pursuant to paragraph C-1.

12. "Foreign Air Carrier" means an air carrier that is not a Domestic Air Carrier.

13. "Gateway" (used with or without capitalization) means an airport in the United States from which the Company engages in non-stop flights to and from foreign points.

14. "Key City" means DCA, MIA, LGA, EWR, JFK, and SEA and any other city that is identified as a hub (currently IAD, ORD, DEN, SFO and LAX) in the Company's Annual Report on Form 10-K.

15. "Hurdle Rate" means the internal rate of return established by the Company for allocating capital resources for airline related expenditures.

16. "Industry Standard Interline Agreement" means an agreement or other arrangement between two carriers or among three or more carriers, such as the International Air Transport Association's "multilateral Interline Traffic Agreements," establishing rights and obligations relating to the transportation of through passengers and/or through shipments by the party carriers.

17. "Joint International Non-Stop Market" means a Non-Stop Market in which parties to an International Code Share Agreement may apply their respective designator codes to each other's flight(s).

18. "Market" means a pair of airports, e.g.., ORD-MSP.

19. "Non-Stop" means a flight in a Market that does not include a scheduled intervening take off and landing.

20. ''Parent'' refers to UAL Corp. (''UAL'') or any other Entity that has majority control of the Company, whether directly or indirectly through the majority control of other Entities that have majority control the Company.

21. "Round Trip" means a pair of flights to and from one city in a Market to the other, e.g. ORD-STL-ORD.

22. "Small Jets" means (a) Jet Aircraft that are certificated in the United States of America for seventy (70) or fewer seats and a maximum permitted gross takeoff weight of less than eighty thousand (80,000) pounds and (b) up to eighteen (18) specific aircraft with certificated seating capacity in excess of seventy (70) seats operated by Feeder Carrier Air Wisconsin Airlines Corp. ("AWAC"). These eighteen aircraft are identified as the "AWAC Quota".. Currently, the AWAC Quota is filled by BAe-146 aircraft with the following tail numbers: N463AP, N179US, N181US, N183US, N606AW, N607AW, N608AW, N609AW, N610AW, N611AW, N612AW, N614AW, N615AW, N616AW, N290UE, N291UE, N292UE, and N156TR. AWAC may replace any aircraft within the AWAC Quota with: (i) any other BAe-146 or AVRO 85 aircraft each with no more passenger seats than were carried in the actual operation of the replaced aircraft, or (ii) any other aircraft with a maximum certificated seating capacity in the United States of eighty-five (85) seats and a maximum certificated gross takeoff weight in the United States of up to ninety thousand (90,000) pounds.

23. "United States" when referring to geographical extent means only the States of the United States of America and the District of Columbia.

24. "United States and Territories" means the United States and its territories and possessions including but not limited to the Commonwealth of Puerto Rico.
 
 

Section 2

Definitions

A. Pilot

"Pilot" means a Captain or First Officer.

B. Captain

"Captain" means a pilot who is in command of the aircraft and its crew members while on duty and who is responsible for the manipulation of or who manipulates the controls of an aircraft including take-off and landing of such aircraft, and who is properly qualified to serve as and holds a currently effective airman's certificate authorizing him to serve as such pilot.

C. First Officer

"First Officer" means a pilot who is second in command and any part of whose duty is to assist or relieve the Captain in the manipulation of the controls of an aircraft including takeoff and landing of such aircraft, and who is properly qualified to serve as and holds a currently effective airman's certificate authorizing him to serve as such First Officer. On aircraft operated with a Captain and First Officer only, the First Officer shall inspect the aircraft before flight.
 
 

D. Lineholder

"Lineholder" means a Captain or First Officer who is assigned to a line of flying (not including a secondary line) in his assigned status and equipment type for the month as a result of the "Schedule Selection Procedure."

E. Reserve

"Reserve" means a Captain or First Officer who is not a lineholder.

F. Line of Flying

"Line of Flying" means a planned pattern of trip sequences and intervening days off constructed so as to not exceed eighty-nine (89) hours of credited flight time in the B747-400, B777 and B767/757 fleets or ninety-five (95) hours of credited flight time in the B737 or A320/319 fleets.

G. Secondary Line

A "Secondary Line" is composed of flying which is unassigned after the assignment of lines of flying for a month and which is then combined into a month's schedule for assignment to reserve pilots.

H. Allocation of Flying

"Allocation of Flying" means the establishment of hours of flying in an equipment type at a domicile.

I. Assignment of Flying

"Assignment of Flying" means the designation of specific trips to be flown in an equipment type from a domicile.

J. Pilot Status

"Status" means a pilot's assigned classification as either Captain or First Officer.

K. Open Flying

"Open Flying" means trips and portions of trips which, after the schedule selection process, remain unassigned or become unassigned due to any pilot absence.

L. Flight Time

"Flight Time" (block-to-block) means the time from the moment an aircraft moves from the blocks, under its own power or under tow, for the purpose of flight until the time the aircraft comes to rest at the unloading point at the next point of landing.

M. Month

"Month" means that for pilot scheduling and pay purposes the period from the first day of, to and including the last day of each of twelve (12) thirty (30) or thirty-one (31) day periods. In leap year, the Company may modify one (1) 30 day month to a 31 day month.

Calendar Month Pay & Scheduling Period

January January 1 - January 30 30 days February January 31 - March 1 30 days March March 2 - March 31 30 days

April April 1 - April 30 30 days

May May 1 - May 31 31 days

June June 1 - June 30 30 days

July July 1 - July 30 30 days August July 31 - August 29 30 days September August 30 - September 29 31 days October September 30 - October 30 31 days November October 31 - November 30 31 days December December 1 - December 31 31 days.

N. Domicile

"Domicile" means a geographical location designated by the Company where pilots are based.

O. Pilot's Schedule

"Pilot's Schedule" means a monthly work assignment and associated trip information which is published by the Company and assigned to a pilot.
 
 
 
 

P. Trip or Trip Sequence

"Trip or Trip Sequence" is a series of flight segments, starting with the initial departure from the pilot's domicile and ending with the final arrival at the pilot's domicile, which are combined as a package for preparation of pilot schedules or for assignment to a pilot.

Q. Hours Flown

"Hours Flown" means the actual flight time from block-to-block recorded cumulatively on a stop-to-stop basis

R. Geographical Relocation of Assignments

"Geographical Relocation of Assignments" is that process whereby pilot assignments at a domicile, associated with flying which have been and can (based on available entries of the equipment at the domicile) continue to be flown by pilots at that domicile, are relocated to another domicile(s) from which the flying can also be accomplished.

S.

"He", "Him", "His" - The masculine pronouns used herein shall include the feminine unless specifically excluded.

T. Pilot Concurrence

In any assignment where the Agreement requires pilot concurrence, pilot concurrence will be construed to mean that the pilot will be advised his concurrence is required and he will accept or reject any offered options prior to being scheduled for such assignment. The Company may request a pilot, and the pilot may concur, to waive only those specific provisions of the Agreement which specify a waiver is permissible.

U. Equipment Domicile

A domicile wherein pilots hold assignments in a designated equipment type.

V. Student Pilot

A "Student Pilot" is an individual who reports to United Airlines for initial training as a United Airlines flight officer in contemplation of continuing employment as a United Airlines pilot. Student Pilots shall be employees and pilot seniority shall commence as of the first day of training per Section 6 of this Agreement.

W. Only Reserve Available

A reserve pilot will be considered to be the only reserve available if he falls within either of the following situations:

1. Time-critical departure. A reserve can be assigned to an open flight as the only reserve available if (1) that assignment can be made within his applicable duty and flight time limitations and (2) assigning another reserve would cause the operation in question to be delayed, further delayed or canceled.

2. Planned coverage. A reserve can be assigned to an open flight as only reserve available in order to avoid junior manning.

3. In the event that it becomes necessary to use an inbound reserve to cover an open trip and there is more than one reserve legal and available per a. above for coverage of the open trip, the reserve whose arrival time is closest to the report time but not less than thirty (30) minutes before the departure of the open trip will be considered the only reserve available for the assignment.

Section 3

Compensation

A. Longevity For Pay Purposes

1. Longevity as a pilot with the Company shall commence to accrue as of the date on which a pilot is first released from technical training at DENTK (excluding IOE preparation or any similar training) and shall continue to accrue except as otherwise provided in sub-paragraphs 2 and 3 of this Paragraph. Longevity increases will be paid on the first of that month for longevity dates from the first through the twentieth of the month, and on the first of the following month for the longevity dates after the twentieth.

2. Pilots shall not accrue longevity as a pilot during any period that seniority ceases to accrue. Once longevity commences, as provided by 3-A-1, above, pilots shall accrue longevity as a pilot during any period that seniority accrues, except that longevity shall not accrue during any period of furlough according to the provisions of Section 7-E.

3. Any pilot who resigns from the service of the Company or is discharged for just cause or loses seniority as provided in Paragraph 7-D of Section 7 shall forfeit all longevity accrued to the date of such resignation or

discharge.

B. Hourly Rates

1. The hourly rates for Captains and First Officers shall be as follows. The hourly rates, overrides, and incentive pay established in this Section 3 shall govern all aspects of pilot compensation.

a. Hourly Rates

Captains

	B747-400	B777	B767/757	A320/319	B737-300
1yr	189.25	189.25	155.09	131.80	131.80
2yr	190.32	190.32	156.27	132.93	132.93
3yr	191.31	191.31	157.71	134.11	134.11
4yr	192.36	192.36	158.76	135.37	135.37
5yr	193.45	193.45	160.01	136.64	136.64
6yr	194.44	194.44	161.20	137.85	137.85
7yr	195.52	195.52	162.27	139.08	139.08
8yr	196.82	196.82	163.64	140.31	140.31
9yr	197.90	197.90	164.72	141.36	141.36
10yr	199.51	199.51	166.42	143.12	143.12
11yr	201.03	201.03	168.21	144.77	144.77
12yr	202.85	202.85	169.79	146.50	146.50

First Officers

	B747-400	B777	B767/757	A320/319	B737-300
1yr	34.84	34.84	34.84	34.84	34.84
2yr	79.37	79.37	65.16	55.43	55.43
3yr	114.79	114.79	94.51	80.47	80.47
4yr	121.38	121.38	100.18	85.42	85.42
5yr	123.91	123.91	102.49	87.52	87.52
6yr	126.77	126.77	105.11	89.88	89.88
7yr	129.72	129.72	107.67	92.27	92.27
8yr	132.85	132.85	110.45	94.70	94.70
9yr	133.98	133.98	111.51	95.70	95.70
10yr	135.57	135.57	113.08	97.24	97.24
11yr	137.11	137.11	114.72	98.73	98.73
12yr	138.54	138.54	115.96	100.06	100.06

 
 

b. International Hourly Override

Captain	$6.00
First Officer	$4.00

 
 

2. Effective May 1, 2006 the hourly rates for Captains and First Officers shall be as follows:

a. Hourly Rates

Captains

	B747-400	B777	B767/757	A320/319	B737-300
1yr	192.09	192.09	157.42	133.78	133.78
2yr	193.17	193.17	158.61	134.92	134.92
3yr	194.18	194.18	159.87	136.12	136.12
4yr	195.25	195.25	161.14	137.40	137.40
5yr	196.35	196.35	162.41	138.69	138.69
6yr	197.36	197.36	163.62	139.92	139.92
7yr	198.45	198.45	164.70	141.17	141.17
8yr	199.77	199.77	166.09	142.41	142.41
9yr	200.87	200.87	167.19	143.48	143.48
10yr	202.50	202.50	168.92	145.27	145.27
11yr	204.05	204.05	170.73	146.94	146.94
12yr	205.89	205.89	172.34	148.70	148.70

First Officers

	B747-400	B777	B767/757	A320/319	B737-300
1yr	35.36	35.36	35.36	35.36	35.36
2yr	80.56	80.56	66.14	56.26	56.26
3yr	116.51	116.51	95.93	81.68	81.68
4yr	123.20	123.20	101.68	86.70	86.70
5yr	125.77	125.77	104.03	88.83	88.83
6yr	128.67	128.67	106.69	91.23	91.23
7yr	131.67	131.67	109.29	93.65	93.65
8yr	134.84	134.84	112.11	96.12	96.12
9yr	135.99	135.99	113.18	97.14	97.14
10yr	137.60	137.60	114.78	98.70	98.70
11yr	139.17	139.17	116.44	100.21	100.21
12yr	140.62	140.62	117.70	101.56	101.56

 
 

b. International Hourly Override

Captain	$7.00
First Officer	$5.00

 
 

3. Effective May 1, 2007 the hourly rates for Captains and First Officers shall be as follows:

a. Hourly Rates

Captains

	B747-400	B777	B767/757	A320/319	B737-300
1yr	194.97	194.97	159.78	135.79	135.79
2yr	196.07	196.07	160.99	136.94	136.94
3yr	197.09	197.09	162.27	138.16	138.16
4yr	198.18	198.18	163.56	139.46	139.46
5yr	199.30	199.30	164.85	140.77	140.77
6yr	200.32	200.32	166.07	142.02	142.02
7yr	201.43	201.43	167.17	143.29	143.29
8yr	202.77	202.77	168.58	144.55	144.55
9yr	203.88	203.88	169.70	145.63	145.63
10yr	205.54	205.54	171.45	147.45	147.45
11yr	207.11	207.11	173.29	149.14	149.14
12yr	208.98	208.98	174.93	150.93	150.93

First Officers

	B747-400	B777	B767/757	A320/319	B737-300
1yr	35.89	35.89	35.89	35.89	35.89
2yr	81.77	81.77	67.13	57.10	57.10
3yr	118.26	118.26	97.37	82.91	82.91
4yr	125.05	125.05	103.21	88.00	88.00
5yr	127.66	127.66	105.59	90.16	90.16
6yr	130.60	130.60	108.29	92.60	92.60
7yr	133.65	133.65	110.93	95.05	95.05
8yr	136.86	136.86	113.79	97.56	97.56
9yr	138.03	138.03	114.88	98.60	98.60
10yr	139.66	139.66	116.50	100.18	100.18
11yr	141.26	141.26	118.19	101.71	101.71
12yr	142.73	142.73	119.47	103.08	103.08

 
 

b. International Hourly Override

Captain	$7.00
First Officer	$5.00

 
 

4. Effective May 1, 2008 the hourly rates for Captains and First Officers shall be as follows:

a. Hourly Rates

Captains

	B747-400	B777	B767/757	A320/319	B737-300
1yr	197.89	197.89	162.18	137.83	137.83
2yr	199.01	199.01	163.40	138.99	138.99
3yr	200.05	200.05	164.70	140.23	140.23
4yr	201.15	201.15	166.01	141.55	141.55
5yr	202.29	202.29	167.32	142.88	142.88
6yr	203.32	203.32	168.56	144.15	144.15
7yr	204.45	204.45	169.68	145.44	145.44
8yr	205.81	205.81	171.11	146.72	146.72
9yr	206.94	206.94	172.25	147.81	147.81
10yr	208.62	208.62	174.02	149.66	149.66
11yr	210.22	210.22	175.89	151.38	151.38
12yr	212.11	212.11	177.55	153.19	153.19

First Officers

	B747-400	B777	B767/757	A320/319	B737-300
1yr	36.43	36.43	36.43	36.43	36.43
2yr	83.00	83.00	68.14	57.96	57.96
3yr	120.03	120.03	98.83	84.15	84.15
4yr	126.93	126.93	104.76	89.32	89.32
5yr	129.57	129.57	107.17	91.51	91.51
6yr	132.56	132.56	109.91	93.99	93.99
7yr	135.65	135.65	112.59	96.48	96.48
8yr	138.91	138.91	115.50	99.02	99.02
9yr	140.10	140.10	116.60	100.08	100.08
10yr	141.75	141.75	118.25	101.68	101.68
11yr	143.38	143.38	119.96	103.24	103.24
12yr	144.87	144.87	121.26	104.63	104.63

 
 

b. International Hourly Override

Captain	$7.00
First Officer	$5.00

 
 

5. Effective April 30, 2009 the hourly rates for Captains and First Officers shall be as follows:

a. Hourly Rates

Captains

	B747-400	B777	B767/757	A320/319	B737-300
1yr	200.86	200.86	164.61	139.90	139.90
2yr	202.00	202.00	165.85	141.07	141.07
3yr	203.05	203.05	167.17	142.33	142.33
4yr	204.17	204.17	168.50	143.67	143.67
5yr	205.32	205.32	169.83	145.02	145.02
6yr	206.37	206.37	171.09	146.31	146.31
7yr	207.52	207.52	172.23	147.62	147.62
8yr	208.90	208.90	173.68	148.92	148.92
9yr	210.04	210.04	174.83	150.03	150.03
10yr	211.75	211.75	176.63	151.90	151.90
11yr	213.37	213.37	178.53	153.65	153.65
12yr	215.29	215.29	180.21	155.49	155.49

First Officers

	B747-400	B777	B767/757	A320/319	B737-300
1yr	36.98	36.98	36.98	36.98	36.98
2yr	84.25	84.25	69.16	58.83	58.83
3yr	121.83	121.83	100.31	85.41	85.41
4yr	128.83	128.83	106.33	90.66	90.66
5yr	131.51	131.51	108.78	92.88	92.88
6yr	134.55	134.55	111.56	95.40	95.40
7yr	137.68	137.68	114.28	97.93	97.93
8yr	140.99	140.99	117.23	100.51	100.51
9yr	142.20	142.20	118.35	101.58	101.58
10yr	143.88	143.88	120.02	103.21	103.21
11yr	145.53	145.53	121.76	104.79	104.79
12yr	147.04	147.04	123.08	106.20	106.20

 
 

b. International Hourly Override

Captain	$7.00
First Officer	$5.00

6. The rates stipulated in Section 3-B-1 through 3-B-5 include the terrain pay differential heretofore paid by the Company and as set forth in Decision 83 and such composite rates shall be paid for all flying whether such flying is over flat or mountainous terrain, on or off the Company's air routes and recognizes the application of the traditional base, hourly, mileage and gross weight pay factors.

7. Minimum Guarantee

a. Each lineholder shall be paid for not less than sixty-five (65) hours of pay credit each month, unless he has an unpaid absence during that month. Each reserve shall be paid for not less than seventy (70) hours of pay credit each month, unless he has an unpaid absence during that month. Further, for a B747-400, B777, or B767/757 pilot, any pay credit which exceeds eighty-nine (89) hours in any month shall not be paid, but shall be placed in a "bank", as provided in 3-I, below. The "bank" will not apply to a B737-300/500 or A320/319 pilot.

b. A lineholder's salary each month shall be determined as follows:

The Pay Credit Value of each pilot's assigned line shall be determined as provided in Section 5-G-3, after taking into consideration the effect of any carry-over trip from the prior month, including any reassignment accomplished under the provisions of Section 5-B-1-b. This pay credit value may be increased and/or decreased due to (1) operational loss of flying, (2) reassignment, (3) voluntary open flying and (4) credit produced by the Minimum Schedule Provisions, Actual Credit Provisions or Actual Flight Time Provisions of Section 5-G-3-e.

c. Lineholders assigned to a line of flying with a flight time credit projection of less than sixty-five (65) hours who trip trade into a trip, or drop and subsequently pick up a trip, the value of which is equal to or greater than the value of the original trip shall not have his guarantee reduced below sixty-five (65) hours.

d. Each reserve shall be paid for the greater of the following:

(1) Seventy (70) pay credit hours, as provided by "a" above, or

(2) The pay credit value of all trips flown in the month as computed under the "Minimum Schedule Provisions, Actual Credit Provisions or Actual Flight Time Provisions'' of Section 5-G-3-e. For a B747-400, B777, or B767/757 pilot, any pay credit produced over eighty-nine (89) hours shall not be paid in that month, but shall be placed in a ''bank'', as described in ''3-I'', below. The "bank" will not apply to a B737-300/500 or A320/319 pilot.

8. Monthly Line Guarantee

a. A lineholder shall be paid for the greater of the following:

(1) Sixty-five (65) pay credit hours,

(2) the Pay Credit Value of his schedule, as determined by 3-B-7 above, or

(3) the Pay Credit Value of his schedule as determined by 3-B-7 above, substituting the scheduled pay credit value of any trip pairing(s) in his line for which he is available that is scheduled to depart on or after the 20th day of the calendar month. This projected line value is determined by adding the pay credit already earned prior to the 20th day of the calendar month to the scheduled Pay Credit Value of the remaining trip pairing(s). The ''scheduled Pay Credit Value'' of the remaining trip(s), for the purpose of this provision is the Pay Credit Value of the trip(s) as it existed prior to the 20th day of the calendar month.

b. In the event that a trip pairing is scheduled to operate over the month end, the Pay Credit Value protected under this provision is limited to that credit which is scheduled to occur in the current month.

9. Any pay credit produced by the application of Section 3-J of the International Supplement shall be in addition to all pay credit produced by the application of this Section 3-B.

10. Incentive Pay

In addition to the Monthly Pay Credit Value determined under the provisions of this Section 3, each lineholder and reserve will receive incentive pay over and above his Pay Credit Value for the month under the following provisions:

a. Late Night Flying - Domestic trips that are operated under the provisions of Section 5-G-1-f will produce incentive pay in accordance with the following:

(1) Incentive pay for late night trips will be calculated based on the scheduled flight time of the trip between the hours of 2300 and 0659 home domicile time.

(2) Incentive pay will be credited to the pilot at the time the trip departs on the initial segment of the pairing. However, this incentive will not be paid if the pilot subsequently removes himself from the trip prior to departing on the Late Night Flight as defined in Section 5-G-1-f-(1)-(b).

(3) The amount of incentive pay will be $10.50 for Captains and $7.00 for First Officers for each qualifying hour. These rates will be increased as follows:

Effective May 1, 2006

Captain $10.66

First Officer $7.11

Effective May 1, 2007

Captain $10.82

First Officer $7.22

Effective May 1, 2008

Captain $10.98

First Officer $7.33

Effective April 30, 2009

Captain $11.14

First Officer $7.44
 
 
 
 

b. Operational Integrity

When a pilot reports for a trip under the provisions of Section 5-G-2-d, he shall receive five (5) hours of incentive pay at his hourly rate, provided he reports for duty for the first segment following his rest period under Section 5-G-2-d. In addition to this incentive pay, the pilot shall receive pay and credit for the value of the original scheduled ID or the pay and credit for the flying actually performed, whichever is greater.

c. Senior/Junior Man

A pilot who accepts an assignment under the provisions of Section 20-H-14 shall receive incentive pay as follows:

(1) The pilot will be credited with incentive pay equal to 50% of the pay credit value of the assigned trip. However, the incentive pay will be reduced by the difference in the value of the trip(s) dropped, if any, compared to the value of the trip assigned. If incentive pay is reduced in accordance with the foregoing the pilot's guarantee will be increased by the amount the incentive pay is reduced, not to exceed the pilot's flight pay credit projection before the assignment.

(2) The flight pay credit projection of a pilot's line of flying who accepts an assignment under Section 20-H-14 will be the value of his line immediately before or immediately following the trip assignment and repair of his line, if any, whichever is greater.

(3) The 50% incentive, adjusted for the difference in trip value, if any, will be credited to the pilot when he departs on the first segment of the trip assigned to him under this provision.

d. Incentive pay will be separate and apart from any other flight time credit and will not be subject to reductions or offsets as provided for in any other section of the Agreement.

e. Accrued incentive pay will be paid as a separate line item on the pilot's monthly paycheck for the month in which it is earned.

C. Unpaid absences

Unpaid absences shall reduce a pilot's salary as follows:

1. Lineholders

a. Pay credit hours which are reduced from those credited hours in excess of sixty-five (65) shall be reduced on a one-for-one basis; i.e., one (1) hour dropped shall reduce pay by one (1) hour.

b. A pilot who is scheduled for fewer than sixty-five (65) credit hours, whose pay is based on the sixty-five (65) hour guarantee, shall have his pay reduced by the amount produced by dividing the number of credit hours dropped by the number of credit hours in the line before the drop and then multiplying by his guarantee salary, e.g., a five (5) hour drop from a sixty (60) hour line would reduce a $5,000.00 salary by $417.00.

2. Reserves

Each field standby day shall be worth five hours (5:00) of pay credit.
 
 

3. Prorating Pay

When it is necessary to adjust salary due to a rate change in mid-month, the value of each hour shall be determined as above and the pilot's salary shall be the composite produced by the number of hours at each rate.
 
 
 
 

D.

Pilots who are permitted to trade trip sequences shall have their salaries adjusted by recalculating each pilot's salary to include the effect of the trade.

E.

1. A pilot who is permitted to drop a trip shall have his salary reduced as in 3-C above. If he subsequently picks up open flying, his salary will be restored on an hour for hour basis calculated on the same basis as the reduction.

2. In addition to the pick-up of open time, a pilot may restore his salary by agreeing to stand by as a reserve on a day suggested by the Company. The number of days of availability will be declared by the pilot at the time he accepts the offer to standby and he shall be restored salary at the rate of five hours (5:00) per standby day or the number of credit hours actually performed, if greater. Pilots under this provision will be placed on the reserve list as number one.

F.

The monthly guarantee provided in this Section 3 shall not apply to those pilots who are unable to fly because all or part of the Company's airplanes are not available for flight for reasons other than those normally encountered in regular scheduled operations, for such time that the affected pilots are unable to fly and the provisions of Section 3-C-1 and 3-C-2 shall apply.

G.

When in line operations a Captain, with his concurrence, is assigned to serve as a First Officer, his monthly salary shall continue to be paid at the rates applicable to his awarded assignment.

H. Displacement

When Company officials whose names appear on the Pilot's System Seniority List or pilots acting in a supervisory capacity or any pilot not actually assigned to airline flying, fly any trip for which compensation is paid, the scheduled pilot shall not have his salary reduced. Further, the Company may displace a pilot for an entire trip. If the Company desires to displace a pilot for a partial trip, the pilot must be given twenty-four (24) hour notification of the intended displacement. If the pilot is not given a twenty-four (24) hour notification of the intended displacement he will not be displaced without his concurrence. Additionally, an augmenting First Officer who is displaced for any reason will not be assigned to another First Officer position on the trip from which he was displaced without his concurrence.

I. Bank

If, in any given month, a B747-400, B777 or B767/757 pilot acquires pay credit in excess of eight-nine (89) pay credit hours, that excess shall be held in his ''bank'' and administered according to the following provisions (for the application of this paragraph, the value of a "reserve availability day" shall be five hours (5:00)):

1. The accounting for bank credits shall be in dollars. When entered into the bank, the hours and minutes earned shall be converted to dollars and cents at the pilot's current rate of pay. Whenever bank credit is paid out or used for a trip drop, the bank balance will be converted back to hours and minutes at the pay rate applicable to the pilot at the time of the pay out.

2. A pilot's bank balance will be updated once each month, showing his balance as of the first day of the pilot schedule month, after his pay for the prior month has been finalized. That balance shall be used in the computation required by 3-I-4, below, to determine eligibility for bank drops.

3. At the end of each month, if a pilot's earned pay credit in that month does not produce eighty-nine (89) hours of pay, any bank balance available as of the last day of that month will be used to increase the pilot's pay up to eighty-nine (89) hours. Bank time paid in this manner will not be used as an offset for the monthly minimum guarantees.

4. Pilots will be required to reduce excess bank time accumulation by dropping trips, or reserve availability days, from their schedules. The pilot will receive pay for and accrued bank time will be reduced by the pay value of the trip or reserve availability day(s) dropped, not including any pay credit which would normally be credited to the following month.

5. A pilot will be considered to be eligible for a bank drop in any month in which his bank balance is high enough to satisfy the following conditions: After month-end schedule adjustments are completed for the transition from the current month to the following month, the projected Pay Credit Value of the pilots schedules in both months will be examined and the amount of bank time necessary to provide the pilot with eight-nine (89) hours of pay in both months will be forecast. Next, that bank time needed to increase the pilot's pay to eighty-nine (89) hours in both months will be subtracted from the pilot's official bank balance as of the first of the current month. If there is sufficient bank time left to cover the entire Pay Credit Value of any complete trip pairing, or reserve availability day, originating in the following month's schedule, the pilot is eligible for a bank drop in that following month.

6. Once a trip, or reserve availability day, is dropped for bank time, it will no longer be considered part of the pilot's schedule (except as provided in 3-I-6-a and 3-I-6-b, below) and the pay credit value of the dropped trip, or reserve availability day, shall be removed from his bank balance.

a. For the purpose of qualifying the pilot for open flying under 20-H-3 and 20-H-5, the scheduled flight time of the dropped trip will remain in the pilot's projection for the month in which the dropped trip originated.

b. For the application of Section 3-C-1, above, Pay Credit Value of the dropped trip, or reserve availability day, will be considered to remain in the pilot's line.

7. It is recognized that, due to the operational events which may occur after a trip is dropped for bank time, a pilot may not have sufficient time in his bank to provide a full eighty-nine (89) hours of pay in any month.

8. In any month in which a pilot is eligible for a bank drop, he will be required to drop a trip, or reserve availability day, unless the Company defers the drop due to manpower considerations. The Company may defer bank drops for two consecutive months. A bank drop may not be deferred and is required no later than the third consecutive month in which the pilot is eligible for a drop. If the Company defers the drop in the first month that the pilot is eligible and the pilot is not eligible for a drop in the following month, or if the drop is deferred for two consecutive months and the pilot is not eligible for a drop in the third month, then the next month in which the pilot is eligible will be considered the ''first month'' in which he is eligible for the purposes of this deferral process and the pilot is again subject to a Company deferral, as above.

9. The Company shall determine which trip sequence, or reserve availability day, will be dropped; however, in anticipation of becoming eligible for a bank drop, a pilot may request in advance the trip, or reserve availability day, which he wants to drop or the days off which he wants to acquire. The pilot's request must be received by the Company within 48 hours after the publication of lineholder schedules for the month in which the drop is requested. (This procedure will be similar to that used to protect specific days off from a PC assignment.) The Company will accommodate the pilot's request within the constraints of available manpower, however the Company will make the final determination regarding the selection of trip, or reserve availability day, to be dropped.

10. Any remaining bank balance which a pilot has on the date his pay begins for another assignment (excluding activations which change only the pilot's domicile) will be paid to the pilot within 45 days of his activation. Further, all pilots' bank balances which exist as of the first of December each year will be paid to the pilots on the 16th of December.

J. Call out

When a pilot at his home domicile is called to the airport to fly a scheduled flight or to deadhead to protect a scheduled flight, and he does not fly or the pay credit value of the assignment, as performed, is less than two (2) hours, he shall nonetheless be credited with 2 hours of pay credit. This subparagraph does not apply to training or instruction flights, familiarization and route qualifying flights. Further, it does not apply to a pilot's completing his interrupted trip or to a pilot who flies a trip scheduled within two (2) hours of the time called for such flying. In the case of a reserve pilot, the two (2) hours credit shall have the same pay application as two (2) hours of actual flying time.
 
 

K. A320/319 and B737-300/500 Look Back
 
 

1. A pilot assigned to the A320/319 or B737-300/500 fleets will be paid the greater of:

a. His actual hours scheduled (as determined by the original or reconstructed value of each trip pairing) or flown including deadhead, whichever is greater, or

b. The minimum monthly guarantee; or

c. A duty period "look back" value of five hours (5:00) per duty period for trips actually flown, deadhead and field standby; or

d. A "look back" value of four hours and thirty minutes (4:30) multiplied by the number of calendar days worked in the month. For purposes of this paragraph 4, a "work day" includes a flying assignment performed, sick leave and field stand-by, but does not include shaded day(s).

2. The "look back" will be performed at the conclusion of the schedule month and prior to the close of the Company's monthly payroll process.

3. Other than the terms stated in this Section "K" there will be no other RIGS or synthetic time in the A320/319 or B737-300/500 fleets.

12. Paid Absences

1. Except as otherwise provided in this Agreement, an absence known at the time monthly schedules are awarded will be paid at 2.8 hours per day.

2. An absence that becomes known after monthly schedules have been awarded will be paid as follows:

1. A pilot assigned to a line of flying shall receive pay equal to the pay credit value of the trip dropped.
1. A reserve pilot will receive five hours (5:00) of pay credit for each reserve duty day dropped.

M. Success Sharing

1. Performance Incentive Program

a. All United pilots will participate in an annual incentive program that aligns the interests of management and other domestic employees.

b. Prior to each calendar year beginning with 2004, the Compensation Committee of the UAL Corporation Board of Directors ("BOD") will establish a performance incentive formula (the "Annual Incentive Formula") that will provide a "Threshold" or minimum incentive payment, a "Target" or average incentive payment and a "Maximum" incentive payment for senior management, other management, pilots and other domestic employees.

c. The Annual Incentive Formula will be based on the following performance measures as reasonably weighted by the Compensation Committee. Each business unit (e.g., United Airlines, ULS) may have its own incentive plan measures. For example: financial performance (e.g., EBITDAR margin, pre-tax margin), operational performance (e.g., on-time performance), customer satisfaction (e.g., intent to repurchase), employee engagement, safety performance (e.g., lost time injuries) and reasonably comparable measures as adopted by the Committee.

d. A significant cash portion of the target cash compensation of management employees is payable through the Annual Performance Incentive Program. It is understood that the Compensation Committee of the BOD will, from time to time, review and adjust the target compensation levels, cash compensation levels and the portion of cash compensation at risk, provided that such compensation at risk remains a significant portion of the target cash compensation of management employees.

e. Pilots will receive the following cash incentive payments based on United's actual performance under the annual incentive program (with linear interpolation between the performance points):

Threshold Performance: 2.5% of Wages

Target Performance: 5% of Wages

Maximum Performance:10% of Wages

f. Qualifying "Wages" shall include base pay, sick pay, vacation pay, overrides, Section 3-B Incentive Pay and premiums but shall exclude expense reimbursement, incentive payments provided for in this Section or profit sharing payments, pension payments, imputed income or other similar awards or allowances.

g. Incentive payments will be made to pilots on the same date as incentive payments are made to management employees.

h. Incentive payments will be recognized as earnings under the United Airlines Defined Benefit Pension Plan (A Plan). Incentive payments will not be recognized as earnings for all other benefits under the pilot Agreement, including the United Airlines Pilot Directed Account Plan (B Plan).

i. The incentive plan will cover each calendar year beginning in 2004.

j. Incentive payments will be paid to the pilot, subject to applicable 401(k) deferral election, withholding and taxes.

k. The Company will provide any information requested by the Association to audit calculation of UAL's performance under the incentive plan and under the profit sharing program below. Any disputes over incentive payment and profit sharing calculations will be subject to the expedited arbitration procedures stated in Section 1-J.
 
 

2. Profit Sharing Program

a. All pilots will participate in a pre-tax profit sharing program with respect to calendar years beginning in 2005.

b. Pre-tax Profit is consolidated UAL pre-tax earnings as calculated under U.S. generally accepted accounting principles and reported in regulatory filings but excluding (i) unusual, special or extraordinary charges or (ii) charges with respect to grant or exercise of employee equity or options or (iii) charges with respect to payments under this profit sharing program.

c. The Annual Profit Sharing Pool is 15% of the excess of (i) annual Pretax Profit over (ii) the Annual Plan Threshold, but in no event more than the Pool Cap.
 
 

d. The Annual Plan Threshold is the product of (i) net UAL revenues and (ii) the following percentages (which represent net pretax profit margins):

1. 8%
2005. 10%
2005. 10%
2005. 10%
2005. 10%

e. The Pool Cap is 8% of Wages of all participating employees.

f. The pilots' share of the Annual Profit Sharing Pool is 43.5% of the Pool.

g. The Association will determine the manner in which the pilots' share of the Annual Profit Sharing Pool is distributed among individual pilots.

h. Profit Sharing payments will be made on May 1.

i. Profit Sharing payments will be paid to the pilot, subject to applicable 401(k) deferral election, withholding and taxes.

Contract Admin Home

Section 4

Expenses, Lodging, and Transportation

A. Expenses

1. Effective May 1, 2003, pilots when on duty or on flight assignment including qualifying flight duty shall receive One Dollar and Seventy-five cents ($1.75) per hour, prorated from the time he is scheduled to report for duty or actually reports for duty, whichever is later and shall continue until termination of duty or flight assignment upon return to his home domicile. This $1.75 rate will be increased by five (5) cents on May 1, 2004, May 1, 2005, May 1, 2006, May 1, 2007 and May 1, 2008.

2. It is understood that a meal will be boarded for each crew member on all flight segments scheduled for over four (4) hours non-stop or when any portion of the on duty period, exclusive of report and debrief exceeds five (5) consecutive hours with the scheduled time on the ground at any point, one and one half (1-1/2) hours or less. A crew breakfast always will be provided on the first scheduled segment whenever the crew has a duty period scheduled to originate between 0001 and 0800. A snack will be boarded in addition to other required crew meals on any flight scheduled for five (5) or more hours of flight time. Other than the crew meal provided in this sub-paragraph, crew meals will not be boarded on any flight unless requested by the System Schedule Committee or Hotel Committee for all crews assigned that trip sequence for the entire month. When the Company boards meals at the request of the System Schedule Committee or Hotel Committee, the payment provided in sub-paragra ph 1 above, will be reduced by the cost of such meal to the Company. For the purpose of this provision, the cost to the pilots when requesting a meal shall be as follows:

.

Breakfast $2.00

Lunch $4.25

Dinner $4.25

Snack $3.50

3. In addition to the standard allowances set forth in sub-paragraph 4-A-1 above, a pilot deadheading on Company business in the cabin will be provided with the normal meal service aboard such aircraft.

4. The Company will provide a supply of "energy" food to be available for the pilot at his request on all flights. The type and location of this food will be reviewed with the Association on a periodic basis.
 
 

B.

1. a. Pilots when scheduled for layovers in excess of four (4) hours shall be furnished suitable single occupancy lodging in a quiet room in a suitable location. Rooms will be located within fifteen (15) minutes normal driving time from the airport and transportation will be provided within fifteen (15) minutes of the crew's scheduled or planned arrival time whichever is later.

(1) Notwithstanding Paragraph B-1-a above, whenever a pilot (including a reserve) is scheduled for any layover (block to block) in excess of four (4) hours, but no more than five (5) hours, the crew desk may contact the pilot prior to departure of the trip sequence and request his waiver of the layover hotel room. Lineholders may advise the crew desk of their requirements on a monthly basis. If the room is not available upon arrival for those pilots who have not agreed to waive the room, the pilot may arrange for his own room and be reimbursed as per Section 4-B-1-c- and 4-B-1-c-(2).

(2) Pilots when on layover of less than four (4) hours shall be furnished suitable lounge facilities as necessary to minimize fatigue. Such facilities shall be reviewed periodically with the Association. In the event the Company is unable to provide the above lounge facilities at non-domicile airports, the Association may request and the Company will provide mutually acceptable off airport facilities.

b. A Hotel/Transportation Representative(s) of the pilots shall meet quarterly with representatives of the Company or more frequently, if needed, to review the suitability of layover and training lodging accommodations and/or rest facilities and transportation for pilots. The parties shall be guided by the current Hotel Protocol and this Protocol may only be modified by the mutual agreement of the Parties. It is the intent of the parties to this Agreement that the Hotel/Transportation representative shall be given the opportunity to consult with and make recommendations to the Company on the suitability of accommodations and/or transportation within the following limitations:

(1) Guidelines for the selection of hotels/ motels shall be established by agreement between the Company and the Association Representatives. The agreed upon guidelines and evaluation form will be used as a criteria for determining hotels or motels used for layovers. If changes or modifications are desired by either party, conferences will be held between the Company and Association Representatives, for the purpose of concluding what these changes or modifications shall be. If changes or modifications in the criteria or evaluation form are mutually agreed upon, these changes will be put into effect. Copies of the evaluation form will be retained by the Company and Association as long as the hotel/motel is used as a layover facility.

(2) If a change in hotel/motel facilities is requested, the Company and the Association Representative or their designees will within thirty (30) days jointly inspect other available facilities before making the change. Nothing herein would prevent prior agreement on acceptable facilities or deleting from such list at any time. Once a mutually acceptable facility is located, the Company will change to that facility within 60 days if the hotel is located within the United States and within 90 days if the hotel is located outside of the United States. If changes are made at the request of the Association Representative, no further changes from that hotel will be requested for a minimum of one (1) year, except by mutual agreement.

(3) The selection by the Company of the hotel/ motel and/or the transportation used to and from such facility will be from the list of available facilities which have been jointly approved. If no joint approval can be reached, the Senior Vice President of Flight Operations and the UAL-MEC Chairman shall meet to attempt to reconcile such differences. If the Senior Vice President of Flight Operations and the UAL-MEC Chairman cannot reach agreement, the Company will make the final determination.

(4) Prompt investigation will be made and appropriate action taken by the Company to correct any deterioration of service or facilities within thirty (30) days of being reported by the Hotel/Motel Transportation Representative.

(5) A Downtown Hotel shall be defined as a hotel located within a city's core business district. The Parties may choose to select a hotel outside a city's core business district, but the Association reserves the right to return to that city's core business district in accordance with paragraph 4-B-1-b-(2) above.

c. (1) If the rooms provided by the Company are not available, the pilot may obtain lodging and claim reasonable actual lodging expense on the regular Company expense account form supported by the hotel receipt.

(2) Pilots when at other than their regular layover station shall receive reasonable actual expenses for lodging when supported by a receipt unless suitable lodging as provided in Paragraph 4-B- 1-a of this Section is furnished by the Company.

2 a. If an employee work stoppage is encountered at any layover facility, the Company will consult with the hotel/motel transportation representative and, if requested, attempt to relocate layover crews at another mutually acceptable facility.

C.

1. Standard allowances provided in Paragraph 4-A of this Section will be allowed automatically and lodging, as provided in Paragraph 4-B of this Section, will be allowed when a pilot lays over at any layover point in connection with flight duties other than qualifying flight duty. In applying this Paragraph to reserve pilots, they shall be considered as standing in the same place as the pilot in whose schedule the trip appears.

2. When a pilot is required to layover away from his domicile in connection with qualifying flight duty, and the cost of the lodging and/or necessary transportation is not billed directly to the Company, he will be entitled to claim reasonable actual lodging and/or transportation expenses on a regular Company expense account form.

D. Transportation

1. When transportation provided by the Company at a layover point does not leave within thirty (30) minutes after actual block arrival, pilots may use any other available means of ground transportation to their place of lodging and may claim reimbursement for expenses for such transportation on the regular Company expense account form and pilots shall be reimbursed therefore.
 
 

2. Hotel pick up times will be arranged to have the pilots arrive at the airport in sufficient time to report for duty at their assigned report time. Pick-up times will be adjusted with regard to the time of day and day of week of planned travel so that the pilot is not required to arrive excessively early for his scheduled report time.

3. In the event a pilot's trip sequence originates at one airport and terminates at another airport at his home domicile, the pilot shall be furnished transportation one way between one airport and the other at his option. A pilot assigned to a schedule involving this type of operation shall advise the Company prior to the start of the schedule, the one direction he desires such transportation during the period he is assigned to that schedule. When transportation does not leave within (30) minutes of actual block arrival such pilot may use any other available means of ground transportation between one airport and the other and may claim reimbursement for expenses for such transportation on the regular Company expense account form and said pilot shall be reimbursed therefore.

4. When a pilot is scheduled to originate and terminate a trip sequence at an airport serving his domicile other than the domicile airport, as defined in Section 5-G-1-a-(2), he shall receive for the actual performance of the scheduled trip a mileage allowance of twenty-nine cents (29) per mile or Company policy, whichever is greater, for the round trip driving distance between the domicile airport and the airport at which the trip originates and terminates. Further, he shall receive Fifteen Dollars ($15.00) per hour and the meal allowance set forth in Paragraph 4-A-1, prorated, based on the applicable time listed in Section 5-G-1-b-(3).

5. If transportation provided by the Company is reported to be unacceptable by the Hotel/Transportation Committee, the Company and the Association representative or their designees will within thirty (30) days jointly inspect other available transportation before making the change. Once a mutually acceptable mode of transportation is located, the Company will change to that mode at the earliest possible time. Nothing herein would prevent prior agreement on acceptable transportation. If no joint approval can be reached, the Senior Vice President of Flight Operations and the UAL-MEC Chairman shall meet to attempt to reconcile such differences. If the Senior Vice President of Flight Operations and the UAL-MEC Chairman cannot reach agreement, the Company will make the final determination.

E. Miscellaneous Assignments

1. When a pilot is away from his home domicile at Company request for temporary flight duty, he will receive the standard allowances provided in Paragraph 4-A of this Section from the time of the departure of the trip on which he deadheads to begin the assignment until the time of the arrival of the trip on which he returns to his home domicile at the completion of the assignment, except that such expenses will be discontinued during any period of days off during which he returns to his home domicile or residence. Additionally, the pilot will receive twenty-five dollars ($25.00) per day for the entire duration of the TDY assignment. For purposes of this paragraph, a TDY assignment begins one day prior to the pilot's first required day on duty and ends one day after the completion of his last duty period. The pilot will be provided suitable single lodging accommodations paid for by the Company or be reimbursed for reasonable actual hotel expenses if he is required to secure his own accommodations. The pilot shall also be furnished transportation to and from his temporary domicile, plus transportation between the lodgings and the airport or expenses therefor if such transportation is not furnished by the Company. Such expenses shall be claimed on a regular Company expense account form and must be submitted within ten (10) days after incurring the expenses. The Company will allow actual and necessary laundry and cleaning expenses when temporary duty is for more than five (5) consecutive days.

2. When pilots are away from their home domicile on special assignment for the Company other than those provided for in Paragraph 4-E-1 above, reasonable actual expenses will be allowed for meals, transportation, laundry and lodging when not provided by the Company. All such expenses will be claimed on regular Company expense account forms and must be submitted within ten (10) days after incurring the expenses. Upon application, a pilot will be given an advance by the Company to cover such expense while on special assignment and within five (5) days after returning to his domicile or at the close of each week in the event a pilot is away for a period longer than one (1) week, he shall submit an expense account for such advance in accordance with Company regulations and if he has returned to his domicile, such expense account shall be accompanied by the balance of any money advanced and not accounted for on such expense accounts.

3. When pilots perform special assignments at their domiciles not directly associated with their duties at the Company's request, they shall receive reasonable actual expenses for transportation and/or meals. Such expense shall be claimed in accordance with Company regulations on Company expense account forms within ten (10) days after incurring the expenses.

F.

In those cases wherein pilots are entitled to claim actual reasonable expenses for meals and/or transportation, they may claim up to fifteen per cent (15%) of such expenses to cover gratuities.

G.

Expenses for the Charter Operation will be as provided in this Section, except that pilots assigned to the International Charter Operation shall receive, in addition to the expenses provided in this Section, Twenty-five ($0.25) for each hour away from home.

1. Should isolated cases of unusual expenses be encountered by a pilot which the expense allowance will not normally cover, the Company will reimburse the pilot for such expenses upon receipt of a documented Company expense form.

H.

Pilots shall be allowed actual reasonable cleaning expenses, when supported by a receipt from a commercial cleaner for the cleaning of the following uniform items: jacket, vest, trousers, necktie, shirt and outer coat.

I.

1. In the event the Company makes a change to the pilot uniform and requires pilots to wear such new uniform item(s) (and disallows the wearing of the old item(s), if a replacement), the purchase cost of these new uniform item(s) will be borne by the Company. This provision does not cover the acquisition costs of routine replacements required by age and wear.

2. The cost of a new hire pilot's standard initial uniform issue will be borne by the Company.

Section 5

Hours of Service

A.

This Agreement contemplates that pilots shall devote their entire professional flying service to the Company provided that nothing in this Agreement shall be construed to prevent any pilot from affiliating or assuming duties with the military services of the United States.

B. Flight Time Limitations

1. Scheduling Provisions

a. Schedules published for B-747-400, B-777 and B-767/757 preferencing shall contain no more than eighty- nine (89) flight credit hours. Schedules published for B-737-300/500 and A-320/319 preferencing shall contain no more than ninety-five (95) flight hours, and shall contain no more than three hundred eighty (380) hours time away from home base. Should the last trip in a prior month require adjustment to an awarded schedule, the adjusted schedule shall be limited to eighty-nine (89)/ninety-five (95) actual flight hours. The Local Schedule Committee, with the concurrence of the SSC and the Company, may authorize the construction of lines of flying in any equipment domicile to exceed the applicable monthly schedule limit by up to thirty (30) minutes, provided the extended monthly schedule limit improves the quality of the affected lines.

b. If a pilot is scheduled to fly a trip sequence originating in the prior month which is projected to interfere with or make him illegal for any part of his awarded schedule in the new month, he may be reassigned by the Company to any flying for which he is legal in the new month. Under this provision, he may be assigned up to eighty-nine (89)/ninety-five (95) actual hours and up to the same number of calendar days for which he was originally scheduled. Assignment of the replacement trip(s) shall be subject to the following:

(1) Every reasonable effort will be made to comply with a pilot's request to retain certain designated days off, provided his request is received within forty-eight (48) hours of the publication of lineholder schedules. Additionally, during this fortyeight (48) hour period, a pilot may indicate a desire for a repair in the current month if possible, rather than in the following month. This assignment shall be made prior to the beginning of the subject month.

(2) In making repairs under this Paragraph, consideration will be given to minimizing disruption to the pilot's line(s), consistent with schedule efficiencies.

(3) A trip may be inserted into a line under these provisions only if it does not create another illegality within that line.

(4) New trip(s) may be substituted for trip(s) in the previous month's line, with pilot concurrence.

2. Actual Performance Limits

a. Eighty-nine (89) actual flight hours in the B-747-400, B-777 and B-767/757 fleets, and ninety-five (95) actual flight hours in the B-737-300/500 and A-320/319 fleets shall constitute the monthly maximum, including the value of any inbound time produced by the completion of a trip sequence which originated in the prior month; unless the pilot volunteers as provided by 5-B-3, below. When a pilot is projected to exceed eighty-nine (89)/ninety-five (95) hours of actual flight time, a trip or a portion of a trip will be removed from his schedule to reduce his projected flight time to the actual monthly maximum or less, or his projection prior to departing his domicile, whichever is higher. The selection of the trip or portion of a trip to be dropped will be subject to concurrence between the pilot and the crew desk unless concurrence cannot be reached, in which case a Flight Manager will decide. Further, should the Local Schedule Committee, with the concurrence of the SSC and the Company, authorize the c onstruction of lines of flying in any equipment domicile to exceed the applicable monthly schedule limit by up to thirty (30) minutes, as provided in 5-B-1-a above, the 89/95 hour maximums stated in this paragraph shall be increased by an amount equal to the time which the scheduled lines of flying exceed the monthly schedule limits.

b. A reserve shall be limited to eighty-nine (89)/ninety-five(95) actual flight hours. B-747-400, B-777 and B-767/757 reserves shall receive one (1) hour for every two (2) hours of deadhead performed associated with revenue flying (not including CRAF and Charter flying) applied toward the eighty-nine (89) hour actual limit for this month..

c. Notwithstanding the provisions of 5-B-2-a, above, a lineholder may be required to continue to fly his schedule even if he becomes projected over 89/95 hours , so long as he was projected at or below 89/95 hours before departing on his next to last trip of the month. Further during the performance of a pilot's last trip of the month, the limitations of 5-B-2-aabove (with respect to a lineholder) and 5-B-2-b above (with respect to a reserve) shall not apply and he may be required to complete his schedule. A reserve pilot involved in a reassignment under this provision shall not be available to any greater extent than a lineholder and may be assigned to exceed the limits in 5-B-2-b above only when given the same assignment as the other members of the disrupted crew.

3. Operational Flexibility

Notwithstanding the 89/95 hour actual monthly flight time limitation of 5-B-1 and 5-B-2, above, a lineholder may elect to fly up to 91/97 actual flight hours. A pilot may make this election at any time including during the line award process, in which case any adjustment made necessary by an inbound carry-over conflict can be repaired up to 91/97 actual flight hours.

a. A pilot who has not previously elected to fly over 89/95 hours may, with his concurrence, be reassigned under Section 20-F-1 and 20-F-2 to flying which exceeds 89/95 flight hours, but in no event more than 91/97 actual flight hours, unless it is his last trip of the month.

b. A pilot who at any time agrees to fly above 89/95 actual hours shall be considered available up to 91/97 hours for the remainder of the relevant month.

c. This 91/97 flight hour flexibility provision shall be applicable to all monthly flight time limitations; except for the pick up of open flying under the provisions of Section 20-H-3 and 20-H-5, which are limited to 89/95 flight hours.

d. This flexibility provision shall not be available at any time that any pilots are on furlough.

4. Reassignment Limitations

If a lineholder is assigned or reassigned under the provisions of Section 20-H or 20-I, he shall be limited, at the time of the assignment to eighty-nine (89)/ninety-five (95) actual flight hours or to his projection just prior to the reassignment, if higher. Should an assignment be given which, at the time of that assignment, projects a pilot above the applicable limit, he shall have a trip or a portion of a trip removed from his schedule upon his return to his domicile at the completion of the assignment, in order to reduce his projection to or below the applicable limit. The selection of the trip or portion of a trip to be dropped will be subject to concurrence between the pilot and the crew desk unless concurrence cannot be reached, in which case a Flight Manager will decide.

5. A pilot on reserve part of the month and assigned to a line of flying under Section 20 for some portion of the month shall, if such assignment results in a projection higher than the actual monthly maximum at the time he starts flying the line of flying, have a trip(s) or portion of a trip deleted from the line of flying to produce a projection equal to or less than the actual monthly maximum. The monthly maximum for this application shall be as provided in 5-B-2-b above.

6. Trips which originate in the current month and project into the following month shall have only that time scheduled prior to 2400 home domicile time of the last day of the month credited to the current month.

7. When a pilot has been on duty aloft in excess of eight (8) hours in any consecutive twenty-four (24) hours, he shall, upon completion of his assigned flight or series of flights be given at least twelve (12) hours for rest before being assigned any further duty with the Company.

8. A pilot shall not be scheduled for duty aloft for more than eight (8) hours during any duty period. At the completion of each duty period a pilot shall be scheduled for a rest period of no less than the applicable minimum provided by Section 5-G-1-c. In the actual operation, the minimum rest requirement shall be no less than (a) the actual rest period provided by Section 5-G-2-c below or (b) the rest period prescribed by the applicable FAR, whichever is greater.

9. A pilot shall not be scheduled for duty aloft if his total flight time will exceed thirty (30) hours in any seven (7) consecutive twenty-four (24) hour period.

10. If a pilot is projected to become illegal, under the provisions of Paragraph 5-B-7, 5-B-8 and/or 5-B-9 above, he shall continue to fly his assigned trip until he is actually illegal except as provided below:

a. If a pilot is scheduled for a layover at a nonequipment domicile and is projected to be illegal to fly the first leg of the next duty period, the Company may designate any remaining portion of his trip sequence open under Paragraph 20-H or 20-I and repair accordingly.

b. If a pilot is scheduled for a layover at a nonequipment domicile and is projected to be illegal for some portion of his remaining trip after the layover, and the remaining portion of his trip does not pass through an equipment domicile prior to the point at which he is projected to become illegal, the Company may designate any remaining portion of his trip sequence open under Paragraph 20-H or 20-I and repair accordingly.

c. In addition to the repairs provided in 5-B-10-a and 5-B-10-b above, a pilot projected to become illegal under this provision may be removed from any portion of his sequence; or he may be reassigned to another pilot's pairing (or portion thereof) if that pilot can be assigned the flying for which the subject pilot is illegal under the provisions of Section 20-H or 20-I.

d. If a pilot becomes illegal, or is expected to become illegal, under the provisions of sub-paragraph 5- B-8 and/or 5-B-9 above to fly his entire scheduled trip sequence, he will not be required to deadhead between flight segments which he was scheduled to fly in one (1) duty period. However, a pilot may be required to deadhead on either the first or last flight segment(s) of any one (1) duty period to become legal.

11. No pilot shall be assigned any duty with the Company during any rest period required by this Paragraph B. In the application of this sub-paragraph, a reserve pilot upon completion of any assignment, will be specifically advised if he is not released from duty and is not commencing a rest period.

12. Duty aloft includes the entire period during which a pilot is assigned as a member of an airplane crew during flight time.

13. Scheduled for duty aloft means the assignment of a pilot on the basis of the flight time established in the applicable Domicile Schedule Letter rather than the actual flight time.

14. Relief from all duty for not less than twenty-four (24) consecutive hours shall be provided for and given to a pilot at his home domicile at least once during any seven (7) consecutive calendar days.

C. 8 in 24 Application

1. For qualifying purposes, a pilot shall not be required to fly as a pilot or as an observer crew member a combined total flight time of more than eight (8) hours in any twentyfour (24) hour period.

2. When the combined total actual flight time of a pilot as a pilot and as an observer crew member (deadhead time as a passenger excluded) is more than eight (8) hours or is scheduled for over eight (8) hours in any consecutive twentyfour (24) hour period, such pilot for such combined total actual flight time shall have a minimum rest period as specified in Section 5-G-2-c.
 
 

D. Deadhead

1. Time spent as a passenger or as an Observer Member of the Crew (OMC) shall not contribute to flight time under the provisions of this Agreement.

2. When a pilot assigned a line of flying is displaced from or is required to deadhead or ride as observer on a flight because he has been displaced from the flight or a part thereof to which he has previously been designated as a member of the crew and he is unable to deadhead or ride as observer member of the crew on the flight from which displaced, he shall be permitted to deadhead or return as observer member of the crew on any other flight in order that he may return to his domicile as soon as possible. This Paragraph shall not apply when a pilot is removed from his assigned trip as a result of the operation of the pilot's schedule selection procedure, equipment substitution, cancellation due to weather or equipment, moving to another trip, or being removed from a trip due to the application of Section 20-F, 20-G, 20-H and 20-I.

3. Pilots when deadheading over the Company's domestic routes shall be on non-revenue positive space (NRPS) or OMC at the pilot's option unless OMC provides the only expedient method of transportation. Pilots will be booked for deadhead travel as outlined below:

a. When a pilot is deadheading to a flight assignment and (i) the deadhead leg is greater than three (3) hours, and (ii) the deadhead leg is in the same duty period as the flight assignment, the booking will be in Business Class in a three class aircraft. If Business Class is not available at time of booking, the pilot will be booked in First Class. If First Class is not available at time of booking, the pilot will be booked in Economy Class and will be assigned a seat in Economy Plus in aisle, window, middle seat priority. If the deadhead is in a two class aircraft, the booking will be in First Class, if available at the time of booking. If First Class is not available at the time of booking, the pilot will be booked in Economy Class and will be assigned a seat in Economy Plus in aisle, window, middle seat priority.

b. When a pilot is deadheading to a layover, or from a flight assignment to his home domicile, and the deadhead leg is greater than three (3) hours, the booking will be in Business Class in a three class aircraft. If Business Class is not available at time of booking, or the aircraft is a two class aircraft, the pilot will be booked in Economy Class and will be assigned a seat in Economy Plus in aisle, window, middle seat priority.

c. When a pilot is deadheading to or from any flight assignment and the deadhead leg is equal to or less than three (3) hours, the pilot will be booked in Economy Class and will be assigned a seat in Economy Plus in aisle, window, middle seat priority.

d. Regardless of the class of service booked in 5-D-3-a, b and c above, pilots may be upgraded to higher class of service at the gate after the Company has accommodated all revenue and passenger upgrades of all classifications.

4. Offline deadheading shall be First Class when available on all flights scheduled for three (3) hours or more.

E.

1.

a. When a pilot assigned to a line of flying is on sick leave, his total allowable monthly flight time shall be reduced by the number of actual flight hours which the pilot missed as a result of sick leave.

b. When a reserve pilot is on sick leave, his total allowable monthly flight time shall be reduced by five hours (5:00) for each duty day he was on sick leave, except as provided in Section 20-H-3 of this Agreement.
 
 

2.

a. When a pilot assigned a line of flying is on vacation, his total allowable monthly flight time shall be reduced by two and eight tenths (2.8) hours for each day of vacation, except as provided for in 2-b below.

b. After the monthly line award process, when a pilot assigned a line of flying is assigned vacation, his total allowable monthly flight time shall be reduced by the number of actual flight hours which the pilot missed as a result of his vacation.

c. When a pilot serving as reserve is on vacation, his total allowable monthly flight time shall be reduced by two and eight tenths (2.8) hours for each day he is on vacation, except as provided for in 2-d below.

d. After the monthly line award process, when a pilot serving as reserve is assigned vacation, his total allowable monthly flight time shall be reduced by five (5) hours for each duty day he is on vacation.

F.

A pilot shall not be required to keep the Company advised of his whereabouts on his days off.

G. Duty Time

1. Preparation of Pilot's Schedule

The following on-duty provisions shall apply to the preparation of pilot schedules and the preparation of initial pilot, including reserve pilot, assignments (other than trip pairings appearing in the Pilots' Schedules).

a.

(1) A pilot shall not be scheduled to be on duty in excess of the following limitations, except that with the concurrence of the System Schedule Committee, duty periods up to fourteen (14) consecutive hours may be scheduled:

(a)

For Duty

Period Starting Trip Preparation

0600-1329 13 hours

1330-2359 13 hours, reduced 1 min. for each 3

min. beyond 1330

2400-0414 9 1/2 hours

0415-0559 9 1/2 hours, increased 2 min. for each 1

min. beyond 0415
 
 

(b) When a duty period is scheduled to end with a deadhead segment, the applicable duty limits shall be one (1) hour greater than the times indicated above.

(c) A pilot shall not be scheduled to be on duty for more than ten (10) hours in any duty period following a layover scheduled for less than ten (10) hours and forty-five (45) minutes free from duty, except that if the duty period begins between 2301 and 0359, the on-duty period shall be scheduled for not more than nine (9) hours.

(d) Determination of all on-duty periods shall be based on home domicile time.

(e) When a pilot is scheduled into one airport and out of another airport serving the layover point, the duty period will have the driving time shown in Section 5-G-1-b-(3) included in the duty time. This provision will not apply to downtown layovers in New York City, downtown layovers between IAD and DCA, all downtown layovers between OAK and SFO when scheduled for a downtown San Francisco hotel.

(2) The domicile airports are LAX, SFO, SEA, DEN, ORD, MIA/FLL, JFK/LGA, IAD/DCA and HNL. In the event a trip sequence is scheduled to originate and terminate at an airport serving the domicile other than these domicile airports, the provisions of Section 4-D-4 shall apply.

b.

(1) Duty time on a scheduled basis shall include scheduled flight and ground time and a pilot shall be considered to be on duty for one (1) hour before the scheduled departure of his trip until fifteen (15) minutes after the scheduled termination of the trip. If the required reporting time exceeds one (1) hour, such additional time shall be considered as duty time. If, due to their arrival from an international city, a crew is required to clear customs at the completion of a trip sequence, the 15 minute debriefing time shall be increased to 30 minutes. This sub-paragraph shall not apply in the application of Section 5-G-1-b-(3).

(2) Notwithstanding sub-paragraph 5-G-1-b- (1) above, a pilot scheduled to fly a cargoliner shall be considered to be on duty until thirty (30) minutes after the scheduled termination of the trip. This cargoliner debrief time shall remain 30 minutes unless the SSC and the Company agree an increased time is necessary at a particular airport. If the SSC and the Company are unable to reach agreement, the issue will be referred to the UAL-MEC Master Chairman and the Senior Vice President of Flight Operations for resolution. (3) When a pilot's scheduled trip sequence originates out of one airport and terminates at another airport serving his domicile, the following times will be used to increase either the first or last duty period, depending on whether the time is provided at the beginning or end of the trip. Such times shall be considered as scheduled deadhead time at one-half (1/ 2) flight time credit for the application of Section 5-G-3-f.

LGA-JFK :45 LAX-ONT 2:15

EWR-LGA 1:30 LAX-PMD 2:30

JFK-EWR 2:00 SFO-OAK 1:00

MDW-ORD 2:00 SEA-BFI :45

DCA-IAD 1:10 MIA-FLL 1:45

DCA-BWI 1:10 PBI-MIA 2:00

IAD-BWI 1:45 SJC-SFO 1:00

LAX-BUR 1:15 PBI-FLL 1:00

When a pilot is scheduled in accordance with Section 4-D-4 of this Agreement, the above times will be used with the following exceptions: JFK/LGA-EWR 1:30; MDW-ORD 1:45; MIA-FLL/PBI 2:00.

c. For the purpose of determining scheduled duty time, a pilot's on-duty period cannot be broken by an off duty period of less than:

(1) Nine (9) hours and thirty (30) minutes - in case of relief from flight duty at a point where sleeping accommodations are provided within fifteen (15) minutes normal driving time from the airport and transportation is provided within fifteen (15) minutes of the scheduled arrival time of the trip. At non-domicile locations, the Company may, on a monthly basis with SSC concurrence, reduce the one (1) hour report time specified in Section 5-G-1-b-(1) to thirty (30) minutes in order to provide the required period free of duty. Such action, however, will not dilute the application or any of the provisions of this Paragraph. Specifically, it will be assumed that the pilot reported for duty one (1) hour before departure.

(2) Eighteen (18) hours and forty-five (45) minutes - in case of relief from flight duty at a point where sleeping accommodations are not provided as specified in sub-paragraph (1) above.

(3)

(a) Twelve (12) hours and forty-five (45) minutes - in case of relief from flight duty at the conclusion of a trip sequence at a scheduled or reserve pilot's home domicile regardless of whether sleeping accommodations are or are not available at the airport.

(b) For the B737-300/500 and A-320/319 fleets, thirteen (13) hours and forty-five (45) minutes - in case of relief from flight duty before a duty period that contains a flight into any Special Qualification Airport (as designated in the United Airlines Flight Operations Manual), i.e., such as those international airports located in Mexico, Central America or South America.
 
 

(4) Thirteen (13) hours and forty-five (45) minutes - in case of relief from flight duty at the conclusion of a trip sequence at a scheduled or reserve pilot's home domicile when the pilot is scheduled out of one airport and into another serving his home domicile if not covered in sub-paragraph 5-G-1-b-(3) above.

(5) Fourteen (14) hours - in case of relief from flight duty at the first rest following a duty period in which the pilot is scheduled to exceed seven (7) hours and thirty (30) minutes flight time in twenty-four (24) consecutive hours.

(6) Notwithstanding the minimum free of duty times required in 5-G-1-c-(3) above, the Company and Association System Schedule Committee may select specific trip pairings which, on a scheduled basis, may be combined into lines of flying while providing thirty (30) minutes less time between trips than required above.

(7) The above off-duty periods may be reduced by one (1) hour under this sub-paragraph c when such off duty period extends to or beyond 0200 Standard Time on the designated day when the change is made from Standard Time to Daylight Time.

d.

(1) or the B-747-400, B-777 and B-767/757 fleets, each schedule line for a full month that is submitted for the schedule selection procedure, as provided in Section 20-B and 20-C shall contain a minimum of twelve (12) calendar days free of all duty at the home domicile. For the purpose of this subparagraph d-(1) only, a day shall be a "day free of all duty", if the lineholder is scheduled to be released from duty before 0100 home domicile time.

(2) For the B-737-300/500 and A-320/319 fleets, each schedule line for a full month that is submitted for the schedule selection procedure, as provided in Section 20-B and 20-C, shall contain a minimum of ten (10) calendar days free of all duty at the home domicile in a thirty (30) day month and eleven (11) calendar days free of duty at the home domicile in a thirty-one (31) day month. For the purpose of this subparagraph d-(1) only, a day shall be a "day free of all duty", if the lineholder is scheduled to be released from duty before 0100 home domicile time.

e.

(1)

1. For the B-747-400, B-777 and B-767/757 fleets, pilots functioning as reserves shall be scheduled for a minimum of twelve (12) calendar days free of duty in each month in patterns consisting of a maximum of four (4) periods of not less than two (2) days off.
1. For the B-737-300/500 and A-320/319 fleets, pilots functioning as reserves shall be scheduled for a minimum of ten (10) calendar days free of duty in a thirty (30) day month and for a minimum of eleven (11) calendar days free of duty in a thirty-one (31) day month in patterns consisting of a maximum of four (4) periods of not less than two (2) days off.
1. All reserve lines posted for preferencing shall include all of those lines which will be awarded, however, the actual lines awarded may not include all of those posted. Additionally, the same line may be awarded to more than one (1) pilot. The schedules posted for preferencing will include a variety of lines sufficient to insure that the following specific day-off patterns are awarded, depending upon the actual number of pilots awarded reserve lines, to the extent they are preferenced. If 7 reserve lines, 1 line with weekends off. If 14 reserve lines, 2 lines with weekends off. If 21 reserve lines, 3 lines with weekends off. If more than 21 reserve lines, one additional line with weekends off for each additional 7 reserve lines; except that these additional weekend off lines (above the first 3 weekends off lines) shall have only three weekends off whenever any part of the fourth weekend falls within either the first four days or the last four days of the schedule month. If 10 reserve lines, 1 lin e with the first four days off. For each additional 10 reserve lines, 1 additional line with the first four days off. If 10 reserve lines, 1 line with the last four days off. For each additional 10 reserve lines, 1 additional line with the last four days off. These additional reserve lines will not be provided when any part of a weekend falls on both the first four days and last four days of the month.
1. In all fleets, reserve pilot day off patterns are subject to having three (3) moveable days each month. The Company will have the ability to move an RDO to cover an assignment when there are no other reserves available to cover all of the known open trips for the calendar day within the domicile. When applied, a reserve pilot may be assigned into only the first day off in a period of days off. The infringed-upon day off will be moved to the next scheduled day of availability unless it is otherwise mutually agreed to by the pilot and the crew scheduler to move it to another group of days off elsewhere in the same month. If a day off cannot be restored, it will not be moved. The infringed-upon day off is now subject to an assignment that is longer than one (1) day in duration. A reserve can only be assigned into a day off if that assignment begins on what was an original day of availability.

 
 

(2) Except as provided for in (d) above, a pilot functioning as a reserve will not be scheduled into a day(s) off.

(3) If as a result of the pilot's schedule selection procedure a reserve has not been provided with one (1) day off in a seven (7) day period, one (1) day of other than a two (2) day off period may be used to provide the required one (1) day off in a seven (7) day period.

(4) The Company may assign a reserve an additional day off to insure legality of the transition into the next month's schedule with the concurrence of the reserve pilot.

(5) Reserve pilots may be permitted to mutually trade day(s) off periods, consistent with the needs of the service so long as such trade does not result in either pilot being scheduled for less than one (1) day off in a seven (7) day period. Additionally, a reserve pilot's scheduled days off may be rescheduled with pilot concurrence.
 
 

(6)

(a) A pilot on reserve shall not be required to report for duty to fly or deadhead on a trip which is scheduled to depart from his home domicile prior to 0700 local domicile time on the day following his day(s) off, provided that the Company may release a reserve from being available for assignment at or before 1500 local domicile time on the day preceding his scheduled day(s) off, and if so released, the reserve pilot may be required to report for duty to fly or deadhead on a trip which is scheduled to depart from his home domicile at or after 0600 local domicile time on the day following his day(s) off. With pilot concurrence, the Company may also assign a reserve pilot who is not released from duty before 1500 local domicile time to a trip scheduled to depart at or after 0600 local domicile time on the day following his day(s) off.

(b) A reserve on call will be released from duty at 1500 for purposes of this subparagraph (6) if he has not been notified of an assignment or notified to remain on duty by 1500 local domicile time.

(c) A reserve on a designated rest period extending beyond 1500 on a day prior to a reserve day(s) off, if not previously given an assignment following the designated rest period, will automatically be released from duty nine (9) hours prior to the completion of the designated rest period.

(7) If a reserve pilot is assigned to a line of flying he shall receive the days off in such scheduled line for the period assigned in lieu of the days off shown in his reserve line for the same period. In no event shall a reserve pilot assigned to a line of flying for less than a full month be scheduled for fewer calendar days off than prescribed for in 5-G-1-e-(1) and (2) above. . Whenever a reserve pilot is scheduled for less than the applicable minimum number of days off when assigned to a line of flying for less than a month, a trip(s) may be deleted or replaced in the line of flying under the provisions of Section 20-F-1, to provide the required days off.

(8) In the application of Section 5-G-1-c-(3) and 5-G-1-c-(4) to the scheduling of reserve pilots, the twelve (12) hours and forty-five (45) minutes or thirteen (13) hours and forty-five (45) minutes, as applicable, will be added to the end of the last duty period of the trip sequence at the time of the initial assignment. The time so established is considered to be the time at which the reserve is scheduled to be legal for his next reserve assignment. However, the provisions of Section 5-G-2-c will apply if the trip sequence is not flown as scheduled, but the required rest (12:45 or 13:45) will be reduced only by the amount of time the reserve arrived later than his scheduled arrival at home. The provisions of 5-G-2-c will also apply if the next assignment is made under the provisions of Section 20-G-8. In no case will a reserve pilot receive less rest than provided in Section 5-G-2-c.

f. Late Night and All Night Flying

(1) Definitions

(a) Window of Circadian Low ("WOCL") means 0100 through 0459 home domicile time

(b) Late Night Flight ("LNF") means a flight, any portion of which, is scheduled to operate between 0045 and 0559 (inclusive) home domicile time.

(c) All Night Flight ("ANF") means a LNF, any portion of which, is scheduled to operate during the hours of 0230 and 0329 home domicile time.

(2) No pilot may be scheduled for duty in consecutive WOCL periods.

(3) A pilot shall have a minimum of sixteen (16) hours and forty-five (45) minutes free from duty prior to a duty period that contains an ANF.

(4) After an ANF a duty break must be scheduled before the pilot's next scheduled flight segment.

(5) Any duty period that contains an ANF shall meet the following requirements:

(a) A maximum of two (2) flight segments, except no more than one (1) segment if the ANF departs from an equipment domicile, and

(b) A maximum duty period of Nine (9) hours and forty-five (45) minutes unless further restricted by Section 5-G-1-a-(1)-(a) above, and

(c) If the duty period contains two (2) flight segments, no more than one (1) hour and forty-five (45) minutes ground time between flight segments.

(6) Central and South American trip pairings that are specifically addressed by the current "doctors letter" are exempt from the provisions of this Section 5- G-1-f.

2. Actual On-Duty Provisions

The following on-duty provisions shall apply to scheduled pilots and reserve pilots in the actual performance of their duties, including any reassignments made after the pilot has reported for duty for his initially assigned trip sequence.

a. A pilot shall not be required to be on duty in excess of the following limitations, except by agreement between the pilot and a Flight Manager.

(1) As a result of a reassignment, a duty period may not be planned to exceed the applicable schedule maximum in 5-G-1-a-(1) above, by more than one (1) hour, without pilot concurrence.

(a) Additionally, a pilot shall not be reassigned to be on duty for more than eleven (11) hours in any duty period following a layover scheduled for less than ten (10) hours and forty-five (45) minutes free from duty. Between 2301 and 0359, the on-duty period shall not be scheduled to exceed ten (10) hours.

(b) Should a pilot become involved in a reassignment which produces a layover that, had it been scheduled, would have subjected him to the provisions of 5-G-1-a- (1)-(c), above; such pilot shall be treated in the actual operation as if he had been scheduled under 5-G-1-a- (1)-(c). Conversely, a pilot scheduled under 5-G-1-a- (1)-(c) who is reassigned so as to actually receive a longer layover not subject to 5-G-1-a-(1)-(c) that pilot shall not be limited to the shorter duty period.

(2) In the actual operation, a duty period may not exceed the applicable schedule limits as provided in 5-G-1-a-(1) above by more than one and one-half (11/2) hours (or fourteen (14) hours total if less) without pilot concurrence.

(3) In the event a pilot is reassigned to deadhead to a layover point or to his home domicile, the actual limitations shall apply.

(4) Determination of all on-duty periods shall be based on home domicile time.

b.

(1) Duty time on an actual basis shall include actual flight and ground time and a pilot shall be considered to be on duty for one (1) hour before the scheduled departure of his trip until fifteen (15) minutes after the termination of the trip. If the required reporting time exceeds one (1) hour, such additional time shall be considered as duty time. This subparagraph shall not apply in the application of Section 5-G-1-b-(3).

(2) Notwithstanding sub-paragraph 5-G-2-b- (1) above, a pilot who flies a cargoliner at the conclusion of a trip sequence shall be considered to be on duty until thirty (30) minutes after the termination of the trip. This cargoliner debrief time shall remain 30 minutes unless the SSC and the Company agree an increased time is necessary at a particular airport. If the SSC and the Company are unable to reach agreement, the issue will be referred to the UAL-MEC Master Chairman and the Senior Vice President of Flight Operations for resolution.

(3) Notwithstanding the provisions of subparagraph 5-G-2-b-(1) above, the one (1) hour reporting time may be reduced to not less than thirty (30) minutes before departure of a trip on a daily basis by request of the crew and with the concurrence of a Flight Manager. This waiver applies only to reporting time of one (1) hour which has not previously been resolved under the provisions of Section 5-G-1-c-(1). Such action, however, will not dilute the application of any of the provisions of this Paragraph. Specifically, it will be assumed that the pilot reported for duty one (1) hour before departure.

(4) When a pilot's return trip terminates at an airport serving his domicile other than the airport at which his return trip was scheduled to terminate, the pilot's on-duty period shall be extended in accordance with Section 5-G-1-b-(3), based on the actual termination airport or the scheduled termination airport, whichever is greater, provided, that if in the actual operation a pilot returns to the airport from which he was scheduled to originate, the provisions of this Paragraph shall not apply.

(5) When a pilot is scheduled into one airport and out of another airport serving the layover point, the duty period will have the driving time shown in Section 5-G-1-b-(3) included.

c. For the purpose of determining actual duty time, a pilot's on-duty period cannot be broken by an actual off duty period of less than:

(1) Nine (9) hours and fifteen (15) minutes - in case of relief from flight duty at a point where sleeping accommodations are provided within fifteen (15) minutes normal driving time from the airport and transportation is provided within fifteen (15) minutes of the crews planned arrival time if later than the scheduled arrival time. At non-domicile locations, the Company may reduce the one (1) hour report time specified in Section 5-G-1-b-(1) to thirty (30) minutes in order to provide the required period free of duty. Such action, however, will not dilute the application or any of the provisions of this Paragraph. Specifically, it will be assumed that the pilot reported for duty one (1) hour before departure.

(2) Ten (10) hours and forty-five (45) minutes - In case of relief from flight duty at a point where sleeping accommodations are not provided as specified in sub-paragraph 5-G-2-c-(1) above. At nondomicile locations the Company may, with pilot concurrence, reduce the one (1) hour report time specified in Section 5-G-1-b-(1) to thirty (30) minutes in order to provide the required period free of duty. Such action, however, will not dilute the application or any of the provisions of this Paragraph. Specifically, it will be assumed that the pilot reported for duty one (1) hour before departure.

(3) Ten (10) hours and forty-five (45) minutes -

(a) In case of relief from flight duty at the conclusion of an assigned trip sequence at a scheduled pilot's home domicile regardless of whether sleeping accommodations are or are not available at the airport or when a pilot departs from one airport and arrives at another airport serving his domicile at the conclusion of an assigned trip sequence.

(b) In case of relief from flight duty at the conclusion of an assigned trip sequence at a reserve pilot's home domicile regardless of whether sleeping accommodations are or are not available at the airport.

(c) In case of relief from flight duty under the provisions of Section 20-F-1-a-(2) and Section 20-F-1-b-(3) and 20-F-1-b-(4).

(d) For the B737-300/500 and A-320/319 fleets, eleven (11) hours and forty-five (45) minutes - in case of relief from flight duty before a duty period that contains a flight into any Special Qualification Airport (as designated in the United Airlines Flight Operations Manual), i.e., such as those international airports located in Mexico, Central America or South America.

(4) Twelve (12) hours - in case of relief from flight duty at the first rest following a duty period in which the pilot exceeds eight (8) hours flight time in any consecutive twenty-four (24) hours.

(5) Notwithstanding the provisions of subparagraph 5-G-1-c-(1) and 5-G-1-c-(2) above, an on duty period cannot be broken by less than nine (9) hours at the place where sleeping accommodations are provided.

(6) The off duty periods required by 5-G-2-c- (1)-5-G-2-c-(2)-5-G-2-c-(3) above, may be reduced by one (1) hour, but in no case less than the amount of time necessary to provide eight (8) hours and thirty (30) minutes at the place where sleeping accommodations are provided, under this subparagraph c when such off duty periods extend to or beyond 0200 Standard Time on the designated day when the change is made from Standard Time to Daylight Time. This exception does not apply to the required rest period for a reserve at his home domicile as provided in Section 5-G-2-c-(3)-(b).

(7) Pairings which have been scheduled under the provisions of Paragraph 5-G-1-c-(6), shall require thirty (30) minutes less time free of duty in the actual operation than the times provided in Paragraph 5-G-2-c-(3) above.

d. Operational Integrity

The Company may initiate the following procedures whenever it is anticipated that a flight crew will be unable to depart on-time following a scheduled layover. These procedures only apply to a layover at a non-domicile location where timely replacement of the crew is not possible:

(1) Notwithstanding the provisions of Section 5-G-2-c above and with pilot concurrence, the minimum rest will be the greater of eight (8) hours or the rest required by the FAR. Provided, however, that:

(a) Each pilot is notified prior to, or immediately upon arrival at the layover station of the Company's request to implement this provision, and

(b) The layover hotel meets the field layover requirements of Section 5-G-2-c-(1) above, and

(c) Transportation to the layover hotel is immediately available upon arrival. If the transportation is not immediately available, the pilot may, at his option and after notifying the Company upon his arrival at the hotel, revert to the actual minimum layover under Section 5-G-2-c-(1) above.

(2) Prior to agreeing to rest under this Section 5-G-2-d, the pilot will be informed of the anticipated duty following the rest period.

(3) Following any rest period under this Section 5-G-2-d, a pilot may fly up to four (4) scheduled flight hours and shall be relieved from duty upon the earliest of:

(a) The first arrival at a domicile location for his equipment type, or

(b) Completion of two (2) flight segments, or

(c) Completion of six (6) hours on duty

(4) When a pilot is relieved from duty following a rest period under this Section 5-G-2-d, the pilot will be either:

(a) Released from the balance of the trip, or

(b) Given a rest period extending through 0459 home domicile time following release from duty, and in no case shall this rest period be less than fourteen (14) hours.

(5) If the pilot is given a rest under Section 5-G-2-d-(4)-(b) above, after completing this rest and provided he is notified prior to 1700 on the day following the rest, the pilot may be:

(a) Assigned to join the balance of his original trip, or

(b) Reassigned other flying under Section 20-F for which the pilot is legal, except that such other flying shall be scheduled to return the pilot to his home domicile no later than two (2) hours after the scheduled arrival time of his original trip, or

(c) Released from further duty, except deadhead if necessary to return to his home domicile.

(6) Following any rest period under this subparagraph d, a reserve will not be available for any assignment until he receives the required rest under Section 5-G-2-d-(4)-(b) above.

(7) A pilot shall receive incentive pay in accordance with Section 3-B-7-b of the Agreement.

3. Minimum Scheduling and Actual Credit Provisions

The following schedule and actual credit provisions shall apply to the construction of schedules for preferencing and in the actual operation and wherever this Agreement refers to "credit hours" or "pay credit." All duty assignments involving line flying duty will be considered as having the minimum flight time credit applications set forth in this sub-paragraph G-3.

a. For B-747-400, B-777 and B-767/757 pilots, schedules shall contain a minimum of one (1) hour's flight time credit for each two (2) hours of duty time scheduled between 0600 and 2159 and a minimum of one (1) hour's flight time credit for each one and three-quarter (1-3/4) hours of duty time scheduled between 2200 and 0559, prorated on a schedule or actual basis whichever is greater.

b.

(1) For B-747-400, B-777 and B-767/757 pilots, schedules shall contain a minimum of five (5) hours of flight time credit, averaged, for each on-duty period in multiple duty period trip sequences or five (5) hours for one (1) duty period trip sequences. In computing the five (5) hour minimum, there shall not be included any on-duty periods which do not involve line flying, and this provision does not apply to publicity and courtesy flights. The five (5) hour minimum shall not apply to any duty period composed solely of deadheading.

(2) For B-737-300/500 and A-320/319 pilots, schedules shall contain a duty period "look back" value of five (5) hours per duty period for trips actually flown (including deadhead) or a field standby assignment, or a "look back" value of four and one half (4.5) hours times calendar days worked in the month. "Work Day" for purposes of the previous sentence includes a flying assignment performed, sick leave and field stand-by, but excludes "shaded day(s)" as described in 5-G-1-d-(1). There are no other duty RIGS or other synthetic time included.

c. For B-747-400, B-777 and B-767/757 pilots, schedules shall contain a minimum of one (1) hour's flight time credit for each four (4) hours elapsed time away from his domicile, prorated on a schedule or actual basis whichever is greater.

d. When a trip pairing does not provide the minimum credit provided by sub-paragraph 5-G-3-a, 5-G- 3-b-(1) and 5-G-3-c above, the following shall apply:

(1) Credit time accrued as a result of the application of the one (1) for two (2) and/or the one (1) for one and three-quarters (1-3/4) on-duty formula when applicable, shall for purposes of credit be added to the end of the last flight in the on-duty period in which such credit was accumulated.

(2) Credit time accrued as a result of the application of the one (1) for four (4) hours away-from-domicile formula and/or the minimum five (5) hours average per duty period shall, for purposes of credit, be added to the end of the last flight in the away-from-domicile period in which such credit was accumulated.

e. Minimum Schedule Provisions, Minimum Actual Credit Provisions or Actual Flight Time

At the completion of each trip pairing, the pay credit value of the pairing shall be considered to be the pay credit value of the pairing as computed above, the pay credit value of the credit provisions applied in the actual performance of the trip pairing, or the accumulated total flight time performed in that pairing, whichever is greater. A pilot will be entitled to accrue "actual flight time" once the flight has left the blocks for the purpose of flight, regardless of whether the segment is cancelled or otherwise terminates at a location other than the scheduled destination. The pilot will be entitled to the actual flight time accrual on the basis of his actual block to block time.

f. On a schedule or actual basis, whichever is greater, deadheading shall provide full flight time credit and shall be used to offset the minimum credit and actual provisions provided above.

g. Trip sequences may be scheduled with up to four (4) duty periods.

4. When a pilot assigned to a line of flying is reassigned or junior manned, and the assignment interferes with his minimum calendar days off, as provided in sub-paragraph 5-G-1-d above, he shall be given additional calendar days free of duty to restore him to his minimum calendar days free of all duty at his domicile. Should a trip drop provide more than the required number of days off to restore the minimum to the pilot, he may be given a Section 20-F standby or flight assignment on those "extra" days off. The day(s) on which the pilot will be given such assignment will be by mutual agreement; unless agreement cannot be reached, in which case a Flight Manager shall make the determination. A B-747-400, B-777 or B-767/757 lineholder pilot who picks up open flying under Section 20-H shall not reduce scheduled days off below twelve (12) for the month. A B-737-300/500 or A-320/319 lineholder pilot who picks up open flying under Section 20-H shall not reduce scheduled days off below ten (10) in a thirty (30) day month or eleven (11) in a thirty-one (31) day month. If he flies into a day off as a result of an irregular operation, he is not subject to the provisions of this subparagraph. Trips dropped under this provision will not affect the pilot's minimum guarantee.

5. Reserve On Standby Status

a. When a pilot on reserve is called to the airport on a standby basis without a specified flight assignment, his duty time shall begin at the time he is scheduled to report or actually reports, whichever is later. The time on standby duty plus the scheduled time of the assigned flight cannot exceed the schedule maximum set forth in Paragraph 5-G-1-a.

b. A pilot on standby duty will receive five hours (5:00) pay credit and have his total allowable monthly flight time reduced by five hours (5:00) for each standby assignment which does not result in a flight assignment.

c. A pilot shall not be held on standby duty at the airport in excess of four (4) hours and any assigned flight must be scheduled to depart no later than five (5) hours of his report time. If a pilot is released from standby duty without a flight assignment, he shall be entitled to legal rest and may, at his option, revert to the bottom of the FIFO list.

H.

The following provisions shall apply to trip pairings in which at least two (2) segments involve flying to or from Hawaii:

1. Flying to and from Hawaii may be assigned to any domicile, provided no trip pairing exceeds four (4) duty periods.

2. The provisions of Section 5-G-1-a-(1)-(a) and 5-G-2- a-(1) shall apply to all duty periods except to duty periods scheduled under sub-paragraph 3 below. When a pilot is scheduled for duty aloft in excess of eight (8) hours as provided by sub-paragraph 3, the duty period will not be scheduled for more than fourteen (14) hours, nor will a pilot so scheduled be required to remain on duty over sixteen (16) hours without his concurrence.

3. Notwithstanding Section 5-B-8, non-stop flights may be scheduled which exceed eight (8) hours flight time, but no more than twelve (12) hours, provided that such flight is the only flight segment in that duty period.

4. Notwithstanding Section 5-B-8, 5-G-1-c and 5-G-2-c, trip pairings scheduled under this provision shall provide ten hours and forty-five minutes (10:45) free from duty after duty periods which contain eight (8) or fewer hours of flight time. For duty periods which contain more than eight (8) hours of flight time, the pilot shall have sixteen (16) hours free from duty following such period.

5. Notwithstanding Section 5-B-8, Mainland-Hawaii- Mainland or Hawaii-Mainland-Hawaii flights may be scheduled in one (1) duty period only if the first segment is scheduled to depart between 0759 and 1301 domicile time of the pilot so assigned. Trip pairings scheduled under this subparagraph may be assigned only to the LAX, SFO, SEA and HNL domiciles; except coverage may be provided from any domicile under the provisions of Paragraph 8-L-6.

6. For flying from Hawaii to the Mainland when the first scheduled Mainland landing is between 0259 and 1159 local time, only one (1) landing will be scheduled in that duty period.

7. Notwithstanding the provisions of Section 5-B-9, a pilot involved in flying to or from the Mainland and Hawaii may be scheduled to exceed thirty (30) hours in seven (7) days provided that the segment that exceeds thirty (30) hours in seven (7) days is an overwater segment.

Contract Admin Home

Section 6

Seniority

A. General

1. Pilot seniority shall accrue from the date of hire as a student pilot with the Company, as defined by Section 2-X of this Agreement, or with other companies whose operations have been taken over by the Company prior to signing of this Agreement. Seniority shall continue to accrue from such date and shall not cease to accrue or be lost except as provided in this Section and Section 7 and 12 of this Agreement. The accrual of Pilot seniority is contingent upon the successful completion of initial training as a student pilot.

2. Seniority shall govern all pilots in the case of promotion and demotion, their retention in case of reduction in force, their assignment or reassignment due to expansion or reduction in schedules, their reemployment after release due to reduction in force and their choice of vacancies, provided that the pilot's qualifications are sufficient for the conduct of the operation. In the event that a pilot is considered by the Company not to be sufficiently qualified, the Company shall immediately furnish such pilot written reasons therefor. This Section shall apply unless otherwise specifically excepted by some other provision of this Agreement.

B. Seniority List

The Pilot Eligibility Seniority List shall be published annually. This list shall contain the names of all flight officers who are eligible to be awarded Captain and First Officer assignments. Copies of the United Air Lines Pilot Eligibility Seniority List will be brought up to date as of July 1 of each year and shall be posted and considered the official list. Each pilot shall be allowed a maximum period ofsixty (60) days after the date of distribution by the Company of the list in which to protest any alleged omission or incorrect listing affecting his seniority. A pilot who does not protest such alleged omission or incorrect listing within sixty (60) days after the date of distribution by the Company of the list, shall thereafter be precluded from protesting the same except that when a pilot is on vacation, leave of absence or sick leave, he shall protest any alleged omission or incorrect listing within sixty (60) days after returning to duty. All seniority protests arising from such revised lists shall be handled in accordance with the procedures outlined in Section 17 of this Agreement, and, when so handled, the result forthcoming therefrom shall be final and binding.

C. Period of Probation

Pilots shall be on probation for the twelve (12) months of service as a pilot employee of the Company (measured from the pilot's Pilot Longevity Date) and having performed 165 days of work for the Company. "Work" in this context, will include pilot duty, reserve availability, training, instruction, special assignment and all other flight duties for which compensation is paid. Nothing in this Agreement shall be construed to prevent the Company from releasing a pilot during his period of probation regardless of his position on the System Seniority List.

D. Loss of Seniority

Any pilot who resigns from the service of the Company as a pilot or is discharged as a pilot for just cause shall forfeit all pilot seniority accrued to the date of such resignation or discharge.

E. Transfer to Non-Flying, Supervisory Duty or Special

Assignment

1. A pilot transferred to non-flying, supervisory duties or special assignment shall retain and continue to accrue seniority.

2. When a pilot is transferred to non-flying, supervisory duty or special assignment on account of any physical incapacity, or becomes sick or injured while on such nonflying, supervisory duty or special assignment, he shall retain and continue to accrue seniority during such period of sickness or injury regardless of whether or not he is able to maintain his airline pilot's certificate or certificates required for his pilot's status, until he is able to return to flying duty or is found to be unfit for such duty for a continuous period of time as described in Section 12-B.

3. When a pilot engaged in non-flying, supervisory duty or special assignments returns to flying duty, he shall assume his former assignment or, in the event he has bid another assignment while on such duty, assume such new

assignment.

4. Any dispute arising hereunder concerning the physical fitness of such pilot shall be settled in accordance with Section 14.

F.

A pilot, while assigned to supervisory or management duty, shall perform as Captain in line operations only if he holds a Captain bid and shall perform as a First Officer in line operations only if he holds a Captain or First Officer bid. Management pilots shall serve in line operations on an equipment type assigned by the Company.

G. Seniority Accrual and the Pilot Disability Income Plan (PDI)

When a pilot begins receiving a PDI benefit, he shall retain and continue to accrue pilot seniority until he no longer qualifies for PDI or he retires.

Section 7

Reduction In Personnel

A.

1. Any reduction in pilot personnel shall be in the reverse order of system seniority, except as provided in the Letter of Agreement between the Company and the Association, signed June 11, 1963. When it becomes necessary to furlough pilots covered by this Agreement, at least thirty (30) days, but not more than one hundred and twenty (120) days, notice of such furlough shall be given all pilots affected; provided, however, that when there is no work because of an Act of God, labor dispute, or other circumstances over which the Company has no control, pilots covered by this Agreement may be furloughed without advance notice. Such pilots furloughed due to reduction in force shall be reemployed in the order of their seniority at the time of furlough.

2. Pilots returning to active service from furlough shall be assigned, in accordance with their seniority and preference, to advertised but unfilled assignment vacancies on the system as provided in Section 8-F-2. If the recalled pilot is assigned to a domicile other than that from which he was furloughed, he shall be allowed moving expenses and travel time in accordance with Section 10 from his former domicile to the domicile to which recalled. Additionally, pilots returning from furlough to the domicile from which they were furloughed will be allowed travel time from their residence during furlough to their domicile as per Section 10-A-2.

B.

When a probationary pilot is furloughed, he shall be furloughed in accordance with the provisions of this Section.

C.

A pilot who has been furloughed due to reduction in force shall file his address in writing with the Personnel Department of the Company and shall thereafter promptly advise the Personnel Department in writing of any change in address.

D.

A pilot shall not be entitled to recall as provided in Paragraph 7-A of this Section and shall forfeit all seniority if he does not comply with the requirements of Paragraph 7-C of this Section or if he does not return to the service of the Company on or before the date specified in the notice offering reemployment, which date shall be not less than thirty (30) days, or if such pilot is outside the continental limits of the United States forty-five (45) days, after notice to return is sent by registered mail, return receipt requested, or by telegram to the last address filed with the Personnel Department. Notice of intent to accept offer of recall from furlough must be furnished to the Company by telegram or registered letter within fourteen (14) days from the date of receipt of recall notice.

1. Notwithstanding Paragraph D above, a pilot who accepts employment while on furlough which requires a contractual commitment for a period not to exceed two (2) years, shall be allowed to fulfill such obligation and shall be considered to be on personal leave of absence commencing with the date of recall until fulfillment of such employment obligation, provided such pilot has received Company concurrence prior to such contractual commitment.

E.

A pilot furloughed due to reduction in force who returns to duty as provided in Paragraph 7-D of this Section shall be allowed, for seniority purposes, all time accrued prior to such furlough as well as all time within the period of furlough. All furloughs shall expire at the end of ten (10) years from the effective date of such furloughs and any accrued seniority shall be forfeited; provided, however, that there shall be no change in the relative seniority position on the System Seniority List as the result of any furloughs unless the pilot fails to exercise the privilege provided for in Paragraph 7-D of this Section. Reinstatement shall be subject to the furloughed pilot's passing a satisfactory physical examination and to his possessing the airman's certificate or certificates required for his pilot status at the time of reinstatement. After reinstatement, pilots shall be required to serve any unexpired portion of their probationary period.

F.

1. A pilot who has one (1) or more years of service as a pilot and who is furloughed shall receive furlough pay equivalent to the minimum monthly flight pay guarantee based on the type of equipment flown his last full month prior to furlough for the period of time specified below, except that no furlough shall be paid where furloughs are caused by an Act of God, labor dispute or other circumstances over which the Company has no control. If pilot has completed:

2. A pilot eligible for furlough pay shall receive such pay starting at the time of furlough and such payments shall be at regular pay periods and continue until all furlough pay credit is exhausted, except that in no event shall any such payment be due after his effective date of recall by the Company.

3. A pilot recalled by the Company who is later furloughed shall again be entitled to furlough pay as provided in Paragraph 7-F-1 of this Section.

4. The Company may offer furloughed pilots other jobs in the Company on a voluntary basis. If a pilot volunteers to accept such job, he will only be eligible for that portion of his monthly furlough payment which exceeds the amount of his monthly salary in the volunteer assignment.

G.

The Accident-Sickness-Dental Insurance of a pilot (and of his eligible dependents) who is furloughed due to a reduction in force will be continued while he is on furlough for a period of ninety (90) days from the date of his furlough.

1 yr of service 1/2 month furlough pay

2 yrs of service 1 month furlough pay

3 yrs of service 1 1/2 months furlough pay

4 yrs of service 2 months furlough pay

5 yrs of service 2 1/2 months furlough pay

6 yrs of service 3 months furlough pay

7 yrs of service 3 1/2 months furlough pay

8 yrs of service 4 months furlough pay

9 yrs of service 4 1/2 months' furlough pay

H.

A pilot who has received notice of furlough shall be exempt from the provisions of Section 8-F-3-a and 8-F-3-b and Section 8-K. Pilots who are declared surplus while other junior pilots in the same domicile, status and equipment are exempted under this provision shall be pay protected on a one-for-one basis for the period of this exemption. During this period those pilots qualifying for pay protection shall continue to receive the salary of the equipment from which displaced.

Section 8

Filling Of Vacancies

A. Classification of Assignments

1. Pilot assignments at a domicile shall be classified in the status of Captain and First Officer, as applicable, in each of the following equipment types: B-747-400, B-777, B-767/B-757, A-320/A-319 and B-737-300/500 equipment.

2. The Company shall each month post on computer, in Unimatic and in the Pilots' Bulletin Book at all domiciles an up-to-date list of all pilot assignments.

B. Manpower Requirements

The number of Captain and First Officer assignments in each equipment type, when required, shall be determined by the following procedure:

1. a. B-747-400, B-777 and B-767/757 scheduled hours (including MAC) plus flight time credit divided by 89:00 = pilots

b. B737-300/500 and A-320/319 scheduled hours (including MAC) plus flight time credit divided by 95:00 = pilots
 
 

2. Reserve -

14% of item #1a (Captains) 12% of item #1b (Captains)

10% of item #1a and b (First Officers)

= pilots

3. Charter & extra lift hours divided by 89:00= pilots

4. Sick leave man months = pilots

5. Vacation man months = pilots

6. Training man months (including PC/PT) = pilots

TOTAL SYSTEM PILOT

REQUIREMENTS FOR 60 DAYS = pilots

Nothing herein shall prevent the Company from bidding or maintaining additional assignments for reserve coverage by equipment type in excess of the percentage set forth above.

C. Advertising of Vacancies

1.

a. Vacancies in Captain and First Officer assignments shall exist when, in accordance with Section 8-B, there is a need for additional assignment for an anticipated period of sixty (60) days or more. Vacancies shall be advertised at all domiciles as far in advance as possible but not later than thirty (30) days after such vacancy exists.

b. Vacancies which were not expected to exist more than sixty (60) days, if existing at the end of sixty (60) days, shall be reviewed with the System Schedule Committee. Such vacancies shall be advertised within five (5) days after such review unless it is mutually agreed that the vacancies will cease to exist within a reasonable period.

2. All such vacancies shall be open to bid by the pilots eligible to bid under the provisions of Section 8-D. Vacancy bulletins shall state the number and status of primary vacancies to be filled; the anticipated effective date of the assignment; the anticipated dates training is to start; the equipment type involved; and the domicile at which the vacancy exists. All vacancies posted together shall share a common closing date and a common effective date. Vacancy bulletins shall be posted not later than noon local time on the date of the bulletin and shall close not sooner than noon local time on the tenth (10th) day following the date of the bulletin.

3. Bidding on Vacancies

a. During the time when primary vacancies are posted for bid, bids will be accepted from eligible pilots for pilot assignments in all domiciles, status and equipment types active on the airline. A pilot desiring a change in domicile, status and/or equipment type should submit bids for all assignments which he desires, in preference order, at any time any vacancies are advertised.
 
 
 
 

b. In addition to the process described in C-3-a above, pilots who desire to have their bids remain on file indefinitely for consideration in filling future vacancies may submit "permanent bids." Permanent bids may require direct entry by the pilot into the Company's computer system. A pilot may revise his permanent bid file at any time, however, the bid on file at the close of each bidding period shall be the pilot's official bid for those vacancies.

c. The Company will implement within twelve (12) months of the date of the signing of the Agreement, conditional bidding for all new equipment domiciles or for the splitting of an existing domicile.

d. Permanent bids as described above shall be considered as cancelled by one of the following:

(1) Submission of a request to cancel the permanent bid.

(2) Submission of a vacancy bid on any posted primary vacancies.

(3) Being awarded a vacancy as a result of a bid.

4. Awarding of Vacancies

Upon closing of a vacancy bulletin, pilots shall be awarded the number of assignments needed in each of the advertised vacancies. At the same time, pilots shall be awarded assignments, if needed, in domicile, status and equipment types which have become available due to the assignment of pilots to fill the advertised primary vacancies. Further, awards may be made to fill the vacancies resulting from all subsequent awards. These secondary vacancies will not have been advertised, but will share the same effective date as the primary vacancies.

5.

a. The most senior pilot bidding on an assignment vacancy, unless excepted by Section 8-C-5-b below, shall be awarded such assignment. The filling of all vacancies shall be subject to Paragraph 6-A-2 of Section 6 and Paragraph 8-D of this Section, provided that, for the purpose of this Paragraph, the phrase "sufficiently qualified" appearing in Paragraph 6-A-2 of Section 6 means the pilot's qualifications as an airline pilot, exclusive of route and equipment qualification, provided that if the pilot has been given the opportunity to so qualify and has failed, he may be denied the assignment.
 
 

b. When a vacancy or vacancies occur in a status, equipment type and domicile from which pilot(s) has been displaced, under the provisions of Section 8-F and 8-K, the displaced pilot(s) shall for a period of one hundred and twenty (120) days beyond the effective date of their displacement be offered in order of seniority the assignment(s) prior to the awarding of that assignment(s) under the provisions of 8-C. This 120 day period is measured from the effective date of the surplus to the bulletin date of the vacancy.

6. All vacancies will be advertised for bid and awards made not more than six (6) months prior to the effective date of the vacancy, except the Company may exceed this time limit if necessary to meet training requirements after review with the System Schedule Committee.

D. Eligibility To Be Awarded Vacancies

In addition to the provisions stated in 8-C above, a pilot's eligibility to vacancies shall be subject to the following conditions:

1. A pilot occupying a First Officer assignment is eligible to be awarded any other First Officer assignment and any Captain assignment.

2. A pilot occupying a Captain assignment is eligible to be awarded any other Captain assignment.

3. In addition to the provisions of sub-paragraph 8-D-1and 8-D-2 above, a pilot holding an assignment as a B-737-300/500 or A-320/319, Captain may bid and be awarded a vacancy in a B-747-400 or a B777 First Officer assignment. A pilot awarded an assignment under the provisions of this sub-paragraph may be required to fill such assignment for a period of thirty-six (36) months following the date on which he is activated in the assignment. Further, a Captain who is awarded a First Officer assignment under the provisions of this sub-paragraph shall be ineligible to bid and be awarded any B-737-300/500, , A-320/319, or B-767/757 Captain assignment during that thirty-six (36) month bid restriction, notwithstanding the provisions of 8-D-4-c, below.

4. Subparagraphs a. through d. below shall apply to the B747-400, B-777 and B-767/757 fleets. Subparagraph e. below shall apply to the B-737-300/500 and A-320/319 fleets.
 
 

a. Notwithstanding the eligibility provisions of Section 8, Paragraph 8-D-1 and 8-D-2, when a pilot is awarded an assignment through bidding, he may be ineligible to bid and be awarded any other vacancy with an effective date earlier than fourteen (14) months (thirty-six (36) months, if scheduled training includes more than twelve (12) days which contain training duty) after the first day of the month following the month he was awarded his bid. In determining the number of scheduled training days for this application only, INS, overwater and/or any other specialized training shall not be counted when such qualification(s) is not required of all pilots assigned to that equipment type and status.

b. The above bid restriction shall also apply to a pilot who requires training upon being hired as a pilot or upon being recalled from furlough; except that the period of restriction shall begin upon the date the pilot is assigned to training.

c. The above provision shall not restrict a pilot from bidding up in status (i.e., First Officer to Captain) at any time; however, a pilot who vacates an awarded assignment by bidding up in status, may be ineligible to bid and be awarded any other vacancy with an effective date earlier than the fourteen (14) (thirty-six (36)) months provided above, plus the amount remaining unfulfilled from his prior assignment. Notwithstanding the above bidding restriction, a pilot who is awarded a vacancy and subsequently receives another award to a higher status prior to beginning training for the initial vacancy award shall not incur any bidding restriction as a result of the initial vacancy award.

d. A pilot who is not within a bid restriction period as provided by this sub-paragraph D-4 may be awarded a vacancy in his present status and equipment type at another domicile.

e. With respect to the operation of the B-737-300/500 and A-320/319 fleets, the following bid freezes shall apply.

1. A pilot already serving in either fleet as of the effective date of the agreement shall incur no further freeze than the one he is currently serving.
2. A pilot who bids into these fleets shall incur a thirty-six (36) month freeze.
3. A pilot who bids within these fleets shall incur a fifty-four (54) month freeze. This includes both a change of equipment within the operation or an upgrade in status in either fleet.
4. A pilot who is surplused into these fleets from another assignment outside these fleets shall incur a thirty-six (36) month freeze for any future bidding within these fleets except that he may bid up in status within these fleets and incur the appropriate additional freeze. Notwithstanding this thirty-six (36) month freeze, a pilot in these fleets may bid and be awarded an assignment in the B-747-400, B-777 or B-767/757 fleets and shall incur the appropriate freeze per 8-D-4-a above and the prior surplus freeze will be vacated.
5. Freezes incurred in (1) through (4) above will be in addition to any unserved freeze in any fleet assignment, but in no case shall any accumulation of freezes exceed sixty (60) months.

5. A pilot who is ineligible to be awarded a vacancy in his present status and equipment type at another domicile because of the bid restrictions of 8-D-4 above, may nonetheless be awarded such vacancy under the following conditions:

a. If awarded, he shall receive no new paid move nor travel time entitlement as a result of his new assignments.

b. He shall continue to serve out the period of his bid restriction associated with the assignment held prior to the lateral award, but shall incur no additional bid restriction.

c. This provision shall be available to a pilot on an unlimited basis.

6. .Only pilots who have met the basic prerequisite piloting requirements for Air Line Transport Pilot Certificate, including successful completion of the written examination and notification to the Company of this completion, and who have completed twelve (12) months of service as a United First Officer shall be eligible to bid or bump to Captain vacancies.

E. Awarding of Vacancies

1. A successful bidder on a vacancy at his domicile shall take over his new assignment on the date that the flying supporting such assignment actually begins or when training is completed for such assignment, whichever is later. If the new assignment is planned to be activated prior to the first day of the pilot schedule month, he may exercise his seniority in his awarded assignment under Section 20-D. If, however, the new assignment is activated at a time which precludes his exercising his seniority in his awarded assignment under the Section 20-D, he will be assigned as a reserve in his awarded status and equipment type until the commencement of the next schedule for which he exercises his seniority under the schedule selection procedure.

2.

a. A successful bidder on a vacancy which required a change in domicile shall take over his new assignment on the date that the flying supporting such assignment actually begins or when training is completed for such assignment, whichever is later. If the new assignment is planned to be activated at a time which permits his exercise of seniority in his awarded assignment under Section 20-D, he shall be afforded such opportunity. If, however, the new assignment is activated at a time which precludes his exercising his seniority in his awarded assignment under Section 20-D, he will be assigned as a reserve in his awarded status and equipment type under the commencement of the next schedule for which he exercises his seniority until the schedule selection procedure.

b. A pilot who is awarded a Captain vacancy at another domicile may be entitled to moving expenses upon activation of that vacancy, under the provisions of Section 10-B-2.

c. Should a pilot be activated into his new assignment during a schedule month, his salary shall be prorated as provided in Section 3-C.

3. A pilot shall not be prevented by the Company from taking over his awarded assignment in excess of ninety-two (92) days after the awarded assignment is activated. If a pilot is prevented by the Company from taking over his new assignment after it has been activated, he shall be compensated as follows until he is released by the Company to take over his new assignment:

a. He shall receive for the period involved a monthly salary based on the status and equipment type of his awarded assignment, or what he actually earned, whichever is greater; prorated, as provided by Section 3-C, if the change is mid-month.

b. Further, if the successful bidder has been prevented by the Company from taking over his new assignment as specified in sub-paragraph 8-E-2 above, or after the awarded vacancy is activated, whichever is later, in excess of forty-five (45) days, he shall receive an expense allowance in accordance with Section 4-E-1 of this Agreement until his awarded assignment is activated.

c. An awarded vacancy shall be considered to have been activated at the domicile, for the application of this sub-paragraph E-3, on a man-for-man basis if:

(1) A more junior pilot who was awarded such assignment on the same vacancy bulletin as the affected pilot is activated into the same assignment; or a pilot who was awarded such assignment on a vacancy bulletin subsequent to the bulletin awarded the affected pilot is activated into the same assignment; or

(2) Subsequent to the advised effective date of the assignment, temporary duty pilots are assigned to the domicile in the status and equipment type of the affected pilot's awarded assignment. Note: Intent of "man-for-man" in this application: In the event two assignments are to be activated, if 2^nd and 4th are activated then #2 triggers pay for #1 and #4 triggers pay for #3.

4. A successful bidder who has been prevented by the Company from taking over his new assignment under the provisions of sub-paragraph 8-E-3 and is then released to take over such assignment at a time which precludes his exercising his seniority in his awarded vacancy under the schedule selection procedures (Section 20-B), will be assigned as a reserve in his awarded status and equipment type until the first of the month following his release; or, if a schedule selection procedure occurs as a result of a schedule change during the month, until the effective date of such schedule change.

F. Insufficient Bidders

1. In the event there are insufficient bids received on a Captain vacancy, the Company may fill such vacancy by assigning the junior pilot at the domicile at which the vacancy exists who meets the requirements specified in Paragraph 8-D-6 of this Section. If no junior pilot at the domicile meets these requirements then the Company may assign the junior pilot on the system who meets these requirements. Pilots transferred from one domicile to another under the provisions of this sub-paragraph shall be transferred in accordance with Section 8 and receive moving expenses in accordance with Section 10 and shall be given as much advance notice as possible but not less than thirty (30) days to assume such vacancy.

2. In the event there are insufficient bids received on a First Officer vacancy, the Company may, with not less than thirty (30) days notice:

a. Fill such vacancy by assigning the junior pilot at the domicile, or

b. Fill such vacancy by assigning any surplus pilots who desire to move in order of seniority from the domicile at which a surplus exists. If no pilots desire to move, the Company may then move pilots from that domicile to fill the unfilled vacancy in reverse order of seniority. Pilots transferred from one domicile to another under the provisions of this sub-paragraph shall be transferred in accordance with Section 8 and receive moving expenses in accordance with Section 10.

c. Fill such vacancy by assigning pilots being recalled from furlough.

3. In the event a vacancy is not filled within three (3) months of the date of the award bulletin, the vacancy shall be cancelled.

4. A surplus of pilots will be considered to exist at a domicile when pilots who have been displaced from their assignment have not exercised a bump or do not have sufficient seniority to revert to another assignment at their domicile.

5. Notwithstanding the provisions of sub-paragraph 8-F- 2 of this Paragraph and Paragraph 8-C-1 of Section 8, bulletined but unfilled First Officer vacancies and secondary vacancies in First Officer assignments may be used by the Company for the assignment of newly hired but unassigned pilots. This paragraph shall not be applicable while pilots are on furlough.

G. Cancellation or Delay In Activation Of Assignment

1. In the event an awarded assignment is cancelled prior to the effective date specified in the bulletin awarding the vacancy, the pilot awarded such assignment shall retain his present assignment and, if any pilot junior to him has been awarded a vacancy which, he could have bid and been awarded, had he not been restricted by the provisions of Section 8-D-3 at the time his cancelled assignment was awarded or during the period he held such assignment, he may within twenty (20) days of notification of such cancellation bump into the assignment status and equipment type which the junior pilot was awarded. The pilot exercising such bump will be considered as though he had bid and been awarded the vacancy awarded the pilot junior to him.

2. If the unactivated assignment is cancelled, on or after the advertised effective date, the pilot shall have bumping rights as established in Paragraph 8-K-2, 8-K-4, 8-K-5, 8-K-6, 8-K-7 and 8-K-8 of this Section, and shall exercise any bump within twenty (20) days of the date he is notified of the cancellation of his awarded assignment. For the purposes of Paragraph 8-K-4, the date of displacement shall be the date that the pilot notifies the Company of his intent to bump. In the event the assignment is cancelled and the pilot exercises a bump, he shall continue to receive pay for the cancelled assignment, in accordance with Paragraph 8-E-3-a of this Section until he is activated in the assignment into which he has bumped.

3. If a pilot is awarded an assignment and such assignment is not activated by the Company within sixty-two (62) days (or two (2) schedule months, if earlier), including the effective date specified in the bulletin advertising the vacancy, and the assignment has not been cancelled, the pilot shall be paid the greater salary of his current or awarded assignment until such time that the assignment is either activated or cancelled. If the pilot exercises a bump, he shall continue to receive pay for the cancelled assignment, in accordance with Paragraph 8-E-3-a of this Section until he is activated in the assignment into which he has bumped.
 
 

4. If at the end of ninety-two (92) days or (three (3) schedule months, if earlier), including the effective date specified in the bulletin advertising the vacancy, such assignment has not been cancelled or activated, a pilot may at his option exercise bumping rights in accordance with Paragraph 8-K-2, 8-K-4, 8-K-5, 8-K-6, 8-K-7 and 8-K-8 of this Section or be eligible to bid any vacancy or continue to receive compensation as provided in sub-paragraph 3 above. Should the pilot bid or bump to another assignment under this provision, he shall continue to receive any delayed activation pay for which he has previously qualified until his activation into the new assignment.

H. Failure To Qualify For Awarded Assignment

In the event a pilot bids or bumps into a new assignment and fails to satisfactorily complete the training required to qualify him for such assignment, or fails to qualify on his new assignment after completing the training required, he shall be considered as not having vacated his previous assignment, and if his previous assignment no longer exists, he shall have bumping rights in accordance with Section 8-K unless action has been taken by the Company under Section 6-A-2.

I. Order of Activation of Assignments

1. The order of activation of awarded assignments in a status and equipment type at a domicile shall be in chronological order of the award bulletins for such assignments, notwithstanding the respective bulletined effective dates of such vacancies or the relative seniority of the pilots awarded such assignments.

2. When awarded assignments are cancelled prior to their activation, the order of cancellation of such assignments in a particular status and equipment type at a domicile shall be in reverse chronological order of the award bulletins for such assignments, notwithstanding the respective bulletined effective dates of such vacancies or the relative seniority of the pilots awarded such assignments.

3. The date of acquiring an assignment shall be considered that date which appears on the publication of the award bulletin. The date for pay purposes shall be considered that date on which the pilot physically assumes the duties of his new assignment; or, if prevented by the Company from assuming his new duties, the date on which he would have assumed the duties of his new assignment had the Company not prevented him from doing so.

J. Reduction in Assignments

In the event there is a reduction in Captain assignments, the procedures specified in Section 20-A-2-c of the Agreement shall be followed to determine at which domicile the assignments shall be reduced. The number of Captain assignments for each domicile in the affected equipment shall be determined by the number of Captains assigned to lines of flying for the full month at the time of publication of the pilots' schedules.

K. Displacement Rights

1. If the Company determines that an excess of Captainor First Officer assignments exists in an equipment type at a domicile, the Company may give notice to the pilots affected that they are surplus in their assignment, status and equipment type and will be displaced from their assignment on a specified date. Such notice shall be given not less than thirty (30) days nor more than one hundred twenty-five (125) days prior to the date of displacement. (Date of displacement is also known as "surplus" date.) Displacement of pilots will be made in inverse order of seniority, unless exempted by the application of Section 7-H. Any pilot who has been notified of the impending discontinuance of his assignment, must exercise bumping rights as established in sub-paragraph 8-K-2 of this Paragraph and shall have until twenty (20) days after notification of specified date of the discontinuance to exercise such bumping rights. Official notice will be conveyed through the pilot's Company mail box. If, however, a pilot's schedule shows that he does not have any duty scheduled within seven (7) days following the initiation of the notice, the Company will make an effort to contact him by telephone. If this attempt is unsuccessful, a letter will be sent by U.S. Mail to his home of record. A pilot exercising bumping rights shall be maintained in his present assignment until he assumes his new assignment, except as provided for in sub-paragraph 8-K-4 of this Paragraph.

a. A pilot notified of his displacement under the provisions of this Paragraph may have that displacement cancelled should the surplus be reduced or cease to exist. Such cancellations will be in seniority order.

b. If a surplus is declared by the Company, any pilot who bids out of the surplus situation shall be entitled to a paid move and shall not receive any freeze except as provided for in 8-D-4-e-(4). The surplus will be reduced by the number of pilots who bid out of the surplus situation.

2.

a. A pilot who has bumping rights under the provisions of this Paragraph may bump into any status on any equipment at any domicile where a pilot junior to him (excluding pilots who remain surplus after the application of Section 8-K-3 below or pilots exempt from surplus under the provisions of Section 7-H) holds an assignment, including an assignment awaiting activation, in such status and equipment type. A pilot will exercise any of the bumps provided for in this Paragraph by notice in writing to the Company and shall begin his new assignment on the effective date of his displacement or when training is completed for such assignment, whichever is later; however, the Company may utilize the provisions of Paragraph 8-K-11 below when activating such pilot. If the new assignment is planned to be activated prior to the first of the pilot schedule month, he may exercise his seniority in his new assignment under Section 20-D. If, however, the new assignment is activated at a time which precludes his e xercising his seniority in his new assignment under Section 20-D, he will be assigned as a reserve in his new status and equipment type until the commencement of the next schedule for which he exercises his seniority under the schedule selection procedure. If the new assignment is at other than his present domicile, he shall be granted time, to be taken at his option, allowed by the Company Regulations, for traveling from his old domicile to his new domicile. The pilot's applicable monthly salary will not be reduced for such period of absence from duty.

b. Notwithstanding sub-paragraph 8-K-2-a above and 8-K-4 and 8-K-8 below, when a surplus of pilots is expected to exist for more than sixty (60) days, such surplus may be temporarily assigned to another equipment type in their current status and at their domicile for a period not to exceed one hundred and eighty-two (182) days. Such assignments will be made on an "offer and accept" basis of the qualified pilots and such pilots shall be pay protected as provided in Paragraph 8-E-3 of this Section until they are returned to their permanent equipment or have been declared surplus as provided in 8-K-1 of this Paragraph.

3. Notwithstanding the provisions of 8-K-1 and 8-K-2 above, any pilot holding an assignment in the same domicile, status and equipment type as a pilot who has been given surplus notice may, on a man-for-man basis, volunteer to accept the surplus for a more junior surplus pilot. When surplus notices are given, the Company will advertise for volunteers, indicating the seniority range which will determine the bumping rights of any volunteer(s). A volunteer shall submit his request indicating the domicile(s), status(s) and equipment type(s) to which he wishes to bump and he shall be accepted as a volunteer only if his bump can be granted, based upon the seniority of the pilot he replaced on the surplus notice. Volunteers will be accepted in seniority order up to the number of the declared surplus notice as adjusted by the provisions of Section 8-K-9 Such volunteers will be entitled to a paid move under the provisions of Section 10-C. The number of pilots to be involuntarily surplused shall be reduced by one f or each volunteer accepted.

4. If as a result of exercising bumping rights training is required, a pilot will remain in the status and equipment type of his former assignment until such time as training is completed or until he reports to his new assignment, whichever is later. If training for the new assignment has not begun within thirty (30) days prior to the pilot's displacement date, as established in Paragraph 8-K-1 above, he shall be paid, on his displacement date, his current salary or the salary of the assignment to which he bumped, whichever is greater. The pilot will not receive such pay, however, if the delay in training resulted from vacation, sick leave or a leave of absence. If the equipment type from which displaced is no longer being flown by that domicile, the displaced pilot will be available for either TDY or 8-L-6 assignments, at his option, until he begins training for his new assignment or for sixty (60) days, whichever is less. The pilot may choose either option on a monthly basis.

5. If a pilot bumps into an assignment awaiting activation and he cannot be utilized in his old assignment, he may be required to function in the highest status in any equipment type for which he has been trained and which he can be utilized at his present domicile until his new assignment is activated. If he cannot be utilized at his present domicile he may, notwithstanding Section 8-L-3, be assigned to temporary duty in the status and equipment type from which being displaced until his new assignment is activated. During such temporary duty assignment, he will be provided with NRPS and OMC (Priority F) transportation to and from his present domicile on his scheduled days off. While functioning in either of the above types of assignment, such pilot shall be paid at the rates applicable to the assignment from which he was displaced or the rates applicable to the assignment in which he is functioning, whichever is greater.

6. A pilot who bumps into an assignment awaiting activation shall for the application of Section 8-I, be considered as though he had bid and been awarded the vacancy awarded the pilot junior to him.

7. A pilot exercising bumping rights under this Paragraph which involve a change in domiciles shall be allowed moving expenses in accordance with Section 10.

8. If a pilot is a successful bidder or has exercised bumping rights as specified in Section 8-K, he shall be given the opportunity to begin transition training in such equipment as soon as practicable but in no case later than six (6) months from the date such pilot qualified under Section 8-E-3.

9. The number of pilots declared surplus in a domicile, status and equipment type shall be reduced by the number of pilots awarded vacancies during the twenty (20) day period after the notification of displacement.

10. Should pilots be declared surplus while junior pilots remain in the same domicile, status and equipment type because of the exemption provided under Section 7-H and should the anticipated furlough subsequently be cancelled, the pilots declared surplus shall be protected as follows:

a. All pilots previously exempted under Section 7-H shall be immediately declared surplus, or

b. Those pilots who had involuntarily bumped to another assignment shall be immediately given the opportunity in seniority order to return to their prior assignment, provided further that the number of pilots exercising this option shall not exceed the number of pilots previously exempted under Section 7-H at that domicile, status and equipment type. If the pilot has moved under the provisions of Section 10 as the result of his bump assignment and elected to return to his prior assignment as the result of this sub-paragraph, he shall again be entitled to a paid move under the provisions of Section 10 back to the domicile of the prior assignment.

11. Notwithstanding the provisions of this Paragraph K, the Company may activate a pilot in a bump assignment earlier or later than specified above provided that:

a. No pilot will be activated into his bump assignment more than fifteen (15) days prior to his date of displacement nor less than thirty (30) days after date of displacement as established in 8-K-1 above.

(1) When the activation is early into a higher paying assignment the pilot shall receive pay for his new assignment upon activation.

(2) When the activation is early into a lower paying assignment the pilot so activated shall continue to receive pay at his former rate until the date of his displacement under 8-K-1 above.

b. When the activation is delayed into a higher paying assignment, the pilot so delayed shall begin receiving pay at the higher rate, if on the effective date of his surplus he is trained for his bump assignment.

c. Within a given status, domicile and equipment type, when the activation is delayed into a lower paying assignment, the most senior pilot with the same surplus date who is already activated into a lower paying assignment, shall continue to receive pay at his former rate so long as the junior pilot does, unless the junior pilot is not trained due to vacation, sick leave or a leave of absence. This application shall be on a man-for-man basis.
 
 
 
 

L. Temporary Duty Assignments

1. The Company will provide a hotel room to any pilot assigned TDY for the entire duration of the TDY assignment. For purposes of this paragraph, a TDY assignment begins one (1) day before the pilot's first required day on duty and ends one day after completion of his last duty period. Should the pilot return to his home domicile or residence during any period of days off, the Company may ask the pilot whether the hotel room should be canceled. However, the Company may only cancel the hotel room at the TDY location with pilot concurrence.

2. Selection of pilots for involuntary temporary duty assignments shall be from pilots functioning as reserves in the status and equipment type needed for the temporary duty assignment. Temporary duty assignments shall not reduce reserve coverage at a domicile below required levels in any status or equipment type. Assignment of eligible reserves for temporary duty shall be in inverse order of their seniority at the domicile regardless of the reserve days off schedule, except pilots may volunteer and be assigned temporary duty in order of their seniority. Any pilot may volunteer for TDY at any domicile(s) as part of the monthly schedule preferencing procedure as follows:

a. Pilots volunteering for TDY will preference and be awarded local schedules, as provided by Section 20. In addition, they will indicate to which domiciles they desire to be sent and which reserve days off they prefer.

b. To the extent that TDY is needed from the domicile, the volunteers who are available for the full month will be assigned in seniority order to the domiciles they requested. Volunteer TDY assignments will be made as early as practical and contact will be attempted at least three (3) days before the beginning of the TDY assignment. When possible a volunteer for the full month shall be assigned to the TDY domicile prior to preferencing in order to allow the volunteer to exercise his seniority at the TDY domicile. However, all pilots who have volunteered for TDY must contact the Company on the next to the last day of the month prior to the month of TDY (if not contacted earlier) to determine if he has received a TDY assignment. Such pilots must be available to begin TDY on the first of the following month, if there is no conflict with his prior month's schedule.

c. Volunteer pilots assigned TDY will be assigned reserve day off lines at the TDY domicile, taking into consideration any day off request he may have submitted. Reserve day off requests will be granted so long as B-747-400, B-777 and B-767/757 pilots receives twelve (12) days off in a month, and B-737-300/500 and A-320/319 pilots receive ten (10) days off in a thirty (30) day month or 11 days off in a 31 day month. and reserve coverage at the TDY domicile is not adversely affected. Time permitting, such volunteer pilots may also be assigned any open lines which their seniority would entitle them to under the provisions of Section 20. These assignments will be made in seniority order. Reserve pilots shall not be required to deadhead to or from the TDY assignment on days off.

d. Lines of flying which are opened because the pilots awarded such lines have been sent TDY, will be covered by moving up a reserve under the provisions of Section 20-D-5, however, no further move-ups will be incurred. No move-up will be performed if the TDY volunteer is a reserve at his domicile. Should a TDY assignment be terminated early, the volunteer shall return to his awarded line at his domicile.

e. TDY assignments required for partial months or after the beginning of the month shall be given to reserves only. Such assignments shall be made to reserves who have volunteered, to the extent available.

3. Temporary duty assignments shall be governed by the following criteria:

a. The length of a temporary duty assignment shall be measured by the number of full calendar days so assigned, including days spent in traveling to and from the temporary duty domicile but exclusive of days required for any necessary qualification.

b. A reserve pilot who has accumulated a total of thirty (30) days of temporary duty during the previous twelve (12) month period shall not be required to remain on temporary duty without his consent until all qualified pilots on reserve duty at his domicile in his status and equipment type have each accumulated thirty (30) days of temporary duty during the previous twelve (12) months, provided that said pilot shall not be assigned more than a total of forty-five (45) days of temporary duty in such twelve (12) month period without his consent.

c. A pilot may not be required to be on temporary duty for more than fifteen (15) consecutive days for any one such assignment, except that a pilot may volunteer to remain on temporary duty; provided that if a pilot is the only reserve pilo