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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1995 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File No. 1-6033
UAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-2675207
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Location: 1200 East Algonquin Road, Elk Grove Township, Illinois 60007
Mailing Address: P. O. Box 66919, Chicago, Illinois 60666
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 952-4000
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock, $.01 par value New York, Chicago and
Pacific Stock Exchanges
Preferred Stock Purchase Rights New York, Chicago and
Pacific Stock Exchanges
Depositary Shares each representing
1/1,000 of a share of Series B
Preferred Stock, without par value New York Stock Exchange
6-3/8% Convertible Subordinated
Debentures due 2025 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [X]
The number of shares of common stock outstanding as of March 1, 1996
was 12,625,189. The aggregate market value of voting stock held by
non-affiliates of the Registrant was $2,295,115,654 as of March 1,
1996.
Documents Incorporated by Reference
Part II of this Form 10-K incorporates by reference certain
information from the Registrant's Annual Report to Stockholders for
the year ended December 31, 1995. Part III of this Form 10-K
incorporates by reference certain information from the Registrant's
definitive Proxy Statement for its Annual Meeting of Stockholders to
be held on April 24, 1996.
PART I
ITEM 1. BUSINESS.
UAL Corporation ("UAL" or the "Company") was incorporated under
the laws of the State of Delaware on December 30, 1968. The world
headquarters of the Company are located at 1200 East Algonquin Road,
Elk Grove Township, Illinois 60007. The Company's mailing address
is P.O. Box 66919, Chicago, Illinois 60666. The telephone number for
the Company is (847) 952-4000.
The Company is a holding company and its principal subsidiary is
United Air Lines, Inc., a Delaware corporation ("United"), which is
wholly-owned. United accounted for virtually all of the Company's
revenues and expenses in 1995. United is a major commercial air
transportation company.
UAL is the world's largest majority employee-owned company. A
recapitalization that occurred in July 1994 (the "Recapitalization")
provided an approximately 55% equity and voting interest in UAL
common stock to United employees who are members of the Air Line
Pilots Association, International, the International Association of
Machinists and Aerospace Workers and U.S. non-union management and
salaried employees through an employee stock ownership plan ("ESOP").
In addition, separate from this U.S.-based ESOP, the Company has also
established employee stock programs covering most of United's
employees in Argentina, Australia, Canada, France, Germany, Hong
Kong, Japan, Mexico, Netherlands, New Zealand, Philippines,
Singapore, Switzerland, Taiwan and the United Kingdom. As of March
1, 1996, approximately 14,500 shares of UAL common stock have been
allocated to such plans. Subject to the requirements of local law,
the Company intends to implement similar programs for employees
located in the remaining foreign countries.
Airline Operations
United has been engaged in the air transportation of persons,
property and mail since 1934, and certain of its predecessors began
operations as early as 1926. United is the world's largest airline
as measured by revenue passenger miles flown. At the end of 1995,
United served 144 airports in the United States and 30 foreign
countries and three territories. During 1995, United averaged 2,172
departures daily, flew a total of 112 billion revenue passenger
miles, and carried an average of 215,521 passengers per day.
United provides its domestic and international service
principally through a system of hub airports at major cities. Each
hub provides United flights to a network of spoke destinations as
well as flights to the other United hubs. This arrangement permits
travelers to fly from point of origin to more destinations without
changing carriers. United has a global network of hubs primarily
designed to fly travelers between North America and the Pacific,
Latin America and Europe. North American hubs include Chicago,
Denver, Washington, D.C., San Francisco and Los Angeles. United also
operates a major hub operation at Tokyo, allowing United to
participate in intra-Pacific traffic. Latin America services are
operated from Miami, New York City and Los Angeles gateways, of which
the Miami and New York City gateways account for over 75% of the
traffic to South America. European service was initiated in 1991 and
is provided to London, Paris, Amsterdam, Milan, Brussels, Zurich and
Frankfurt from several of United's U.S. hubs.
In December 1995, United became a truly global carrier with the
start up of around the world service, operating New York - London -
New Delhi - Hong Kong - Los Angeles - New York, in both directions.
During the last several years, United has strengthened the
revenue generating capability of its hub airports by: (1) adding new
spokes (routes to new cities); (2) adding frequencies on previously
operated route segments; and (3) entering into marketing agreements
with smaller U.S. air carriers which serve less populated
destinations, and with foreign carriers which serve destinations that
United could not serve itself for economic or regulatory reasons.
Under the United Express program, six independent regional
carriers, utilizing mainly turboprop equipment, feed United hubs and
international gateways. Currently, the carriers in the United
Express program provide seamless service on United to 195 cities
where true on-line United service is not commercially viable. Also,
North American traffic is served by code-sharing agreements United
has with five independent air carriers.
Since October 1994, United has operated a new service, "Shuttle
by United", designed to compete with low cost carriers on routes
under 750 miles. As of February 1996, Shuttle by United was
operating daily 366 flights on 14 routes between 12 West Coast
cities. Shuttle by United is strategically important to United in
domestic, transcontinental, Latin American and Pacific markets by
providing critical feed traffic and market presence on the West
Coast.
Alliances with other international carriers have allowed United
to participate in markets that it is unable to serve on-line for
commercial or governmental reasons. Through joint frequent flyer
participation, code sharing of operations, and enhanced customer
service coordination, the alliance carriers' goal is to provide each
of their customers a seamless global travel network. United's
principal global alliance partner is Germany's flag carrier,
Lufthansa. Through Lufthansa, United has dramatically increased its
trans-Atlantic operations to Europe and beyond, including Eastern
Europe and the former Soviet Union. With the U.S. and Germany having
initialed a new "open skies" civil aviation agreement to liberalize
air travel between the two countries, United and Lufthansa filed an
application with the U.S. Department of Transportation on February
29, 1996 seeking antitrust immunity to expand and enhance their
existing alliance.
Other major alliance partners include Ansett, Air Canada,
British Midland and Aloha. After the U.S. and Thailand entered into
a new bilateral agreement, United and Thai Airways International
began planning for the implementation of the code-sharing provisions
of their comprehensive marketing arrangement, which will be subject
to U.S. Department of Transportation approval. Also, United has
entered into a similar comprehensive marketing arrangement with SAS
which will be implemented in 1996.
Pacific. Asian traffic is currently served from six U.S. cities
via United's Tokyo hub to Beijing, Shanghai, Seoul, Hong Kong,
Bangkok and Singapore. In addition, United provides nonstop flights
from San Francisco to Hong Kong, Osaka, Seoul and Taipei; from
Honolulu and Guam to Osaka; and from Los Angeles to Hong Kong and
Osaka. South Pacific traffic to Sydney is served from Los Angeles
and San Francisco, while traffic to Auckland and Melbourne is served
from Los Angeles. In addition, United expects to expand its
international service at Los Angeles on May 1, 1996 with a second
daily nonstop flight to Tokyo. United also has a comprehensive code-
sharing agreement with Ansett which operates in both Australia and
New Zealand.
United holds significant traffic rights "beyond" Japan and as
capacity at Japan's two major airports, Narita and Kansai, increases,
United hopes to add service from Japan to Kuala Lumpur, Ho Chi Minh
City, Jakarta and other Asian points. United has increased its focus
on the fast growing South China area with new service from Hong Kong
to New Delhi and increased service to San Francisco. Based on
reports filed with the Department of Transportation, in 1995, United
was the leading U.S. carrier in the Pacific in revenue passenger
miles and available seat miles. During 1995, United's Pacific
Division accounted for 22% of United's revenues.
Latin America. Service between the U.S. and Latin America is
provided by flights to twelve Latin American cities in ten countries
from a number of cities in the U.S. Eight Latin American cities are
served nonstop from Miami (with the introduction of service to Lima,
Peru and Belo Horizonte, Brazil in 1995 and the termination of
service to Central America, other than Mexico City), three nonstop
from Los Angeles, and three from New York-Kennedy. United also has
code-sharing agreements with one independent air carrier in this
region.
Europe. Service between the U.S. and Europe is provided by:
flights from six U.S. cities to London (including Chicago which was
started on September 7, 1995) with connecting service at London to
Amsterdam, New Delhi and Brussels; flights from three U.S. cities to
Paris; nonstop service from Washington Dulles to Amsterdam, Brussels,
Frankfurt, Milan and Zurich (service to Rome and Madrid was
discontinued in September 1995 and January 1996, respectively); and
nonstop service from Chicago to Frankfurt. In addition, United
expects to commence daily nonstop service on June 6, 1996 to
Dusseldorf, Germany from Chicago. This will serve to further
strengthen United's route system and alliance with Lufthansa, which
will code share on the Chicago - Dusseldorf flight. European and
Middle Eastern traffic is also served by United's code-sharing
agreements with three independent air carriers, including Lufthansa,
which will increase to four with the implementation of United's
comprehensive marketing arrangement with SAS.
Operating revenues attributed to United's foreign operations
were approximately $5.3 billion in 1995, $4.9 billion in 1994 and
$4.5 billion in 1993.
Selected Operating Statistics
The following table sets forth certain selected operating data
for United:
Year Ended December 31
----------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Revenue Aircraft Miles
(millions) (a) 817 776 756 695 635
Revenue Aircraft
Departures 780,864 731,284 746,665 721,504 691,402
Available Seat Miles
(millions) (b) 158,569 152,193 150,728 137,491 124,100
Revenue Passenger Miles
(millions) (c) 111,811 108,299 101,258 92,690 82,290
Revenue Passengers
(thousands) 78,808 74,241 69,814 66,692 62,003
Average Passenger Journey
(miles) 1,419 1,459 1,450 1,390 1,327
Average Flight Length
(miles) 1,046 1,062 1,013 964 918
Passenger Load Factor (d) 70.5% 71.2% 67.2% 67.4% 66.3%
Break-even Load Factor (e) 66.1% 68.2% 65.5% 70.6% 69.7%
Average Yield Per Revenue
Passenger Mile
(in cents) (f) 11.8 11.3 11.6 11.3 11.5
Cost Per Available Seat
Mile Excluding ESOP
Charges (in cents) (g) 8.55 8.64 -- -- --
Cost Per Available Seat
Mile (in cents) (h) 8.9 8.8 8.5 8.9 9.0
Average Fare Per Revenue
Passenger $167.84 $165.61 $169.00 $157.17 $153.17
Average Daily Utilization
of each Aircraft
(hours:minutes) (i) 8:42 8:28 8:30 8:19 8:13
(a) "Revenue aircraft miles" means the number of miles flown in
revenue producing service.
(b) "Available seat miles" represents the number of seats available
for passengers multiplied by the number of miles those seats are
flown.
(c) "Revenue passenger miles" represents the number of miles flown
by revenue passengers.
(d) "Passenger load factor" represents revenue passenger miles
divided by available seat miles.
(e) "Break-even load factor" represents the number of revenue
passenger miles at which operating earnings would have been zero
(based on the actual average yield) divided by available seat miles.
(f) "Average yield per revenue passenger mile" represents the
average revenue received for each mile a revenue passenger is
carried.
(g) "Cost per available seat mile excluding ESOP charges" represents
operating expenses less ESOP compensation expense and one-time
expenses relating to the recapitalization (1994 only) divided by
available seat miles.
(h) "Cost per available seat mile" represents operating expenses
divided by available seat miles.
(i) "Average daily utilization of each aircraft" means the average
air hours flown in service per day per aircraft for the total fleet
of aircraft.
Industry Conditions
Seasonal and Other Factors. The Company's results of operations
for interim periods are not necessarily indicative of those for an
entire year, because the air travel business is subject to seasonal
fluctuations. United's first and fourth quarter results normally are
affected by reduced travel demand in the fall and winter, and
United's operations are often affected adversely by winter weather.
In the past, these fluctuations have generally resulted in better
operating results for United and, thus, the Company, in the second
and third quarters.
The results of operations in the air travel business have also
fluctuated significantly in the past in response to general economic
conditions. In addition, the airline business is characterized by a
high degree of operating leverage. As a result, the economic
environment and small fluctuations in United's yield per revenue
passenger mile and cost per available seat mile can have a
significant impact on operating results. The Company anticipates
that seasonal factors and general economic conditions, in addition to
industrywide fare levels, labor and fuel costs, the competition from
other airlines, international government policies, and other factors,
will continue to impact United's operations.
Competition and Fares. The airline industry is highly
competitive. In domestic markets, new and existing carriers are free
to initiate service on any route. United faces competition from
other carriers on virtually every route it serves. In United's
domestic markets, these competitors include all of the other major
U.S. airlines as well as smaller carriers, some of which have lower
cost structures than United. United's response to these lower cost
structures has been the consummation of the Recapitalization which
allowed United to lower its labor costs and to introduce Shuttle by
United, a short-haul, high frequency operation.
United's marketing strategy is driven by four principal
competitive factors: schedule convenience, overall customer service,
frequent flyer programs and price. United seeks to attract travelers
through convenient scheduling, high quality service, frequent flyer
programs designed to reward customer loyalty and competitive pricing.
From time to time, excess aircraft capacity and other factors
such as the cash needs of financially distressed carriers induce
airlines to engage in "fare wars." Such factors can have a material
adverse impact on the Company's revenues. The Company maintains
yield and inventory management programs designed to manage the number
of seats offered in various fare categories in order to enhance the
effectiveness of fare promotions and maximize revenue production on
each flight.
In its international service, United competes not only with U.S.
carriers but also with national flag carriers of foreign countries,
which in certain instances enjoy forms of governmental support which
are not available to U.S. carriers. Competition on certain
international routes is subject to varying degrees of governmental
regulations (see "Government Regulation").
United has advantages over foreign air carriers in its ability
to generate U.S.-origin-destination traffic from its integrated
domestic route systems, and because foreign carriers are prohibited
by law from carrying local passengers between two points in the
United States. On the other hand, U.S. carriers in many cases are
constrained from carrying passengers to points beyond designated
international gateway cities due to limitations in air service
agreements or restrictions imposed unilaterally by foreign
governments. To compensate for these structural limitations, U.S.
and foreign carriers have entered into alliances and marketing
arrangements which allow the carriers to provide feed to each other's
flights. (See "Airline Operations").
Airport Access. United's operations at its principal domestic
hub, Chicago-O'Hare International Airport ("O'Hare"), as well as at
three other airports, JFK International ("Kennedy"), New York
LaGuardia ("LaGuardia"), and Washington National ("National"), are
limited by the "high density traffic rule" administered by the
Federal Aviation Administration ("FAA"). Under this rule, take-off
and landing rights ("slots") required for the conduct of domestic
flight operations may be bought, sold or traded. As of December 31,
1995, United held 756 domestic air carrier slots at O'Hare, 34 at
National, 63 at LaGuardia, and 11 at Kennedy. United also holds ten
commuter slots at O'Hare. In addition, Air Wisconsin, Inc., an
indirect wholly-owned subsidiary of UAL, held or owned the beneficial
interest in 38 air carrier slots and 118 commuter slots at O'Hare
which are either operated by United or leased to United Express
carriers serving O'Hare. Under the high density rule, carriers are
required to relinquish slots to the FAA for reallocation if they fail
to meet certain minimum use standards.
Slots for international services at O'Hare are allocated by the
FAA seasonally to both U.S. and foreign carriers based upon the
carriers' historic operations and requests for additional capacity.
The FAA holds a certain number of slots in reserve for this purpose.
Current FAA regulations provide that carriers holding 100 or more
domestic slots at O'Hare may receive slots from the FAA for
international services only if the total number of slots allocated to
that carrier does not exceed the total number allocated to that
carrier as of February 23, 1990. Under this rule, United is eligible
to receive 17 international slots from the FAA each season.
Prior to October 1993, the FAA was authorized to withdraw
domestic slots from carriers at O'Hare to provide slots to satisfy
international requests. Congress has since capped the number of
slots the FAA could withdraw for this purpose at the number of slots
that had been withdrawn from a carrier as of October 31, 1993. As of
that date, the FAA had withdrawn from United 33 daily slots, defined
as slots which United operated three days or more per week. United
continues to be subject, each season, to the withdrawal of as many as
33 daily slots.
United currently has a sufficient number and distribution of
slots it holds at airports subject to the high density rule to
support its current operations, although its ability to expand could
be constrained if sufficient additional slots were not available on
satisfactory terms. If an alternative to the current system were to
be proposed and adopted, no assurance can be given that such an
alternative would preserve United's investment in slots already
acquired or that slots adequate for future operations would be
available.
United currently has a sufficient number of leased gates and
other airport facilities at the cities it serves to meet its current
and near term needs. From time to time, expansion by United at
certain airports may be constrained by insufficient availability of
gates on attractive terms. United's ability to expand its
international operations in Asia, the South Pacific, Europe and Latin
America is subject to restrictions at many of the airports in these
regions, including noise curfews, slot controls and absence of
adequate airport facilities.
Mileage Plus Program. United established the Mileage Plus
frequent flyer program to retain and develop passenger loyalty by
offering awards to frequent travelers for their business. Mileage
Plus members earn mileage credit for flights on United, United
Express and certain other participating airlines, or by utilizing
services of other program participants, including hotels, car rental
companies and bank credit card issuers. United sells mileage credits
to the other companies participating in the program. Mileage credits
can be redeemed for free, discounted or upgraded travel on United and
other participating airlines, or for other travel industry awards.
When an award level is attained, a liability is recorded for the
incremental costs of accrued credits under the Mileage Plus program
based on the expected redemptions. United's incremental costs
include the costs of providing service for an otherwise vacant seat
including fuel, meals, certain incremental personnel and ticketing
costs. The incremental costs do not include any contribution to
overhead or profit.
Effective February 1, 1995, United increased the mileage levels
for Mileage Plus domestic award travel on a prospective basis
requiring 25,000 miles, instead of the previous 20,000 miles, for
award tickets issued for economy class travel within the continental
United States. In addition, United made certain other mileage award
level changes as well as a change to a bank-account type of system to
track mileage. The program also contains certain restrictive
provisions including blackout dates and capacity controlled bookings,
which substantially limit the use of the awards on certain flights.
Awards earned after July 1989 have an expiration date three years
from date earned.
At December 31, 1995 and 1994, it was estimated that the total
number of outstanding awards was approximately 6.0 million and 7.8
million, respectively. United estimated that 4.6 million and 5.8
million, respectively, of such awards could be expected to be
redeemed and, accordingly, had recorded a liability amounting to $195
million and $195 million, respectively, at December 31, 1995 and
1994. The difference between the awards expected to be redeemed and
the total awards outstanding is the estimate, based on historical
data, of awards (1) which will never be redeemed, (2) which will be
redeemed for other than free trips, or (3) which will be redeemed on
Partner carriers.
The number of awards used on United were 1.8 million, 1.9
million and 1.6 million for the years 1995, 1994 and 1993,
respectively. Such awards represented 8.2%, 9.1% and 7.5% of
United's total revenue passenger miles for each period, respectively.
With these percentages, seat availability and restrictions on the use
of free travel awards, the displacement, if any, of revenue
passengers by users of Mileage Plus awards is minimal.
Computer Reservations Systems. Travel agents account for a
substantial percentage of United's sales. The use of electronic
distribution systems has been a key factor in the marketing and
distribution of airlines' products.
United, through a wholly-owned subsidiary, owns 38% of Galileo
International Partnership ("Galileo"), formerly known as Covia, and
77% of Apollo Travel Services Partnership ("ATS"). These two general
partnerships own and market computer reservation system ("CRS")
products and services. Galileo owns the Apollo and Galileo CRSs and
markets CRS services worldwide through a system of national
distribution companies. ATS, directly or through its wholly-owned
subsidiaries, is responsible for marketing, sales and support of
Apollo CRS products and services in the United States, Mexico and the
Caribbean.
Competition among CRS vendors is intense, and services similar
to those offered by ATS and Galileo are marketed by several air
carriers and other concerns, both in the United States and worldwide.
In the European and Pacific CRS market, various consortia of foreign
carriers have formed CRSs to be marketed in countries in which the
owning carriers have a substantial presence.
On February 15, 1995, United introduced a new travel agency
commission payment plan that offers a maximum of $50 for any round-
trip domestic ticket and a maximum of $25 for any one-way domestic
ticket.
Lawsuits have been filed challenging the reductions by United
and other carriers in the commissions paid to travel agencies for
ticketing of air transportation alleging, among other things, a
conspiracy to restrain trade among the carriers in violation of
antitrust laws. (See Item 3. Legal Proceedings. Travel Agency
Commission Litigation.) United believes it has the right to make the
aforementioned changes to such commissions, and will defend itself
vigorously in the pending litigation.
On August 28, 1995, United introduced its electronic ticketing
service, E-Ticket [service mark], on all of its 2,000 daily domestic flights.
United first introduced this electronic ticketing option in November
1994 on Shuttle by United flights. In addition, United introduced in
November 1995 a disk-based version of United Connection [service mark], which
gives consumers the option to reserve and purchase airline tickets,
rental cars and hotel rooms via personal computer.
Government Regulation
General. All carriers engaged in air transportation in the
United States are subject to regulation by the Department of
Transportation ("DOT") and the Federal Aviation Administration
("FAA") under federal aviation laws. The DOT has authority to
regulate certain economic and consumer protection aspects of air
transportation. It is empowered to issue certificates of public
convenience and necessity for domestic air transportation upon a
carrier's showing of fitness; to authorize the provision of foreign
air transportation by U.S. carriers; to prohibit unjust
discrimination; to prescribe forms of accounts and require reports
from air carriers; to regulate methods of competition, including the
provision and use of computerized reservation systems; and to
administer regulations providing for consumer protection, including
regulations governing the accessibility of air transportation
facilities for handicapped individuals. United's operations require
certificates of public convenience and necessity issued by the DOT
(or specific exemptions therefrom), and an air carrier operating
certificate and related operations specifications issued by the FAA.
United's operations also require licenses issued by the aviation
authorities of the foreign countries United serves. Foreign aviation
authorities may from time to time impose a greater degree of economic
regulation than exists with respect to United's domestic operations.
In connection with its international services, United is
required to file with the DOT and observe tariffs establishing the
fares charged and the rules governing the transportation provided.
In certain cases, fares and schedules require the approval of the DOT
and the relevant foreign governments.
In addition, United's operating authorities in international
markets are governed by the aviation agreements between the United
States and foreign countries. United's ability to serve some foreign
markets and its expansion in many foreign markets is presently
restricted by lack of aviation agreements allowing such service or,
in some cases, by the restrictive terms of such agreements. In
addition, the Government of Japan has, for over a year, deferred its
approval of an Osaka-Seoul flight scheduled by United. Japan
maintains that it will not approve new services beyond Japan by U.S.
carriers until the U.S. and Japan renegotiate the U.S.-Japan Air
Services Agreement. United has urged the U.S. Government to compel
Japan to honor the bilateral rights of U.S. carriers. United
continually urges the U.S. Government to negotiate increased access
to such restricted markets.
Shifts in United States or foreign government aviation policies
can lead to the alteration or termination of existing air service
agreements that the U.S. has with other governments, which could
diminish the value of United's international route authority. While
such events are generally the subject of inter-governmental
negotiations, there are no assurances that United's operating rights
under the bilateral aviation agreements and DOT-issued certificates
of public convenience and necessity can be preserved in such cases.
Safety. The FAA has regulatory jurisdiction over flight
operations generally, including equipment, ground facilities,
maintenance, communications and other matters. In order to ensure
compliance with its operational and safety standards, the FAA
requires air carriers to obtain operating, airworthiness and other
certificates.
United's aircraft and engines are maintained in accordance with
the standards and procedures recommended and approved by the
manufacturers and the FAA. For all of its engines, United utilizes a
"condition monitoring" maintenance program so that the schedule for
engine removals and overhauls is based on performance trend
monitoring of engine operating data. In addition, all engines
contain time-limited components, each of which has a maximum amount
of time (measured by operating hours) or a maximum number of
operating cycles (measured by takeoffs and landings) after which the
component must be removed from the engine assembly and overhauled or
scrapped. Similarly, United's FAA-approved maintenance program
specifies the number of days, hours or operating cycles between
inspections and overhauls of the airframes and their component parts.
The nature and extent of each inspection and overhaul is specifically
prescribed by the approved maintenance program.
From time to time, the FAA issues airworthiness directives
("ADs") which require air carriers to undertake inspections and to
make unscheduled modifications and improvements on aircraft, engines
and related components and parts. The ADs sometimes cause United to
incur substantial, unplanned expense and occasionally aircraft or
engines must be removed from service prematurely in order to undergo
mandated inspections or modifications on an accelerated basis. The
issuance of any particular AD may have a greater or lesser impact on
United compared to its competitors depending upon the equipment
covered by the directive.
Since 1988 the airlines, in cooperation with the FAA, have been
engaged in an in-depth review of the adequacy of existing maintenance
procedures applicable to older versions of most of the aircraft types
in general use in the airline industry. These include certain of the
Boeing and Douglas aircraft used by United. As a part of this
program, the FAA has issued ADs requiring interim inspections and
remedial maintenance procedures. While certain of these aging
aircraft ADs have necessitated unscheduled removals from service and
increased maintenance costs, compliance is not expected to have a
material adverse impact on United's costs or operations.
Both the DOT and the FAA have authority to institute
administrative and judicial proceedings to enforce federal aviation
laws and their own regulations, rules and orders. Both civil and
criminal sanctions may be assessed for violations.
Environmental Regulations. The Airport Noise and Capacity Act
of 1990 ("ANCA") requires the phase-out by December 31, 1999 of Stage
2 aircraft operations, subject to certain waivers. The FAA has
issued final regulations which require carriers to modify or reduce
the number of Stage 2 aircraft operated by 25% by December 31, 1994,
50% by December 31, 1996, 75% by December 31, 1998 and 100% by
December 31, 1999. Alternatively, a carrier could satisfy compliance
requirements by operating a fleet that is at least 55% Stage 3 by
December 31, 1994, 65% Stage 3 by December 31, 1996, 75% Stage 3 by
December 31, 1998 and 100% Stage 3 by December 31, 1999. At December
31, 1995, United operated 390 Stage 3 aircraft representing 70% of
United's total operating fleet, and thus is in compliance with these
regulations.
The ANCA generally recognizes the rights of operators of
airports with noise problems to implement local noise abatement
procedures so long as such procedures do not interfere unreasonably
with interstate or foreign commerce or the national air
transportation system. ANCA generally requires FAA approval of local
noise restrictions on Stage 3 aircraft first effective after October
1990, and establishes a regulatory notice and review process for
local restrictions on Stage 2 aircraft first proposed after October
1990. While United has had sufficient scheduling flexibility to
accommodate local noise restrictions imposed to the present, United's
operations could be adversely affected if locally-imposed regulations
become more restrictive or widespread.
The Environmental Protection Agency regulates operations,
including air carrier operations, which affect the quality of air in
the United States. United has made all necessary modifications to
its operating fleet to meet emission standards issued by the
Environmental Protection Agency ("EPA").
Federal and state environmental laws require that underground
storage tanks (USTs) be upgraded to new construction standards and
equipped with leak detection by December 22, 1998. These
requirements are phased into effect based on the age, construction
and use of existing tanks. United operates a number of underground
and above ground storage tanks throughout its system, primarily used
for the storage of fuels and deicing fluids. A program for the
removal or upgrading of USTs and remediation of any related
contamination has been ongoing since 1987. Compliance with these
federal and state UST regulations is not expected to have a material
adverse effect on United's financial condition.
United has been identified by the EPA as a potentially
responsible party with respect to Superfund sites involving soil and
groundwater contamination at the Bay Area Drum Site in San Francisco,
California, the Chemsol, Inc. Site in Piscataway, New Jersey, the
Petrochem/Ekotek Site in Salt Lake City, Utah, the Monterey Park Site
at Monterey Park, California, the West Contra Costa Sanitary Landfill
Site in Richmond, California, and the Douglasville Site in Berks
County, Pennsylvania. Because of the limited nature of the volume of
pollutants allegedly contributed by United to the above Superfund
sites, the outcome of these matters is not expected to have a
material adverse effect on United's financial condition.
United is aware of soil and groundwater contamination present on
its leaseholds at several U.S. airports, with the most significant
locations being San Francisco International Airport, John F. Kennedy
International Airport in New York, Seattle Tacoma International
Airport, Stapleton International Airport in Denver (which closed in
1995) and Los Angeles International Airport in California. United is
investigating these sites, assessing its obligations under applicable
environmental regulations and lease agreements and, where
appropriate, remediating these sites. Remediation of these sites,
for which United may be responsible, is not expected to have a
material adverse effect on United's financial condition.
Other Government Matters. Besides the DOT and the FAA, other
federal agencies with jurisdiction over certain aspects of United's
operations are the Department of Justice (Antitrust Division and
Immigration and Naturalization Service), the Equal Employment
Opportunity Commission, the Occupational Safety and Health
Administration, the Department of Labor (Office of Federal Contract
Compliance Programs of the Employment Standards Administration), the
National Labor Relations Board, the National Mediation Board, the
National Transportation Safety Board, the Treasury Department (U.S.
Customs Service), the Federal Communications Commission (use of radio
facilities by aircraft), and the United States Postal Service
(carriage of domestic and international mail). In connection with
its service to cities in other countries, United is subject to
varying degrees of regulation by foreign governments.
In time of war or during an unlimited national emergency or
civil defense emergency declared by the President or the Congress of
the United States, or in a situation short of this if approved by the
Director of the Office of Emergency Preparedness, the Commander in
Chief, Military Airlift Command, or any official designated by the
President to coordinate all civil and defense mobilization
activities, United may be required to provide airlift services to the
Military Airlift Command under the Civil Reserve Air Fleet Program.
As of February 1, 1996, up to 27 B747 and 12 DC-10 aircraft in
United's fleet could be subject to these requirements.
Fuel
United's results of operations are significantly affected by the
price and availability of jet fuel. Based on 1995 fuel consumption,
every $.01 change in the average annual price-per-gallon of jet fuel
caused a change of approximately $28 million in United's annual fuel
costs. The table below shows United's fuel expenses, fuel
consumption, average price per gallon and fuel as a percent of total
operating expenses for annual periods from 1991 through 1995:
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Fuel expense,
including tax
(in millions) $1,680 $1,585 $1,718 $1,679 $1,674
Gallons consumed
(in millions) 2,822 2,697 2,699 2,529 2,338
Average cost per
gallon (in cents) 59.5 58.8 63.6 66.4 71.6
% of total
operating expenses 12% 12% 13% 14% 15%
United's average fuel cost per gallon in 1995 was 1.2% higher
than in 1994. Changes in fuel prices are industry-wide occurrences
that benefit or harm United's competitors as well as United. Lower
fuel prices may be offset by increased price competition and lower
revenues for all air carriers, including United. There can be no
assurance that United will be able to increase its fares in response
to any increases in fuel prices in the future.
In order to assure adequate supplies of fuel and to provide a
measure of control over fuel costs, United ships fuel on major
pipelines, maintains fuel storage facilities, and trades fuel to
locations where it is needed. In 1995, almost all of United's fuel
was purchased under contracts with major U.S. and international oil
companies. Most of these contracts are terminable by United on short
notice. United also purchases minor volumes of fuel on the spot
market at some domestic locations. Although United has not
experienced any problem with fuel availability in the past few years
and does not anticipate any in the near future, it is impossible to
predict the future availability of jet fuel. If there were major
reductions in the availability of jet fuel, United's business would
be adversely affected.
The Omnibus Budget Reconciliation Act of 1993 imposed a 4.3 cent
per gallon tax on commercial aviation jet fuel purchased for use in
domestic operations. The industry was successful in obtaining a two
year exemption from the tax which expired October 1, 1995. An
additional two year extension of the industry's exemption is included
in the budget reconciliation package currently stalled in Congress.
Since the fate of the jet fuel tax is caught in the budget impasse,
United as well as other carriers have been paying the tax since
October 1, 1995 and United cannot predict the ultimate outcome of the
fuel tax issue.
Insurance
United carries liability insurance of a type customary in the
air transportation industry, in amounts which it deems adequate,
covering passenger liability, public liability and property damage
liability. Insurance is subject to price fluctuations from time to
time. The amount recoverable by United under aircraft hull insurance
covering all damage to its aircraft is not subject to any deductible
amount in the event of a total loss.
Employees - Labor Matters
At December 31, 1995, the Company and its subsidiaries had
approximately 83,929 employees, of which approximately 82,160 were
employed by United (approximately eleven percent of whom are part-
time employees) and 1,769 were employed by United's subsidiaries.
Approximately 61% of United's employees were represented by various
labor organizations.
The employee groups, number of employees, labor organization and
current contract status for each of United's major collective
bargaining groups as of December 31, 1995 are as follows:
Number of Contract Open
Employee Group Employees Union For Amendment
-------------- --------- ----- -------------
Mechanics, ramp
servicemen & other
ground employees 23,031 IAM July 12, 2000 *
Flight attendants 18,703 AFA March 1, 1996
Pilots 8,120 ALPA April 12, 2000 *
___________________________
* However, certain provisions become amendable at a later date.
United's relations with these labor organizations are governed
by the Railway Labor Act. Under this Act, collective bargaining
agreements between United and these organizations become amendable
upon the expiration of their stated term. If either party wishes to
modify the terms of any such agreement, it must notify the other
party before the contract becomes amendable. After receipt of such
notice, the parties must meet for direct negotiations and, if no
agreement is reached, either party may request that a mediator be
appointed. If no agreement is reached, the National Mediation Board
may determine, at any time, that an impasse exists and may proffer
arbitration. Either party may decline to submit to arbitration. If
arbitration is rejected, a 30-day "cooling off" period commences,
following which the labor organization may strike and the airline may
resort to "self-help," including the imposition of its proposed
amendments and the hiring of replacement workers.
In February 1996, United and the Association of Flight
Attendants (the "AFA") reached tentative agreement on a new contract.
This agreement is subject to ratification by United's flight
attendants. If ratified, the new agreement will replace the current
contract. Ratification results are expected in April 1996.
ITEM 2. PROPERTIES.
Flight Equipment
As of December 31, 1995, United's operating aircraft fleet
totaled 558 jet aircraft, of which 266 were owned and 292 were
leased. These aircraft are listed below:
Average Average
Aircraft Type No. of Seats Owned Leased* Total Age (Years)
------------- ------------ ----- ------ ----- -----------
A320-200 144 -- 29 29 1
B727-222A 147 59 16 75 17
B737-200 109 45 -- 45 27
B737-200A 109 24 -- 24 16
B737-300 126 10 91 101 7
B737-500 108 27 30 57 4
B747-100 393 17 -- 17 24
B747-200 346 2 7 9 17
B747-400 389 3 21 24 4
B757-200 188 33 55 88 4
B767-200 168 19 -- 19 13
B767-300ER 211 3 20 23 3
B777-200 292 -- 8 8 0
DC10-10 287 23 8 31 20
DC10-30 298 1 7 8 16
TOTAL OPERATING
FLEET 266 292 558 11
=== === === ==
* United's aircraft leases have initial terms of 4 to 26 years,
and expiration dates range from 1999 through 2021. Under the
terms of leases for 283 of the aircraft in the operating fleet,
United has the right to purchase the aircraft at the end of the
lease term, in some cases at fair market value and in others at
fair market value or a percentage of cost.
As of December 31, 1995, 64 of the 266 aircraft owned by United
were encumbered under transaction agreements.
In 1995 United took delivery of 16 new aircraft, eight B777-200s
and eight A320-200s. United also retired one B747-100 aircraft.
As of December 31, 1995, United had 26 B777-200s, four B747-400s
and four B757-200s on order which are scheduled to be delivered
between 1996 and 1999, and United has arrangements with Airbus
Industrie ("Airbus") and A320 engine manufacturer International Aero
Engines to lease an additional 21 A320-200 aircraft, which are
scheduled for delivery through 1998. The following table sets forth
United's firm aircraft orders, options and expected delivery
schedules as of December 31, 1995:
Order Status Aircraft Type Number To Be Delivered Delivery Rate
------------ ------------- ------ --------------- -------------
Firm Orders B747-400 4 1996-1997 0-1 per month
B757-200 4 1996 0-2 per month
B777-200 26 1996-1999 0-2 per month
--
Total-Firms 34*
Options** A320-200 45 1997-2001 0-3 per month
B737*** 137 1998-2002 0-5 per month
B747-400 40 1998-2003 0-2 per year
B757-200 29 1998-1999 0-2 per month
B767-300ER 5 1998-1999 0-1 per month
B777-200 34 1998-2000 0-1 per month
--
Total-Options 290
________________
* In addition, United has agreed to lease an additional 21 A320-200
aircraft. Deliveries of these aircraft are expected to occur
between 1996 and 1998.
** Rate of deliveries with respect to option aircraft assumes that
all options are exercised and that all orders subject to recon
firmation are confirmed by United.
*** Models 300, 400 and 500, at United's discretion.
Ground Facilities
In the vicinity of O'Hare, United owns a 106 acre complex
consisting of over one million square feet of office space for its
world headquarters, a computer facility and a training center.
United operates reservation centers in or near eight U.S. cities -
Chicago, Denver, Detroit, Honolulu, Los Angeles, San Francisco,
Seattle and Washington, D.C. United also operates 138 city ticket
offices in the U.S., plus offices in the Pacific and European
countries served by United. In addition, United operates four mini-
reservations centers in Rockford, Illinois, Moreno Valley and Suisun,
California and at its maintenance facility in Indianapolis, Indiana.
United's Maintenance Operation Center ("MOC") at San Francisco
International Airport occupies 129 acres of land, three million
square feet of floor space and 12 aircraft hangar docks, under leases
expiring in 2003, with an option to extend for ten years. Heavy
maintenance of aircraft and component maintenance for most of
United's fleet occurs at the MOC. United also has a major facility
at the Oakland, California airport which is dedicated to airframe
maintenance and which includes a hangar with sufficient space to
accommodate maintenance work on four wide-bodied aircraft
simultaneously. As of December 31, 1995, United employed
approximately 10,000 mechanics, inspectors, engineers and maintenance
support personnel at the MOC and approximately 1,400 at the Oakland
facility. United also has line aircraft maintenance facilities at 64
domestic and international locations.
United's Indianapolis Maintenance Center ("IMC") opened in 1994
and operates under a lease with the Indianapolis Airport Authority
which expires November 30, 2031. IMC is a major aircraft maintenance
and overhaul facility and is being used for maintenance of Boeing 737
aircraft. United is significantly expanding its operations at IMC in
order to maintain its fleets of Boeing 757 and 767 aircraft at the
facility in the future, construction of which began in 1995. In
connection with incentives received, United has agreed to reach an
aggregate $800 million capital spending target by the year 2001 and
employ at least 7,500 individuals by the year 2004. In the event
that such targets are not reached, United may be required to make
certain additional payments under related agreements.
On February 28, 1995, United relocated its Denver hub operations
to the new Denver International Airport. Under a new 30-year lease
and use agreement, expiring in 2023, United occupies 44 gates and
over one million square feet of exclusive terminal building space.
With the opening of the new airport, Stapleton International Airport
was closed to all aircraft operations. United's flight training
center will continue to be located near Stapleton and is under lease,
including options to extend, until 2018. This flight training center
consists of four buildings with a total of 300,000 square feet
located on 22 acres of land adjoining Stapleton. The flight training
center accommodates 26 flight simulators and over 90 computer-based
training stations, as well as cockpit procedures trainers, autoflight
system trainers and emergency evacuation trainers.
United has entered into various leases relating to its use of
airport landing areas, gates, hangar sites, terminal buildings and
other airport facilities in most of the municipalities it serves.
Major leases expire at Chicago O'Hare in 2018, San Francisco in 2011,
Denver in 2023 and Washington Dulles in 2015. In many cases United
has constructed, at its expense, the buildings it occupies on its
leased properties. In general, buildings and fixtures constructed by
United on leased land are the property of the lessor upon the
expiration of such leases. United also has leased and improved
ticketing, sales and general office space in the downtown and
outlying areas of most of the larger cities in its system. United
believes its facilities are suitable and adequate for its current
requirements.
ITEM 3. LEGAL PROCEEDINGS.
The Company is involved from time to time in legal proceedings
incidental to the ordinary course of its business. Such proceedings
include claims brought by and against the Company or its subsidiaries
including claims seeking substantial compensatory and punitive
damages. Such claims arise from routine commercial disputes as well
as incidents resulting in bodily injury and damage to property. The
Company believes that the potential liabilities in all of the bodily
injury and property damage actions are adequately insured and none of
the other actions are expected to have any material adverse effect on
the Company or its subsidiaries.
1. Travel Agency Commission Litigation -- On February 13, 1995 and
dates thereafter United and six other airlines were sued in various
courts around the nation by travel agents and ASTA claiming as a
class action that the carriers acted collusively in violation of
federal antitrust laws when they announced a cap on ticket sales
commissions payable to travel agencies by the carriers. The cases
are now consolidated before the federal court in Minneapolis. The
court, on August 23, 1995, denied the plaintiffs' motion for
preliminary injunction as well as the defendants' motion for summary
judgment. As relief, the plaintiffs seek an order declaring the
carriers' commission cap action to be illegal and the recovery of
damages (trebled) to the agencies resulting from that action. On
December 21, 1995, the carriers filed a motion to obtain damages
discovery from absent class members, which the magistrate judge
denied on January 22, 1996. In his decision, the magistrate rejected
defendants' arguments that plaintiffs' efforts to mitigate damages
allegedly suffered as a result of the commission caps were relevant
to the litigation. The defendants appealed the magistrate's decision
to the district court.
2. Summers et al. v. State Street Bank and Trust Company et al. --
On April 14, 1995, plaintiffs filed a class action complaint (the
"Complaint") against State Street Bank and Trust Company ("State
Street"), the UAL Corporation Employee Stock Ownership Plan (the
"Plan") and the UAL Corporation Supplemental ESOP (the "Supplemental
Plan") in the United States District Court for the Northern District
of Illinois. The Complaint is brought on behalf of a putative class
of all persons who are, or were as of July 12, 1994, participants or
beneficiaries of the Plan or the Supplemental Plan. Plaintiffs
allege that State Street breached various fiduciary duties under the
Employee Retirement Income Security Act of 1974 ("ERISA") in
connection with the 1994 purchase by the Plan and Supplemental Plan
of UAL preferred stock. The Plan and Supplemental Plan are nominal
defendants; no relief is sought from them. The complaint seeks a
declaration that State Street has violated ERISA, restoration by
State Street to the Plan and Supplemental Plan of the amount of an
alleged "overpayment" for stock, and other relief. United is
obligated, subject to certain exceptions, to indemnify State Street
for part or all of an adverse judgment and State Street's defense
costs. The defendants filed a motion to dismiss the complaint in its
entirety on July 12, 1995.
3. Fry v. UAL Corp. -- On February 21, 1990, a purported class
action complaint was filed in the U.S. District Court for the
Northern District of Illinois, Eastern Division. This complaint was
brought by several UAL stockholders, purportedly on behalf of all of
UAL stockholders who sold puts or common stock from October 29, 1987
through December 8, 1987. The complaint alleged that UAL committed
common law fraud and violated Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and the
Illinois Deceptive Trade Practices Act by falsely announcing that it
intended to distribute proceeds of sales of non-core businesses as a
special dividend, when in fact it was negotiating a cash tender offer
for the buyback of shares. Plaintiffs claimed $160 million in
damages, plus attorneys' fees, fees and costs of plaintiff's
accountants and experts and other costs and disbursements. UAL's
motion for summary judgment was granted on August 11, 1995.
Plaintiffs have filed a notice of appeal to the Seventh Circuit.
United may be affected by legal proceedings brought by owners of
property located near certain airports. Plaintiffs generally seek to
enjoin certain aircraft operations and/or to obtain damages against
airport operators and air carriers as a result of alleged aircraft
noise or air pollution. Any liability or injunctive relief imposed
against airport operations or air carriers could result in higher
costs to United and other air carriers.
The ultimate disposition of the matters discussed in this Item
3, and other claims affecting the Company, are not expected to have a
material adverse effect on the Company's financial condition or
results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders of the
Company during the fourth quarter of 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding the executive officers of the Company is
as follows:
GERALD GREENWALD. Age 60. Mr. Greenwald has been Chairman and
Chief Executive Officer of the Company and United since July 12,
1994. Prior to joining the Company, he served as Chairman of Tatra
Truck Company, Czech Republic (a truck manufacturer) from March 1993
until July 1994. Mr. Greenwald previously served as President of
Olympia & York Developments Limited (a real estate development
company that was in the process of a financial restructuring at the
time Mr. Greenwald agreed to serve as president and certain
subsidiaries of which filed for protection under federal bankruptcy
laws in connection with such restructuring) from April 1992 until
March 1993, and as Managing Director of Dillon Read & Co. Inc. (an
investment banking firm) in 1991-1992.
JOHN A. EDWARDSON. Age 46. Mr. Edwardson has been President
since July 12, 1994 and Chief Operating Officer since March 30, 1995
of the Company and United and a member of the board of directors of
the Company since July 12, 1994. Prior to joining the Company, he
served as Executive Vice President and Chief Financial Officer of
Ameritech Corporation (a telecommunications company) from 1991 to
July 1994.
JOSEPH R. O'GORMAN, JR. Age 52. Mr. O'Gorman has been
Executive Vice President of the Company since February 18, 1991 and
Executive Vice President - Fleet Operations and Administration of
United since April 1, 1995. He served as Executive Vice President -
Operations of United from April 30, 1992 to March 31, 1995. He had
served as Executive Vice President - Flight Services of United since
February 25, 1991. Previously, Mr. O'Gorman served as Executive Vice
President - Operations of USAir Group (an air carrier) from August
1990 until February 1991.
STUART I. ORAN. Age 45. Mr. Oran has been Executive Vice
President - Corporate Affairs and General Counsel of the Company and
United since July 12, 1994. Prior to joining the Company, he was a
corporate partner with Paul, Weiss, Rifkind, Wharton and Garrison, a
law firm he joined in 1974.
DOUGLAS A. HACKER. Age 40. Mr. Hacker has been Senior Vice
President - Finance and chief financial officer of the Company since
July 12, 1994. He has been Senior Vice President and Chief Financial
Officer of United since February 13, 1996 and had been Senior Vice
President - Finance of United beginning March 8, 1993. Prior to
joining United, Mr. Hacker served in various senior management
positions at American Airlines, Inc. (an air carrier) since July 1987
including Vice President - Corporate and Fleet Planning, Vice
President - Corporate Services, Vice President and Treasurer and Vice
President - Corporate Finance and Development.
CHRISTOPHER D. BOWERS. Age 48. Mr. Bowers has been Senior Vice
President - International of United since April 1, 1995. Prior to
assuming his current position, he was Vice President and General
Sales Manager of the Sales Division since April 1, 1988.
DAVID COLTMAN. Age 53. Mr. Coltman has been Senior Vice
President - Marketing of United since April 1, 1995. Previously, Mr.
Coltman served as Vice President - Atlantic Division in London since
January 25, 1989.
RONO DUTTA. Age 44. Mr. Dutta has been Senior Vice President -
Planning of United since November 7, 1994 and became an executive
officer of United on April 1, 1995. His prior positions with United
include Vice President - Cargo from September to November of 1994,
Vice President - U2 Development from April to September of 1994, Vice
President - Management Information Systems from July 1993 to April
1994, Senior Vice President - Maintenance Operation from May 1992 to
July 1993, Vice President - Base Maintenance Operations from June
1991 to May 1992, and Vice President - Financial Planning and
Analysis from November 1990 to June 1991.
PAUL G. GEORGE. Age 44. Mr. George has been Senior Vice
President - People of United since April 11, 1988.
JAMES E. GOODWIN. Age 51. Mr. Goodwin has been Senior Vice
President - North America of United since April 1, 1995. He had
served as Senior Vice President - International of United since May
1992. Prior thereto, he was Senior Vice President - Maintenance
Operations since January 1991.
There are no family relationships among the executive officers
of the Company. The executive officers of the Company serve at the
discretion of the board of directors.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company's Common Stock, $.01 par value (the "Common Stock"),
is traded principally on the New York Stock Exchange (the "NYSE")
under the symbol UAL, and is also listed on the Chicago Stock
Exchange and the Pacific Stock Exchange. The following sets forth
for the periods indicated the high and low sales prices per share of
the Company's Common Stock on the NYSE Composite Tape and the
Company's old common stock outstanding immediately prior to the
Recapitalization (which occurred on July 12, 1994). As a result of
the Recapitalization, the price per share of old common stock is not
comparable to the price per share of the Common Stock.
COMMON STOCK:
High Low
1995:
1st quarter $107 1/4 $ 87 5/8
2nd quarter 143 104
3rd quarter 172 137 1/2
4th quarter 211 7/8 166
1994:
3rd quarter 105 86 3/4
(from July 13)
4th quarter 96 7/8 83 1/8
OLD COMMON STOCK:
1994:
1st quarter 150 123 3/4
2nd quarter 130 1/2 115 1/8
3rd quarter 130 1/2 125 1/2
(through July 12)
No dividends have been declared on the Company's common stock
during the past five years. The payment of any future dividends on
the Common Stock and the amount thereof will be determined by the
Board of Directors of the Company in light of earnings, the financial
condition of the Company and other relevant factors. At March 1,
1996, based on reports by the Company's transfer agent for the Common
Stock, there were 11,338 common stockholders of record.
On February 29, 1996 the Board of Directors of UAL conditionally
approved a four-for-one split in the Common Stock. The split, which
is scheduled to occur at the close of business on May 6, 1996 (which
is also the record date), is dependent on stockholder approval at its
April 24, 1996 annual meeting of a proposal to increase the number of
authorized shares of the Common Stock.
ITEM 6. SELECTED FINANCIAL DATA.
Information required by this item is set forth under "Selected
Financial Data" of the Company's 1995 Annual Report to Stockholders
and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Information required by this item is set forth under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" of the Company's 1995 Annual Report to
Stockholders and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information required by this item is set forth under "Statements
of Consolidated Operations", "Statements of Consolidated Financial
Position," "Statements of Consolidated Cash Flows," "Statements of
Consolidated Shareholders' Equity," "Notes to Consolidated Financial
Statements" and "Report of Independent Public Accountants" of the
Company's 1995 Annual Report to Stockholders and is incorporated
herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information required by this item is incorporated by reference
from the Company's definitive proxy statement for its 1996 Annual
Meeting of Stockholders. Information regarding the executive officers
is included in Part I of this Form 10-K under the caption "Executive
Officers of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this item is incorporated by reference
from the Company's definitive proxy statement for its 1996 Annual
Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
Information required by this item is incorporated by reference
from the Company's definitive proxy statement for its 1996 Annual
Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this item is incorporated by reference
from the Company's definitive proxy statement for its 1996 Annual
Meeting of Stockholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K.
(a) 1. Financial Statements. The following is a list of the
financial statements, all of which are incorporated in this report by
reference from the Company's 1995 Annual Report to Stockholders
(portions of which are filed as Exhibit 13 to this Form 10-K).
Statements of Consolidated Operations for the years ended
December 31, 1995, 1994 and 1993
Statements of Consolidated Financial Position - December 31,
1995 and 1994
Statements of Consolidated Cash Flows for the years ended
December 31, 1995, 1994 and 1993
Statements of Consolidated Shareholders' Equity for the years
ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
2. Financial Statement Schedules. The financial statement
schedule required by this item is listed below and included in this
report on page F-1 after the signature page hereto.
Schedule II - Valuation and Qualifying Accounts for the years
ended December 31, 1995, 1994 and 1993
All other schedules are omitted because they are not applicable,
not required or the required information is shown in the
consolidated financial statements or notes thereto.
3. Exhibits. The following is an index of exhibits included in
this report or incorporated herein by reference.
3.1 Restated Certificate of Incorporation as filed in Delaware
on July 12, 1994, as corrected on February 2, 1995 (filed as
Exhibit 3.1 to UAL Corporation's ("UAL") Form S-4
Registration Statement (Registration No. 33-57579) and
incorporated herein by reference).
3.2 Certificate of Amendment of the Restated Certificate of
Incorporation of UAL Corporation as filed in Delaware on May
25, 1995 (filed as Exhibit 3.1 to UAL's Form 8-K dated June
27, 1995 and incorporated herein by reference).
3.3 By-laws (filed as Exhibit 3.2 to UAL's Form 10-Q for the
quarter ended June 30, 1994 and incorporated herein by
reference).
4.1 Rights Agreement dated as of December 11, 1986 between UAL
Corporation and First Chicago Trust Company of New York, as
Rights Agent, as amended (filed as Exhibit 4.1 to UAL's Form
10-K for the year ended December 31, 1994, as amended, and
incorporated herein by reference).
4.2 Deposit Agreement dated as of July 12, 1994 between UAL
Corporation and holders from time to time of Depositary
Receipts described herein (filed as Exhibit 4.2 to UAL's
Form 10-Q for the quarter ended June 30, 1994 and
incorporated herein by reference).
4.3 Indenture dated as of April 3, 1995 between UAL Corporation
and The Bank of New York, as Trustee (filed as Exhibit 4.1
to UAL's Form 10-Q for the quarter ended March 31, 1995, as
amended, and incorporated herein by reference).
4.4 Officer's Certificate relating to UAL's 6-3/8% Convertible
Subordinated Debentures due 2025 (filed as Exhibit 4.2 to
UAL's Form 10-Q for the quarter ended March 31, 1995, as
amended, and incorporated herein by reference).
4.5 Form of UAL's 6-3/8% Convertible Subordinated Debenture due
2025 (filed as Exhibit 4.3 to UAL's Form 10-Q for the
quarter ended March 31, 1995, as amended, and incorporated
herein by reference).
UAL's indebtedness under any single instrument does not
exceed 10% of UAL's total assets on a consolidated basis.
Copies of such instruments will be furnished to the
Securities and Exchange Commission upon request.
10.1 Amended and Restated Agreement and Plan of Recapitalization,
dated as of March 25, 1994 (the "Recapitalization
Agreement"), as amended, among UAL Corporation, the Air Line
Pilots Association, International and the International
Association of Machinists and Aerospace Workers (filed as
Exhibit A to Exhibit 10.1 of UAL's Form 8-K dated June 2,
1994 and incorporated herein by reference; amendment thereto
filed as Exhibit 10.1 of UAL's Form 8-K dated June 29, 1994
and incorporated herein by reference).
10.2 Waiver and Agreement, dated as of December 23, 1994, to the
Recapitalization Agreement among UAL Corporation, the Air
Line Pilots Association, International and the International
Association of Machinists and Aerospace Workers (filed as
Exhibit 10.2 to UAL's Form 10-K for the year ended December
31, 1994, as amended, and incorporated herein by reference).
10.3 Third Amendment, dated as of March 15, 1995, to the
Recapitalization Agreement among UAL Corporation, the Air
Line Pilots Association, International and the International
Association of Machinists and Aerospace Workers (filed as
Exhibit 10.3 to UAL's Form 10-K for the year ended December
31, 1994, as amended, and incorporated herein by reference).
10.4 UAL Corporation Employee Stock Ownership Plan, effective as
of July 12, 1994 (filed as Exhibit 10.1 to UAL's Form 10-Q
for the quarter ended September 30, 1994 and incorporated
herein by reference).
10.5 First Amendment to UAL Corporation Employee Stock Ownership
Plan, dated December 28, 1994 and effective as of July 12,
1994 (filed as Exhibit 10.39 to UAL's Form 10-K for the year
ended December 31, 1994, as amended, and incorporated herein
by reference).
10.6 Second Amendment to UAL Corporation Employee Stock Ownership
Plan, dated as of August 17, 1995 and effective as of July
12, 1994 (filed as Exhibit 10.1 to UAL's Form 10-Q for the
quarter ended September 30, 1995 and incorporated herein by
reference).
10.7 Third Amendment to UAL Corporation Employee Stock Ownership
Plan, dated as of December 28, 1995 and effective as of July
12, 1994.
10.8 UAL Corporation Employee Stock Ownership Plan Trust
Agreement between UAL Corporation and State Street Bank and
Trust Company, effective July 12, 1994 (filed as Exhibit
10.2 to UAL's Form 10-Q for the quarter ended September 30,
1994 and incorporated herein by reference).
10.9 UAL Corporation Supplemental ESOP, effective as of July 12,
1994 (filed as Exhibit 10.3 to UAL's Form 10-Q for the
quarter ended September 30, 1994 and incorporated herein by
reference).
10.10 First Amendment to UAL Corporation Supplemental ESOP, dated
February 22, 1995 and effective as of July 12, 1994 (filed
as Exhibit 10.1 to UAL's Form 10-Q for the quarter ended
March 31, 1995, as amended, and incorporated herein by
reference).
10.11 Second Amendment to UAL Corporation Supplemental ESOP, dated
as of August 17, 1995 and effective as of July 12, 1994
(filed as Exhibit 10.2 to UAL's Form 10-Q for the quarter
ended September 30, 1995 and incorporated herein by
reference).
10.12 Third Amendment to UAL Corporation Supplemental ESOP, dated
as of December 28, 1995 and effective as of July 12, 1994.
10.13 UAL Corporation Supplemental ESOP Trust Agreement between
UAL Corporation and State Street Bank and Trust Company,
effective July 12, 1994 (filed as Exhibit 10.4 to UAL's Form
10-Q for the quarter ended September 30, 1994 and
incorporated herein by reference).
10.14 Preferred Stock Purchase Agreement, dated as of March 25,
1994, between UAL Corporation and State Street Bank and
Trust Company (filed as Exhibit 10.5 to UAL's Form 10-Q for
the quarter ended September 30, 1994 and incorporated herein
by reference).
10.15 Amendment No. 1 to Preferred Stock Purchase Agreement, dated
as of June 2, 1994, between UAL Corporation and State Street
Bank and Trust Company (filed as Exhibit 10.6 to UAL's Form
10-Q for the quarter ended September 30, 1994 and
incorporated herein by reference).
10.16 Preferred Stock Purchase Agreement, dated as of August 11,
1995, between UAL Corporation and State Street Bank and
Trust Company.
10.17 Class I Junior Preferred Stockholders' Agreement dated as of
June 12, 1994 (filed as Exhibit 10.12 to UAL's Form 10-Q for
the quarter ended September 30, 1994 and incorporated herein
by reference).
10.18 Class SAM Preferred Stockholders' Agreement dated as of July
12, 1994 (filed as Exhibit 10.13 to UAL's Form 10-Q for the
quarter ended September 30, 1994 and incorporated herein by
reference).
10.19 First Refusal Agreement dated as of July 12, 1994, as
amended by First Amendment dated as of February 24, 1995
(filed as Exhibit 10.12 to UAL's Form 10-K for the year
ended December 31, 1994, as amended, and incorporated herein
by reference).
10.20 Second Amendment to First Refusal Agreement dated as of
February 29, 1996.
10.21 UAL Corporation 1981 Incentive Stock Plan.
10.22 UAL Corporation 1988 Restricted Stock Plan.
10.23 UAL Corporation Incentive Compensation Plan, as amended
(filed as Exhibit 10.15 to UAL's Form 10-K for the year
ended December 31, 1994, as amended, and incorporated herein
by reference).
10.24 UAL Corporation Retirement Plan for Outside Directors, as
supplemented March 30, 1995 (filed as Exhibit 10.3 to UAL's
Form 10-Q for the quarter ended June 30, 1995 and
incorporated herein by reference).
10.25 Description of Complimentary Travel and Cargo Carriage
Benefits for UAL Directors.
10.26 UAL Corporation 1995 Directors Plan (filed as Exhibit 10.19
to UAL's Form 10-K for the year ended December 31, 1994, as
amended, and incorporated herein by reference).
10.27 Employment Agreement between UAL Corporation and Gerald
Greenwald (filed as Exhibit 10.5 to UAL's Form 10-Q for the
quarter ended June 30, 1994 and incorporated herein by
reference).
10.28 Amendment No. 1 to Employment Agreement between UAL
Corporation and Gerald Greenwald (filed as Exhibit 10.6 to
UAL's Form 10-Q for the quarter ended June 30, 1994 and
incorporated herein by reference).
10.29 Restricted Stock Deposit Agreement between UAL Corporation
and Gerald Greenwald (filed as Exhibit 10.7 to UAL's Form 10-Q
for the quarter ended June 30, 1994 and incorporated
herein by reference).
10.30 Non-Qualified Stock Option Agreement between UAL Corporation
and Gerald Greenwald (filed as Exhibit 10.9 to UAL's Form 10-
Q for the quarter ended June 30, 1994 and incorporated
herein by reference).
10.31 Restricted Stock Deposit Agreement between UAL Corporation
and John A. Edwardson (filed as Exhibit 10.10 to UAL's Form
10-Q for the quarter ended June 30, 1994 and incorporated
herein by reference).
10.32 Restricted Stock Deposit Agreement between UAL Corporation
and Stuart I. Oran (filed as Exhibit 10.12 to UAL's Form
10-Q for the quarter ended June 30, 1994 and incorporated
herein by reference).
10.33 United Supplemental Retirement Plan (filed as Exhibit 10.42
to UAL's Form 10-K for the year ended December 31, 1992, and
incorporated herein by reference).
10.34 Description of Officer Benefits.
10.35 Form of Severance Agreement between UAL Corporation and
certain officers of United Air Lines, Inc. (filed as Exhibit
10.27 to UAL's Form 10-Q for the quarter ended June 30, 1993
and incorporated herein by reference).
10.36 Letter Agreement dated April 28, 1995 between UAL
Corporation, United Air Lines, Inc. and Joseph R. O'Gorman
(filed as Exhibit 10.2 to UAL's Form 10-Q for the quarter
ended June 30, 1995 and incorporated herein by reference).
10.37 Change Order No. 7 dated September 19, 1995 to the Agreement
dated December 18, 1990 between The Boeing Company and
United Air Lines, Inc. (and United Worldwide Corporation)
for acquisition of 777-200 aircraft (as previously amended
and supplemented, the "777-200 Purchase Agreement" (filed as
Exhibit 10.7 to UAL's Form 10-K for the year ended December
31, 1990, and incorporated herein by reference; supplements
thereto filed as (i) Exhibits 10.1, 10.2 and 10.22 to UAL's
Form 10-Q for the quarter ended June 30, 1993, (ii) Exhibit
10.2 to UAL's Form 10-K for the year ended December 31,
1993, (iii) Exhibit 10.14 to UAL's Form 10-Q for the quarter
ended June 30, 1994, (iv) Exhibits 10.27 and 10.28 to UAL's
Form 10-K for the year ended December 31, 1994, (v) Exhibits
10.2 and 10.3 to UAL's Form 10-Q for the quarter ended March
31, 1995, and (vi) Exhibits 10.4, 10.5 and 10.6 to UAL's
Form 10-Q for the quarter ended June 30, 1995, and
incorporated herein by reference)). (Exhibit 10.37 hereto
is filed with a request for confidential treatment of
certain portions thereof.)
10.38 Change Order No. 8 dated October 17, 1995 to the 777-200
Purchase Agreement. (Exhibit 10.38 hereto is filed with a
request for confidential treatment of certain portions
thereof.)
10.39 Supplemental Agreement No. 3 dated October 27, 1995 to the
777-200 Purchase Agreement. (Exhibit 10.39 hereto is filed
with a request for confidential treatment of certain
portions thereof.)
10.40 Letter Agreement No. 6-1162-JME-118 dated December 19, 1995
to the 777-200 Purchase Agreement. (Exhibit 10.40 hereto is
filed with a request for confidential treatment of certain
portions thereof.)
10.41 Supplemental Agreement No. 7 dated as of December 29, 1995
to the Agreement dated December 18, 1990 between The Boeing
Company and United Air Lines, Inc. (and United Worldwide
Corporation) for acquisition of 747-400 aircraft (as
previously amended and supplemented, the "747-400 Purchase
Agreement" (filed as Exhibit 10.8 to UAL's Form 10-K for the
year ended December 31, 1990, and incorporated herein by
reference; supplements thereto filed as (i) Exhibits 10.4
and 10.5 to UAL's Form 10-K for the year ended December 31,
1991, (ii) Exhibits 10.3, 10.4, 10.5, 10.6 and 10.22 to
UAL's Form 10-Q for the quarter ended June 30, 1993, (iii)
Exhibit 10.3 to UAL's Form 10-K for the year ended December
31, 1993, (iv) Exhibit 10.14 to UAL's Form 10-Q for the
quarter ended June 30, 1994, (v) Exhibits 10.29 and 10.30 to
UAL's Form 10-K for the year ended December 31, 1994, (vi)
Exhibits 10.4 through 10.8 to UAL's Form 10-Q for the
quarter ended March 31, 1995, and (vii) Exhibits 10.7 and
10.8 to UAL's Form 10-Q for the quarter ended June 30, 1995,
and incorporated herein by reference)). (Exhibit 10.41
hereto is filed with a request for confidential treatment of
certain portions thereof.)
10.42 Amendment No. 4 dated November 27, 1995 to the Agreement
dated August 10, 1992 between AVSA, S.A.R.L., as seller, and
United Air Lines, Inc., as buyer, for the acquisition of
Airbus Industrie A320-200 model aircraft (as previously
amended and supplemented, "A320-200 Purchase Agreement"
(filed as Exhibit 10.14 to UAL's Form 10-K for the year
ended December 31, 1992, and incorporated herein by
reference; supplements thereto filed as (i) Exhibits 10.4
and 10.5 to UAL's Form 10-K for the year ended December 31,
1993, (ii) Exhibits 10.15 and 10.16 to UAL's Form 10-Q for
the quarter ended June 30, 1994, (iii) Exhibit 10.31 to
UAL's Form 10-K for the year ended December 31, 1994, and
(iv) Exhibit 10.9 to UAL's Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference)).
(Exhibit 10.42 hereto is filed with a request for
confidential treatment of certain portions thereof.)
11 Calculation of fully diluted net earnings per share.
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.
13 Certain portions of UAL Corporation's 1995 Annual Report to
Stockholders.
21 List of Registrant's subsidiaries.
23 Consent of Independent Public Accountants.
27 Financial Data Schedule.
99 Annual Report on Form 11-K for Employees' Stock Purchase
Plan of UAL Corporation.
Each of Exhibits 10.21 through 10.32 and 10.34 through 10.36 is a
management contract or compensatory plan or arrangement required to
be filed as an exhibit to Registrant's Form 10-K pursuant to Item
14(c) of Form 10-K.
(b) Reports on Form 8-K.
Form 8-K dated October 2, 1995 to report a press release issued
regarding UAL exploring possible acquisition of USAir.
Form 8-K dated November 13, 1995 to report a press release
issued regarding UAL ceases acquisition talks with USAir.
Form 8-K dated January 23, 1996 to report a press release issued
regarding UAL earnings release.
Form 8-K dated January 29, 1996 to report a press release issued
regarding UAL credit improvement initiatives.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 29th day of February, 1996.
UAL CORPORATION
By: /s/ Gerald Greenwald
Gerald Greenwald
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on the 29th day of February, 1996
by the following persons on behalf of the registrant and in the
capacities indicated.
/s/ Gerald Greenwald /s/ James J. O'Connor
Gerald Greenwald James J. O'Connor
Chairman of the Board and Chief Director
Executive Officer (principal
executive officer)
/s/ John A. Edwardson /s/ John F. Peterpaul
John A. Edwardson John F. Peterpaul
Director Director
/s/ Duane D. Fitzgerald /s/ Paul E. Tierney, Jr.
Duane D. Fitzgerald Paul E. Tierney, Jr.
Director Director
/s/ Michael H. Glawe /s/ John K. Van de Kamp
Michael H. Glawe John K. Van de Kamp
Director Director
/s/ Richard D. McCormick /s/ Joseph V. Vittoria
Richard D. McCormick Joseph V. Vittoria
Director Director
/s/ John F. McGillicuddy /s/ Paul A. Volcker
John F. McGillicuddy Paul A. Volcker
Director Director
/s/ Douglas A. Hacker
Douglas A. Hacker
Senior Vice President - Finance
(principal financial and
accounting officer)
Exhibit 10.7
THIRD AMENDMENT
UAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
(Effective as of July 12, 1994)
By virtue and in exercise of the amending power reserved to
UAL Corporation (the "Company") under Section 13.1(a) of the UAL
Corporation Employee Stock Ownership Plan (effective as of July
12, 1994) (the "Plan"), which amending power thereunder is
subject to the approval of the Air Line Pilots Association
International ("ALPA") and the International Association of
Machinists and Aerospace Workers (the "IAM"), the Company hereby
amends the Plan, subject to the approval of ALPA and the IAM, as
follows, effective January 1, 1995 (except as specified below).
1. The paragraph inserted by the Second Amendment to the
Plan at the end of the material labelled "Part A" which precedes
Section 1 is deleted and replaced with the following paragraph:
"For the Plan Years beginning on and after January 1,
1995, the foregoing percentages are amended to take into
account the participation by the IAM Employee Group in
allocations of Class 2 Non-Voting Preferred Stock under Part
B and the Supplemental Plan. Accordingly, the shares of
Class 1 Non-Voting Preferred Stock allocated on or after
January 1, 1995, will be allocated ratably over the
remaining Wage Investment Period, to the Employee Groups in
accordance with the following revised percentages:
ALPA Employee Group - 32.234549%
IAM Employee Group - 47.036084%
Management and Salaried Employee Group - 20.729367%"
2. Section 1(p) is amended by adding the following to the
end of the Section:
"With respect to a Participant who is a member of the ALPA
Employee Group, Compensation shall not include amounts paid
as a vacation buy-back at the book rate under the collective
bargaining agreement applicable to members of the ALPA
Employee Group. An amount included as "compensation," as
defined in the Supplemental Plan, as a result of an election
by the Employee to defer receipt of the amount, shall not be
included as Compensation in the Plan Year in which the
amount is actually paid to the Employee."
3. Section 1(dd) is amended by adding the following to the
end of the Section:
"The requirement that an Employee be "non-probationary" to
be a member of the IAM Employee Group shall not apply if the
Employee (i) satisfies the other requirements of this
subsection, and (ii) either (x) was previously a Participant
before completing the probationary period, or (y) before
completing the probationary period, completes (whether or
not in a capacity represented by the IAM) either (I) a total
of six months of consecutive service as an Employee, or (II)
six months of service within a single Plan Year."
4. The following is added to the end of Section 2.3:
"A Participant who transfers from one Employee Group to
another, and who is an Eligible Employee in the Employee
Group to which the Participant transfers (ignoring any
service requirement otherwise applicable to members of such
Employee Group), shall become a Participant in the Employee
Group to which the Participant transfers as of the date of
transfer."
5. The material added by the Second Amendment to Section
5.4(a)(i)(A) is deleted and the following inserted in its place:
"For Class 1 Non-Voting Preferred Stock released for Plan
Years beginning on or after January 1, 1995, the allocation
percentage shall be as follows: ALPA Employee Group
32.234549%; IAM Employee Group - 47.036084% and Management
and Salaried Employee Group - 20.729367%."
6. Section 5.4(c) is amended, for Plan Years beginning on
or after January 1, 1995, by eliminating the following proviso:
"provided, however, that no allocations (other than
allocations under clauses (i) and (viii) below) shall be
made to Accounts of Participants who are members of the IAM
Employee Group."
7. The material added to the end of Section 5.4(c) by the
Second Amendment is hereby deleted.
8. Section 7.11 is amended by adding the following to the
end of the Section:
"Notwithstanding anything to the contrary contained herein,
all payments under qualified domestic relations orders must
be made as soon as administratively feasible following the
determination of the qualified status of the order. Any
domestic relations order under which payment cannot be made
as set forth in the preceding sentence is considered to
provide for a type or form of benefit not provided in the
Plan and will not be recognized as a qualified domestic
relations order."
9. The following new Section 11.13 is added to the
Plan, effective as of July 12, 1994:
"11.13 Committee Alternates.
An individual acting as an alternate member of the
ESOP Committee shall be considered a member of the ESOP
Committee for all purposes of this Plan."
10. Paragraph (a)(2) of Appendix A, as added by the Second
Amendment, is amended to read as follows:
"(2) Shares to be included in hypothetical share number
and hypothetical allocation. The following number of shares
is to be included in the hypothetical share number under
Section 5.4(c)(ii) and Section 2.4(a) of the Supplemental
Plan as the Special Annual Allocation for each affected
Participant: the sum of (i) the 1994 Shortfall Shares, plus
(ii) $8.8872 times the Participant's 1994 Shortfall Shares
divided by the fair market value of a share of Class 1 Non-
Voting Preferred Stock as of the end of the 1995 Plan Year."
11. Paragraph (b)(2) of Appendix A, as added by the Second
Amendment, is amended by deleting the last sentence thereof.
12. Appendix A, as added by the Second Amendment, is
amended by adding the following to the end of the Appendix:
"Other Special Annual Allocations. Prior to the end of any
Plan Year (including the 1995 Plan Year), the Committee may adopt
a Special Annual Allocation in addition to those set forth above.
Such additional Special Annual Allocations may be adopted by the
Committee if it determines that, as a result of missing data or a
similar reason, a Participant's account was not allocated the
number of shares the Committee determines to be appropriate
according to the terms of the Plan. Such additional Special
Annual Allocations shall be made according to the method set
forth above for the Special Annual Allocation for 1995, using
data applicable to the appropriate Plan Year(s). As is the case
for the other Special Annual Allocations under this Appendix A,
the hypothetical share number referred to in the Plan shall be
calculated by taking into account such Special Annual Allocation,
as explained in Section 5.4(c)(ii) of the Plan."
IN WITNESS WHEREOF, the Company has caused this Third
Amendment to be executed on December 28, 1995.
UAL CORPORATION
/s/ Douglas A. Hacker
APPROVED BY:
AIR LINE PILOTS ASSOCIATION,
INTERNATIONAL
/s/ Harlow B. Osteboe /s/ J. Randolph Babbitt
INTERNATIONAL ASSOCIATION
OF MACHINISTS AND AEROSPACE
WORKERS
/s/ Kenneth W. Thiede
Exhibit 10.12
THIRD AMENDMENT
OF
UAL CORPORATION
SUPPLEMENTAL ESOP
(Effective as of July 12, 1994)
By virtue and in exercise of the amending power reserved to
UAL Corporation (the "Company") under section 5.1 of the UAL
Corporation Supplemental ESOP (effective as of July 12, 1994)
(the "Plan"), which amending power thereunder is subject to the
approval of the Air Line Pilots Association, International
("ALPA") and the International Association of Machinists and
Aerospace Workers (the "IAM"), the Company hereby amends the
Plan, as follows, effective January 1, 1995:
1. The material added to the end of Section 1.1(c) by
the Second Amendment is deleted and the following inserted in its
place:
"For Convertible Shares to be allocated under this Plan for
Plan Years beginning on or after January 1, 1995, 96.286956%
will be allocated to the ALPA Employee Group, 1.699314% will
be allocated to the IAM Employee Group, and 2.01373% will be
allocated to the Management and Salaried Employee Group."
2. The material added to the end of Section 1.1(d) by the
Second Amendment is deleted and the following inserted in its
place:
"Effective for Plan Years beginning on or after January 1,
1995, the Class M Voting Shares will be contributed to the
ESOP (Part B) or the Supplemental Trust."
3. Section 1.3(d) is amended to read as follows:
"`Committee' means the ESOP Committee."
4. Section 1.3(g) is amended by adding the following to the
end of the Section:
"For the Plan Year commencing January 1, 1995, and for
subsequent Plan Years, `Compensation' for an Employee who is
a member of the Management and Salaried Employee Group shall
include any compensation which would have been paid to the
Employee during the Plan Year, but was not paid during that
Plan Year because the Employee elected to defer its receipt
according to a procedure adopted by the Company.
Compensation included as a result of the preceding sentence
shall not be included as Compensation in the Plan Year in
which it is actually paid to the Employee."
5. Section 1.3(j) is amended to read as follows:
"(j) `Eligible Employee' means an `eligible employee' as
defined in the ESOP."
6. The second sentence of Section 2.1 is deleted.
7. The first sentence of Section 2.4(c) is amended to read
as follows:
"For each ESOP Participant, the difference, if any, between
the Hypothetical Share Number and the Actual Share Number
shall be referred to as the Tentative Allocation."
8. Section 3.1(b) is amended by adding the following to the
end of the Section:
"The Committee may determine for any Participant or group of
Participants that, because of the possibility of transfers
to the ESOP (Part B) under Section 2.7, it is not
practicable to make payments under Section 3.1(b) until the
amount (if any) of such transfers can be determined."
9. Subsections 4.2(a), (b), (c) and (i) are deleted and
replaced in each instance by "Reserved."
10. Section 5.1 is amended to read as follows:
"5.1 Amendment. While the Company expects and intends
to continue the Plan, the Company must necessarily reserve,
and does hereby reserve, the right to amend the Plan at any
time, except that no amendment may be adopted, without the
approval of ALPA and the IAM, provided, that, with respect
to amendments adopted which are described in Section 13.1(b)
or (d) of the ESOP (which subsections shall be treated as
appropriately modified to the extent necessary to reflect
the circumstances of this Plan) the need for joint approval
shall be modified."
IN WITNESS WHEREOF, the Company has caused this Third
Amendment to be executed on December 28, 1995.
UAL CORPORATION
/s/ Douglas A. Hacker
Approved by:
AIR LINE PILOTS ASSOCIATION,
INTERNATIONAL
/s/ J. Randolph Babbitt /s/ Harlow B. Osteboe
INTERNATIONAL ASSOCIATION OF
MACHINISTS AND AEROSPACE WORKERS
/s/ Kenneth W. Thiede
Exhibit 10.16
PREFERRED STOCK PURCHASE AGREEMENT
PREFERRED STOCK PURCHASE AGREEMENT dated as of August 11,
1995, between UAL Corporation, a Delaware corporation ("UAL"),
and State Street Bank and Trust Company, a Massachusetts trust
company, acting solely in its capacity as trustee under the Plan
defined below and not in its individual capacity (the "Trustee").
W I T N E S E T H:
WHEREAS, on July 12, 1994, certain transactions contemplated
by the Agreement and Plan of Recapitalization dated March 25,
1994 by and among UAL and the unions representing certain of the
employees of United Air Lines, Inc., as amended, (the
"Recapitalization Agreement") were consummated. (The
recapitalization of UAL, as more fully described in the
Recapitalization Agreement, shall hereinafter be referred to as
the "Transaction");
WHEREAS, in connection with the Transaction, UAL established
the UAL Corporation Employee Stock Ownership Plan (the "Plan"),
which consists of an employee stock ownership plan and a stock
bonus plan; and
WHEREAS, a portion of the employee stock ownership plan
(Part A thereof) forms part of the stock bonus plan, includes a
money purchase pension plan and is intended to qualify as an
employee stock ownership plan under Section 4975(e) (7) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, UAL appointed the Trustee as the trustee of the UAL
Corporation Employee Stock Ownership Plan Trust (the "Trust"),
which was established to hold the assets of the Plan pursuant to
the terms of the Trust Agreement, by and between UAL and the
Trustee (the "Trust Agreement"); and
WHEREAS, Part A of the Plan and Trust Agreement provide that
the assets of the trust created thereunder attributable to the
Plan shall be invested primarily in shares of "employer
securities" of UAL within the meaning of Section 409(l) of the
Code; and
WHEREAS, UAL created a new class of securities designated as
the Class 1 ESOP Convertible Preferred Stock, par value ($0.01)
(the "Class 1 ESOP Convertible Preferred Stock" or the "ESOP
Preferred Stock"); and
WHEREAS, the Recapitalization Agreement provided for, among
other things, the transfer to the Trust of 13,813,282 shares of
the Class 1 ESOP Convertible Preferred Stock in a series of
transactions which shall occur during the 69 months immediately
following the Effective Time (as defined in the Recapitalization
Agreement); and
WHEREAS, UAL now wishes to sell and the Trustee now wishes
to purchase 2,850,103 shares of the Class 1 ESOP Convertible
Preferred Stock from UAL, in the amount, at the purchase price
and subject to the other terms and conditions as set forth in
this Agreement;
NOW, THEREFORE, in consideration of these premises and the
mutual promises contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. Purchase; Purchase Price. Subject to the terms and
conditions of this Agreement, the Trustee shall purchase on
behalf of the Plan (the "Purchase") from UAL, and UAL shall issue
and sell to the Trustee an aggregate of 2,850,103 shares of Class
1 ESOP Convertible Preferred Stock (the "Shares") for an
aggregate purchase price (the "Purchase Price") of
$535,391,848.55.
2. Closing; Payment. The Purchase shall be consummated
(the "Closing") at or about August 11, 1995 at the offices of
UAL, or at such time, date or place as shall be fixed by an
agreement of UAL and the Trustee. The date of the Closing shall
hereinafter be referred to as the "Closing Date". At the
Closing, UAL shall deliver to the Trustee a certificate or
certificates representing the Shares, which shall be registered
in the name of the Trustee, as trustee under the Trust, or in the
name of its nominee, against delivery to UAL by the Trustee of a
check for a dollar amount equal to the par value per Share times
the number of Shares described in Section 1 above (the "Cash
Amount"), representing the aggregate par value of the Shares and
a promissory note of the Trust (the "ESOP Note") substantially in
the form set forth in Exhibit A hereto, in an amount equal to the
difference between the Purchase Price and a dollar amount equal
to the par value per Share times the number of Shares described
in Section 1 above. Notwithstanding the foregoing, UAL may, with
the consent of the Trustee, accomplish the transfer of shares to
the Trustee by book entry, in which event a cross receipt in the
form set forth in Exhibit B hereto shall be executed by the
parties. UAL shall pay all stamp and other transfer taxes, if
any, that may be payable in respect of the issuance, sale and
delivery of the Shares and shall be entitled to any refund
thereof, and shall present the Trustee with evidence that such
transfer taxes either have been paid or are not due.
3. Representations and Warranties of UAL. UAL hereby
represents and warrants to the Trustee as follows:
3.1 UAL has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware with corporate power and authority, including
governmental licenses, authorizations, consents and approvals, to
own, lease and operate its properties and conduct its business
except for licenses, authorizations, consents and approvals the
absence of which will not have a Material Adverse Effect. For
the purposes of this Agreement, "Material Adverse Effect" shall
mean any change or effect the consequence of which is materially
adverse to the condition (financial or otherwise), business,
assets or results of operations of UAL and its Subsidiaries (as
defined below) taken as a whole. UAL is duly qualified as a
foreign corporation to transact business and is in good standing
in each jurisdiction where its ownership or leasing of properties
or the conduct of its business requires such qualification,
except for the jurisdictions where the failure to be so qualified
would not have a Material Adverse Effect.
3.2 Except as set forth in Schedule 3.2 hereto, the
execution, delivery and performance of this Agreement and all
other documents or instruments to be executed or delivered by UAL
in connection with this Agreement are within UAL's powers and
have been duly authorized by all necessary corporate action.
This Agreement and all other documents or instruments to be
executed or delivered by UAL in connection with this Agreement
are, assuming due authorization, execution and delivery by the
Trustee, valid and binding upon UAL and enforceable against UAL
in accordance with their respective terms except as the
enforceability thereof may be limited by the effect of any
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors'
rights generally, ERISA and by general principles of equity
(regardless of whether considered in a proceeding at law or in
equity).
3.3 Except as set forth in Schedule 3.3 hereto, the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not
conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under (i) the Certificate
of Incorporation or Bylaws, each as amended, of UAL or any of its
Subsidiaries (as hereinafter defined), or (ii) except as set
forth in Schedule 3.3(ii) hereto, any provision of any indenture,
mortgage, deed of trust, agreement, instrument, order,
arbitration award, judgment or decree to which UAL or any of its
Subsidiaries is a party or by which any of their respective
assets are bound, or (iii) any material statute, material rule or
material regulation applicable to UAL or any of its Subsidiaries
of any court, bureau, board, agency or other governmental body
having jurisdiction.
3.4 As of the Closing Date, the authorized, issued and
outstanding capital stock of UAL shall be as set forth in
Schedule 3.4 hereto, and UAL shall have no obligations to issue
any additional shares pursuant to any options, warrants,
conversion rights or other arrangements except as set forth in
Schedule 3.4 hereto, and all shares of issued and outstanding
capital stock of UAL shall have been duly authorized and are
fully paid and nonassessable.
3.5 Each Subsidiary is a corporation or partnership
duly incorporated or formed, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
formation, has all requisite power and authority including all
governmental licenses, authorizations, consents and approvals
required to own, lease and operate its properties (except those
the absence of which would not have a Material Adverse Effect)
and to conduct its business and is in good standing in each
jurisdiction where the character of the property owned or leased
by it or the nature of its activities make such qualification
necessary, except for those jurisdictions where failure to be so
qualified would not, individually or in the aggregate, have a
Material Adverse Effect. For purposes of this Agreement,
"Subsidiary" means any entity of which securities or other
ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing
similar functions are directly or indirectly owned by UAL prior
to the Closing Date. All Subsidiaries and their respective
jurisdictions of incorporation or formation are identified on
Schedule 3.5 hereto.
Except as otherwise disclosed on Schedule 3.5, all of
the outstanding capital stock of, or other ownership interests
in, each Subsidiary, is owned by UAL, directly or indirectly,
free and clear of any liens, claims, charges and encumbrances
(collectively "Liens") and free of any other limitation or
restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other ownership
interests). Except as disclosed on Schedule 3.5, there are
outstanding (i) no securities of UAL or any Subsidiary
convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in any Subsidiary,
and (ii) no options, subscriptions, warrants or other rights,
agreements, arrangements or commitments of any character to
acquire from UAL or any Subsidiary, and no other obligation of
UAL or any Subsidiary to issue, any capital stock, voting
securities or other ownership interests in, or any securities
convertible into or exchangeable or exercisable for any capital
stock, voting securities or ownership interest in, any Subsidiary
(the items in clauses (i) and (ii) being referred to collectively
as the "Subsidiary Securities"). There are no outstanding
obligations of UAL or any Subsidiary to repurchase, redeem or
otherwise acquire any outstanding Subsidiary Securities.
3.6 As of the Closing Date, the Shares (i) shall have
the rights, preferences and qualifications set forth in the
Restated Certificate of Incorporation of UAL Corporation, (a copy
of which is attached hereto as Exhibit C), (ii) shall have been
duly and validly authorized and (iii) when issued and delivered
to the Trustee in exchange for the Cash Amount and the ESOP Note,
will be in proper form, validly issued, fully paid and
nonassessable. As of the Closing Date, UAL shall have full right
and authority to issue, sell, transfer, and deliver the Shares
and will effectively transfer to the Trustee, on the Closing
Date, the full right, title and interest therein and thereto,
free and clear of all Liens, except for (A) beneficial interests
accruing to participants in the Plan and their beneficiaries and
(B) any Liens created or imposed by the Trustee on behalf of the
Trust.
3.7 As of the Closing Date, the shares of Common Stock
(as hereinafter defined) into which the Shares are convertible,
shall be duly and validly authorized and reserved for issuance
and, when issued upon such conversion, will be validly issued,
fully paid and nonassessable and upon delivery to the Trustee,
the Trust will acquire full right, title and interest to such
shares of Common Stock free and clear of all Liens, except for
(i) beneficial interests accruing to the participants in the Plan
and their beneficiaries and (ii) any Liens created or imposed by
the Trustee on behalf of the Trust.
3.8 No authorization, approval or consent of, or filing
with, any governmental authority or agency or other third party,
is required in connection with the sale of the Shares by UAL
hereunder or the conversion of the Shares into Common Stock
except for (i) any of such as shall have been made or obtained
prior to the Closing, (ii) any of such relating to the listing on
any securities exchange of any shares of UAL common stock, par
value $.01 per share (the "Common Stock"), to be delivered upon
conversion of Shares and (iii) filings with and/or approvals of
the Internal Revenue Service. The Shares are being issued
pursuant to a valid exemption from registration under the
Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws.
3.9 UAL's filings with the Securities and Exchange
Commission ("Commission") for the years 1992, 1993 and 1994,
respectively, at the time they were filed with the Commission,
(i) complied in all material respects with the requirements of
the Securities Act, or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as appropriate, and the Rules and
Regulations of the Commission respectively promulgated
thereunder, (ii) in the case of filings under the Exchange Act,
did not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were
made, not misleading and (iii) no registration statement, as
amended or supplemented, if applicable, filed pursuant to the
Securities Act as of the date such statement, amendment or
supplement became effective contained any untrue statement of a
material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading.
3.10 The consolidated financial statements of UAL,
together with related notes, schedules and reports thereon of
independent public accountants for the years 1992, 1993 and 1994,
respectively (collectively, the "Financial Statements"), included
in UAL's Annual Reports on Form 10-K and Quarterly Reports on
Form 10-Q ("Reports") for the years ended December 31, 1992, 1993
and 1994, respectively, all of which Reports previously have been
delivered to the Trustee, present fairly (except as may be
indicated in the notes thereto and subject to normal immaterial
year-end audit adjustments in the case of any unaudited interim
Financial Statements) the consolidated financial position and the
consolidated results of operation of UAL and its consolidated
Subsidiaries at the indicated dates and for the indicated
periods. The Financial Statements have been prepared in
accordance with generally accepted accounting principles
consistently applied throughout the periods involved except as
otherwise noted therein. UAL and its Subsidiaries considered as
one enterprise have no material liabilities or obligations,
contingent or otherwise, that are not fully disclosed in the
Financial Statements or the Reports.
3.11 Except as disclosed on Schedule 3.11 hereto, since
December 31, 1994, (i) there has been no event, and no state of
circumstances has existed, that has had or will, or could
reasonably be expected to, have a Material Adverse Effect, (ii)
there has not been any material transaction entered into by UAL
or any of its Subsidiaries, other than transactions in the
ordinary course of business or other than the transactions
contemplated in this Agreement or the Transaction, and (iii)
except for regular dividends on shares of its outstanding common
stock and preferred stock, there has been no dividend or
distribution of any kind declared, paid or made by UAL on any
class of its capital stock other than the distributions
contemplated by the Transaction.
3.12 Except as set forth in Schedule 3.12, there is no
action, suit or proceeding before or by any court or government
or administrative agency or body, domestic or foreign, now
pending or, to the best knowledge of UAL, threatened against or
affecting UAL or any of its Subsidiaries, which might have a
Material Adverse Effect.
3.13 UAL and its Subsidiaries hold all certificates,
authorizations or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them the absence of which,
individually or in the aggregate, would have a Material Adverse
Effect, and neither UAL nor any of its Subsidiaries has received
any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit which,
individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material
Adverse Effect. UAL and its Subsidiaries are in compliance with
all rules, laws and regulations related to the operation of the
business of UAL and its Subsidiaries, except for instances of
noncompliance which, individually or in the aggregate, would not
have a Material Adverse Effect.
3.14 The Plan has been duly authorized by all corporate
action and Part A constitutes an employee stock ownership plan
within the meaning of Section 4975(e)(7) of the Code and Section
407(d)(6) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), Part B (that portion of the stock bonus
plan which does not constitute an employee stock ownership plan)
constitutes a stock bonus plan under the Code and the Plan will
qualify under Section 401(a) of the Code taking into account
amendments which may be reasonably requested by the Internal
Revenue Service, but no representation or warranty is made as to
the compliance of the Plan in operation under the referenced Code
and ERISA sections; the Trust Agreement has been duly authorized
by all necessary corporate action on the part of UAL; all
contributions by UAL to the Plan and all dividends paid on the
ESOP Preferred Stock which are used by the Trust to make the
required principal and interest payments with respect to the ESOP
Note will be deductible by UAL or its Subsidiaries for federal
income tax purposes under Section 404 of the Code (as in effect
on the date of the Closing), except to the extent there are
insufficient "earnings and profits" under the Code for the
dividends to be deductible; and the ESOP Preferred Stock
constitutes "employer securities" within the meaning of Section
409(l) of the Code.
3.15 There is no investment banker, broker or finder
which has been retained by or is authorized to act on behalf of
UAL or any Subsidiary or, to the knowledge of UAL, any CRS
Company who might be entitled to a fee or commission from UAL,
either Union or any affiliate of either of them upon consummation
of the transactions contemplated by this Agreement, based upon
arrangements made by or on behalf of UAL. For the purposes of
this Section 3.15, "CRS Company" and "Union" shall have the
respective meanings assigned to such terms in the
Recapitalization Agreement.
4. Representations and Warranties of the Trustee, as
Trustee. The Trustee, in its capacity as such, represents and
warrants as follows:
4.1 The Trustee (i) is a duly organized and validly
existing trust company in good standing and with full authority
to act as Trustee and exercise trust powers under the laws of the
Commonwealth of Massachusetts and (ii) has full corporate power
and authority to execute and deliver the Trust Agreement and to
carry out the transactions contemplated thereby.
4.2 The execution, delivery and performance of this
Agreement will not violate (i) the Trustee's Charter or By-laws,
each as amended or restated to date, (ii) any provision of any
indenture, mortgage, deed of trust, agreement, instrument, order,
arbitration award, judgment or decree to which the Trustee or the
Trust is a party or by which it or the Trust or any of their
respective assets are bound, or (iii) any statute, rule or
regulation applicable to the Trustee or the Trust of any court,
bureau, board, agency or other governmental body having
jurisdiction, which conflict, breach or default might have a
material adverse effect.
4.3 This Agreement and the Trust Agreement have been
duly executed and delivered by the Trustee on behalf of the Trust
and, assuming due authorization, execution and delivery by UAL,
each constitutes the legal, valid and binding obligation of the
Trust enforceable against the Trustee in accordance with their
respective terms, except as the enforceability thereof may be
limited by the effect of any applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar
laws affecting creditors rights generally, ERISA and by general
principles of equity (regardless of whether considered in a
proceeding at law or in equity).
4.4 The Trustee is acquiring the shares on behalf of
the Plan pursuant to the Trust Agreement and the Plan solely for
investment purposes and not with a view toward, or for sale in
connection with, any public distribution thereof; provided,
however, nothing herein shall prohibit the Trustee from disposing
of any or all of the Shares.
4.5 No authorization, approval or consent of any
governmental authority or agency is necessary to be obtained by
the Trustee or the Plan in connection with the purchase of the
Shares by the Trustee on behalf of the Plan hereunder.
4.6 The Trustee, at the expense of UAL, has retained
independent legal counsel knowledgeable in matters regarding
ERISA and Code fiduciary responsibilities and has retained an
independent financial advisor to advise the Trustee regarding the
transactions contemplated by this Agreement.
4.7 The Trustee has not employed any broker, finder or
agent, or agreed to pay or incurred any brokerage fee, finder's
fee, commission or other similar form of compensation in
connection with this Agreement or the transactions contemplated
hereby.
4.8 Trustee has received an opinion of Houlihan, Lokey,
Howard and Zukin, Inc., financial advisor to the Trustee, to the
effect that (i) the Purchase Price is not greater than fair
market value, (ii) the Transaction is fair to the Plan from a
financial point of view, (iii) the conversion price with respect
to the Shares is reasonable and (iv) the interest rate on the
ESOP Note is not unreasonable.
5. Conditions to Closing.
5.1 Conditions to the Trustee's Obligations at Closing.
The obligations of the Trustee hereunder are subject to the
fulfillment at or before the Closing of each of the following
conditions:
(a) The representations and warranties contained in
Section 3 hereof shall be true on and as of the Closing Date and,
the Trustee shall have been furnished with a certificate, dated
the Closing Date, to such effect, signed by an authorized officer
of UAL.
(b) The Trustee shall have received a cash contribution
to the Plan at least equal to the Cash Amount.
(c) No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions
contemplated by this Agreement, and no suit, action or other
proceedings by any governmental body or other person shall have
been instituted which questions the validity or legality of the
transactions contemplated by this Agreement which suit, action or
proceeding the Trustee reasonably determines, upon advice of
counsel, is more likely than not to successfully challenge the
validity or legality of the transactions contemplated by this
Agreement or otherwise result in a Material Adverse Effect.
(d) Neither the Trustee nor UAL shall have determined
in good faith that the purchase of the Shares would result in a
"prohibited transaction" under ERISA or otherwise violate the
provisions of applicable law.
(e) The Trustee shall have received UAL's most recent
annual report on form 10-K and any subsequently filed Quarterly
Reports on Form 10-Q.
(f) The Trustee shall have received from Kirkpatrick &
Lockhart, counsel to the Trustee, an opinion in substantially the
form set forth in Schedule 5.1(f) hereto.
(g) The Trustee shall have received from Charles F.
McErlean, Jr., acting general counsel of UAL, the opinion in
substantially the form set forth in Schedule 5.1(g) hereto.
(h) The Trustee shall have received an opinion of its
financial advisor, in substantially the form set forth in
Schedule 5.1(h) hereto.
(i) The Trustee shall have made a good faith
determination that the purchase of the Shares contemplated
hereunder and the consummation of all other transactions
contemplated by the Agreement are prudent and in the best
interests of the Plan participants. In the event the Trustee is
unable to consummate the purchase of the Shares described in
Section 1 hereof at the Purchase Price by reason of the failure
of one or more of the conditions set forth in Sections 5.1(d),
(h) and (i) hereof, the Trustee agrees to negotiate in good faith
with UAL in an attempt to arrive at a purchase price for the
Shares at which the Trustee would consummate the purchase of
Shares contemplated by this Agreement.
(j) UAL shall have certified to the Trustee that it has
determined that it is reasonably likely to have sufficient
earnings and profits such that dividends paid on the Class 1 ESOP
Convertible Preferred Stock are reasonably likely to be
deductible under Section 404 of the Code.
5.2 Conditions to UAL's Obligations at Closing. The
obligations of UAL hereunder are subject to the fulfillment at or
before the Closing of each of the following conditions:
(a) The representations and warranties contained in
Section 4 hereof shall be true on and as of the Closing and, UAL
shall have been furnished with a certificate dated the Closing
Date to such effect, signed by an authorized officer of the
Trustee.
(b) No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions
contemplated by this Agreement, and no suit, action or other
proceedings by any governmental body or other person shall have
been instituted which questions the validity or legality of the
transactions contemplated by this Agreement which suit, action or
proceeding UAL reasonably determines, upon advice of counsel, is
more likely than not to successfully challenge the validity or
legality of the transactions contemplated by this Agreement or
otherwise result in a Material Adverse Effect.
(c) Neither the Trustee nor UAL shall have determined
in good faith that the purchase of the Shares would result in a
"prohibited transaction" under ERISA or otherwise violate the
provisions of applicable law.
(d) UAL shall have received an opinion of Kirkpatrick &
Lockhart, counsel to the Trustee, in the form set forth in
Schedule 5.2(d) hereto.
(e) The Trustee shall have delivered to UAL a
certification that the conditions set forth in section 5.1(d) and
section 5.1(i) have been satisfied.
6. Covenants of Trustee. The Trustee hereby covenants and
agrees as follows:
(a) Except as otherwise provided in the ESOP, all cash
contributions (including any earnings on such contributions) that
are received by the Trust and cash dividends (including any
earnings on such contributions) that are received by the Trust
with respect to the Class 1 ESOP Convertible Preferred Stock or
Common Stock issued upon conversion thereof will be, to the
extent permitted by law, applied solely for the purpose of making
principal and interest payments on the ESOP Note.
(b) The Trustee shall not transfer or otherwise dispose
of any shares of Common Stock issued upon conversion of the Class
1 ESOP Convertible Preferred Stock unless such securities have
been registered under the Securities Act of 1933, as amended, and
any applicable state securities laws or pursuant to an exemption
or exemptions from such registration.
(c) The Trustee agrees that UAL may (with the consent
of the Air Line Pilots Association, International and the
International Association of Machinists and Aerospace Workers if
and to the extent such consent is required by the Plan) extend
the maturity of the ESOP Note for up to four (4) years, provided
that the interest rate on the ESOP Note, as extended, is
determined by the Trustee to be reasonable at the time of
extension.
7. Covenants of UAL. UAL hereby covenants and agrees as
follows:
(a) So long as any principal or interest amount of the
ESOP Note or any note representing a refinancing of the ESOP Note
remains unpaid, UAL shall use reasonable efforts to cause Part A
of the Plan to maintain its qualification as an employee stock
ownership plan within the meaning of Section 4975(e)(7) of the
Code.
(b) So long as any principal or interest amount of the
ESOP Note or any note representing a refinancing of the ESOP Note
remains unpaid, UAL and its Subsidiaries shall make contributions
to the Plan which, when combined with any dividends received by
the Plan that can be used for the payment of such debt, are
sufficient to allow the Trustee to make, in a timely fashion all
scheduled principal and interest payments with respect to the
ESOP Note or any note representing a refinancing of the ESOP
Note; provided, however, that any contribution to the Plan shall
be limited to the extent that such contribution would cause the
aggregate contributions made by UAL and its Subsidiaries for the
relevant Plan year to exceed the limitations set forth in
Sections 404 or 415 of the Code. Any contributions limited or
not made in a timely fashion pursuant to the preceding sentence
shall be (i) carried over and paid to the Plan as soon as is
practicable in connection with contributions to the Plan and (ii)
increased by an amount sufficient for the Trustee to pay any
increased interest or other costs arising under the ESOP Note
from the failure to make any payment thereunder when due. The
Trustee shall be entitled to reimbursement upon demand for
reasonable attorney fees and other reasonable costs of collection
in enforcing the provisions of this Section 7(b).
(c) Registration of the Common Stock. As and if
required by applicable securities laws, UAL shall at all times
maintain an effective registration statement under the Securities
Act and timely comply with the reporting requirements under the
Exchange Act with respect to the shares of Common Stock into
which the Shares are convertible. The Trustee will provide UAL
with any information about the Trustee or such proposed sale
required to be included in such registration statement. The
Trustee will, upon receipt of notice from UAL that any such
registration statement includes an untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make any statement therein not
misleading, discontinue the distribution of Common Stock
thereunder until such misstatement or omission is eliminated.
The Trustee further agrees not to effect any public sale or
distribution of Common Stock without the consent of UAL during
the seven days prior to or ninety days after any registration
statement relating to an underwritten sale of securities of UAL
has become effective. UAL shall obtain any other federal, state
or local approvals as may be necessary from time to time to
enable the Trust to consummate any desired conversion or
disposition of the shares of Common Stock into which the Shares
are convertible.
8. Restrictive Legend. The Trustee understands that
the certificates representing the Shares, when issued, will bear
the following legend and that a notation restricting their
transfer will be made on the stock transfer books of UAL:
"The shares of stock represented by this
certificate have not been registered under the
Securities Act of 1933, as amended. Such shares may
not be sold, assigned, pledged or otherwise transferred
in the absence of an effective registration statement
under said Securities Act covering the transfer or an
opinion of counsel satisfactory to the issuer that
registration under said Securities Act is not required.
Notice
The shares of stock represented by this certificate
are subject to a security interest in favor of UAL
Corporation."
9. Expenses. Whether or not the transactions contemplated
by this Agreement shall be consummated, UAL shall, as provided
for in the applicable engagement letter between UAL and the
Trustee (the "Engagement Letter"), pay the expenses incurred by
the Trustee in connection with the authorization, preparation,
negotiation, execution and performance of this Agreement and
related transactions.
10. Integration; Amendment. This Agreement (including the
documents delivered pursuant hereto), together with the Plan,
Trust Agreement and Engagement Letter, constitutes the entire
agreement and understanding between the parties hereto relating
to the purchase of the 2,850,103 shares of ESOP Preferred Stock
and supersedes any prior agreement or understanding relating in
any way to the transaction contemplated hereby. This Agreement
may be modified or amended only by a written instrument executed
by or on behalf of the parties hereto. The headings and captions
contained herein are solely for convenience of reference and do
not constitute a part of this Agreement or affect in any way its
meaning or construction.
11. Savings Clause. The invalidity, illegality or
enforceability of any one or more of the provisions of this
Agreement shall in no way affect or impair the validity and
enforceability of the remaining provisions hereof. In the event
any such provision shall be so declared unenforceable due to its
scope or breadth, it shall be narrowed to the scope or breadth
permitted by law.
12. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and
all of which together shall constitute one and the same
instrument. It shall not be necessary that any single
counterpart hereof be executed by all parties so long as each
party executed at least one counterpart.
13. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of Illinois without regard
to any principles of conflicts of law.
14. Survival of Representations, Warranties and Covenants.
All covenants contained in this Agreement (including in any
certificates delivered hereunder) shall survive the Closing or,
in the case of Section 9, Section 13 and Section 14 hereof, the
sooner termination of this Agreement. Notwithstanding the
Closing, or the sooner termination of this Agreement or any
investigation at any time made by or on behalf of either party,
UAL or the Trustee shall be liable for damages arising from its
breaches of representations or warranties under this Agreement
(including in any certificates delivered hereunder) which
breaches shall not be considered waived by consummation of the
transactions contemplated hereby, provided, however, that UAL and
the Trustee shall be liable only to the extent that notice
therefor is asserted by the other in writing and delivered prior
to the expiration of forty-two (42) months from the Closing or
sooner termination of this Agreement.
15. Notices. Any notice or other communication required or
permitted hereunder shall be in writing, either delivered by
hand, by mail, or by telex, telefax or telegram (charges
prepaid), and any such notice shall be effective when received at
the address specified below (or, if by mail, three business days
after deposited in the U.S. mails, registered or certified mail,
postage prepaid and return receipt requested):
By Mail
If to UAL: UAL Corporation
P.O. Box #66919
Chicago, IL 60666
Attn: Corporate Secretary
By Courier
UAL Corporation
1200 Algonquin Road
Elk Grove Township, IL 60007
Attn: Corporate Secretary
If to the Trustee: State Street Bank and Trust Company
Retirement Investment Services
Batterymarch Park III
Three Pine Hill Drive
Quincy, MA 02169
Attn: UAL ESOP Administration
With a copy to: Kirkpatrick & Lockhart
1500 Oliver Building
Pittsburgh, PA 15222
Attn: Charles R. Smith, Esquire
Addresses may be changed by written notice given pursuant to this
Section. Any notice given hereunder may be given on behalf of
any party by his counsel or other authorized representatives.
16. Successors and Assigns; Assignability. This Agreement
shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto, and their respective legal
representatives, successors and assigns. This Agreement (i)
shall not confer upon any person other than the parties hereto
and their respective successors and assigns any rights or
remedies hereunder and (ii) shall not be assignable by operation
of law or otherwise by any party hereto.
17. Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto shall use
all reasonable efforts to take, or cause to be taken, all action
and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions
contemplated by this Agreement.
18. Certain Limitations. The execution and delivery of
this Agreement and the performance by the Trustee of this
Agreement have been, or will be, effected by the Trustee solely
in its capacity as Trustee and not individually.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereof have duly
executed and delivered this Agreement as of the date first above
written.
UAL CORPORATION
By: /s/ Douglas A. Hacker
Name: Douglas A. Hacker
Title: Senior Vice President and
Chief Financial Officer
State Street Bank and Trust Company,
solely in its capacity as Trustee
under the UAL Corporation Employee
Stock Ownership Plan Trust and not
individually
By: /s/ Kelly Q. Driscoll
Name: Kelly Q. Driscoll
Title: Vice President
Exhibit 10.20
SECOND AMENDMENT TO FIRST REFUSAL AGREEMENT
THIS SECOND AMENDMENT, dated as of February 29, 1996 (the
"Amendment"), amends the First Refusal Agreement, dated as of
July 12, 1994 (as previously amended, the "First Refusal
Agreement"), among UAL Corporation (the "Company"), The Air
Line Pilots Association, International ("ALPA"), The
International Association of Machinists and Aerospace Workers
("IAM") and the Salaried/Management Employee Director (as
defined in Article FIFTH, Section 1.66 of the Restated
Certificate of Incorporation of the Company (the "Restated
Certificate")) on behalf of the salaried and management
employees of United Air Lines, Inc. who are not represented by
any collective bargaining organization (the "SAM"; together
with ALPA and IAM, the "Employee Groups").
WHEREAS, the Company and the Employee Groups entered into
the First Refusal Agreement in order to effectuate the terms
and intent of the Amended and Restated Agreement and Plan of
Recapitalization, dated as of March 25, 1994 (as previously
amended, the "Recapitalization Agreement"), among the Company,
ALPA and IAM, and the Restated Certificate with respect to,
among other things, the Company's grant of a right of first
refusal to the Employee Groups in connection with certain Non-
Dilutive Issuances (as defined in Article FIFTH, Subsection
3.4(b)(vii) of the Restated Certificate);
WHEREAS, the First Refusal Agreement provides that the
issuance of Equity Securities (as defined in Article FIFTH,
Section 1.37 of the Restated Certificate) pursuant to a
transaction which would constitute an "Other Extraordinary
Matter" pursuant to Article FIFTH, Section 3.4(b) of the
Restated Certificate constitutes a Proposed Equity Issuance
under the First Refusal Agreement and is subject to the right
of first refusal of the Employee Groups;
WHEREAS, the Company proposes to issue Equity Securities
in connection with a four-for-one stock split in the form of a
stock dividend of Common Stock, $.01 par value (the "Common
Stock"), of the Company to holders of record of Common Stock
on a record date to be set by the Board of Directors of the
Company at the February 29, 1996 meeting of the Board (the
"Stock Split"); and
WHEREAS, the Company and the Employee Groups desire to
amend the First Refusal Agreement in certain respects as
hereinafter set forth so that the issuance of Equity
Securities in connection with the Stock Split is not subject
to the right of first refusal of the Employee Groups under the
First Refusal Agreement;
NOW, THEREFORE, in consideration of the foregoing
premises and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Amendments.
A. The first sentence of Section 1.A of the First
Refusal Agreement is amended to read as follows:
If, during the term of this Agreement, the Company
proposes to issue Equity Securities (as defined in
Article FIFTH, Section 1.37 of the Restated
Certificate) pursuant to a transaction which would
constitute an Other Extraordinary Matter pursuant to
Article FIFTH, Section 3.4(b) of the Restated
Certificate or would not constitute an Other
Extraordinary Matter pursuant to Article FIFTH,
Section 3.4(b)(vii)(A) or (B) of the Restated
Certificate (a "Proposed Equity Issuance"), the
Company, prior to making such Proposed Equity
Issuance, shall provide each of the Employee Groups
with a written statement of the specific terms of
such Proposed Equity Issuance (the "Proposed Sale
Notice"); provided, however, that the issuance of
Equity Securities in exchange for the Series A
Convertible Preferred Stock, without par value (the
"Series A Preferred Stock") of the Company, or upon
the conversion of any Equity Security so issued in
exchange, shall not constitute a Proposed Equity
Issuance; provided, further, that the issuance of
Equity Securities in the four-for-one stock split in
the form of a stock dividend of Common Stock, $.01
par value ("Common Stock"), on or with respect to
the Common Stock of the Company, and approved at the
February 29, 1996 meeting of the Board of Directors
of the Company (the "Stock Split"), shall not
constitute a Proposed Equity Issuance.
B. Section 1.G of the First Refusal Agreement is
amended by deleting the word "or" before clause (b)
therein and adding the following immediately before the
end thereof:
, or (c) in connection with the Stock Split.
2. Continuing Effectiveness, etc. As herein amended,
the First Refusal Agreement shall remain in full force and
effect and is hereby ratified and confirmed in all respects.
After the date hereof, all references in the First Refusal
Agreement, the Recapitalization Agreement, the Restated
Charter or any other document to "First Refusal Agreement" or
"Agreement" or similar terms shall refer to the First Refusal
Agreement as amended hereby.
3. Counterparts. This Amendment may be signed in any
number of counterparts, each of which shall be an original,
with the same effect as if the signature thereto and hereto
were upon the same instrument.
4. Governing Law. This Amendment shall be construed in
accordance with and governed by the laws of the State of
Delaware without regard to the conflicts of laws principles
thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the date first above written.
UAL CORPORATION
By: /s/ John A. Edwardson
Name: John A. Edwardson
Title: President and Chief
Operating Officer
AIR LINE PILOTS ASSOCIATION,
INTERNATIONAL
By: /s/ Michael H. Glawe
Name: Michael H. Glawe
Title: Chairman, UAL-MEC
INTERNATIONAL ASSOCIATION OF
MACHINISTS AND AEROSPACE WORKERS
By: /s/ William L. Scheri
Name: William L. Scheri
Title: General Vice President
/s/ Joseph V. Vittoria
Joseph V. Vittoria
Salaried/Management Employee
Director (not personally but as
representative of the
Salaried/Management Employees)
Exhibit 10.21
As Amended
February 29, 1996
UAL CORPORATION
1981 INCENTIVE STOCK PLAN
1. Purpose. The purpose of the UAL Corporation 1981
Incentive Stock Plan (the "Plan") is to attract and retain
outstanding individuals as officers and key employees of UAL
Corporation (the "Company") and its subsidiaries, and to furnish
incentives to such persons by providing such persons
opportunities to acquire shares of the Company's Common Stock,
par value $.01 per share ("Common Stock"), or monetary payments
based on the value of such shares or both, on advantageous terms
as herein provided.
2. Administration. The Plan shall be administered by
a stock option committee (the "Committee") of not less than three
Directors of the Company who shall be appointed from time to time
by the Board of Directors of the Company; provided, however, that
no Director, who within one year prior thereto was eligible to
participate in the Plan, shall be appointed as a member of the
Committee. No member of the Committee shall be eligible, while a
member of the Committee, to receive a Benefit under the Plan.
The Committee is authorized to interpret the provisions of the
Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, to determine the terms and conditions of
Benefits to be granted under the Plan and to make all other
determinations necessary or advisable for the administration of
the Plan, but only to the extent not contrary to or inconsistent
with the express provisions of the Plan.
3. Participants. The Plan shall be administered by
the Compensation Administration Committee of the Board of
Directors of the Company for all grants to (I) any "officer" as
such term is defined in Rule 16a-1(f) under the Securities
Exchange Act of 1934, as amended, or (II) any "covered employee"
within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended, and the regulations promulgated thereunder,
and by the Compensation Committee of the Board of Directors of
the Company for all other grants (such committee, as applicable,
herein called the "Committee"). The Committee shall consider
such factors as it deems pertinent in selecting participants and
in determining the type and amount of their respective Benefits,
including without limitation (i) the financial condition of the
Company; (ii) anticipated profits for the current or future
years; (iii) contributions of participants to the profitability
and development of the Company; and (iv) other compensation
provided to participants.
4. Types of Benefits. Benefits under the Plan may be
granted in any one or a combination of (a) Incentive Stock
Options, (b) Non-qualified Stock Options, and (c) Stock
Appreciation Rights, all as described below.
5. Shares Reserved under the Plan. There is hereby
reserved for issuance under the Plan an aggregate of 1,200,000
shares of Common Stock, which may be newly issued or treasury
shares. (1) All of such shares may, but need not be issued
pursuant to the exercise of Incentive Stock Options. If there is
a lapse, expiration, termination or cancellation of any Benefit
granted hereunder without the issuance of shares or payments of
cash thereunder, or if shares are issued under any Benefit and
thereafter are reacquired by the Company pursuant to rights
reserved upon the issuance thereof, the shares subject to or
reserved for such Benefit may again be used for new options or
rights under this Plan; provided, however, that in no event may
the number of shares issued under this Plan exceed the total
number of shares reserved for issuance hereunder. Subject to
Section 14(a), in no event may the aggregate number of shares of
Common Stock with respect to which options or Stock Appreciation
Rights are granted to any individual exceed 125,000 in any period
of two calendar years, provided, however, that grants made to any
new employee as a condition of employment may not exceed two
times such biennial limit during the first two years of
employment.
(1) Represents shares reserved for issuance under the Plan in
connection with grants made on or after July 12, 1994. Shares
issuable under grants made prior to such date are in addition to
such number of shares.
6. Incentive Stock Options. Incentive Stock Options will
consist of options to purchase shares of Common Stock at purchase
prices not less than one hundred percent (100%) of the fair
market value of such shares on the date of grant. Incentive
Stock Options will be exercisable over not more than ten (10)
years after date of grant and shall terminate not later than
three (3) months after termination of employment for any reason
other than death. If the optionee should die while employed or
within three (3) months after termination of employment, the
right of the optionee or his or her successor in interest to
exercise an option shall terminate not later than twelve (12)
months after the date of death. The aggregate fair market value
(determined as of the time the option is granted) of the shares
of Common Stock which any participant may exercise pursuant to
Incentive Stock Options for the first time in any calendar year
(under all option plans of the Company and its parent and
subsidiary corporations) shall not exceed $100,000.
7. Non-qualified Stock Options. Non-qualified Stock
Options will consist of options to purchase shares of Common
Stock at purchase prices not less than one hundred percent (100%)
of the fair market value of shares on the date of grant. Non-
qualified Stock Options will be exercisable over not more than
ten (10) years after date of grant. Non-qualified Stock Options
will terminate no later than six (6) months after termination of
employment for any reason other than retirement or death, unless
immediately after such termination of employment the optionee
shall be a member of the Board of Directors of the Company, in
which case such options will terminate two (2) years after such
termination of employment. In the event termination of
employment occurs by reason of the optionee's retirement, the
option shall terminate not later than the fixed expiration date
set forth therein. In the event termination of employment occurs
by reason of the optionee's death or if the optionee's death
occurs within six months after termination of employment, the
option shall terminate not later than twelve (12) months after
the date of such death.
8. Stock Appreciation Rights. The Committee may, in
its discretion, grant a Stock Appreciation Right to the holder of
any Non-qualified Stock Option granted hereunder. In addition, a
Stock Appreciation Right may be granted independently of and
without relation to any stock option. Stock Appreciation Rights
shall be subject to such terms and conditions consistent with the
Plan as the Committee shall impose from time to time, including
the following:
(a) A Stock Appreciation Right may be granted with
respect to a Non-qualified Stock Option at the
time of its grant or at any time thereafter up to
six (6) months prior to its expiration.
(b) Each Stock Appreciation Right will entitle the
holder to elect to receive up to 100% of the
appreciation in fair market value of the shares
subject thereto up to the date the right is
exercised. In the case of a Stock Appreciation
Right issued in relation to a Non-qualified Stock
Option, such appreciation shall be measured from
the option price. In the case of a Stock
Appreciation Right issued independently of any
stock option, the appreciation shall be measured
from not less than the fair market value of the
Common Stock on the date the right is granted.
(c) The Committee shall have the discretion to satisfy
a participant's right to receive the amount of
cash determined under subparagraph (b) hereof, in
whole or in part, by the delivery of shares of
Common Stock valued as of the date of the
participant's election.
(d) In the event of the exercise of a Stock
Appreciation Right, the number of shares reserved
for issuance hereunder (and the shares subject to
the related option, if any) shall be reduced by
the number of shares with respect to which the
right is exercised.
9. Nontransferability. Each Benefit granted under
this Plan shall not be transferable other than by will or the
laws of descent and distribution, and shall be exercisable,
during the holder's lifetime, only by the holder.
10. Other Provisions. The award of any Benefit under
the Plan may also be subject to other provisions (whether or not
applicable to the Benefit awarded to any other participant) as
the Committee determines appropriate, including, without
limitation, provisions for the purchase of common shares under
stock options in installments, provisions for the payment of the
purchase price of shares under stock options by delivery of other
shares of the Company having a then market value equal to the
purchase price of such shares, restrictions on resale or other
disposition, such provisions as may be appropriate to comply with
federal or state securities laws and stock exchange requirements
and understandings or conditions as to the participant's
employment in addition to those specifically provided for under
the Plan.
11. Term of Plan and Amendment, Modification or
Cancellation of Benefits. No Benefit shall be granted after
December 8, 2001; provided, however, that the terms and
conditions applicable to any Benefits granted prior to such date
may at any time be amended, modified, extended or canceled by
mutual agreement between the Committee and the participant or
such other persons as may then have an interest therein, so long
as any amendment or modification does not increase the number of
shares of Common Stock issuable under this Plan and any extension
does not extend the option term beyond ten (10) years.
12. Taxes. The Company shall be entitled to withhold
the amount of any tax attributable to any amount payable or
shares deliverable under the Plan after giving the person
entitled to receive such amount or shares notice as far in
advance as practicable, and the Company may defer making payment
or delivery if any such tax may be pending unless and until
indemnified to its satisfaction.
13. Fair Market Value. The Fair Market Value of the
Company's shares of Common Stock at any time shall be determined
in such manner as the Committee may deem equitable or required by
applicable laws or regulations.
14. Adjustment Provisions.
(a) If the Company shall at any time change the number
of issued shares of Common Stock without new
consideration to the Company (such as by stock
dividend or stock split), the total number of
shares reserved for issuance under this Plan, the
maximum number of shares with respect to which
options or Stock Appreciation Rights may be
granted to any individual, the exercise price of
outstanding options (other than options granted
prior to July 12, 1994) and the base for measuring
a Stock Appreciation Right and the number of
shares covered by each outstanding Benefit
(including the number of shares issuable upon
exercise of outstanding options granted prior to
July 12, 1994, which are exercisable for
"reclassification packages" consisting of a
combination of cash and shares, so that the number
of shares included in each such reclassification
package shall adjust as herein provided) shall be
adjusted so that the aggregate consideration
payable to the Company and the value of each such
Benefit shall not be changed. The Committee shall
also have the right to provide for the
continuation of Benefits or for other equitable
adjustments after changes in the shares of Common
Stock resulting from reorganization, sale, merger,
consolidation or similar occurrence.
(b) Notwithstanding any other provision of this Plan,
and without affecting the number of shares
otherwise reserved or available hereunder, the
Committee may authorize the issuance or assumption
of Benefits in connection with any merger,
consolidation, acquisition of property or stock,
or reorganization upon such terms and conditions
as it may deem appropriate.
15. Amendment and Termination of Plan. The Board of
Directors of the Company may amend the Plan from time to time or
terminate the Plan at any time, but no such action shall reduce
the then existing amount of any participant's Benefit or
adversely change the terms and conditions thereof without the
participant's consent. However, except for adjustments expressly
provided for herein, no amendment may, without stockholder
approval, (i) materially increase the Benefits accruing to
participants, (ii) materially increase the number of shares which
may be issued, or (iii) materially modify the requirements as to
eligibility for participation in the Plan.
Exhibit 10.22
As Amended
February 29, 1996
UAL CORPORATION
1988 RESTRICTED STOCK PLAN
1. Purpose.
The purposes of the Plan are to attract and retain key
employees of the Company and its Subsidiaries, to compensate
them for their contributions to the growth and profits of the
Company and its Subsidiaries and to encourage ownership by them
of shares of Common Stock of the Company.
2. Definitions.
(a) "Company" shall mean UAL Corporation.
(b) "Subsidiary" or "Subsidiaries" shall mean a
corporation or corporations of
which the Company owns, directly or indirectly, shares having a
majority of the ordinary voting power for the election of
directors.
(c) "Board" shall mean the Board of Directors of the
Company.
(d) "Committee" shall mean, as applicable, the
Compensation Administration Committee of the Board of Directors
of the Company for all grants to (I) any "officer" as such term
is defined in Rule 16a-1(f) under the Securities Exchange Act of
1934, as amended, or (II) any "covered employee" within the
meaning of Section 162(m) of the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder, and the
Compensation Committee of the Board of Directors of the Company
for all other grants.
(e) "Plan" shall mean the UAL Corporation 1988
Restricted Stock Plan.
(f) "Restricted Share" shall mean a share of Common
Stock of the Company, par value $.01 per share ("Common Stock"),
allocated to a Recipient pursuant to the Plan.
(g) "Recipient" shall mean an employee of the Company
or a Subsidiary to whom shares are allocated pursuant to the Plan
and shall be deemed to include such Recipient's estate and the
beneficiaries of such estate as the context may require.
(h) "Change in Control" shall be deemed to have
occurred if (A) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing
25% or more of the combined voting power of the Company's then
outstanding securities (such percentage ownership to be
determined in the manner provided in Rule 13d-3(d)(1)(i) under
the Exchange Act); or (B) during any period of two consecutive
years or portion thereof not including any period prior to July
1, 1993, individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (A) or (C) of
this Subsection) whose election by the Board or nomination for
election by the Company's shareholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; or (C) the
shareholders of the Company approve a merger or consolidation of
the Company with any other corporation (or similar transaction),
other than a merger or consolidation (or similar transaction)
which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 80% of the
combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger,
consolidation or similar transaction (either alone or in
combination with new or additional voting securities held by
management of the Company and its subsidiaries) or the
shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets. For purposes of (I) clause (A) of the
preceding sentence, beneficial ownership of securities of United
Air Lines, Inc. ("United") representing 25% or more of the
combined voting power of United's then outstanding securities
shall be deemed to constitute such beneficial ownership of the
Company and (II) clause (C) of the preceding sentence, the
approval by the shareholders of United of a plan of complete
liquidation of United or an agreement for the sale or disposition
by United of all or substantially all of United's assets shall be
deemed to constitute approval by the shareholders of the Company
of such events in respect of the Company.
3. Restricted Shares Available Under the Plan.
(a) An aggregate of five hundred thousand (500,000)
shares of Common Stock, par value $5 per share, will be available for
allocation under the Plan. (1) Such shares, which shall be treasury
shares of such Common Stock, shall be credited to a Restricted Share
reserve. (2) Upon the allocation of shares hereunder, said reserve
shall be reduced by the number of shares so allocated. Upon the failure
of a Recipient to complete on a timely basis all of the requirements of
Section 6 in connection with the allocation of any Restricted Shares or
upon the forfeiture of any Restricted Shares pursuant to Section 7(d) or
Section 9, the Restricted Share reserve shall be increased by such number
of shares, and such Restricted Shares may again be the subject of allocations
hereunder.
(b) In the event of any merger, consolidation, reorganization,
recapitalization, or other change in corporate structure of the Company,
appropriate adjustment shall be made in the aggregate number of shares
which may be allocated under the Plan and to the number of shares which
may be allocated to any individual. Such adjustment shall be made by the
Committee, whose determination as to what adjustment shall be made, and
the extent thereof, shall be final. No fractional shares of stock shall
be allocated or authorized by any such adjustment. In the event of a
stock dividend or stock split, the aggregate number of shares which may be
allocated to any individual shall be proportionately adjusted.
(1) Pursuant to the recapitalization of the Company on July 12,
1994, each share of old Common Stock, par value $5 per share, was
reclassified and converted into, among other things, 1/2 of a
share of new Common Stock, par value $.01 per share.
(2) The Restricted Share reserve of old Common Stock immediately
prior to the Effective Time (as defined in the Agreement and Plan
of Recapitalization of the Company and which occurred on July 12,
1994) shall continue to constitute such Restricted Share reserve
of new Common Stock as of the Effective Time. Such reserve is
equal to 142,500 shares of new Common Stock as of the Effective
Time.
4. Eligibility and Making of Allocations.
(a) Any officer or key employee of the Company or any
Subsidiary shall be eligible to receive an allocation of
Restricted Shares pursuant to the Plan.
(b) The Committee shall from time to time select those
employees who will receive allocations and determine the number
of Restricted Shares subject to each such allocation. Subject to
Section 3(b) above, in no event may the aggregate number of
Restricted Shares allocated to any individual exceed 30,000 in
any period of two calendar years, provided, however, that
allocations made to any new employee as a condition of employment
may not exceed two times such biennial limit during the first two
years of employment
5. Form of Allocations.
(a) Each allocation shall specify the number of
Restricted Shares subject thereto. At the time of making any
allocation, the Committee or its designee shall advise the
Recipient thereof by delivery of written notice in the form
prescribed by the Committee.
(b) The Company shall take such action as shall be
necessary to cause any Restricted Shares not previously so listed
to be listed on the New York Stock Exchange and/or such other
exchange or exchanges on which shares of the same class as the
Restricted Shares are then listed.
6. Actions Required of Recipients.
(a) Within 30 days of an allocation of Restricted
Shares, the Recipient shall deliver to the Company an agreement
in writing, signed by such Recipient, in form and substance as
prescribed by the Committee, together with a stock power, duly
endorsed in blank, relating to such Restricted Shares. The
Company may require that the Recipient represent to the Company
in such agreement that such Recipient is acquiring such
Restricted Shares for the purpose of investment and with no
present intention to transfer, sell or otherwise dispose of such
shares, except such distribution by a legal representative as
shall be required by will or the laws of descent and distribution
of any jurisdiction in administering the estate of any Recipient.
In the event the Company requires such a representation in
connection with an acquisition of Restricted Shares hereunder,
such shares shall be transferable only if (i) the proposed
transfer shall be permissible pursuant to the Plan and (ii) the
Company shall determine at the time of the lapse of the
restrictions thereon pursuant to Section 7(c) or at any time
thereafter (based upon an opinion of counsel satisfactory to the
Company, if the Company shall so require) that such a transfer
would comply with applicable securities laws.
(b) The date on which such agreement and stock power
are received by the Company shall be deemed the "Date of
Transfer" of the Restricted Shares. The failure of a Recipient
to deliver such agreement and stock power within 30 days from the
date of an allocation of shares shall terminate such allocation
to the Recipient.
7. Restrictions.
(a) On or promptly after the Date of Transfer of
Restricted Shares, a certificate or certificates representing
such shares shall be prepared in the Recipient's name. The
Recipient shall thereupon be a stockholder with respect to all
the shares represented by such certificate or certificates and
shall have all the rights of a stockholder with respect to all
such shares, including the right to vote such shares and to
receive all dividends and other distributions (subject to the
provisions of Section 7(b)) paid with respect to such shares,
provided, however, that such shares shall be subject to the
restrictions hereinafter described in Section 7(d). Certificates
of stock representing Restricted Shares shall be imprinted with a
legend to the effect that the shares represented thereby may not
be sold, exchanged, transferred, pledged, hypothecated or
otherwise disposed of except in accordance with the terms of the
Plan, and each transfer agent for the Common Stock shall be
instructed to the same effect in respect of such shares. In aid
of such restrictions, during the Restricted Period with respect
to the Restricted Shares represented by such a certificate, such
certificate, together with the stock power described in Section
6(a), shall remain in the physical custody of the Company.
(b) In the event that, as the result of an event
giving rise to an adjustment described in Section 3(b), the
Recipient shall, as the owner of Restricted Shares, receive new
or additional or different shares of stock or securities, the
certificate or certificates for, or other evidences of, such new
or additional or different shares or securities shall also be
imprinted with a legend as provided in Section 7(a) and, together
with a stock power duly endorsed in blank by the Recipient, shall
remain in the physical custody of the Company, and all provisions
of the Plan relating to restrictions and lapse of restrictions
shall thereupon be applicable to such new or additional or
different shares or securities; provided, however, that if the
Recipient shall receive rights, warrants or fractional interests
in respect of any of such Restricted Shares, such rights or
warrants may be held, exercised, sold or otherwise disposed of,
and such fractional interests may be settled, by the Recipient,
without regard to such restrictions.
(c) The term "Restricted Period" with respect to
Restricted Shares shall mean a period commencing on the Date of
Transfer of such shares and ending ten (10) years after such Date
of Transfer or, if sooner, upon the first to occur of any of the
following:
(i) the dissolution of the Company, or any merger
or consolidation of the Company where the Company is not the
surviving corporation and the surviving corporation does not
agree to exchange the Restricted Shares outstanding
hereunder for shares of stock or securities of which it is
the issuer having an aggregate value equal to the aggregate
value of such Restricted Shares;
(ii) a Change in Control;
(iii) a determination by the Committee at any time
to accelerate or terminate such Restricted Period, but only
to the extent of such determination.
Notwithstanding the foregoing provision of this Section 7(c), the
Committee may provide with respect to any allocation of
Restricted Shares that the "Restricted Period" with respect to
such Restricted Shares shall lapse based upon the attainment by
the Company of one or more target levels of pre-tax income (as
determined under generally accepted accounting principles but
without regard to any items (whether gains or losses) otherwise
included therein relating to (1) the UAL Corporation Employee
Stock Ownership Plan, the UAL Corporation Supplemental ESOP, or
the trusts relating thereto, (2) any event or occurrence that the
Committee determines to be either not directly related to the
operations of the Company or not within the reasonable control of
the Company's management, (3) the Plan and (4) the Company's
Incentive Compensation Plan). Such target level(s) shall be
determined by the Committee on or before the allocation of such
Restricted Shares, shall relate to such period or periods of time
as the Committee shall prescribe and may provide that any period
in which such pre-tax income is less than zero may be
disregarded.
(d) During the Restricted Period applicable to any
Restricted Shares and except as otherwise specifically provided
in the Plan, none of such Restricted Shares may be sold,
assigned, exchanged, transferred, pledged, hypothecated or
otherwise disposed of or encumbered. If a Recipient ceases to be
an employee of the Company or any Subsidiary for any reason, all
of such Recipient's Restricted Shares which at such time remain
subject to the restrictions imposed hereunder shall be forfeited
and returned to the Company, unless and to the extent the
Committee determines to end the Restricted Period with respect to
any such Restricted Shares pursuant to Section 7(c)(iii).
(e) The restrictions set forth in Section 7(d) shall
lapse with respect to Restricted Shares when the Restricted
Period applicable to such shares expires, as described in Section 7(c).
8. Administration.
The Committee shall administer the Plan and construe
its provisions. The Committee is authorized, subject to the
provisions of the Plan, to establish such rules and regulations
as it deems necessary for the proper administration of the Plan
and to determine such other terms and conditions of Restricted
Shares and make such other determinations and interpretations and
to take such action in connection with the Plan as it deems
necessary or advisable. All determinations by the Committee in
carrying out, administering or construing this Plan shall be
final, binding and conclusive for all purposes and upon all
persons interested herein.
9. Limitations.
(a) Except as provided herein, no person shall at any
time have any right to receive an allocation of Restricted Shares
hereunder, and no person shall have authority to enter into an
agreement for the making of an allocation hereunder or to make
any representation or warranty with respect thereto without the
approval of the Committee and the Board.
(b) Recipients of allocations shall have no rights in
respect thereof except as set forth in the Plan. Except as
provided in Section 6(a), in the event that any attempt shall be
made to sell, assign, transfer, pledge, hypothecate or otherwise
dispose of or encumber any Restricted Shares which are then
subject to restrictions hereunder, the shares which are the
subject of such attempted disposition shall be deemed forfeited
and shall be returned to the Company. No Recipient shall have
any rights as a stockholder with respect to any shares reserved
for allocation hereunder nor shall any such shares be earmarked
for any Recipient prior to the Date of Transfer of such shares.
(c) Neither the action of the Company in establishing
the Plan, nor any action taken by it or by the Board or the
Committee under the Plan, nor any provision of the Plan, shall be
construed as giving to any person the right to be retained in
employment with the Company or any Subsidiary.
10. Amendment, Suspension or Termination of the Plan in Whole or
in Part.
The Board may amend, suspend or terminate the Plan in
whole or in part at any time, provided that such amendment,
suspension or termination shall not, without a Recipient's
consent, affect adversely such Recipient's rights with respect to
allocations of Restricted Shares theretofore made; and provided,
further, that no modification of the Plan by the Board without
approval of the stockholders of the Company shall (i) increase
the maximum number of Restricted Shares available for allocation
under the Plan pursuant to Section 3 of the Plan or (ii) render
any member of the Committee eligible to receive an allocation of
Restricted Shares at any time while such member is serving on the
Committee.
11. Withholding.
The Company shall be entitled to withhold the amount of
taxes which the Company deems necessary to satisfy any applicable
federal, state and local tax withholding obligations arising from
allocations of or the lapse of restrictions on Restricted Shares
under the Plan, or to make other appropriate arrangements with
Recipients to satisfy such obligations. At the discretion of the
Committee, the Company may deduct or withhold from any transfer
or payment to a Recipient, or may receive payment from a
Recipient, in the form of cash or other property, including
shares of Common Stock of the Company.
12. Effective Date and Term of Plan.
(a) The Plan was adopted by the Board on March 31,
1988, subject to approval of the Plan by the shareholders of the
Company within twelve (12) months after its adoption by the
Board. If the Plan is not so approved, the Plan shall be
ineffective. No Restricted Shares may be allocated to a
Recipient under the Plan unless and until such shareholders have
so approved the Plan.
(b) The Plan shall terminate ten (10) years after the
date of its adoption by the Board, unless terminated sooner by
the Board. No Restricted Shares may be allocated under the Plan
after its termination date, but the Plan shall continue in effect
with respect to all Restricted Shares which, as of such
termination date, have been allocated under the Plan.
Exhibit 10.25
Description Of Complimentary Travel
And Cargo Carriage Benefits For UAL Directors
Flight and Cargo Benefits - Director and Spouse
Each director and spouse are entitled to complimentary, positive
space travel on United Airlines for pleasure or UAL business
travel. Each child of a director under 25 and a dependent of the
director is also eligible for complimentary, positive space
travel on United. The director and spouse are also entitled to
use of the Red Carpet Rooms of United Airlines. Each UAL
director and spouse and eligible dependents are also entitled to
complimentary cargo carriage (excludes ground transportation) on
United Airlines of up to 2,500 pounds per director per year for
personal goods only (not business related). The goods will be
shipped as general freight.
Flight and Cargo Benefits - Director Emeriti
Each UAL Director Emeritus is afforded the same flight and cargo
benefits as are provided to current directors. From and after a
Change in Control (as defined in the UAL Corporation Retirement
Plan for Outside Directors), the travel benefit for Directors
Emeriti immediately prior to the Change in Control (including non-
employee directors who are directors immediately prior to the
change in control) or, if more favorable, for the directors or
the Chairman or President of UAL from time to time, is fixed as
the travel benefit in effect for Directors Emeriti from and after
such Change in Control.
Tax Consequences
Each director and each Director Emeritus is paid cash in an
amount designed as reimbursement for federal and state income tax
liability on the value of the above benefits.
Exhibit 10.34
Officer Benefits
UAL Corporation and United Air Lines, Inc.
Welfare Benefits
Each officer of United and UAL is eligible to receive "split-
dollar" life insurance and 24-hour all-risk accidental death and
dismemberment ("AD&D") insurance. Under the split-dollar
program, officers receive whole life coverage equal to
approximately three times base salary less $50,000. UAL and
United pay the entire premium, partly with cash and partly with
loans against the policy's cash value. UAL and United recover
their cash payments from the cash value of the policy. The AD&D
insurance pays a $250,000 benefit upon the accidental death or
dismemberment of the insured.
Officers are covered by a self-insured supplemental long term
disability plan which provides a supplement to the Company's
disability benefit for certain management employees equal to 50%
of monthly pay in excess of $20,000.
Company Cars
Designated senior officers are entitled to the personal use of
cars owned or leased by United.
Club Memberships
United pays the cost of social club memberships of designated
senior officers only upon approval by the Chairman and Chief
Executive Officer.
Travel Benefits
Free travel is provided on United for active and retired officers
of UAL and United and their spouses and dependent children, and
payments are made to federal and state tax authorities with
respect to the imputed tax liability on up to $12,000 in value of
travel benefits for active officers, and up to $6,000 for retired
officers. This benefit also includes admission to United's Red
Carpet Club. Active officers who are also directors of UAL
receive the benefits provided to active directors.
Financial Advisory Services
Each officer of UAL and United at the Senior Vice President level
and above are entitled to receive reimbursement for costs
incurred for professional financial counseling in the areas of
cash management, taxes, investments, insurance and estate
planning. Reimbursement is limited to $7,000 in the first year
the officer is admitted to the program, and to $4,000 per year
thereafter. Unused reimbursements may be carried over and used
in succeeding years.
EXHIBIT 10.37
Change Order No. - 7
Purchase Agreement No. 1663
Page 2
CHANGE ORDER NO. 7
DATED SEPTEMBER 19, 1995
TO
PURCHASE AGREEMENT NO. 1663
BETWEEN
THE BOEING COMPANY
AND
UNITED AIR LINES, INC.
Purchase Agreement No. 1663 between The Boeing Company and United Air
Lines, Inc. is hereby further amended as follows:
I. Effect of Changes on Exhibit A (Detail Specification).
The attached Weight and Price Tabulation, including the effects
of the changes listed, are hereby deemed incorporated into the Detail
Specification.
II. Effect of Changes on the Purchase Agreement Except Exhibit A).
The effects of the foregoing changes, except Rapid Revisions,
are as follows:
A. Delivery Schedule
There is no change to the Aircraft delivery schedule as set
forth in Article 2.1 of the Agreement on account of the attached
changes.
Change Order No. - 7
Purchase Agreement No. 1663
Page 3
B. Aircraft Price.
The Basic Price of each affected 777-222 Aircraft as
set forth in Article 3 of the Agreement is adjusted on account of the
foregoing changes as follows:
Contract Block No. Price (1990 $ STE)
[*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
SIGNED as of the day and year first above written.
THE BOEING COMPANY
By /s/ R. C. Nelson
Title Attorney-In-Fact
UNITED AIR LINES, INC.
By /s/ Douglas A. Hacker
Title Senior Vice President and
Chief Financial Officer
Enclosure B to B-S210-9531858
Page 1 of 5
Change Summary
Change Order 7 to Purchase Agreement 1663
Model 777-222 Aircraft
Post Contract Change Requests
Change Change Title Engineering MEW OEW Change Price (1990 $s STE)
Number Tab Block
None
Master Changes
Change Change Title Engineering MEW OEW Change Price (1990 $s STE)
Number Tab Block
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Enclosure B to B-S210-9531858
Page 2 of 5
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Enclosure B to B-S210-9531858
Page 3 of 5
Miscellaneous Changes
Change Change Title Engineering MEW OEW Change Price (1990 $s STE)
Number Tab Block
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Enclosure B to B-S210-9531858
Page 4 of 5
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Enclosure B to B-S210-9531858
Page 5 of 5
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Total Weight and PRICE Change
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT]
EXHIBIT 10.38
CHANGE ORDER NO. 8
DATED OCTOBER 17, 1995
TO
PURCHASE AGREEMENT NO. 1663
BETWEEN
THE BOEING COMPANY
AND
UNITED AIR LINES, INC.
Purchase Agreement No. 1663, between The Boeing Company and United Air
Lines, Inc. is hereby further amended as follows:
I. Effect of Changes on Exhibit A (Detail Specifications.
The attached Weight and Price Tabulation, including the effects of the
changes listed, are hereby deemed incorporated into the Detail
Specifications.
II. Effect of Changes on the Purchase Agreement (Except Exhibit A).
The effects of the foregoing changes, except Rapid Revision, are as
follows:
A. Delivery Schedule.
There is no change to the Aircraft delivery schedule as set forth
in Article 2.1 of the Agreement on account of the attached changes.
Change Order No. 8 to
Purchase Agreement No. 1663
Page 2
B. Aircraft Price.
The Basic Price of each affected 777-222 Aircraft as set forth in
Article 3 of the Agreement is adjusted on account of the foregoing changes
as follows:
Contract Block No. Price (1990 $ STE)
[*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
SIGNED as of the day and year first above written.
THE BOEING COMPANY
By /s/ R.C. Nelson
Title Attorney-in-Fact
UNITED AIR LINES, INC.
By /s/ Douglas A. Hacker
Title Senior Vice President and
Chief Financial Officer
Attachment to Change Order No. 8
to Purchase Agreement No. 1663
Page 1 of 3
WEIGHT AND PRICE TABULATION
Model 777-222 IGW
Post Contract Change Requests
Change Number Change Title Engineering MEW OEW Change
(Equivalent 777-222 Tab Block Price (1990
Change) $s STE)
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
Attachment to Change Order No. 8
to Purchase Agreement No. 1663
Page 2 of 3
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
Master Changes - Price Adjustments
Change Number Change Title Engineering MEW OEW Change
(Equivalent 777-222 Tab Block Price (1990
Change) $s STE)
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
Attachment to Change Order No. 8
to Purchase Agreement No. 1663
Page 3 of 3
Miscellaneous Changes
Change Number Change Title Engineering MEW OEW Change
(Equivalent 777-222 Tab Block Price (1990
Change) $s STE)
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
Rapid Revisions
Change Number Change Title Engineering MEW OEW Change
(Equivalent 777-222 Tab Block Price (1990
Change) $s STE)
TOTAL WEIGHT AND PRICE CHANGE
Engineering Tab Block MEW OEW 1990 $ STE
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Note: Rapid Revisions are included in this Change Order only for the
purpose of documenting the Aircraft configuration. The Price of Rapid
Revisions will be accounted for on the Aircraft invoice at time of
delivery.
EXHIBIT 10.39
Supplemental Agreement No. 3
to
Purchase Agreement No. 1663
between
The Boeing Company
and
UNITED AIR LINES, INC.
Relating to Boeing Model 777-222 Aircraft
THIS SUPPLEMENTAL AGREEMENT, entered into as of the 27th day
of October, 1995, by and between THE BOEING COMPANY, a Delaware
corporation (hereinafter called Boeing), and UNITED AIR LINES,
INC., a Delaware corporation, (hereinafter called Buyer);
W I T N E S S E T H:
WHEREAS, the parties hereto entered into an agreement dated
as of December 18, 1990, relating to Boeing Model 777-222 aircraft
(hereinafter referred to as the "Aircraft"), which agreement, as
amended, together with all exhibits and specifications attached
thereto and made a part thereof which is hereinafter called the
"Purchase Agreement" and:
WHEREAS, Buyer wishes to convert certain "A" Market Aircraft
to "B" Market Aircraft;
NOW THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree to supplement the
Purchase Agreement as follows:
1. Article 1, "Subject Matter of Sale", is hereby deleted in its
entirety and replaced with new Article 1, which is Attachment No.
1 hereto.
P.A. No. 1663 S3-1
2. Article 2, "Delivery of Aircraft; Title and Risk of Loss", is
hereby deleted in its entirety and replaced with a new Article 2
which is Attachment No. 2 hereto.
3. Article 3, "Basic Price", is hereby deleted in its entirety
and replaced with a new Article 3 which is Attachment 3 hereto.
4. Article 5, "Payment", is hereby deleted in its entirety and
replaced with a new Article 5 which is Attachment No. 4 hereto.
5. Article 8, "Federal Aviation Administration Requirements", is
hereby deleted in its entirety and replaced with a new Article 8
which is attachment No. 12 hereto.
6. Article 9, "Demonstration Flights and Test Data", is hereby
deleted in its entirety and replaced with a new article 9 which is
Attachment No. 13 hereto.
7. In paragraph no. 1 of Part J to Exhibit B of the Purchase
Agreement, Boeing agrees to provide Document No. M6-TBD, "Supplier
Component Reliability (MTBF/MTBUR) Program Model 777 Airplanes";
prior to delivery of the first Model 777 Aircraft. Boeing hereby
agrees to provide such document prior to delivery of the first 777
"A" Market Aircraft and also prior to delivery of the first 777
"B" Market Aircraft. Such document delivered for the 777 "B"
Market Aircraft will contain only these systems in the "B" Market
Aircraft that have differences in components, parts, software, of
interfaces from the "A" Market Aircraft that relate to form, fit,
function, interchangeability, reliability, or maintainability of
such components, parts, software or interfaces.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663 S3-2
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
10. Exhibit A to the Purchase Agreement is hereby deleted in its
entirety and replaced with two new Exhibits A-1 and A-2, which are
Attachments Nos. 5 and 6 respectively hereto.
11. Exhibit C to the Purchase Agreement is hereby deemed to apply
exclusively to the 777 "A" Market Aircraft. A new Exhibit C-1
which applies exclusively to the 777 "B" Market Aircraft is hereby
incorporated into the Purchase Agreement and is Attachment No. 14
hereto.
12. In Letter Agreement No. 6-1162-DLJ-829, the "Performance
Guarantees", is a defined term referring to the Performance
Guarantees attached to Letter Agreement No. 6-1162-DLJ-846.
Henceforth, the Performance Guarantee referred to in Letter
Agreement No. 6-1162-DLJ-829 for the "A" Market Aircraft will be
those attached to Letter Agreement no. 6-1162-DLJ-1193 and for the
"B" market Aircraft will be those attached to Letter Agreement No.
6-1162-RCN-925.
13. Letter Agreement No. 1162-DLJ-836, [*CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
paragraph No. 1 applies exclusively to the "A" Market Aircraft.
14. Letter Agreement No. 6-1162-DLJ-848, [*CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
paragraph Nos. 2, 3, 11, and 14 apply exclusively to the "A"
Market Aircraft. Paragraph No. 1 applies to the "B" Market
Aircraft only if there is a significant configuration change from
the "A" Market (such as a crew rest). [*CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
P.A. No. 1663 S3-3
15. The following Letter Agreements apply exclusively to the "A"
Market Aircraft:
6-1162-DLJ-846 - Performance Guarantees
6-1162-DLJ-1193 - Performance Guarantees
6-1162-DLJ-935 - [*CONFIDENTIAL MATERIAL OMITTED AND
6-1162-DLJ-947 - FILED SEPARATELY WITH THE SECURITIES
6-1162-DLJ-948 - AND EXCHANGE COMMISSION PURSUANT TO
6-1162-DLJ-955 - A REQUEST FOR CONFIDENTIAL
1663-5 - TREATMENT]
16. Letter Agreement No. 6-1162-DLJ-837, [*CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT], is
hereby deleted in its entirety and replaced with a new Letter
Agreement 6-1162-RCN-859, which is Attachment No. 7 hereto.
17. In order to add the "B" Market Aircraft engine price to the
airframe escalation exhibit, Exhibit D to the Purchase Agreement
is hereby deleted in its entirety and replaced with a new Exhibit
D which is Attachment No. 8 hereto.
18. A new Letter Agreement No. 6-1162-RCN-925, ""B" Market
Aircraft Performance Guarantees" which contains the Performance
Guarantees for the "B" Market Aircraft is hereby incorporated into
the Purchase Agreement and Attachment No. 9 hereto.
19. A new Letter Agreement No. 6-1162-RCN-851, [*CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] which addresses certain Buyer's "B" Market Aircraft to
be used in the [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT] is hereby incorporated into
the Purchase Agreement and is Attachment No. 10 hereto.
20. Letter agreement No. 6-1162-DLJ-835, [*CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] is
hereby deleted in its entirety and replaced with a new Letter
Agreement No. 6-1162-RCN-866 which is Attachment No. 11 hereto.
21. A new Letter Agreement No. 1663-5A [*CONFIDENTIAL MATERIAL
P.A. No. 1663 S3-4
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] is
hereby incorporated into the Purchase Agreement and is Attachment
No. 15 hereto.
22. A new Letter Agreement No. 6-1162-RCN-962 [*CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] is hereby incorporated into the Purchase Agreement and
is Attachment No. 17 hereto.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
24. The parties agree that for any provision in the Purchase
Agreement which is applicable to the "B" Market Aircraft and
contains a reference to Part E of Exhibit C; such reference shall
be deemed to be Part E of Exhibit C-1.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
26. This Supplemental Agreement, including all of the
Attachments, will be treated as privileged and confidential
information pursuant to the terms of Letter Agreement No. 6-1162-
DLJ-832.
The Purchase Agreement shall be deemed to be supplemented to the
extent herein provided and as so supplemented shall continue in
full force and effect.
EXECUTED IN DUPLICATE as of the day and year first above written.
THE BOEING COMPANY UNITED AIR LINES
By: /s/ R.C. Nelson By: /s/ Douglas A. Hacker
Its: Attorney-in-Fact Its: Senior Vice President and
Chief Financial Officer
P.A. No. 1663 S3-5
Attachment No. 1
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 1
ARTICLE 1. Subject Matter of Sale.
1.1.1 "A" Market Aircraft Description". Boeing
shall sell and deliver to Buyer, and Buyer shall purchase from
Boeing, sixteen (16) Boeing Model 777-222 "A" Market Aircraft.
Such aircraft are referred to individually and collectively as the
"Aircraft" or "AIRCRAFT" or "the "A" Market Aircraft". The
Aircraft will be manufactured by Boeing in accordance with Boeing
Detail Specification [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT] (as modified and describe in
Exhibit A-1 attached hereto) as it may be modified from time to
time in accordance with the terms and conditions of Article 7
herein. Such Detail Specification as so modified is by this
reference incorporated in this Agreement and is hereinafter
referred to as the "Detail Specification" or "the "A" Market
Detail Specification." In connection with the sale and purchase of
the Aircraft, Boeing shall also deliver to Buyer other things
under this Agreement including data, documents, training and
services.
1.1.2 "B" Market Aircraft Description". Boeing
shall sell and deliver to Buyer, the Buyer shall purchase from
Boeing, eighteen (18) Boeing Model 777-222 "B" Market Aircraft.
Such aircraft are referred to individually and collectively as the
"Aircraft" or "AIRCRAFT" or "the "B" Market Aircraft". The
Aircraft will be manufactured by Boeing in accordance with Boeing
Detail Specification [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT] (as modified and described
in Exhibit A-2 attached hereto) as it may be modified from time to
time in accordance with the terms and conditions with Article 7
herein. Such Detail Specification as so modified by this reference
incorporated in this Agreement and is hereinafter referred to as
the "Detail Specification" or "the "B" Market Detail
Specification." In connection with the sale and purchase of the
Aircraft, Boeing shall also deliver to Buyer other things
P.A. No. 1663 S3-6
Attachment No. 1
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 2
under this Agreement including data, documents, training and
services.
1.2 Performance Guarantees. Any performance
guarantees applicable to the Aircraft shall be expressly included
in this Agreement.
P.A. No. 1663 S3-7
Attachment No. 2
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 1
ARTICLE 2. Delivery of Aircraft; Title and Risk of Loss.
2.1 Time of Delivery. Each Aircraft shall be
delivered to Buyer assembled and ready for flight, and Buyer shall
accept delivery of such Aircraft during or, if mutually agreed,
before the months set forth in the following schedule:
Month and Year
of delivery Quantity of Aircraft
"A" Market Aircraft
May 1995 Three (3)
June 1995 Two (2)
July 1995 One (1)
September 1995 One (1)
October 1995 One (1)
November 1995 One (1)
December 1995 Two (2)
February 1996 One (1)
[*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]
"B" Market Aircraft
[*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]
If Boeing gives Buyer at least ten (10) days' advance notice of
the delivery date for an Aircraft, and delivery is delayed beyond
P.A. No. 1663 S3-1
Attachment No. 2
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 2
such date due to Buyer's fault or responsibility, Buyer shall
promptly reimburse Boeing for all costs and expenses incurred by
Boeing as a result of such delay, including but not limited to
reasonable amounts for storage, insurance, taxes, preservation of
protection of the Aircraft, and interest on payments due.
2.2 Place of Delivery. Each Aircraft shall be
delivered at an airport in the State of Washington selected by
Boeing or at such alternate site as may be mutually agreed upon in
writing. If delivery is made at an alternate site at Buyer's
request, Buyer shall promptly reimburse Boeing for any increased
costs incurred by Boeing as a result thereof.
2.3 Title and Risk of Loss. Title to and risk of
loss of each Aircraft shall pass from Boeing to Buyer upon
delivery of such Aircraft but not prior thereto.
2.4 Documents of Title. Upon delivery of and
payment for each Aircraft, Boeing shall deliver to Buyer a bill of
sale duly conveying to Buyer good title to such Aircraft free and
clear of all liens, claims, charges and encumbrances of every kind
whatsoever, and such other appropriate documents of title as Buyer
may reasonably request.
P.A. No. 1663 S3-2
Attachment No. 3
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 1
Article 3. Price of Aircraft.
3.1 Basic Price.
3.1.1 Basic Price for the "A" Market Aircraft. The
basic price of each of the "A" Market Aircraft shall be equal to
the sum of [*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT] and (ii) such price adjustments
applicable to such "A" Market Aircraft as may be made pursuant to
the provisions of this Agreement, including Article 7 (Changes to
Detail Specification) and Article 8 (FAA Requirements) or other
written agreements executed by Buyer and Boeing.
3.1.2 Basic Price for the "B" Market Aircraft. The
basic price of each of the "B" Market Aircraft shall be equal to
the sum of (i) the airframe and special features for
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] and (ii) such price adjustments applicable
to such "B" Market Aircraft as may be made pursuant to the
provisions of this Agreement, including Article 7 (Changes to
Detail Specification) and Article 8 (FAA Requirements) or other
written agreements executed by Buyer and Boeing.
3.2 Purchase Price.
The purchase price of each Aircraft shall be equal
to the sum of the following items as determined at the time of
such Aircraft delivery; (i) the Basic Price of the "A" Market or
"B" Market Aircraft, as applicable, (ii) the Airframe and Engine
Price Adjustments to be determined pursuant to Exhibit D (Price
Adjustment Due to Economic Fluctuations - Airframe and Engine)
attached hereto or the applicable provisions determined in Article
3.1 above, and (iii) such price adjustments applicable to such
Aircraft as may be made pursuant to the provisions of this
Agreement, including Exhibit E (Buyer Furnished Equipment
P.A. No. 1663 S3-1
Attachment No. 3
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 2
Document) or other written agreements executed by Boeing and Buyer
(the "Purchase Price").
P.A. No. 1663 S3-2
Attachment No. 4
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 1
ARTICLE 5. Payment.
5.1 Advance Payment Base Price. The advance payment
base price of each Aircraft, depending on the month and year of
scheduled delivery, is indicated below:
Month and Year of Advance Payment Base
Scheduled Delivery Price per Aircraft
"A" Market Aircraft
[*CONFIDENTIAL MATERIAL OMITTED
May 1995 AND FILED SEPARATELY WITH THE
June 1995 SECURITIES AND EXCHANGE COMMISSION
July 1995 PURSUANT TO A REQUEST FOR
September 1995 CONFIDENTIAL TREATMENT]
October 1995
November 1995
December 1995
February 1996
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
"B" Market Aircraft
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663 S3-1
Attachment No. 4
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 2
Such advance payment base prices will be used to determine the
amount of the first advance payment to be made by Buyer on each
Aircraft pursuant to the provisions of Article 5.2. The advance
payment base price of each Aircraft has been established using
currently available forecast of the escalation factors used by
Boeing and applicable to the scheduled month and year of Aircraft
delivery. The advance payment base prices will be further
increased or decreased by Boeing not later than twenty-five (25)
months prior to the scheduled month of delivery, as required to
reflect the effects of the then-current forecasted escalation
factors used by Boeing in accordance with Exhibit D. The advance
payment base price of each Aircraft, including any adjustments
made thereto, as contemplated herein, is referred to as the
"Advance Payment Base Price."
5.2 Advance Payments. Buyer shall pay to Boeing advance
payments for each Aircraft on the dates indicated in the schedule
below. The advance payment amount for an Aircraft due on a payment
date shall be equal to (i) the sum of the advance payment
percentages given in such schedule through the payment date
multiplied by the Advance Payment Base Price for the Aircraft
provided to Buyer pursuant to Article 5.1 for such payment date,
less (ii) the sum of the advance payment amounts paid by Buyer to
Boeing on such Aircraft up to such payment date.
P.A. No. 1663 S3-2
Attachment No. 4
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 3
Due Date of Payment Amount Due per Aircraft
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT]
5.3 Payment for Aircraft. Concurrently with delivery of
each Aircraft, Buyer shall pay to Boeing the Purchase Price
thereof, less the total amount of advance payments theretofore
received by Boeing for such Aircraft under Article 5.2.
5.4 Repayment of Advance Payments. If this Agreement is
terminated with respect to any Aircraft (i) by Buyer under
Article 6.2, (ii) by Buyer under Article 11, or (iii) by failure
of Buyer to provide Boeing with written notice pursuant to
Article 6.4, then Boeing shall promptly repay to Buyer, without
interest, any advance payments received by Boeing from Buyer here
under with respect to any Aircraft so terminated. If this
Agreement is terminated by Boeing under Article 6.2, then Boeing
shall promptly
P.A. No. 1663 S3-3
Attachment No. 4
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 4
repay to Buyer with interest any advance payments received by
Boeing from Buyer hereunder with respect to any Aircraft so
terminated.
5.5 Payment in United States Funds. All prices and
payments set forth in this Agreement are in United States
Dollars. All payments required under this Agreement shall be
made in United States Dollars and in immediately available funds
by (i) transfer to the party to receive payment of a cashier's
check drawn on a member bank, located at Seattle, Washington, of
the United States Federal Reserve System mutually acceptable to
the parties, or (ii) unconditional deposit to the account of the
party to receive payment in a bank in the United States mutually
acceptable to the parties. Buyer shall comply with all
applicable monetary and exchange control regulations, and shall
obtain any necessary authority from the governmental agency
administering such regulations in order to enable Buyer to make
payments at the time and place and in the manner and medium
specified herein.
P.A. No. 1663 S3-4
Attachment No. 5
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 1
EXHIBIT A-1
TO
PURCHASE AGREEMENT NO. 1663
DATED DECEMBER 18, 1990
BETWEEN
THE BOEING COMPANY
AND
UNITED AIR LINES, INC.
"A" MARKET AIRCRAFT CONFIGURATION
The Detail Specification, referred to in Article 1 of the
Purchase Agreement for the "A" Market Aircraft is Boeing Detail
Specification [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT]. Such Detail
Specification shall be comprised of Boeing Configuration
Specification [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT] as amended to
incorporate the applicable Specification language to reflect the
effect of the changes set forth in the Change Requests listed
below, including the effects of such changes on Manufacturer's
Empty Weight (MEW) and Operating Empty Weight (OEW). Such Change
Requests are set forth in Boeing Document [*CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]. As
soon as practicable Boeing shall furnish to Buyer copies of the
Detail Specification, which copies shall reflect the effect of
such changes. It is understood and agreed that the basic price
of the Aircraft, as set forth in Article 3 of this Agreement,
reflects and includes all applicable price effects of such
changes.
P.A. No. 1663 S3-1
Attachment No. 6
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 1
EXHIBIT A-2
TO
PURCHASE AGREEMENT NO. 1663
DATED DECEMBER 18, 1990
BETWEEN
THE BOEING COMPANY
AND
UNITED AIR LINES, INC.
"B" MARKET AIRCRAFT CONFIGURATION
The Detail Specification, referred to in Article 1 of the
Purchase Agreement for the "B" Market Aircraft is Boeing Detail
Specification [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT], for Aircraft WA013, as
further revised to include Pratt & Whitney model PW4090 engines
and the following changes:
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663 7-1
Attachment No. 7
6-1162-RCN-859
United Air Lines, Inc.
P.O. Box 66100
Chicago, Illinois 60666
Subject: Letter Agreement No.
6-1162-RCN-859 to
Purchase Agreement No. 1663 -
[*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]
Gentlemen:
Reference is made to Purchase Agreement No. 1663 dated as of even
date herewith (the Purchase Agreement) between The Boeing Company
(Boeing) and United Air Lines, Inc. (United), relating to the
sale by Boeing and the purchase by United of thirty-four (34)
Model 777-222 aircraft (hereinafter referred to as the Aircraft).
Further reference is made to Letter Agreement 1663-5 dated as of
even date herewith to the Purchase Agreement relating to the
granting of options to purchase thirty-four (34) Model 777-222
option aircraft (the Option Aircraft).
This letter, when accepted by Buyer, will become part of the
Purchase Agreement and will evidence our further agreement with
respect to the matters set forth below.
All terms used herein and in the Purchase Agreement, and not
defined herein, shall have the same meaning as in the Purchase
Agreement.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 7
United Air Lines, Inc.
6-1162-RCN-859 Page 2
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 7
United Air Lines, Inc.
6-1162-RCN-859 Page 3
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 7
United Air Lines, Inc.
6-1162-RCN-859 Page 4
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 7
United Air Lines, Inc.
6-1162-RCN-859 Page 5
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 7
United Air Lines, Inc.
6-1162-RCN-859 Page 6
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 7
United Air Lines, Inc.
6-1162-RCN-859 Page 7
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 7
United Air Lines, Inc.
6-1162-RCN-859 Page 8
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 7
United Air Lines, Inc.
6-1162-RCN-859 Page 9
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 7
United Air Lines, Inc.
6-1162-RCN-859 Page 10
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 7
United Air Lines, Inc.
6-1162-RCN-859 Page 11
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 7
United Air Lines, Inc.
6-1162-RCN-859 Page 12
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 7
United Air Lines, Inc.
6-1162-RCN-859 Page 13
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 7
United Air Lines, Inc.
62-RCN-859 Page 14
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 7
United Air Lines, Inc.
6-1162-RCN-859 Page 15
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
23. Non-Disclosure.
The parties understand that certain commercial and financial
information contained in this letter agreement is considered as
privileged and confidential. The parties agree that they will
treat such information as privileged and confidential and will
not, without prior written consent of the other party, disclose
such information to any other person except as may be required by
(i) applicable law or governmental regulations, or (ii) for
financing the Aircraft in accordance with the provisions of
Article 11.2 of the Purchase Agreement. In connection with any
such disclosure or filing of such information pursuant to any
applicable law or governmental regulations; Buyer shall request
and use its best reasonable efforts to obtain confidential
treatment of such information. Boeing agrees to cooperate with
Buyer in making and supporting its request for confidential
treatment. In fulfilling its obligations under this paragraph
11, the parties shall only be required to use the same degree of
care to prevent unauthorized disclosure and use of the
information contained in this Letter Agreement as they would use
to prevent the disclosure and use of its own commercial and
financial information of the same or similar nature and which it
considers proprietary or confidential.
P.A. No. 1663
Attachment No. 7
United Air Lines, Inc.
6-1162-RCN-859 Page 16
If the foregoing correctly sets forth your understanding of our
agreement with respect to the matters treated above, please
indicate your acceptance and approval below.
Very truly yours,
THE BOEING COMPANY
By: /s/ R.C. Nelson
Its: Attorney-in-Fact
ACCEPTED AND AGREED TO this
Date: October 27, 1995
UNITED AIR LINES, INC.
By: /s/ Douglas A. Hacker
Its: Senior Vice President and
Chief Financial Officer
P.A. No. 1663
Attachment 8
Exhibit D to
Purchase Agreement No. 1663
Page 1
PRICE ADJUSTMENT DUE TO
ECONOMIC FLUCTUATIONS
AIRFRAME PRICE ADJUSTMENT
1990 AHE BASE PRICE
(a) The adjustment in airframe price of each Aircraft ("Airframe
Price Adjustment" herein) shall be determined at the time of
Aircraft delivery in accordance with the following formula:
Pa = (P + F) (AA + BB) - P
(b) The following definitions shall apply herein:
Pa = Airframe Price Adjustment.
AA = .65 x H
-------
$16.053
BB = .35 x W
-----
113.4
In determining the value of AA, the ratio of H divided by
$16.053 shall be expressed as a decimal rounded to the nearest
ten-thousandth and then multiplied by 0.65 with the resulting
value also expressed as a decimal and rounded to the nearest ten-
thousandth.
In determining the value of BB, the ratio of w divided by
113.4 shall be expressed as a decimal rounded to the nearest ten-
thousandth and then multiplied by 0.35 with the resulting value
also expressed as a decimal and rounded to the nearest ten-
thousandth.
P = Aircraft basic price (as set forth in Article 3.1 of
the Agreement) less the base price of Engines (as
defined in the Exhibit D) in the amount of
[*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
P.A. No. 1663 D-1
Attachment 8
Exhibit D to
Purchase Agreement No. 1663
Page 2
TREATMENT] for the "A" Market Aircraft and
[*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] for the "B" Market Aircraft.
F = 0.005 (N)(P). Where N = the calendar year of
scheduled Aircraft delivery, minus 1990.
AHE = "Average Gross Hourly Earnings of Production Workers
in Aircraft Companies" (Standard Industrial
Classification Code 3721 - Aircraft) as released by
the Bureau of Labor Statistics, U.S. Department of
Labor. For the months of October 1983 and on such
Code values shall contain a pro rata effect of the
lump-sum payment to hourly workers provided for in
aerospace wage contracts.
$16.053 = 3 month average of AHE for Dec. 89, Jan & Feb 90
= 15.98 + 16.04 + 16.14
---------------------
3
H = The three-month arithmetic average of the AHE values
(expressed as a decimal and rounded to the nearest
thousandth) for the months set forth in the table
below for the applicable Aircraft.
ICI = Industrial Commodities Index as set forth in
the "Producer Prices and Price Indexes" (Base Year
1982 = 100) as released by the Bureau of Labor
Statistics, U.S. Department of Labor.
113.4 = 3 month average of ICI for Dec 89, Jan & Feb 90
= 112.3 + 114.2 + 113.6
---------------------
3
w = The three-month arithmetic average of the ICI values
(expressed as a decimal and rounded to the nearest
tenth) for the months set forth in the table below
for the applicable Aircraft.
P.A. No. 1663 D-2
Attachment 8
Exhibit D to
Purchase Agreement No. 1663
Page 3
Month of Scheduled
Aircraft Delivery as Quantity Months to be Utilized
Set Forth in Article of in Determining the
2.1 of the Agreement Aircraft Value of H and W
May 1995 Three (3)
June 1995 Two (2)
July 1995 One (1) [*CONFIDENTIAL
September 1995 One (1) OMITTED AND FILED
October 1995 One (1) SEPARATELY WITH THE
November 1995 One (1) SECURITIES AND EXCHANGE
December 1995 Two (2) COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL
February 1996 One (1) TREATMENT]
One (1)
[*CONFIDENTIAL One (1)
MATERIAL OMITTED AND One (1)
FILED SEPARATELY WITH
THE SECURITIES AND
EXCHANGE COMMISSION
PURSUANT TO A REQUEST
FOR CONFIDENTIAL
TREATMENT]
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
(c) In addition, it is understood that at the time of delivery
of each of the Aircraft to Buyer, Boeing may be unable to
determine the precise Airframe Price Adjustment for such Aircraft
because the applicable AHE and ICI values may not be released by
the Bureau of Labor Statistics, or if released, may be adjusted
at a later date by such Bureau. Accordingly, the parties agree
as follows:
(i) The Airframe Price Adjustment, to be used at the time
of delivery of each of the Aircraft will be determined by
utilizing the escalation provisions set forth above. The most
current AHE and ICI values released by the Bureau of Labor
Statistics for the applicable months (including those noted as
preliminary by the Bureau of Labor Statistics) and available to
P.A. No. 1663 D-3
Attachment 8
Exhibit D to
Purchase agreement No. 1663
Page 4
Boeing at the time the escalation calculation is made shall be
used to calculate the adjustment. If no values have been
released for an applicable month, the provisions set forth in
Paragraph (c)(iii) below shall apply. If prior to delivery of an
Aircraft the U.S. Department of Labor changes the base year for
determination of the ICI values as defined above, such rebased
values will be incorporated into the numerator and the
denominator of part BB of the Airframe Price Adjustment
calculation. The payment by Buyer to Boeing of the amount of the
Purchase Price for such Aircraft, as determined at the time of
Aircraft delivery, shall be deemed to be the payment for
such Aircraft required at the delivery thereof, and title to such
Aircraft will be conveyed to Buyer upon such delivery.
(ii) Subsequent to delivery of each of the Aircraft,
Boeing may from time to time make revisions to the value of the
Airframe Price Adjustment for such Aircraft to reflect any
changes in AHE or ICI values previously used to determine such
Airframe Price Adjustment. If the U.S. Department of Labor
revises any previously released values by removing or replacing
such values, or by describing such revision by footnote, appendix
or by any other method, the revised values shall be used to
revise the value of the Airframe Price Adjustment. Such
adjustments) by Boeing, if any, shall be made within 12 months
after delivery of such Aircraft, except as provided in Paragraph
(c)(iii) below.
(iii) If prior to delivery of an Aircraft the U.S.
Department of Labor substantially revises the methodology used
for the determination of its AHE and/or ICI values (in contrast
to benchmark adjustments or other corrections of previously
released values), or for any reason has not released AHE and/or
ICI values for any months needed to determine the applicable
Aircraft Airframe Price Adjustment, the parties shall, prior to
delivery of any such Aircraft, select a substitute for such AHE
or ICI values from data published by the Bureau of Labor
Statistics or other similar data reported by non-governmental
P.A. No. D-4
Attachment 8
Exhibit D to
Purchase Agreement No. 1663
Page 5
United States organizations, such substitute to lead in
application to the same adjustment result, insofar as possible,
as would have been achieved by continuing the use of the original
AHE or ICI values as they may have fluctuated during the
applicable time period. Appropriate revision of the formula
shall be made as required to reflect any substitute values.
However, if within twenty-four (24) months from delivery of the
Aircraft the Bureau of Labor Statistics should resume releasing
AHE or ICI values for the months needed to determine the Airframe
Price Adjustment, such values shall be used to determine any
increase or decrease in the Airframe Price Adjustment for the
Aircraft from that determined at the time of delivery of such
Aircraft.
(iv) In the event escalation provisions are made non-
enforceable or otherwise rendered null and void by any agency of
the United States Government, the parties agree, to the extent
they may lawfully do so, to equitably adjust the Purchase Price
of any affected Aircraft to reflect an allowance for increases or
decreases in labor and material costs occurring since February
1990, which is consistent with the applicable provisions of
paragraphs (a) and (b) of this Exhibit D.
(v) If required, Boeing will submit either a
supplemental invoice or refund the amounts due Buyer as
appropriate to reflect any increase or decrease in the Airframe
Price Adjustment for the Aircraft from that determined at the
time of delivery of such Aircraft. Any payments due Boeing or
Buyer shall be made with reasonable promptness.
(d) For the calculations herein, the AHE and ICI values shall
be the latest values that have been released by the U.S.
Department of Labor, Bureau of Labor Statistics.
Note: Any rounding of a number, as required under this Exhibit D
with respect to escalation of the airframe price, shall be
accomplished as follows: if the first digit of the portion
to be dropped from the number to be rounded is five or
greater, the preceding digit shall be raised to the next
higher number.
P.A. No. 1663 D-5
Attachment 8
Exhibit D to
Purchase Agreement No. 1663
Page 6
ENGINE PRICE ADJUSTMENT - PRATT & WHITNEY
"A" MARKET AIRCRAFT
(a) The basic price of each "A" Market Aircraft set forth in
Article 3.1 of the Purchase Agreement includes an aggregate price
for PW4073 engines and all accessories, equipment and parts
therefor provided by the engine manufacturer (collectively in
this Exhibit D called "Engines") of [*CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].
The adjustment in Engine price applicable to each "A" Market
Aircraft ("A" Market "Engine Price Adjustment" herein) shall be
determined at the time of "A" Market Aircraft delivery in
accordance with the following formula:
Pa = (P) (AA + BB + CC) - P
(b) The following definitions shall apply herein:
Pa = "A" Market Engine Price Adjustment
P = Aqqregate "A" Market Engine Base Price
[*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]
AA = .60 x L
------
$14.68
BB = .30 x m
-----
121.7
CC = .10 x E
----
73.7
P.A. No. 1663 D-6
Attachment 8
Exhibit D to
Purchase Agreement No. 1663
Page 7
In determining the value of AA, BB and CC, the ratio of L divided
by $14.68, M divided by 121.7 and E divided by 73.7 shall be
expressed as a decimal and rounded to the nearest ten-thousandth
but the decimal value resulting from multiplying such ratios by
the respective constants (.60, .30 and .10) shall not be rounded.
The value of the sum of AA + BB + CC shall also be rounded to the
nearest ten-thousandth.
L = Labor Index, which is the "Hourly Earnings of
Aircraft Engines and Engine Parts Production
Workers, SIC 3724" published by the Bureau of
Labor Statistics, U.S. Department of Labor, for
the seventh month preceding the month of scheduled
aircraft delivery.
$14.68 = Published Labor Index (SIC 3724) for December,
1989.
M = Material Index, which is the "Producer Price Index
- Code 10, Metals and Metal Products," (Base Year
1982 = 100) published by the Bureau of Labor
Statistics, U.S. Department of Labor, for the
seventh month preceding the month of scheduled
Aircraft delivery.
121.7 = Published Material Index (Code 10) for December,
1989.
E = Fuel Index, which is the "Producer Price Index
Code 5, Fuels and Related Products and Power"
(Base Year 1982 = 100) published for the Bureau of
Labor Statistics, U.S. Department of Labor, for
the seventh month preceding the month of scheduled
Aircraft delivery.
73.7 = Published Fuel Index (Code 5) for December, 1989.
P.A. No. 1663 D-7
Attachment 8
Exhibit D to
Purchase Agreement No. 1663
Page 8
The "A" Market Engine Price Adjustment shall not be made if it
would result in a decrease in the aggregate "A" Market Aircraft
Engine base price.
(c) The value of the Labor, Material and Fuel Index used in
determining the "A" Market Engine Price Adjustment shall be those
published by the Bureau of Labor Statistics, U.S. Department of
Labor as of a date thirty (30) days prior to the scheduled "A"
Market Aircraft delivery to Buyer. Such Index values shall be
considered final and no revision to the "A" Market Engine Price
Adjustment shall be made after Aircraft delivery for any
subsequent changes in published Index values.
(d) If the Bureau of Labor Statistics, U. S. Department of
Labor, (i) substantially revises the methodology (in contrast to
benchmark adjustments or other corrections of previously
published data), or (ii) discontinues publication of any of the
data referred to above or (iii) temporarily discontinues
publication of any of the data referred to above, Pratt & Whitney
Aircraft (P&WA) agrees to meet jointly with Boeing and Buyer and
jointly select a substitute for the revised or discontinued data,
such substitute data to lead in application to the same
adjustment result, insofar as possible, as would have been
achieved by continuing the use of the original data as it may
have fluctuated had it not been revised or discontinued.
Appropriate revision of the "A" Market Engine Price Adjustment
provisions set forth above shall be made to accomplish this
result for affected Engines.
In the event the Engine Price Adjustment escalation provisions of
this Agreement are made non-enforceable or otherwise rendered
null and void by any agency of the United States Government, P&WA
agrees to meet with Boeing and jointly agree, to the extent that
they may lawfully do so, to adjust equitably the purchase price
of the Engine(s) to reflect an allowance for increases in labor,
material and fuel costs that occurred from December, 1989 to the
P.A. No. 1663 D-8
Attachment 8
Exhibit D to
Purchase Agreement No. 1663
Page 9
seventh month preceding the month of scheduled delivery of the
applicable "A" Market Aircraft.
(e) The Engine escalation provisions set forth above shall be
appropriately amended to reflect changes in such provisions
(including any increase in "A" Market Engine base price)
established by the Engine manufacturer as of the date of entering
into a definitive agreement to purchase the "A" Market Aircraft
and applicable to Engines for delivery to Boeing during the same
approximate time period as the "A" Market Aircraft.
NOTES: Any rounding of a number, as required under this Exhibit D
with respect to escalation of the Engine price, shall be
accomplished as follows: if the first digit of the portion
to, be dropped from the number to be rounded is five or
greater, the preceding digit shall be raised to the next
higher number.
P.A. No. 1663 D-9
Attachment No. 8
Exhibit D to
Purchase Agreement No. 1663
Page 10
ENGINE PRICE ADJUSTMENT - PRATT & WHITNEY
"B" MARKET AIRCRAFT
(a) The basic price of each "B" Market Aircraft set forth
in Article 3.1 of the Purchase Agreement includes an aggregate
price for PW4090 Engines of [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]. The adjustment
in Engine price applicable to each "B" Market Aircraft ("B"
Market "Engine Price Adjustment" herein) shall be determined at
the time of "B" Market Aircraft delivery in accordance with the
following formula:
(a) Pa = (P) (AA+BB+CC) - P
(b) The following definitions shall apply herein:
Pa = "B" Market Engine Price Adjustment
P = Aggregate "B" Market Engine Base Price as set
forth in paragraph (a) above.
AA = .60 x L
------
$17.13
BB = .30 x m
-----
120.2
CC = .10 x E
----
74.7
In determining the value of AA, BB and CC, the ratio of L
divided by $17.13, M divided by 120.0 and E divided by 74.7
shall be expressed as a decimal and rounded to the nearest
ten-thousandth but the decimal value resulting from
multiplying such ratios by the respective constants (.60,
.30 and .10) shall not be rounded. The value of the sum of
AA + BB + CC shall also be rounded to the nearest ten-
thousandth.
P.A. No. 1663 D-10
Attachment No. 8
Exhibit D to
Purchase Agreement No. 1663
Page 11
L = Labor Index, which is the "Hourly Earnings of
Aircraft Engines and Engine Parts Production
Workers, SIC 3724" published by the Bureau of
Labor Statistics, U.S. Department of Labor,
for the seventh month preceding the month of
scheduled Aircraft delivery.
$17.13 = Published Labor Index (SIC 3724) for December,
1993.
M = Material Index, which is the "Producer Price
Index - Code 10, Metals and Metal Products,"
(Base Year 1982 = 100) published by the
Bureau of Labor Statistics, U.S. Department
of Labor, for the seventh month preceding the
month of scheduled Aircraft delivery.
120.2 = Published Material Index (Code 10) for
December, 1993.
E = Fuel Index, which is the "Producer Price
Index Code 5, Fuels and Related Products and
Power" (Base Year 1982 = 100) published by
the Bureau of Labor Statistics, U.S.
Department of Labor, for the seventh month
preceding the month of scheduled Aircraft
delivery.
74.7 = Published Fuel Index (Code 5) for December,
1993.
The "B" Market Engine Price Adjustment shall not be made if it
would result in a decrease in the aggregate "B" Market Engine
base price.
(c) The value of the Labor, Material and Fuel Index used in
determining the "B" Market Engine Price Adjustment shall be those
P.A. No. 1663 D-11
Attachment No. 8
Exhibit D to
Purchase Agreement No. 1663
Page 12
published by the Bureau of Labor Statistics, U.S. Department of
Labor as of a date thirty (30) days prior to the scheduled "B"
Market Aircraft delivery to Buyer. Such Index values shall be
considered final and no revision to the "B" Market Engine Price
Adjustment shall be made after Aircraft delivery for any
subsequent changes in published Index values.
(d) If the Bureau of Labor Statistics, U.S. Department of Labor,
(i) substantially revises the methodology (in contrast to
benchmark adjustments or other corrections of previously
published data), or (ii) discontinues publication of any of the
data referred to above or (iii) temporarily discontinues
publication of any of the data referred to above, Pratt & Whitney
Aircraft (P&WA) agrees to meet jointly with Boeing and Buyer and
jointly select a substitute for the revised or discontinued data,
such substitute data to lead in application to the same
adjustment result, insofar as possible, as would have been
achieved by continuing the use of the original data as it may
have fluctuated had it not been revised or discontinued.
Appropriate revision of the "B" Market Engine Price Adjustment
provisions set forth above shall be made to accomplish this
result for affected engines.
In the event the "B" Market Price Adjustment escalation
provisions of this Agreement are made non-enforceable or
otherwise rendered null and void by any agency of the United
States Government, P&WA agrees to meet with Boeing and jointly
agree, to the extent that they may lawfully do so, to reflect an
allowance for increases in labor, material and fuel costs that
occurred from December, 1993, to the seventh month preceding the
month of scheduled delivery of the applicable "B" Market
Aircraft.
(e) The Engine escalation provisions set forth above shall be
appropriately amended to reflect changes in such provisions
(including any increase in "B" Market Engine base price)
established by P&WA as of the date of entering into a definitive
P.A. No. 1663 D-12
Attachment no. 8
Exhibit D to
Purchase Agreement No. 1663
Page 13
agreement to purchase the "B" Market Aircraft and applicable to
Engines for delivery to Boeing during the same approximate time
period as the "B" Market Aircraft.
NOTE: Any rounding of a number, as required under this
Attachment C with respect to escalation of the Engine
price, shall be accomplished as follows: if the first
digit of the portion to be dropped from the number to be
rounded is five or greater, the preceding digit shall be
raised to the next higher number.
P.A. No. 1663 D-13
Attachment No. 9
6-1162-RCN-925
United Air Lines, Inc.
P. 0. Box 66100
Chicago IL 60666
Subject: Letter Agreement No. 6-1162-RCN-925 to Purchase
Agreement No. 1670 -
"B" Market Aircraft Performance Guarantees
Gentlemen:
Reference is made to Purchase Agreement No. 1663 dated December
18, 1990, (the Purchase Agreement) between The Boeing Company
(Boeing) and United Air Lines, Inc. (United), relating to the
sale by Boeing and the purchase by United of thirty-four (34)
Model 777-222 aircraft (hereinafter referred to as the Aircraft).
This letter, when accepted by Buyer, will become part of the
Purchase Agreement and will evidence cur further agreement with
respect to the matters set forth below.
All terms used herein and in the Purchase Agreement, and not
defined herein, shall have the same meaning as in the Purchase
Agreement.
Set forth in the Attachment hereto are the performance guarantees
applicable to the "B" Market Aircraft (the Performance
Guarantees). The Performance Guarantees shall be deemed to be
part of the Detail Specification as though fully set forth
therein. All provisions of the Purchase Agreement and ail
Exhibits thereto shall be applicable to the Performance
Guarantees in the same manner and to the same extent as would be
the case if the Performance Guarantees had been set forth in full
in the Detail Specification.
Attachment No. 9
United Air Lines, Inc.
6-1162-RCN-925 Page 2
If the foregoing correctly sets forth your understanding of our
agreement with respect to the matters treated above, please
indicate your acceptance and approval below.
Very truly yours,
THE BOEING COMPANY
By /s/ R.C. Nelson
Its Attorney-in-Fact
ACCEPTED AND AGREED TO this
Date: October 27, 1995
UNITED AIR LINES, INC.
By: /s/ Douglas A. Hacker
Its: Senior Vice President and
Chief Financial Officer
Attachment to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 1
MODEL 777-200 PERFORMANCE GUARANTEES
PW4090 ENGINES
SECTION CONTENTS
1 AIRCRAFT MODEL APPLICABILITY
2 FLIGHT PERFORMANCE
3 MANUFACTURER'S EMPTY WEIGHT
4 SOUND LEVELS
5 AIRCRAFT CONFIGURATION
6 GUARANTEE CONDITIONS
7 GUARANTEE COMPLIANCE
8 EXCLUSIVE GUARANTEE
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 2
1 AIRCRAFT MODEL APPLICABILITY
The guarantees contained in this Attachment (the
"Performance Guarantees") are applicable to the 777-
200 Aircraft with a maximum takeoff weight of 624,700
pounds,a maximum landing weight of 460,000 pounds, a
maximum zero fuel weight of 430,000 pounds and a fuel
capacity of 44,700 U.S. gallons, and equipped with
Boeing furnished PW4090 engines operated at a Boeing
equivalent thrust rating of 90,200 pounds and flat
rated to 86 degrees F at sea level.
2 FLIGHT PERFORMANCE
2.1 Takeoff
2.1.1 The FAA approved takeoff gross weight at the start of
ground roll, at a temperature of 86 degrees F,at a sea level
altitude, from a 10,500 foot runway and using maximum
takeoff thrust, shall not be less than the following
guarantee value:
NOMINAL: [*CONFIDENTIAL MATERIAL OMITTED
TOLERANCE: AND FILED SEPARATELY WITH THE
GUARANTEE: SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
2.1.2 The FAA approved takeoff climb limited gross weight
without using the improved climb performance procedure
at a temperature of 86 degrees F, and at a sea level altitude
and with the Aircraft configuration used to show
compliance with Paragraph 2.1.1 and using maximum
takeoff thrust, shall not be less than the following
guarantee value:
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 3
NOMINAL: [*CONFIDENTIAL MATERIAL OMITTED
TOLERANCE: AND FILED SEPARATELY WITH THE
GUARANTEE: SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
2.1.3 The FAA approved takeoff gross weight at the start of
ground roll, at a temperature of 86 degrees F, at an altitude
of 5,431 feet, from a 12,000 foot runway and using
maximum takeoff thrust, shall not be less than the
following guarantee value:
NOMINAL: [*CONFIDENTIAL MATERIAL OMITTED
TOLERANCE: AND FILED SEPARATELY WITH THE
GUARANTEE: SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 4
2.1.4 The FAA approved takeoff climb limited gross weight
without using the improved climb performance procedure
at a temperature of 86 degrees F, and at an altitude of 5,431
feet and with the Aircraft configuration used to show
compliance with Paragraph 2.1.3 and using maximum
takeoff thrust, shall not be less than the following
guarantee value:
NOMINAL: [*CONFIDENTIAL MATERIAL OMITTED
TOLERANCE: AND FILED SEPARATELY WITH THE
GUARANTEE: SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
2.2 Landing
2.2.1 The FAA approved landing field length at a gross
weight of 460,000 pounds and at a sea level altitude,
shall not be more than the following guarantee value:
NOMINAL: [*CONFIDENTIAL MATERIAL OMITTED
TOLERANCE: AND FILED SEPARATELY WITH THE
GUARANTEE: SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
2.2.2 The FAA approved landing climb limited gross weight at
a temperature of 86 degrees F, and at a sea level altitude,
with the Aircraft configuration used to show
compliance with Paragraph 2.2.1, and with engine bleed
for air conditioning with two packs operating, shall
not be less than the following guarantee value:
NOMINAL: [*CONFIDENTIAL MATERIAL OMITTED
TOLERANCE: AND FILED SEPARATELY WITH THE
GUARANTEE: SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 5
2.2.3 The FAA approved landing field length at a gross
weight of 460,000 pounds and at an altitude of 5,431
feet, shall not be more than the following guarantee
value:
NOMINAL: [*CONFIDENTIAL MATERIAL OMITTED
TOLERANCE: AND FILED SEPARATELY WITH THE
GUARANTEE: SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 6
2.2.4 The FAA approved landing climb limited gross weight at a
temperature of 86 degrees F, and at an altitude of 5,431 feet,
with the Aircraft configuration used to show compliance
with Paragraph 2.2.3, and with engine bleed for air
conditioning with two packs operating, shall not be less
than the following guarantee value:
NOMINAL: [*CONFIDENTIAL MATERIAL
TOLERANCE: OMITTED AND FILED SEPARATELY
GUARANTEE: WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
2.3 Enroute One-Engine-Inoperative Weight
The FAA approved enroute one-engine-inoperative gross
weight at which the available gross climb gradient equals
1.1 percent at an altitude of 17,800 feet on an ISA+10 degrees C
day using not more than maximum continuous thrust with
engine and wing anti-ice bleed on, shall not be less than
the following guarantee value:
NOMINAL: [*CONFIDENTIAL MATERIAL
TOLERANCE: OMITTED AND FILED SEPARATELY
GUARANTEE: WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 7
2.4 Altitude Capability - All Engines Operating
2.4.1 The altitude capability at a gross weight of 600,000
pounds on a standard day and satisfying the conditions
defined below, shall not be less than the following
guarantee value:
NOMINAL: [*CONFIDENTIAL MATERIAL
TOLERANCE: OMITTED AND FILED SEPARATELY
GUARANTEE: WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
Conditions:
1) The Aircraft shall be capable of maintaining level
cruising flight using not more than maximum cruise
thrust, at 0.84 Mach number.
2) The Aircraft shall be capable of maintaining a rate
of climb of 300 feet per minute using not more than
maximum climb thrust, at 0.84 Mach number.
3) The Aircraft shall be capable of at least a 1.3 g
maneuver load factor at buffet onset, at 0.84 Mach
number.
2.4.2 The altitude capability at a gross weight of 500,000
pounds on an ISA+15 degrees C day and satisfying the conditions
defined below, shall not be less than the following
guarantee value:
NOMINAL: [*CONFIDENTIAL MATERIAL
TOLERANCE: OMITTED AND FILED SEPARATELY
GUARANTEE: WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 8
Conditions:
1) The Aircraft shall be capable of maintaining level
cruising flight using not more than maximum cruise
thrust, at 0.84 Mach number.
2) The Aircraft shall be capable of maintaining a rate
of climb of 300 feet per minute using not more than
maximum climb thrust, at 0.84 Mach number.
3) The Aircraft shall be capable of at least a 1.3g
maneuver load factor at buffet onset, at 0.84 Mach
number.
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090
Page 9
2.5 Range
2.5.1 The still air range at a cruise altitude of 10,000 feet
on an ISA+10 degrees C day at 310 knots calibrated Air Speed,
starting at a gross weight of 480,000 pounds and
consuming 20,000 pounds of fuel, using not more than
maximum cruise thrust with engine and wing anti-ice bleed
on, shall not be less than the following guarantee value:
NOMINAL: [*CONFIDENTIAL MATERIAL
TOLERANCE: OMITTED AND FILED SEPARATELY
GUARANTEE: WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
2.5.2 The still air range at a cruise altitude of 15,000 feet
on an ISA+10 degrees C day at 310 knots Calibrated Air Speed,
starting at a gross weight of 480,000 pounds and
consuming 20,000 pounds of fuel, using not more than
maximum cruise thrust with engine and wing anti-ice bleed
on, shall not be less than the following guarantee value:
NOMINAL: [*CONFIDENTIAL MATERIAL
TOLERANCE: OMITTED AND FILED SEPARATELY
GUARANTEE: WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
2.5.3 The still air range at a cruise altitude of 20,000 feet
on an ISA+10 degrees C day at 310 knots Calibrated Air Speed,
starting at a gross weight of 480,000 pounds and
consuming 20,000 pounds of fuel, using not more than
maximum cruise thrust with engine and wing anti-ice bleed
on, shall not be less than the following guarantee value:
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 10
NOMINAL: [*CONFIDENTIAL MATERIAL
TOLERANCE: OMITTED AND FILED SEPARATELY
GUARANTEE: WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
2.5.4 The still air range at a cruise altitude of 31,000 feet
on an ISA+10 degrees C day at 0.84 Mach number, starting at a
gross weight of 610,000 pounds and consuming 20,000
pounds of fuel, and using not more than maximum cruise
thrust, shall not be less than the following guarantee
value:
NOMINAL: [*CONFIDENTIAL MATERIAL
TOLERANCE: OMITTED AND FILED SEPARATELY
GUARANTEE: WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
2.5.5 The still air range at a cruise altitude of 35,000 feet
on an ISA+10 degrees C day at 0.84 Mach number, starting at a
gross weight of 580,000 pounds and consuming 20,000
pounds of fuel, and using not more than maximum cruise
thrust, shall not be less than the following guarantee
value:
NOMINAL: [*CONFIDENTIAL MATERIAL
TOLERANCE: OMITTED AND FILED SEPARATELY
GUARANTEE: WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
2.5.6 The still air range at a cruise altitude of 39,000 feet
on an ISA+10 degrees C day at 0.84 Mach number, starting at a
gross weight of 430,000 pounds and consuming 20,000
pounds of fuel, and using not more than maximum cruise
thrust, shall not be less than the following guarantee
value:
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 11
2.5.7 The still air range at a cruise altitude of 41,000 feet
on an ISA+10 degrees C day at 0.84 Mach number, starting at a
gross weight of 430,000 pounds and consuming 20,000
pounds of fuel, and using not more than maximum cruise
thrust, shall not be less than the following guarantee
value:
NOMINAL: [*CONFIDENTIAL MATERIAL
TOLERANCE: OMITTED AND FILED SEPARATELY
GUARANTEE: WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 12
2.6 Mission
2.6.1 Mission Payload
The payload for a stage length of 5,497 nautical
miles in still air (equivalent to a distance of
5,036 nautical miles with a 41 knot headwind,
representative of a Paris to Los Angeles route)
using the conditions and operating rules defined
below, shall not be less than the following
guarantee value:
NOMINAL: [*CONFIDENTIAL MATERIAL
TOLERANCE: OMITTED AND FILED SEPARATELY
GUARANTEE: WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
Conditions and operating rules:
Stage The stage length is defined as the sum of the
Length distances for climb, cruise, and descent.
Takeoff: The airport altitude is 387 feet.
The airport temperature is 46 degrees F.
The runway length is 11,860 feet prior
to subtracting the lineup allowance.
The takeoff lineup allowance is 272 feet.
The runway slope is 0.231 percent uphill.
The following obstacle definition is based
on a straight-out departure where obstacle
height and distance are specified with
reference to the liftoff end of the
runway:
Distance Height
1. 1641 Feet 26 Feet
2. 3462 Feet 46 Feet
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 13
Maximum takeoff thrust is used for the
takeoff.
The takeoff gross weight shall conform to
FAA Regulations.
Climbout Following the takeoff to 35 feet, the Aircraft
Maneuver accelerates to 250 KCAS while climbing to 1,500
feet above the departure airport altitude and
retracting flaps and landing gear.
Climb: The Aircraft climbs from 1,500 feet above the
departure airport altitude to 10,000 feet
altitude at 250 KCAS.
The Aircraft then accelerates at a rate of
climb of 500 feet per minute to a climb speed
of 315 KCAS.
The climb continues at 315 KCAS until
0.83 Mach number is reached.
The climb continues at 0.83 Mach number to the
initial cruise altitude.
The temperature is standard day during Climb.
Maximum climb thrust is used during climb.
Cruise: The Aircraft cruises at 0.84 Mach number.
The initial cruise altitude is 31,000 feet.
A step climb or multiple step climbs of 4,000
feet altitude may be used when beneficial to
minimize fuel burn.
The temperature is standard day during cruise.
The cruise thrust is not to exceed maximum
cruise thrust except during a step climb when
maximum climb thrust may be used.
Descent: The Aircraft descends from the final cruise
altitude at 0.83 Mach number until 310 KCAS is
reached.
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 14
The descent continues at 310 KCAS to an
altitude of 10,000 feet. At that altitude the
Aircraft decelerates to 250 KCAS.
The descent continues at 250 KCAS to an
altitude of 1,500 feet above the destination
airport altitude.
Throughout the descent, the cabin pressure will
be controlled to a maximum rate of descent
equivalent to 300 feet per minute at sea level.
The temperature is standard day during descent.
Approach The Aircraft decelerates to the final approach
Landing speed while extending landing gear and flaps,
Maneuver then descends and lands
The destination airport altitude is 126 feet.
Fixed For the purpose of this guarantee and for the
Allowances purpose of establishing compliance with the
guarantee, the following shall be used as
fixed quantities and allowances:
Taxi-out:
Fuel: [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Takeoff and Climbout Maneuver:
Fuel [*CONFIDENTIAL MATERIAL OMITTED AND
Distance FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090
Page 15
Approach and Landing Maneuver:
Fuel: [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Taxi-in (shall be consumed from the reserve fuel)
Fuel: [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Usable reserve fuel remaining upon completion of
the approach and landing maneuver:
[*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 16
2.6.2 Mission Payload
The payload for a stage length of 5,858 nautical miles in
still air (equivalent to a distance of 5,187 nautical
miles with a 56 knot headwind, representative of a Los
Angeles to Osaka route) using the conditions and
operating rules defined below, shall not be less than the
following guarantee value:
NOMINAL: [*CONFIDENTIAL MATERIAL
TOLERANCE: OMITTED AND FILED SEPARATELY
GUARANTEE: WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
Conditions and operating rules:
Stage The stage length is defined as the sum of the
Length: distances for climb, cruise and descent.
Takeoff: The airport altitude is 126 feet.
The takeoff gross weight is 632,500 pounds.
The airport temperature is 62 degrees F.
The runway length is 12,093 feet prior to
subtracting the lineup allowance.
The takeoff lineup allowance is 272 feet.
The runway slope is 0.341 percent uphill.
The following obstacle definition is based on a
straight-out departure where obstacle height
and distance are specified with reference to
the liftoff end of the runway:
Distance Height
1. 709 Feet 8 Feet
2. 899 Feet 14 Feet
G95-001
Attachment A to letter Agreement
No. 6-1162-RCN-925
PW4090
Page 17
Maximum takeoff thrust is used for the takeoff.
The takeoff gross weight shall conform to FAA
Regulations.
Climbout Following the takeoff to 35 feet, the Aircraft
Maneuver accelerates to 250 KCAS while climbing to 1,500
feet above the departure airport altitude and
retracting flaps and landing gear.
Climb: The Aircraft climbs from 1,500 feet above the
departure airport altitude to 10,000 feet
altitude at 250 KCAS.
The Aircraft then accelerates at a rate of
climb of 500 feet per minute to a climb speed
of 315 KCAS.
The climb continues at 315 KCAS until 0.83 Mach
number is reached.
The climb continues at 0.83 Mach number to the
initial cruise altitude.
The temperature is standard day during climb.
Maximum climb thrust is used during climb.
Cruise: The Aircraft cruises at 0.84 Mach number.
The initial cruise altitude is 31,000 feet.
A step climb or multiple step climbs of 4,000
feet altitude may be used when beneficial to
minimize fuel burn.
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 18
The temperature is standard day during cruise.
The cruise thrust is not to exceed maximum
cruise thrust except during a step climb when
maximum climb thrust may be used.
Descent: The Aircraft descends from the final cruise
altitude at 0.83 Mach number until 310 KCAS is
reached.
The descent continues at 310 KCAS to an
altitude of 10,000 feet. At that altitude the
Aircraft decelerates to 250 KCAS.
The descent continues at 250 KCAS to an
altitude of 1,500 feet above the destination
airport altitude.
Throughout the descent, the cabin pressure will
be controlled to a maximum rate of descent
equivalent to 300 feet per minute at sea level.
The temperature is standard day during descent.
Approach The Aircraft decelerates to the final approach
and Landing speed while extending landing gear and flaps,
Maneuver: then descends and lands
The destination airport altitude is 26 feet.
Fixed For the purpose of this guarantee and for the
Allowances: purpose of establishing compliance with this
guarantee, the following shall be used as
fixed quantities and allowances:
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090
Page 19
Taxi-out:
Fuel: [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
Takeoff and Climbout Maneuver:
Fuel [*CONFIDENTIAL MATERIAL OMITTED AND
Distance FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
Approach and Landing Maneuver:
Fuel: [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
Taxi-in (shall be consumed from the reserve fuel):
Fuel: [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
Usable reserve fuel remaining upon completion of
the approach and landing maneuver: [*CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 20
2.6.3 Operational Empty Weight Basis
The Operational Empty Weight (OEW) derived in the
following is the basis for the mission guarantees of
Paragraph 2.6.1 and 2.6.2.
777-200 Weight Summary - UNITED AIRLINES Pounds
Standard Model Specification MEW
Configuration [*CONFIDENTIAL MATERIAL OMITTED
Specification: AND FILED SEPARATELY WITH THE
Dated: SECURITIES AND EXCHANGE
Passengers: 305 COMMISSION PURSUANT TO A
(24F/54C/227Y) REQUEST FOR CONFIDENTIAL
Engines: Two
PW4084 engines rated
at 84,600 pounds
thrust
Fuel Capacity:
Maximum Taxi
Weight:
Post Configuration Specification Weight Increase
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 21
*Weight Included in MEW:
Quantity Pounds Pounds
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4M Engines
Page 22
2.6.4 Standard and Operational Items Allowance
Quantity Pounds Pounds Pounds
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 23
2.6.5 United Airlines Interior Lopa 772-021
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 24
2.6.6 Additional Change Requests
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 25
3 MANUFACTURER'S EMPTY WEIGHT
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 26
4 SOUND LEVELS
4.1.1 Community Sound Levels
The Aircraft shall be certified in accordance with
Stage 3 requirements of FAR Part 36 (essentially
equivalent to ICAO Annex 16, Volume 1, Chapter 3).
The following external noise levels apply to operation
in still air at a sea level airport with a temperature
of 77 degrees F and a relative humidity of 70%.
4.1.2 Takeoff Condition
Sound level at a point on the ground, 6,500 meters
from brake release and directly under the flight path,
following a takeoff with flap position 5 and with a
brake release gross weight of 632,500 pounds using a
thrust cutback procedure and a climbout speed of V2 +
10 knots, shall not be greater than the following
guarantee value:
NOMINAL: [*CONFIDENTIAL MATERIAL
TOLERANCE: OMITTED AND FILED SEPARATELY
GUARANTEE: WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
4.1.3 Approach Condition
Sound level at a point 394 feet below an approach
path, in which the aircraft is descending at an angle
of 3 degrees at a constant airspeed corresponding to
Vref + 10 knots at a gross weight of 460,000 pounds
with maximum landing flap setting and landing gear
extended, shall not be greater than the following
guarantee value:
NOMINAL: [*CONFIDENTIAL MATERIAL
TOLERANCE: OMITTED AND FILED SEPARATELY
GUARANTEE: WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 27
5 AIRCRAFT CONFIGURATION
5.1 The guarantees contained in this Attachment are based on
the Aircraft configuration as defined in Paragraph
2.6.3. Appropriate adjustment shall be made for changes
approved by the Buyer and Boeing or otherwise allowed by
the Purchase Agreement which cause changes to the flight
performance, sound levels, and/or weight and balance of
the Aircraft. Such adjustment shall be accounted for by
Boeing in its evidence of compliance with the
guarantees.
5.2 The guarantee payload of Paragraph 2.6.1 and 2.6.2
will be adjusted by Boeing for the effect of the
following on OEW, and the Manufacturer's Empty Weight
guarantee of Section 3 will be adjusted by Boeing for
the following in its evidence of compliance with the
guarantees:
(1) Changes to the Aircraft configuration defined in
Paragraph 2.6.3 including Change Requests, Master-
Changes, Change Orders or any other changes mutually
agreed upon between the Buyer and Boeing or otherwise
allowed by the Purchase Agreement.
(2) The difference between the passenger seat and
engine weight allowances given in Appendix IV of the
Detail Specification and the actual weights.
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 28
6 GUARANTEE CONDITIONS
6.1 All guaranteed performance data are based on the
ICAO International Standard Atmosphere (ISA) and
specified variations therefrom; altitudes are pressure
altitudes.
6.2 The FAA Regulations (FAR) referred to in this
Attachment are, unless otherwise specified, those set
forth in FAR Part 25 effective February 1, 1965, plus
Amendments 25-1 through 25-82 excluding Paragraph 25.571
(e) (1) , which remains at Amendment 71 level.
6.3 In the event a change is made to any law,
governmental regulation or requirement, or in the
interpretation of any such law, governmental regulation
or requirement that affects the certification basis for
the Aircraft as described in Paragraphs 4.1 or 6.2, and
as a result thereof, a change is made to the
configuration and/or the performance of the Aircraft in
order to obtain certification, the guarantees set forth
in this Attachment shall be appropriately modified to
reflect any such change.
6.4 The takeoff and landing guarantees, and the takeoff
portion of the mission guarantees are based on hard
surface, level and dry runways with no wind or
obstacles, no clearway or stopway, 235 mph tires, and
with anti-skid operative unless otherwise specified.
The takeoff performance is based on no engine bleed for
air conditioning or thermal anti-icing and the Auxiliary
Power Unit (APU) turned off. The improved climb
performance procedure will be used for takeoff as
required unless otherwise specified. The landing climb
limited weight is based on engine bleed for air
conditioning with two packs operating, but no engine
bleed for thermal anti-icing and the Auxiliary Power
Unit (APU) is turned on. The landing performance is
based on the use of automatic spoilers.
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 29
6.5 The enroute one-engine-inoperative altitude guarantee is
based on engine bleed for air conditioning with two
packs operating. No engine bleed for thermal anti-icing
is provided unless otherwise specified. The APU is
turned on.
6.6 The all-engine altitude capability, range, and the
climb, cruise and descent portions of the mission
guarantees include allowances for normal power
extraction and engine bleed for normal operation of the
air conditioning system. Normal electrical power
extraction shall be defined as not less than a 212
kilowatts total electrical load. Normal operation of
the air conditioning system shall be defined as pack
switches in the "Auto" position, the temperature control
switches in the "Auto" position that results in a
nominal cabin temperature of 75 degrees F, and all air
conditioning systems operating normally. This operation
allows a maximum cabin pressure differential of 8.6
pounds per square inch at higher altitudes, with a
nominal Aircraft cabin ventilation rate of 7,880 cubic
feet per minute including passenger cabin recirculation
(nominal recirculation is 50 percent). The APU is
turned off unless otherwise specified.
6.7 The all-engine altitude capability, range, and the
climb, cruise, and descent portions of the mission
guarantees are based on an Aircraft center of gravity
location, as determined by Boeing, not to be aft of 30
percent of the mean aerodynamic chord.
6.8 Performance, where applicable, is based on a fuel Lower
Heating Value (LHV) of 18,580 BTU per pound and a fuel
density of 6.75 pounds per U.S. gallon.
6.9 Boeing equivalent thrust is defined as the installed
takeoff net thrust at 0.25 Mach number, sea level,
standard day (no airbleed, but with horsepower
extraction included) multiplied by 1.255, then rounded
to the nearest 100 pounds.
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 30
7 GUARANTEE COMPLIANCE
7.1 Compliance with the guarantees of Sections 2, 3, and 4
shall be based on the conditions specified in those
sections, the Aircraft configuration of Section 5 and the
guarantee conditions of Section 6.
7.2 Compliance with the takeoff, landing, and enroute one-
engine-inoperative altitude guarantees, the buffet onset
portion of the altitude capability guarantee, the takeoff
portion of the mission guarantees, and the community
sound level guarantees shall be based on the FAA approved
Airplane Flight Manual for the Model 777-200 described in
Section 1 except that the takeoff weight used to show
compliance with Paragraph 2.6.2 may exceed the takeoff
weight limit appearing on the Weight Limitations page in
the FAA approved Airplane Flight manual for the Model 777-
200 in which case such guarantee compliance shall not be
construed as authorizing operation at such a weight.
7.3 Compliance with all-engine altitude capability, range,
and with the climb, cruise and descent portions of the
mission guarantees shall be established by calculations
based on flight test data obtained from an aircraft in a
configuration similar to that defined by the Detail
Specification.
7.4 The OEW used for compliance with the mission guarantees
shall be the actual MEW plus the Standard and Operational
Items Allowance in Paragraph 03-60-00 of the Detail
Specification.
7.5 Compliance with the Manufacturer's Empty Weight guarantee
shall be based on information in the "Weight and Balance
Control and Loading Manual - Aircraft Report."
7.6 The data derived from tests shall be adjusted as required
by conventional methods of correction, interpolation or
extrapolation in accordance with established engineering
practices to show compliance with these guarantees.
7.7 Compliance shall be based on the performance of the
airframe and engines in combination, and shall not be
contingent on the engine's meeting its manufacturer's
performance specifications.
G95-001
Attachment A to Letter Agreement
No. 6-1162-RCN-925
PW4090 Engines
Page 31
8 EXCLUSIVE GUARANTEES
The only performance guarantees applicable to the Aircraft
are those set forth in this Attachment.
G95-001
Attachment No. 10
6-1162-6-1162-RCN-851
United Air Lines, Inc.
P.O. Box 66100
Chicago, Illinois 60666
Subject: Letter Agreement No. - 6-3162-RCN-851 to
Purchase Agreement No. 1663
[*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
Gentlemen:
Reference is made to Purchase Agreement No. 1663 dated as of even
date herewith (the Purchase Agreement) between The Boeing Company
(Boeing), United Air Lines, Inc. (United) and United Worldwide
Corporation (Worldwide), relating to the sale by Boeing and the
purchase by United and Worldwide (collectively the Buyer) of
thirty-four (34) Model 777-222 aircraft (hereinafter referred to
as the Aircraft).
This letter when accepted by Buyer, will become part of the
Purchase Agreement and will evidence our further agreement with
respect to the matters set forth below.
All terms used herein and in the Purchase Agreement, and not
defined herein, shall have the same meaning as in the Purchase
Agreement.
[* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 10
United Air Lines Inc.
6-1162-RCN-851 Page 2
[* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 10
United Air Lines Inc.
6-1162-RCN-851 Page 3
[* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
Attachment No. 10
United Air Lines Inc.
6-1162-RCN-851 Page 4
If the foregoing correctly sets forth your understanding of our
agreement with respect to the matters treated above, please
indicate your acceptance and approval below.
Very truly yours,
THE BOEING COMPANY
By /S/ R.C. Nelson
Its Attorney-in-Fact
ACCEPTED AND AGREED TO this
Date: October 27, 1995
UNITED AIR LINES, INC.
By /S/ Douglas A. Hacker
Its Senior Vice President and
Chief Financial Officer
P.A. No. 1663
Attachment No. 11
6-1162-RCN-866
United Air Lines, Inc.
P.0. Box 66100
Chicago, Illinois 60666
Subject: Letter Agreement No. 6-1162-RCN-866 to
Purchase Agreement No. 1663
[* CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]
Gentlemen:
Reference is made to Purchase Agreement No. 1663 dated as of even
date herewith (the Purchase Agreement) between The Boeing Company
(Boeing) and United Air Lines, Inc. (United) relating to the sale
by Boeing and the purchase by United of thirty-four (34) Model 777-
222 aircraft (hereinafter referred to as the Aircraft).
This letter, when accepted by Buyer, will become part of the
Purchase Agreement and will evidence our further agreement with
respect to, the matters set forth below.
All terms used herein and in the Purchase Agreement, and not
defined herein, shall have the same meaning as in the Purchase
Agreement.
1. In consideration of Buyer's purchase of the Aircraft, should
Buyer purchase 777 "A" Market full flight simulators or fixed base
simulators for ownership or use by Buyer and for delivery after the
date of execution of the Purchase Agreement Boeing shall grant
Buyer a license for 777-200 "A" Market simulator packages for such
simulators) for the prices set forth below. The prices are quoted
in 1990 dollars and subject to escalation. Except as set forth in
this letter agreement, all terms and conditions relating to the
licensing of such simulator data will be substantially the same as
Boeing Agreement No. 6-1171-SD-105, dated December 15, 1988, for
Buyer's licensing of Model 757-222 simulator data.
P.A. No. 1663
Attachment No. 11
United Air Lines, Inc.
6-1162-RCN-866 Page 2
Initial Set [*CONFIDENTIAL MATERIAL OMITTED AND FILED
Subsequent Sets SEPARATELY WITH THE SECURITIES AND
Concurrent Sets EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT
2. The price to upgrade the "A" Market simulators discussed in
paragraph 1 above to include "B" Market Aircraft capability is
given below. The prices quoted are in 1995 dollars and are
subject to escalation.
Initial Set [*CONFIDENTIAL MATERIAL OMITTED AND FILED
Subsequent Sets SEPARATELY WITH THE SECURITIES AND
Concurrent Sets EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT
The Initial Set price applies to the first license of a 777-200
data package from either paragraph 1 or 2 above, as applicable.
The Concurrent Set price applies to an additional license of the
simulator data package from either paragraph 1 or paragraph 2, as
applicable, and such license must be obtained within 5 years from
the respective Initial Set data license. Beyond 5 years, the
Subsequent Set price will apply.
If the foregoing correctly sets forth your understanding of our
agreement with respect to the matters treated above, please
indicate your acceptance and approval below.
Very truly yours,
THE BOEING COMPANY
By /S/ R.C. Nelson
Its Attorney-in-Fact
ACCEPTED AND AGREED TO this
Date: , 1995
UNITED AIR LINES, INC.
By /S/ DOUGLAS A. HACKER
Its Senior Vice President and
Chief Financial Officer
P.A. No. 1663
Attachment No. 12 to
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 1
ARTICLE 8. Federal Aviation Administration Requirements.
8.1 Certificates. Boeing shall:
(a) obtain from the FAA a Type Certificate
(transport category) issued pursuant to Part 21 of the Federal
Aviation Regulations for the type of aircraft purchased under this
Agreement, and
(b) obtain for each Aircraft at the time of
delivery a Standard Airworthiness Certificate issued pursuant to
Part 21 of the Federal Aviation Regulations which will permit
operation of such Aircraft under Part 91 of such FARS. Buyer
shall cooperate with Boeing in complying with the foregoing
requirements.
Boeing shall not be obligated to obtain any other certificates or
approvals for the Aircraft except as expressly provided in
paragraph 2-54-00 of the Detail Specification and Article 8.5 of
the Purchase Agreement.
8. 2 Provisions. Boeing shall deliver each Aircraft
with provisions suitable for that equipment required to be
incorporated on such Aircraft as set forth in the Detail
Specification, to meet those additional requirements of the
Federal Aviation Regulations which (i) are generally applicable
with respect to transport category aircraft to be used in United
States certificated air carriage and (ii) are required to be
complied with on or before the date of delivery of such Aircraft.
Buyer shall cooperate with Boeing in complying with the foregoing
requirements.
8.3 Changes. If any addition or change to, or
modification or testing of, any Aircraft (in this Article 8
individually and collectively called "Change") is required,
P.A. No. 1993
8-1
Attachment No. 12 to
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 2
pursuant to any law or governmental regulation or requirement or
interpretation thereof by any governmental agency (in this Article
any such law or governmental regulation or requirement or
interpretation thereof is called a "Governmental Regulation") ,
whether promulgated prior to or subsequent to the date of this
Agreement, in order to meet the requirements of Article 8.1 or
8.2, such Change shall be made to such Aircraft prior to delivery.
[* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
8.3.3 If such Change is necessary to meet the
requirements of Article 8.2, Buyer shall pay Boeing's reasonable
charge for such Change.
8.4 Delay and Change Order. If delivery of any
Aircraft is delayed by the incorporation in such Aircraft of any
Change required to be made under Article 8.3, such delay shall be
an Excusable Delay within the meaning of Article 6. Boeing shall
issue and Buyer shall accept a Change Order reflecting any Change
required to be made under Article 8.3, which Change Order shall
set forth in detail the particular Changes to be made therein and
the effect, if any, of such changes on design, performance,
weight, balance, time of delivery and basic price of the affected
Aircraft.
P.A. No. 1663
8-2
Attachment No. 12 to
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 3
Notwithstanding the provisions of Article 7.1 of this Agreement,
any Change Orders issued pursuant to this Article 8.4 need not be
signed by Buyer and shall be deemed to be accepted by Buyer and
effective upon the date of Boeing's transmittal of such Change
Order.
8.5 Discontinuance. If the use of either of the
Certificates identified in Article 8.1 is discontinued during the
performance of this Agreement, thereafter reference to such
discontinued Certificate shall be deemed a reference to any other
certificate or instrument issued by the FAA which corresponds to
such Certificate, or if there should not be any such other
certificate or instrument, then Boeing shall be deemed to have
obtained such discontinued Certificate or Certificates upon
demonstrating that each Aircraft complies with the performance
guarantees set forth in this Agreement.
P.A. No. 1663
8-4
Attachment No. 13 to
Supplemental Agreement No. 3
Purchase Agreement No. 1663
Page 1
ARTICLE 9. Demonstration Flights and Test Data.
9.1 Demonstration Flights. Each Aircraft shall be test
flown by Boeing for such periods as may be required to demonstrate
to Buyer the functioning of the Aircraft and its equipment. The
aggregate duration of such flights shall not be less than one and
one-half (1-1/2) hours. Five (5) persons (or more if consented to
by Boeing) designated by Buyer may participate in such flights as
observers.
9.2 Flight Test Data. Boeing shall furnish to Buyer,
as soon as practicable, flight test data, obtained on an aircraft
of the type purchased hereunder, certified as correct by Boeing,
to evidence compliance with any and all performance guarantees set
forth in this Agreement. Any such performance guarantee shall be
deemed to be met if reasonable engineering interpretations and
calculations based on such flight test data establish that the
Aircraft, if actually flown, would comply with such guarantee.
9.3 Use of Aircraft. Boeing may use any of the
Aircraft to be purchased hereunder for flight and ground tests
prior to delivery if such tests are deemed necessary by Boeing
(a) to obtain the certificates required under
Article 8.1, and
(i) other aircraft of the type purchased
hereunder are not available for such tests, or
(ii) special features incorporated in the
Aircraft (but not incorporated in other aircraft of the type
purchased hereunder) necessitate such tests, or
(iii) the Engines (as defined in Exhibit D
to this Agreement) to be installed on the Aircraft are of
different manufacture or type from those installed on other
aircraft of the type purchased hereunder; or
P.A. No. 1663
9-1
Attachment No. 13 to
Supplemental Agreement No. 3
Purchase Agreement No. 1663
Page 2
(b) to evaluate actual or contemplated changes for
the improvement of aircraft of the type purchased hereunder which
may be offered for incorporation, in production or by retrofit, in
any Aircraft, except Boeing's use of the Aircraft as described in
this subparagraph (b) shall not exceed in the aggregate ten (10)
flight hours beyond that required for acceptance of the Aircraft.
9.4 Boeing Indemnity. Boeing shall indemnify and hold
harmless Buyer, UAL Corporation and each of Buyer's observers from
and against all claims and liabilities, including costs and
expenses (including attorneys' fees) incident thereto or incident
to successfully establishing the right to indemnification, for
injury to or death of any person or persons, including employees
of Boeing but not employees, officers or agents of Buyer or UAL
Corporation, or for loss of or damage to any property, arising out
of or in connection with the operation of the Aircraft during all
demonstration and test flights conducted under the provisions of
this Article 9 prior to delivery (and whether or not arising in
tort or occasioned in whole or in part by the negligence of Buyer,
UAL Corporation or any of Buyer's observers, whether active,
passive or imputed).
9.5 Conformance with Detail Specification. If, during
any flight or test as herein required, any of the Aircraft or any
accessory, equipment or part thereon shall fail to conform to or
comply with the Detail Specification or shall fail to function
properly, Boeing shall promptly correct the defects and
deficiencies involved and conduct such additional demonstration,
flights as may be reasonably necessary to demonstrate the proper
correction thereof, all without charge to Buyer, except that Buyer
shall be responsible for the cost of correcting the defects and
deficiencies in BFE when such defect or deficiency is not the
fault of Boeing.
9.6 Inspection and Acceptance. Promptly upon the
completion of its manufacture in accordance with the Detail
P.A. No. 1663
9-2
Attachment No. 13 to
Supplemental Agreement No. 3
Purchase Agreement No. 1663
Page 3
Specification and upon completion of the demonstration flights
provided for in Article 9.1, each Aircraft shall be submitted at
Boeing's plant for final inspection and acceptance by Buyer. Upon
completion of Buyer's final inspection, Buyer shall give notice to
Boeing of either its (i) acceptance, (ii) qualified acceptance, or
(iii) rejection of such Aircraft. If the Aircraft is rejected,
Buyer shall in such notice state the reasons for its rejection,
specifying in what respects such Aircraft fails to comply with the
terms of this Agreement or the Detail Specification set forth
therein. In the event of rejection of such Aircraft by Buyer,
Boeing shall promptly notify Buyer as to Boeing's concurrence or
nonconcurrence (and the extent of such nonconcurrence) with
Buyer's reasons for rejection. If Boeing does not concur with
Buyer's reason for rejection, the usual remedies for breach of
this Agreement shall be preserved to both parties. If Boeing
concurs with Buyer's reasons for rejection, then Boeing will
promptly proceed to correct the conditions which were specified as
the basis for rejection by Buyer and with which Boeing concurred.
Upon correction of such conditions, Boeing shall, if so requested
by Buyer and agreed to by Boeing (which agreement shall not be
unreasonably withheld), perform, at no additional cost to Buyer,
additional demonstration flights of such Aircraft as may be
reasonably required to demonstrate compliance with the Detail
Specification. Upon completion of any such required corrections,
such Aircraft shall once again be submitted at Boeing's plant for
final inspection by Buyer in accordance with the procedures stated
above. If, upon such inspection, such Aircraft is not rejected as
hereinabove provided, Boeing shall proceed with and Buyer will
accept delivery thereof. Buyer shall indicate its acceptance or
qualified acceptance by signing an acceptance certificate in the
form attached hereto as Exhibit F, as the same may be amended by
agreement of the parties, and no other acknowledgment or receipt
of such Aircraft or its condition shall be required by Boeing or
Buyer. In the event that Boeing shall not, within ninety (90)
days after the month of scheduled delivery of such Aircraft, have
P.A. No. 1663
9-3
Attachment No. 13 to
Supplemental Agreement No. 3
Purchase Agreement No. 1663
Page 4
corrected all conditions which were specified as a basis for
rejection of such Aircraft by Buyer and with which Boeing
concurred, all remedies for breach of this Agreement shall be
preserved to both parties. In the event Buyer qualifiedly accepts
delivery but claims that there are deficiencies in or failure of
such Aircraft to comply with the terms of this Agreement or the
Detail Specification, such deficiencies shall be stated on the
acceptance certificate (Exhibit F hereto) to the extent that Buyer
may reasonably do so and may reasonably be expected to be aware of
or able to ascertain the same. Any acceptance of an Aircraft
pursuant to this Article 9.6 shall not impair Boeing's warranties
set forth in Part A of Exhibit B.
P.A. No. 1663
9-4
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 1
CUSTOMER SUPPORT DOCUMENT NO. 1663
Dated
Relating to
BOEING MODEL 777-222 "B" MARKET AIRCRAFT
This Customer Support Document is Exhibit C-1 to and forms a
part of Purchase Agreement No. 1663 between The Boeing Company
(Boeing) and United Air Lines, Inc. (Buyer) relating to the
purchase of Boeing Model 777-222 "B" Market Aircraft. This
Customer Support Document consists of the following parts:
PART A Boeing maintenance Training Program
PART B Boeing Customer Support Services
PART C Boeing Flight Training Program
PART D Technical Data and Documents
PART E Buyer's Indemnification of Boeing and Insurance
P.A. No. 1663
C-1-I
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 2
PART A
BOEING MAINTENANCE TRAINING PROGRAM
1. General.
This Part describes the maintenance training to be provided
by Boeing (Maintenance Training) at Boeing's training facility at
or near Seattle. The Maintenance Training will be provided at no
additional charge to Buyer, except as otherwise provided herein.
Buyer will be responsible for the living expenses of Buyer's
personnel during Maintenance Training. For Maintenance Training
provided at or near Seattle, Boeing will transport Buyer's
personnel between their local lodging and the training facility.
2. Maintenance Training Program.
If requested by Buyer at least 12 months prior to delivery
of the first "B" Market Aircraft, Boeing agrees to provide 1
Maintenance Training course consisting of classroom training to
acquaint up to 15 of Buyer's personnel with any operational,
structural or systems differences between the first "B" Market
Aircraft scheduled for delivery pursuant to this Agreement and the
last "A" Market Aircraft for which maintenance training and/or
materials were delivered by Boeing to Buyer that are significant
to the maintenance of the Aircraft. Such course will be scheduled
by mutual agreement of Boeing's and Buyer's maintenance training
organizations.
P.A. No. 1663 C-1
A-2
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 3
3. Training Materials.
[* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
4. Training at a Facility Other Than Boeing's.
[* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663 C-1
A-3
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 4
[* CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663 C-1
A-4
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 5
PART B
BOEING CUSTOMER SUPPORT SERVICES
1. General
This Part describes the support services to be provided by
Boeing at no additional charge to Buyer, unless otherwise specified
herein. Except with respect to Field Services, the services
described in this Part will be provided by Boeing during a period
commencing with delivery of the first Aircraft and continuing so
long as one Aircraft is regularly operated by Buyer in commercial
air transport service.
2. Field Service Engineering.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
P.A. No. 1663 C-1
B-5
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 6
3. Additional Engineering Support Services.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
4. Special Services.
4.1 Facilities, Ground Equipment and Maintenance Planning
Assistance.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
P.A. No. 1663 C-1
B-6
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 7
4.2 Additional Services.
Boeing may, at Buyer's request, provide additional
special services with respect to the Aircraft after delivery, which
may include such items as Master Changes (Kits and/or Data),
training and maintenance and repair of the Aircraft. Providing
such additional services will be subject to (i) mutually acceptable
price, schedule and scope of work and (ii) Boeing's then-current
standard contract therefor including disclaimer and release,
exclusion of consequential and other damages and indemnification
and insurance requirements.
4.3 Post-Delivery Aircraft Services.
If Boeing performs unanticipated work on an
Aircraft after delivery of such Aircraft, but prior to its initial
departure flight, or upon its return to Boeing's facilities prior
to completion of such flight, the following provisions will apply:
4.3.1 Title to and risk of loss of any such Aircraft
will at all times remain with Buyer.
4.3.2 The provisions of the Boeing Warranty set
forth in Exhibit B of this Agreement will apply to such work.
4.3.3 Buyer will reimburse Boeing for such work to
the extent not covered by the Boeing Warranty applicable to the
Aircraft.
4.3.4 The Disclaimer and Release and Exclusion of
Consequential and Other Damages provisions set forth in Article 12
of this Agreement and the indemnification and insurance provisions
set forth in this Exhibit C-1 will apply to such Boeing work.
4.3.5 In performing such work, Boeing may rely upon
the commitment authority of Buyer's personnel requesting such work.
P.A. No. 1663 C-1
B-7
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 8
5. Additional Informational Services.
Boeing may, from time to time, provide Buyer with additional
services in the form of information about the Aircraft or other
aircraft of the same type, including information concerning design,
manufacture, operation, maintenance, modification, repair and in-
service experience.
P.A. No. 1663 C-1
B-8
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 9
PART C
BOEING FLIGHT TRAINING PROGRAM
1. General.
This Part describes the flight training to be
provided by Boeing (Flight Training) at or near Seattle, or at some
other location to be determined pursuant to this Part. The Flight
Training will be provided at no additional charge to Buyer, except
as otherwise provided herein.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
2. Flight Training Program.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
3. Training Materials.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
P.A. No. 1663 C-1
C-9
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 10
4. Training at a Facility Other Than Boeing.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
P.A. No. 1663 C-1
C-10
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 11
PART D
TECHNICAL DATA AND DOCUMENTS
1. General.
Boeing will furnish to Buyer the data and documents set
forth herein at no additional charge to Buyer, unless otherwise
specified herein. Such data and documents will, where applicable,
be prepared essentially in accordance with the provisions of
Revision 28 to Air Transport Association of America Specification
No. 100, dated June 1, 1956, entitled "Specification for
Manufacturers' Technical Data," with the specific exception of the
Illustrated Parts Catalog, which will be prepared essentially in
accordance with the provisions of Revision 28 thereto. Such data
and documents are only intended to provide Buyer with pertinent
information on components, equipment and installations designed by
Boeing for aircraft of the same model type as the Aircraft. Such
data and documents will be in English and in the units of measure
used by Boeing, except as otherwise specified herein or as may be
required to reflect Aircraft instrumentation.
2. Treatment of Data and Documents.
2.1 The data and documents provided by Boeing under this
Agreement ("Documents") are licensed to Buyer. They contain
confidential, proprietary and/or trade secret information belonging
to Boeing; and Buyer will treat them in confidence and use and
disclose them only for Buyer's own internal purposes as
specifically authorized herein. If Buyer makes copies of any
Documents, the copies will also belong to Boeing and be treated as
Documents under this Agreement. Buyer will preserve all
restrictive legends and proprietary notices on all Documents and
copies.
2.2 All Documents will only be used: (a) for the purpose
of maintenance, repair, or modification of an Aircraft or spare
part as permitted in the Spare Parts GTA or Customer Services GTA
between Buyer and Boeing, and then only in connection with an
Aircraft or spare part for which the Document in question is
tabulated or identified by Boeing serial number, and (b) for the
purpose of Buyer's own development and manufacture of training
devices for use by Buyer, in connection with the Aircraft.
P.A. No. 1663 C-1
D-11
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 12
2.3 Any Document may be provided to Buyer's contractors
for maintenance, repair, or modification of the Aircraft; and
Airplane Flight Manuals, Operations Manuals, Maintenance Manuals,
Wiring Diagram Manuals, Systems Schematics Manuals, and assembly
and installation drawings may be provided to Buyer's contractors
for development and manufacture of training devices for use by
Buyer, but in both cases, only if Buyer's contractor is, at the
time of transfer of Documents, bound by a Boeing Customer Services
GTA, or other appropriate proprietary information protection
agreement with Boeing, applicable to the Documents.
3. Document Formats and Quantities.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
4. Revision Service.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
P.A. No. 1663 C-1
K/UAL D-12
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 13
5. Supplier Technical Data.
Boeing will continue to maintain the supplier data program
referred to in the purchase agreement or purchase agreement
supplement under which data and documents for Buyer's "A" Market
Aircraft were originally provided to Buyer. As indicated in such
prior purchase agreement or supplement, the provisions of such
supplier data program are not applicable to items of Buyer
Furnished Equipment.
6. Additional Data and Documents.
If Boeing provides data or documents other than
Documents which are not covered by a Boeing Customer Services GTA
or other proprietary information protection agreement between
Boeing and Buyer, all such data and documents will be considered
things delivered under this Agreement and treated as Documents.
7. Buyer's Shipping Address.
Boeing will ship the Documents furnished hereunder to
Buyer's shipping address for data and documents previously provided
to Boeing. Buyer shall promptly notify Boeing of any change to
such address.
P.A. No. 1663 C-1
K/UAL D-13
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 22
PART E
BUYERS INDEMNIFICATION OF B0EING AND INSURANCE
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
K/UAL E-22
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 23
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663 C
K/UAL E-23
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 24
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663 C
K/UAL E-24
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 25
A. FLIGHT OPERATIONS:
1. Airplane Flight Manual [*CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
Note: An Additional copy THE SECURITIES AND EXCHANGE
is placed aboard COMMISSION PURSUANT TO A
each airplane at REQUEST FOR
delivery as required CONFIDENTIAL TREATMENT]
by FAR's.
2. Operations Manual * *
and 1 Mag Tape
3. Weight and Balance * *
Control and Loading
Manual
4. Dispatch Deviation * *
Procedures Guide
5. Flight Crew * *
Training Manual
6. Performance * *
Engineer's Manual
7. Baggage/Cargo * *
Loading Manual
and 1 Mag Tape
8. Fault Reporting * *
Manual and 1
Mag Tape
9. Jet Transport * *
Performance Methods
(total quantity -
all models)
10. FMC Supplemental * *
Data
P.A. No. 1663 C-1
K/UAL F-25
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 26
11. Operational Performance Software (OPS)
a. Inflight and Report [*CONFIDENTIAL MATERIAL OMITTED
Programs AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
* *
* *
* *
b. Airplane * *
Performance
Monitoring
(APM/HISTRY)
* *
* *
* *
B. MAINTENANCE
1. Maintenance Manual * [*CONFIDENTIAL MATERIAL OMITTED AND
Part I 8 Printed 2 FILED SEPARATELY WITH THE SECURITIES
Sides AND EXCHANGE COMMISSION PURSUANT TO A
Part II 6 Printed * REQUEST FOR CONFIDENTIAL TREATMENT
2 Sides
*
*
*
P.A. No. 1663 C-1
K/UAL F-26
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 27
2. Wiring Diagram [*CONFIDENTIAL MATERIAL OMITTED AND FILED
Manual SEPARATELY WITH THE SECURITIES AND EXCHANGE
and 1 Mag Tape COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
* * *
* * *
* *
*
*
* *
*
3. System Schematics
Manual and 1 Mag
Tape
* *
* *
*
P.A. No. 1663 C-1
K/UAL F-27
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 28
4. Ramp Maintenance Manual [*CONFIDENTIAL MATERIAL OMITTED
and 1 Mag Tape AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]
5. Fault Isolation * *
Manual (if separate)
* *
* *
* *
6. Structural Repair * *
Manual and 1 Mag Tape
* *
* *
7. Component * *
Maintenance/
Overhaul Manuals
and 1 Mag Tape * *
*
8. Chapter 20 Standard * *
Overhaul Practices
Manual
(total quantity-all * *
models) and 1 Mag Tape
* *
9. Chapter 20 Standard * *
Wiring
Practices Manual
(total quantity-all * *
models) and 1 Mag Tape
* *
P.A. No. 1663 C-1
K/UAL F-28
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 29
10. Non-Destructive [*CONFIDENTIAL MATERIAL OMITTED AND
Test Manual FILED SEPARATELY WITH THE SECURITIES
and 1 Mag Tape AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
11. Service * *
Bulletins
and 1 Digital
12. Service * *
Bulletins Index
13. Corrosion * *
Prevention Manual
and 1 Mag Tape
* *
*
14. Fuel Measuring
Stick Calibration
Document (In Maintenance
Manual)
15. Power Plant * *
Buildup Manual
and 1 Mag Tape
*
*
16. In-Service * *
Activity Report
17. Significant * *
Service Item
Summary
18. All Operators * *
Letters
19. Service Letters * *
20. Service Letters * *
Index
21. Structural Item * *
Interim Advisory
22. Maintenance * *
Tips
P.A. No. 1663 C-1
K/UAL F-29
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 30
C. MAINTENANCE PLANNING
1. Maintenance [*CONFIDENTIAL MATERIAL OMITTED AND FILED
Planning Data SEPARATELY WITH THE SECURITIES AND EXCHANGE
Documents COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
and 1 Mag Tape TREATMENT]
2. Maintenance * *
Task Cards
3. Maintenance * *
Inspection
Intervals Report
(total quantity-
all models)
D. SPARES
1. Illustrated *
Parts Catalog
(Select one
format only)
and 1 Mag Tape *
*
*
2. Standards Books
a. Index *
* *
b. Parts *
Standards
* *
c. Parts *
Specifications
* *
d. Standards *
for Repair
* *
e. Obsolete *
Standards
* *
P.A. No. 1663 C-1
K/UAL F-30
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 31
f. Commercial [*CONFIDENTIAL MATERIAL OMITTED AND FILED
Markers SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]
g. Commercial *
Markers +
h. Passenger Cabin *
Symbology (Commercial
Placards)
* *
i. Process *
Standards
* *
j. Material *
Standards
* *
k. Drafting *
Standards Practices
* *
l. Specification *
Support
Standards
* *
E. FACILITIES AND EQUIPMENT PLANNING
1. Facilities and * *
Equipment Planning
Document
2. Special Tool * *
and Ground Handling
Equipment Drawings
*
*
3. Special Tool * *
and Ground
Handling
Equipment Drawings
Index
P.A. No. 1663 C-1
K/UAL F-31
Attachment No. 14
Supplemental Agreement No. 3
Purchase Agreement No. 1663
United Air Lines, Inc.
Page 32
4. Supplementary [*CONFIDENTIAL MATERIAL OMITTED AND
Tooling FILED SEPARATELY WITH THE SECURITIES
Documentation AND EXCHANGE COMMISSION PURSUANT TO A
(total quantity- REQUEST FOR CONFIDENTIAL TREATMENT]
all models)
5. System Test
Equipment
Document
6. Illustrated * *
Tool and
Equipment List
Manual * *
and 1 Mag Tape
*
7. Airplane * *
Recovery Document
8. Airplane * *
Characteristics
for Airport Planning
9. Crash, Fire and * *
Rescue Document
10. Engine Handling * *
Document
F. COMPUTER SOFTWARE DOCUMENTATION FOR AIRBORNE COMPONENTS
Computer * *
Software Index
G. SUPPLIER TECHNICAL DATA
Product Support * *
Supplier
Directory (total
quantity -
all models)
P.A. No. 1663 C-1
K/UAL F-32
Attachment No. 15
1663-5A
United Air Lines, Inc.
P.O. Box 66100
Chicago, Illinois 60666
Subject: Letter Agreement No. 1663-5A to
Purchase Agreement No. 1663 -
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT]
Gentlemen:
Reference is made to Purchase Agreement No. 1663 dated as of even
date herewith (the Purchase Agreement) between The Boeing Company
(Boeing) and United Air Lines, Inc. (United) relating to the sale
by Boeing and the purchase by United of thirty-four (34) Model 777-
222 aircraft (hereinafter referred to as the Aircraft).
All terms used herein and in the Purchase Agreement, and not
defined herein, shall have the same meaning as in the Purchase
Agreement.
1. [*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
2. "B" Market Option Aircraft Description.
2.1 Each "B" Market Option Aircraft (hereinafter "Option
Aircraft") will be powered by PW4090 engines. Such Option Aircraft
will be manufactured in accordance with Boeing Detail
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT], as defined in Exhibit A-2 to the Purchase
Agreement, as amended or revised to incorporate (i) the changes
developed for Boeing's basic Model 777-200 aircraft between the
date of this Letter Agreement and the execution of a definitive
agreement to purchase the Option Aircraft, (ii) changes made
pursuant to Article 7 of the Purchase Agreement and (iii) any
changes required pursuant
P.A. No. 1663
K/UAL
Attachment No. 15
United Air Lines, Inc.
1663-5A Page 2
to any law or governmental regulation or requirement or any
interpretation thereof by any governmental agency, in order to
obtain a Standard Certificate of Airworthiness. Changes to the
Detail Specification incorporated pursuant to the provisions of
clauses (i), (ii), and (iii) above shall include the effects of
such changes upon Option Aircraft basic price, purchase price,
weight, balance, design and performance.
3. Price.
3.1 Base Price.
The basic price of each Option Aircraft is
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]. The basic price above includes the prices
of Engine (as defined below) as set forth in Exhibit D to the
Purchase Agreement. Such Engine prices are used for reference
purposes only. It is understood and agreed that the basic price
set forth above and the price adjustment provisions set forth in
Exhibit D to the Purchase Agreement will be revised by Boeing to
incorporate the price and price adjustment provisions, if
necessary, when the engine manufacturer (P&WA) establishes such
prices and provisions for such Engines.
3.1.1 Basic Price. The basic price of each Option
Aircraft shall be the applicable basic price set forth in 3.1
above,
(A) increased or decreased by Boeing's then
current prices for Buyer's special features incorporated in the
applicable Detail Specification as of the date of execution of a
definitive agreement to purchase such Option Aircraft,
(B) adjusted to reflect the price effects of
the changes referred to in clauses (i), (ii) and (iii) of paragraph
2 herein,
(C) adjusted for any changes mutually agreed
upon subsequent to the date that Buyer and Boeing enter into a
definitive purchase agreement for the Option Aircraft and,
(D) adjusted to reflect the price effect of
changes referred to in paragraphs 2 or 3.
P.A. No. 1663
K/UAL
Attachment No. 15
United Air Lines, Inc.
1663-5A Page 3
3.2 Purchase Price.
The purchase price of each Option Aircraft shall be
the applicable basic price thereof at the time of Option Aircraft
delivery adjusted for economic fluctuations in accordance with the
provisions of Airframe Price Adjustment and the Engine Price
Adjustment for "B" Market Aircraft contained in Exhibit D to the
Purchase Agreement.
4. Payment.
4.1 Advance Payment Base Price.
The option Aircraft advance payment base price
depending on the month and year of scheduled delivery are set forth
below.
Advance Payment Base
Month and year of Price per Option
Scheduled Delivery Aircraft
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
P.A. No. 1663
K/UAL
Attachment No. 15
United Air Lines, Inc.
1663-5A Page 4
Advance Payment Base
Month and year of Price per Option
Scheduled Delivery Aircraft
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
Each such advance payment base price shall be adjusted to reflect
the price effects of the changes referred to in paragraph 3.1
herein and for the effects of escalation on the price of any such
change utilizing Boeing's then current advance payment escalation
factor applicable for the month and year of such Option Aircraft
delivery.
The advance payment base price of each Option Aircraft, including
any such adjustments thereto, is hereinafter referred to as the
"advance payment base price".
4.2 The advance payment base prices of each Option
Aircraft determined in accordance with paragraph 4.1 have been
established using currently available forecasts of the escalation
factors used by Boeing and applicable to the scheduled month and
year of Option Aircraft delivery. Such advance payment base prices
will be increased or decreased, as appropriate, at the time of
signing of the definitive purchase agreement, using the then-
current forecasted escalation factors used by Boeing, to determine
the amount of the first advance payment to be made by Buyer on each
Option Aircraft.
The advance payment base prices will be further increased or
decreased by Boeing not later than twenty-five (25) months prior to
the scheduled month of delivery, as required to reflect the effects
of (i) any adjustments in the basic prices of such Option Aircraft,
as determined in accordance with the provisions of the definitive
purchase agreement, and (ii) the then-current forecasted escalation
factors used by Boeing.
P.A. No. 1663
K/UAL
Attachment No. 15
United Air Lines, Inc.
1663-5A Page 5
[*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]
4.4 Advance Payments.
Buyer shall pay to Boeing advance payments for each
Option Aircraft on the dates determined pursuant to the schedule
below in amounts equal to the product of (i) the percentages
indicated in such schedule (each expressed as a decimal), and (ii)
the Advance Payment Base Price adjusted as of the date the advance
payment is due Boeing.
Amount Due per Option Aircraft
(Percentage times
Due Date of Payment Advance Payment Base Price)
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
P.A. No. 1663
K/UAL
Attachment No. 15
United Air Lines, Inc.
1663-5A Page 6
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
Each of the foregoing advance payments will be credited against the
purchase price of the appropriate Option Aircraft and the balance
of such purchase price will be due upon Option Aircraft delivery.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
P.A. No. 1663
K/UAL
Attachment No. 15
United Air Lines, Inc.
1663-5A Page 7
5. Option Exercise.
5.1 In the event Buyer elects to purchase an Option
Aircraft under the provisions contained herein Buyer shall exercise
its option by giving written or telegraphic notice to Boeing of
such election and specifying the month and year of delivery of such
Option Aircraft on or before [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] prior to the
first day of the scheduled delivery month of such Option Aircraft.
5.2 [*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
6. Contract Terms.
From time to time, Buyer may request Boeing by written or
telegraphic notice, to provide for specified Option Aircraft, a
supplemental agreement setting forth the price for such specified
Option Aircraft. Boeing shall provide such supplemental agreement
not later than fifteen (15) days following the request by Buyer.
Such supplemental agreement shall confirm that the applicable terms
and conditions contained herein and (to the extent not inconsistent
herewith) in the remainder of Purchase Agreement No. 1663, as
amended and supplemented by Letter Agreements thereto, shall govern
the rights and obligations of Boeing and buyer in connection with
the purchase of the Option Aircraft subject thereto. If Buyer
desires to exercise its option to purchase one or more Option
Aircraft, Boeing and Buyer shall execute the supplemental agreement
evidencing the option exercise on or before the option exercise
date for the applicable Option Aircraft.
P.A. No. 1663
K/UAL
Attachment No. 15
United air Lines, Inc.
1663-5A Page 8
7. Effect of Failure to Exercise or Cancellation.
In the event of any failure to execute a supplemental
agreement on or before the option exercise date for any Option
Aircraft, all rights and obligations of Boeing and Buyer with
respect to the Option Aircraft so affected shall thereupon
terminate and be without further force and effect, except that
Boeing will promptly refund to Buyer, without interest, all advance
payments, less the Deposits, received by Boeing from Buyer pursuant
to paragraph 4 above for such Option Aircraft.
If the foregoing correctly sets forth your understanding of
our agreement with respect to the matters treated above, please
indicate your acceptance and approval below.
Very truly yours,
THE BOEING COMPANY
By
Its
ACCEPTED AND AGREED TO THIS
Date: , 1995
UNITED AIR LINES, INC.
By
Its
P.A. No. 1663
K/UAL
Attachment No. 16 to
Supplemental Agreement No. 3
Purchase Agreement No. 1663
Page 1
Aircraft Loadability for the "B" Market Aircraft
For the purpose of flexible operational loadability, the "B" Market
Aircraft as defined in Exhibit A-2 to the Purchase Agreement shall
not exceed the center of gravity loading limits defined in
subparagraph A below. The following assumptions shall be utilized
in the analysis:
Configuration specification, Rev. T, UAL 303 passenger TRI
Class (ICX-6115A) interior configuration with changes per UAL
Detail Specification, [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUESTS FOR CONFIDENTIAL TREATMENT], plus PW 4090 engines,
and 632,500 MTOW.
Passenger weight including carry-on baggage weight allowance
of 195 lbs. each.
Passenger check baggage weight allowance of 65 lbs. per
passenger.
Cargo capacity as determined by container and bulk pit
usable volume and a cargo density of ten (10) lbs. per cubic
foot.
A. The loading limit restrictions shall be:
(1) Fwd limit = 0.15 (Nx) (195) (p-pf)
(2) Rear Limit = 0.15 (Nx) (195) (p-pf)
where:
Nx = max passenger count in the coach class
section of the airplane
P = centroid of the passenger seats in the
coach class section
pf = centroid of those passenger seats in
the coach class section that are
forward of "p"
pr = centroid of those passenger seats in
the coach class section that are aft
of "p"
The above restrictions shall be further
increased by applicable movement of crew, passengers, landing gear,
flaps and slats.
P.A. No. 1663 SA-3-1
K/UAL
Attachment No. 16 to
Supplemental Agreement No. 3
Purchase Agreement No. 1663
Page 2
B. Inflight loading limits shall be the aerodynamic
center of gravity limits restricted by the loading limit estimate
plus the effect of fuel loading and burnout cases. The fuel
loading and burnout cases shall be as many points in the fuel
management schedule as constitute adverse forward and rear balance
cases. FAR minimum reserve and full fuel shall be particular
points of compliance.
C. Loading assumptions shall include the following
passenger load factor combination.
(1) 30% FC/40% BC/100% EC
(2) 100% FC/100% BC/30% EC
(3) 100% FC/100% BC/100% EC
Cargo loading assumes a full compliment of LD-3
containers (158 cu ft/cont - 18 in the forward hold and 14 in the
aft hold). Cargo distribution extremes shall assume a front hold
to rear hold total weight ratio of 1.5 to 1 or 1 to 1.5. For this
analysis, the forward loading case will have 28,440 lb. in the
forward hold, 18,960 lb. in the aft hold and 6,000 lb. in the bulk
cargo pit. Aft loading cases shall have 14,746 in the forward
hold, 22,120 in the aft hold and 6,000 lb. in the bulk cargo pit.
Combined front and combined rear pit centroids shall be used.
Baggage allowance shall be employed only to validate that
passengers and bags can be carried.
To preclude the aircraft from tipping on its tail,
the Aircraft center of gravity shall be at least six (6) inches
forward of the centerline of the main landing gear axles under both
of the following cases:
(1) Manufacturer's empty weight, plus
(2) Standard items as set forth in UAL Detail
Specification, [*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT], plus
(3) FAR minimum reserve fuel, or 26,000 lb.
whichever is higher.
D. Where Aircraft weight and center of gravity are
determined by:
(1) Operating empty weight, plus
(2) Critical passenger load, relocated aft as
per emergency evacuation, plus
P.A. No. 1663 SA-3-2
K/UAL
Attachment No. 16 to
Supplemental Agreement No. 3
Purchase Agreement No. 1663
Page 3
(3) Tail heavy cargo distribution (assumes a
full compliment of LD-3 containers) of 1 lb. in the forward hold
for every 2 lb. in the aft hold. For this analysis: 22,120 lb. in
the aft hold, 6,000 lb. in the bulk cargo pit, and 11,060 in the
forward hold.
(4) FAR minimum reserve fuel or 26,000 lb.
whichever is higher.
P.A. No. 1663 SA-3-3
K/UAL
Attachment No. 17
6-1162-RCN-926
United Air Lines, Inc.
P.O. Box 66100
Chicago, Illinois 60666
Subject: Letter Agreement No. 6-1162-RCN-926
Purchase Agreement No. 1663
[*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Gentlemen:
Reference is made to Purchase Agreement No. 1663 dated as of even
date herewith (the Purchase Agreement) between The Boeing Company
(Boeing), and United Air Lines, Inc. (United) relating to the sale
by Boeing and the purchase by United of thirty-four (34) Model 777-
222 aircraft (hereinafter referred to as the Aircraft).
This letter, when accepted by Buyer will become part of the
Purchase Agreement and will evidence our further agreement with
respect to the matters set forth below.
All terms used herein and in the Purchase Agreement, and not
defined herein, shall have the same meaning as in the Purchase
Agreement.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1663
K/UAL
Attachment No. 17
United Air Lines, Inc.
6-1162-RCN-926 Page 2
1. Definitions
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
P.A. No. 1663
K/UAL
Attachment No. 17
United Air Lines, Inc.
6-1162-RCN-926 Page 3
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
P.A. No. 1663
K/UAL
Attachment No. 17
United Air Lines, Inc.
6-1162-RCN-926 Page 4
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
P.A. No. 1663
K/UAL
Attachment No. 17
United Air Lines, Inc.
6-1162-RCN-926 Page 5
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
P.A. No. 1663
K/UAL
Attachment No. 17
United Air Lines, Inc.
6-162-RCN-926 Page 6
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
5. Privileged and Confidential Treatment.
Buyer understands and agrees that this Letter Agreement
is considered by Boeing to be privileged and confidential. Buyer
agrees that it will treat this Letter Agreement and the information
contained herein as privileged and confidential and will not,
without the prior written consent to Boeing, disclose this Letter
Agreement or any information contained herein to any entity or
person.
6. Assignment.
Neither party may assign this Letter Agreement or any
portion or rights or obligations thereof without the express
written approval of the other party.
P.A. No. 1663
K/UAL
Attachment No. 17
United Air Lines, Inc.
6-1162-RCN-926 Page 7
If the foregoing correctly sets forth your understanding of our
agreement with respect to the matters treated above, please
indicate your acceptance and approval below.
Very truly yours,
THE BOEING COMPANY
By /s/ R. C. Nelson
Its Attorney-in-Fact
ACCEPTED AND AGREED TO THIS
Date: October 27, 1990
UNITED AIR LINES, INC.
By /s/ Douglas A. Hacker
Its Senior Vice President and
Chief Financial Officer
EXHIBIT 10.40
December 11, 1995
6-1161-JME-118
United Air Lines, Inc.
P.O. Box 66100
Chicago, IL 60666-0100
Subject: Letter Agreement No. 6-1162-JME-118 to Purchase
Agreement No. 1663 [*CONFIDENTIAL MATERIAL OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]
Gentlemen:
Reference is made to Purchase Agreement No. 1663 dated December
18, 1990, as amended (the Purchase Agreement), between The Boeing
Company (Boeing) and United Air Lines, Inc. (Buyer), relating to
the sale by Boeing and the purchase by Buyer of certain Model 777
aircraft (the Aircraft)
This letter agreement, when accepted by Buyer will become part of
the Purchase Agreement and will evidence our further agreement to
the matters set forth below.
All terms used herein and in the Purchase Agreement and not
defined herein, shall have the same meaning as in the Purchase
Agreement.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
4. This letter agreement does not preclude additional services
which may be requested in the future, for which the scope and
compensation will be subject to mutual agreement.
5. The agreements cited in paragraphs 1.(b), 1.(c), and 1.(d)
are hereby terminated.
6. Except as modified herein the Purchase Agreement including
Exhibit E remains in full force and effect.
If the foregoing correctly sets forth your understanding of our
agreement with respect to the matters set forth above, please
indicate your acceptance and approval below.
ACCEPTED AND AGREED THIS
Date: December 19, 1995
THE BOEING COMPANY UNITED AIR LINES, INC.
By: /s/ R.C. Nelson By: /s/ Douglas Hacker
Its: Attorney-in-Fact Its: Senior Vice President - Finance
EXHIBIT 10.41
Supplemental Agreement No. 7
to
Purchase Agreement No. 1670
between
THE BOEING COMPANY
and
UNITED AIR LINES, INC.
Relating to Boeing Model 747-422 Aircraft
This SUPPLEMENTAL AGREEMENT, entered into as of the 29th day
of December 1995, by and between THE BOEING COMPANY, a Delaware
corporation (hereinafter called Boeing), and UNITED AIR LINES,
INC., a Delaware corporation, and UNITED WORLDWIDE CORPORATION
(collectively hereinafter called Buyer);
W I T N E S S E T H:
WHEREAS, the parties entered into that certain Purchase
Agreement No. 1670, dated as of December 18, 1990, relating to
the purchase and sale of Boeing Model 747-422 aircraft
(hereinafter referred to as "The Aircraft", or the "Firm
Aircraft", Reconfirmation Aircraft" or the "Option Aircraft", as
such capitalized terms, and any other capitalized terms used
herein, unless otherwise specifically defined herein, are defined
in the "Purchase Agreement" (as such term is defined below)),
which agreement, as amended and supplemented, together with all
exhibits, specifications and letter agreements related or
attached thereto, is hereinafter called the "Purchase Agreement"
and;
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1670 SA 6-1
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
NOW THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree to amend the Purchase
Agreement as follows:
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
2. Article 5, entitled Payment, paragraph 5.1, entitled Advance
Payment Base Price, is hereby deleted and replaced with a new
paragraph 5.1, which includes the revised Advanced Payment Base
Prices for the [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT] Aircraft. Such revised
paragraph is attached hereto as Attachment 2 and incorporated
into the Purchase Agreement by this reference.
3. The first sentence in paragraph no. 11 of Letter Agreement
No. 6-1162-DLJ-891R2 entitled [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] is hereby
deleted and replaced with the following sentence: "Aircraft in
Article 2.1 of the Purchase Agreement scheduled for delivery
after [*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
4. The following "Months to be Utilized in Determining the
Value of H & W" are hereby added to the table on page 3 of
Exhibit D, entitled Price Adjustment due to Economic
Fluctuations.
Month of Scheduled
Aircraft Delivery as Set Months to be Utilized
Forth in Article 2.1 of Determining the Value
the Agreement of H & W
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT]
5. Buyer hereby [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT] of the Aircraft
scheduled for delivery in [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
P.A. No. 1670 SA 6-2
6. Buyer agrees that the invoice for the July 1997 747 Aircraft
in this Supplemental Agreement will contain [*CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] pursuant to paragraph No. 13 of Letter Agreement No. 6-
1162-TML-1205.
7. Boeing agrees to [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT] for one 747, one 767,
and three 737's pursuant to paragraph 7 of Letter Agreement No. 6-
1162-TML-1205 in the [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT]
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1670 SA 6-3
10. This Supplemental Agreement is subject to the confidentially
provisions of Letter Agreement 6-1162-DLJ-886.
11. The Purchase Agreement shall be deemed amended to the extent
herein provided and as amended shall continue in full force and
effect.
EXECUTED IN DUPLICATE as of the day and year first above written.
THE BOEING COMPANY UNITED AIR LINES, INC.
By: /s/ R.C. Nelson By: /s/ Douglas A. Hacker
Its: Attorney-in-Fact Its: Senior Vice President and
Chief Financial Officer
P.A. No. 1670 SA 6-4
Attachment 1 to
Supplemental
Agreement No. 7
ARTICLE 2. Delivery of Aircraft; Title and Risk of Loss.
2.1 Time of Delivery. Each Aircraft shall be
delivered to Buyer assembled and ready for flight, and Buyer
shall accept delivery of such Aircraft, during or, if mutually
agreed, before the months set forth in the following schedule:
Month and Year
of Delivery Quantity of Aircraft
August 1992 One (1)
October 1992 One (1)
December 1992 One (1)
April 1993 Two (2)
June 1993 One (1)
August 1993 One (1)
June 1994* One (1)
July 1994* One (1)
[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
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[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
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[Conf.Treat.Req.] [Conf.Treat.Req.]
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[Conf.Treat.Req.] [Conf.Treat.Req.]
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[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1670 1-1
Attachment 1 to
Supplemental
Agreement No. 7
If Boeing gives Buyer at least ten (10) days' advance notice of
the delivery date for an Aircraft, and delivery is delayed beyond
such date due to Buyer's fault or responsibility, Buyer shall
promptly reimburse Boeing for all costs and expenses incurred by
Boeing as a result of such delay, including but not limited to
reasonable amounts for storage, insurance, taxes, preservation or
protection of the Aircraft, and interest on payments due.
P.A. No. 1670 1-2
Attachment 2 to
Supplemental
Agreement No. 7
ARTICLE 5. Payment.
5.1 Advance Payment Base Price. The advance payment
base price of each Aircraft, depending on the month and year of
scheduled delivery, is indicated below:
Month and Year of Advance Payment Base
Scheduled Delivery Price per Aircraft
August 1992 [Conf.Treat.Req.]
October 1992 [Conf.Treat.Req.]
December 1992 [Conf.Treat.Req.]
April 1993 [Conf.Treat.Req.]
August 1993 [Conf.Treat.Req.]
November 1993 [Conf.Treat.Req.]
June 1994 * [Conf.Treat.Req.]
July 1994 * [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
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[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
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[Conf.Treat.Req.] [Conf.Treat.Req.]
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[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
[Conf.Treat.Req.] [Conf.Treat.Req.]
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P.A. No. 1670 2-1
Attachment 2 to
Supplemental
Agreement No. 7
Such advance payment base prices will be used to determine the
amount of the first advance payment to be made by Buyer on each
Aircraft pursuant to the provisions of Article 5.2. The advance
payment base prices of each Aircraft has been established using
currently available forecasts of the escalation factors used by
Boeing and applicable to the scheduled month and year of Aircraft
delivery. The advance payment base prices will be further
increased or decreased by Boeing not later than twenty-five (25)
months prior to the scheduled month of delivery, as required to
reflect the effects of the then-current forecasted escalation
factors used by Boeing in accordance with Exhibit D. The advance
payment base price of each Aircraft, including any adjustments
made thereto, as contemplated herein, is referred to as the
"Advance Payment Base Price."
P.A. No. 1670 2-2
EXHIBIT 10.42
AMENDMENT No. 4
TO THE A320 PURCHASE AGREEMENT
dated as of August 10, 1992
between
ASVA, S.A.R.L.,
and
UNITED AIR LINES, INC.
This Amendment No. 4 (hereinafter referred to as the "Amendment")
is entered into as of November 27, 1995, by and between AVSA,
S.A.R.L., a societe a responsibilite limitee organized and
existing under the laws of the Republic of France, having its
registered office located at 2, Rond Point Maurice Bellonte,
31700 Blagnac (France) (hereinafter referred to as the "Seller"),
and UNITED AIR LINES, Inc., a corporation organized and existing
under the laws of the State of Delaware, United States of
America, having its principal corporate offices located at 1200
East Algonquin Road, Elk Grove Village, Illinois 60007
(hereinafter referred to as the "Buyer").
WITNESSETH:
WHEREAS, the Buyer and the Seller have entered into an A320
Purchase Agreement, dated as of August 10, 1992 (which agreement,
as previously amended by and supplemented with all Exhibits,
Appendices, Letter Agreements, and Amendments attached thereto is
hereinafter called the "Agreement"), which Agreement relates to
the sale by the Seller and the purchase by the Buyer of certain
firmly ordered Airbus Industrie A320-200 model aircraft (the
"Aircraft") and certain Airbus Industrie A320-200 model option
aircraft (the "Option Aircraft"). Amendment No. 1 to the
Agreement was signed on November 24, 1993. Amendment No. 2 to the
Agreement was signed on April 22, 1994. Amendment No. 3 to the
Agreement was signed on March 31, 1995.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
WHEREAS, capitalized terms used herein and not otherwise defined
in this Amendment shall have the meaning assigned to them in the
Agreement. The terms "herein," "hereof," and "hereunder" and
words of similar import refer to this Amendment.
A320 - United Airlines Amdt. 4-1
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
4. EFFECT OF AMENDMENT
The Agreement shall be deemed amended to the extent herein
provided, and, except as specifically amended hereby, shall
continue in full force and effect in accordance with its
original terms.
5. CONFIDENTIALITY
Subject to any legal or governmental requirements of
disclosure, the Parties (which for this purpose shall
include their employees, agents and advisors) shall maintain
strictly confidential the terms and conditions of this
Amendment and any information, reports or other data
furnished hereunder or in connection with the negotiation of
this Amendment. Without limiting the generality of the
foregoing, the Buyer shall use its best efforts to limit the
disclosure of the contents of this Amendment to the extent
legally permissible in any filing required to be made by the
Buyer with any Governmental agency and shall make such
applications as shall be necessary to implement the
foregoing. The Buyer and the Seller shall consult with each
other prior to the making of any public disclosure or filing
permitted hereunder of this Amendment or the terms and
conditions hereof. Each party will inform the other of
receipt of any legal demand, whether by subpoena, discovery
request or otherwise, for disclosure of this Amendment or
its contents. The provisions of this paragraph 4 shall
survive any termination of this Amendment.
If the Foregoing correctly sets forth our understanding, please
indicate your acceptance by signing in the space provided below.
Agreed and Accepted Agreed and Accepted
UNITED AIR LINES, INC. AVSA, S.A.R.L.
By: /s/ Douglas Hacker By: /s/ Christophe Mourey
Its: Senior Vice President and Its: Chief Executive Officer
Chief Financial Officer
Date: 11/27/95 Date:
Exhibit 13
ITEM 6. SELECTED FINANCIAL DATA
Exhibit 21
UAL Corporation Subsidiaries
Place of
Subsidiary Incorporation Business Name
Air Wis Services, Inc. Wisconsin Air Wis Services, Inc.
Four Star Insurance Bermuda Four Star Insurance
Company, Ltd. Company, Ltd.
UAL Leasing Corporation Delaware UAL Leasing Corporation
United Air Lines, Inc. Delaware United Air Lines, Inc.
Exhibit 23
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the
incorporation of our report included in the UAL Corporation Form
10-K for the year ended December 31, 1995, into the Company's
previously filed Post-Effective Amendment No. 1 to Form S-8
Registration Statement (File No. 2-67368) and Post-Effective
Amendment No. 2 to Form S-8 Registration Statement (File No. 33-
37613) for the Employees' Stock Purchase Plan of UAL Corporation;
Post-Effective Amendment No. 1 to Form S-8 Registration Statement
(File No. 33-38613) for the United Air Lines, Inc. Management and
Salaried Employees' 401(k) Retirement Savings Plan; Form S-8
Registration Statement (File No. 33-57331) and Post-Effective
Amendment No. 1 to Form S-8 Registration Statement (File No. 33-
44552) for the United Air Lines, Inc. Ground Employees' 401(k)
Retirement Savings Plan; Form S-8 Registration Statement (File
No. 33-62749) and Post-Effective Amendment No. 1 to Form S-8
Registration Statement (File No. 33-44553) for the United Air
Lines, Inc. Flight Attendant Employees' 401(k) Retirement Savings
Plan; Post-Effective Amendment No. 2 to Form S-8 Registration
Statement (File No. 33-41968), Form S-8 Registration Statement
(File No. 33-10206) and Form S-8 (File No. 33-61007), for the
UAL Corporation 1981 Incentive Stock Plan; Form S-8 Registration
Statement (File No. 33-58385) for Stock in Lieu of Cash Bonuses
for Certain Executive Officers; Form S-8 Registration Statement
and Post-Effective Amendment No. 1 to Form S-8 Registration
Statement (File No. 33-60675) for Directors Fees Taken in Stock
Under UAL Corporation 1995 Directors Plan; Form S-3 Registration
Statement (File No. 33-57192), as amended; Post-Effective Amendment
No. 1 to Form S-8 Registration Statement (File No. 33-59950) for
the United Air Lines, Inc. Pilots' Directed Account Retirement
Income Plan; Form S-4 Registration Statement (File No. 33-57579),
as amended; and Form S-8 Registration Statement (File No. 333-01437)
for Stock in Lieu of Cash Bonuses for Certain Officers.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Chicago, Illinois
March 8, 1996
EXHIBIT 99
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1995
Employees' Stock Purchase Plan of UAL Corporation
(Full title of the Plan)
UAL Corporation
(Employer sponsoring the Plan, issuer of the
participations in the Plan and issuer of
the shares held pursuant to the Plan)
1200 Algonquin Road, Elk Grove Township, Illinois
Mailing Address:
UAL Corporation, P.O. Box 66919, Chicago, Illinois 60666
(Address of principal executive offices)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To UAL Corporation:
We have audited the accompanying statement of financial position
of the Employees' Stock Purchase Plan of UAL Corporation (the "Plan") as of
December 31, 1995 and 1994 and the related statement of changes in
participants' equity for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of the
Plan's administrator. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by the Plan's administrator, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Plan as of
December 31, 1995 and 1994 and the changes in its participants' equity for
each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 28, 1996
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the sponsor and issuer of the participants of the Plan, UAL
Corporation, has duly caused this Annual Report to be signed on its
behalf by the undersigned thereunto duly authorized.
UAL Corporation
-----------------------------------
Administrator
Dated February 28, 1996 By /s/ Douglas A. Hacker
--------------------------------
Douglas A. Hacker
Senior Vice President - Finance