Class I Junior Preferred Stockholders’ Agreement – UAL Corp. and the Air Line Pilots Association International
CLASS I JUNIOR PREFERRED STOCKHOLDERS' AGREEMENT
This Agreement (the 'Agreement') has been made
and entered into as of this 12th day of July, 1994, by
and among UAL Corporation, a Delaware corporation (the
'Company'), the Air Line Pilots Association,
International ('ALPA'), pursuant to its authority as the
collective bargaining representative for the crafts or
class of pilots employed by United Airlines, Inc.
('United'), the International Association of Machinists
and Aerospace Workers ('IAM'), pursuant to its authority
as the collective bargaining representative for the
crafts or classes of mechanics and related employees,
ramp and stores employees, food service employees,
dispatchers and security officers employed by United,
Duane D. Fitzgerald, Richard D. McCormick, John K. Van de
Kamp, Paul A. Volcker (each such individual, an
'Individual Party' and collectively, the 'Individual
Parties').
WHEREAS, pursuant to the terms of and schedules
to the Agreement and Plan of Recapitalization, dated as
of March 25, 1994, by and among the Company, ALPA and the
IAM (as amended, the 'Recapitalization Agreement'),
including the terms of the restated certificate of
incorporation of the Company to be effective as of the
Effective Time (as defined in the Recapitalization
Agreement) (the 'Restated Certificate') and the restated
By-Laws of the Company to be effective as of the
Effective Time (the 'Restated By-Laws') (the
Recapitalization Agreement, the Restated Certificate and
the Restated By-Laws, collectively, the 'Governance
Documents'), the board of directors of the Company (the
'Board') will, until the Termination Date (as defined in
the Restated Certificate) consist of twelve (12)
directors (subject to adjustment in certain
circumstances), four (4) of whom are to be independent
directors (the 'Independent Directors') nominated and
elected and/or appointed as provided herein and in the
Governance Documents;
WHEREAS, the ALPA and the IAM have entered into
the Recapitalization Agreement based in part on the
composition and operation of the Board as provided for in
the Governance Documents and each has a substantial
interest in assuring that the terms thereof and of this
Agreement are carried out;
WHEREAS, the Governance Documents contemplate
that, at the Effective Time, pursuant to the terms of a
subscription agreement to be entered into by and between
the Company and each initial Independent Director, the
Company shall issue to each initial Independent Director,
and each initial Independent Director shall be the
registered holder of, one share of the Class I Junior
Preferred Stock of the Company (the 'Class I Preferred
Stock'), each such share of Class I Preferred Stock
having the relative rights, privileges and powers as set
forth in the Restated Certificate (the holders of the
Class I Preferred Stock from time to time, including each
Individual Party so long as and whenever such Individual
Party is a holder of Class I Preferred Stock, are
referred to individually herein as a 'Class I Preferred
Stockholder' and are collectively referred to herein as
the 'Class I Preferred Stockholders');
WHEREAS, the Governance Documents contemplate
that Class I Preferred Stock may be held only by
Independent Directors and that each Independent Director
shall be a Class I Preferred Stockholder during such time
as such person serves as an Independent Director; and
WHEREAS, the parties hereto have entered into
this Agreement in order to effectuate the terms and
intent of the Governance Documents regarding the
Independent Directors;
NOW, THEREFORE, in consideration of the
foregoing premises, the mutual covenants herein contained
and other good and valuable consideration the receipt of
which is hereby acknowledged, the parties hereto hereby
agree as follows:
1. Effective Date; Term. This Agreement
shall become effective simultaneous with the Effective
Time and shall remain in effect in accordance with the
terms hereof until the earlier of (i) the tenth
anniversary of the Effective Time or such later date to
which the duration of this Agreement shall be permitted
under the General Corporation Law of the State of
Delaware (the 'GCL'), as the same may hereafter from time
to time be amended, it being the express intention of the
parties hereto that this Agreement shall remain in effect
(subject to clause (ii) of this Section 1) for more than
ten (10) years if permitted under, and for as long as
permitted under, the GCL, as amended from time to time,
and (ii) the Termination Date (as defined in the Restated
Certificate).
2. Voting for Election of Independent
Directors; Filling of Vacancies. At all elections for
Independent Directors, whether at a meeting of
stockholders or pursuant to action by written consent
without a meeting, each Class I Preferred Stockholder
shall vote, or act by written consent with respect to,
each share of Class I Preferred Stock held by such
Class I Preferred Stockholder in favor of the candidates
for Independent Directors nominated by the Independent
Director Nomination Committee (as defined in the Restated
Certificate) pursuant to Article FIFTH, Section 4.1.6 of
the Restated Certificate. In the event of a vacancy of
an Independent Director other than upon the scheduled
expiration of an Independent Director's term on the
Board, it is agreed that such vacancy shall be filled by
the Independent Director Nomination Committee in
accordance with Article FIFTH, Section 4.1.6 of the
Restated Certificate.
3. Grant of Proxy. Each Class I Preferred
Stockholder does hereby constitute and appoint each of
the other parties hereto (including each of the other
Class I Preferred Stockholders), other than the Company,
as his or her proxy to vote and/or to act by written
consent with respect to all of the shares of Class I
Preferred Stock owned by such Class I Preferred
Stockholder in accordance with the provisions of this
Agreement in the event that such Class I Preferred
Stockholder shall fail to do so, to the same extent and
with the same effect as such Class I Preferred
Stockholder could do so. The proxy hereby granted by
each Class I Preferred Stockholder is given in
consideration of the proxy hereby granted by each other
Class I Preferred Stockholder and in consideration of the
other mutual covenants herein contained, and as such the
proxy granted hereby by each Class I Preferred
Stockholder is coupled with an interest and shall be
irrevocable for so long as such Class I Preferred
Stockholder remains a holder of Class I Preferred Stock.
4. Restrictions on Transfer of the Class I
Preferred Stock. Except as provided in Section 5 hereof,
a Class I Preferred Stockholder may not sell, transfer,
pledge, assign, hypothecate or otherwise dispose of any
interest in (each, a 'Disposition') any share of Class I
Preferred Stock, including, without limitation, by
operation of law or otherwise. Any purported Disposition
of any share of Class I Preferred Stock in violation of
this Section 4 shall be null and void and of no force and
effect as to the proposed transferee and, upon any such
purported Disposition, such share of Class I Preferred
Stock shall be automatically redeemed by the Company as
provided in and subject to, Article FOURTH, Part X of the
Restated Certificate (the 'Automatic Redemption'). The
certificates evidencing the shares of Class I Preferred
Stock shall bear a legend describing the transfer and
voting restrictions and Automatic Redemption set forth in
this Agreement, as well as any other restrictions imposed
by the Restated Certificate or the Restated By-Laws.
5. Return of the Shares of Class I Preferred
Stock; Resignation of Non-Nominated Independent Directors.
Notwithstanding anything contained in Section 4 of this
Agreement to the contrary, each Class I Preferred
Stockholder, immediately upon (i) the expiration of his or
her term of office as an Independent Director (unless
concurrently therewith such individual is re-elected for an
additional term as an Independent Director), (ii) his or
her removal as an Independent Director pursuant to Article
FIFTH, Section 2.8 of the Restated Certificate or pursuant
to the penultimate sentence of this Section 5, (iii) his or
her resignation as an Independent Director, (iv) his or her
ceasing to serve as an Independent Director for any reason
whatsoever, (v) his or her failure to continue to be
qualified and serve as an Independent Director in
accordance with Article FIFTH, Section 2.4 of the Restated
Certificate, or (vi) his or her failure to be re-nominated
to continue to serve as an Independent Director by the
Independent Director Nomination Committee at a meeting of
such Committee at which such re-nomination is voted upon
(in any such case, the 'Terminated Independent Director'),
shall deliver or cause to be delivered, in exchange for the
payment of the par value of each share so delivered, the
stock certificate representing such Class I Preferred
Stockholder's shares of Class I Preferred Stock, duly
endorsed for transfer, to (a) such individual's elected or
appointed successor as an Independent Director, upon such
successor executing and delivering an agreement in the form
of Exhibit A hereto, or (b) in the case where no such
successor Independent Director has been elected or
appointed concurrently with such individual's removal,
resignation, failure to remain qualified or failure to be
re-nominated or otherwise ceasing to serve as an
Independent Director, to any Independent Director then in
office, or if there are no Independent Directors then in
office, to the Corporation to be held in escrow to be
delivered to the successor of such Terminated Independent
Director when such successor (x) is duly elected or
appointed, as the case may be, and (y) executes and
delivers an agreement in the form of Exhibit A hereto. The
Company shall immediately effect the Automatic Redemption
with respect to, or if such Automatic Redemption is not
applicable, the Terminated Independent Director shall sell
and the Company, subject to legally available funds
therefor, shall purchase, all shares of Class I Preferred
Stock of any Terminated Independent Director who fails to
comply with the transfer requirements of this Section 5 and
shall (subject to the following sentence) transfer or
reissue such redeemed or purchased shares to such
Terminated Independent Director's successor upon such
successor executing and delivering an agreement in the form
of Exhibit A annexed hereto. If such Terminated
Independent Director's successor is elected or appointed
and executes and delivers an agreement in the form of
Exhibit A annexed hereto prior to such Automatic Redemption
or purchase, the Company shall issue to such successor one
share of Class I Preferred Stock upon the payment of the
par value thereof. In addition, if a Class I Preferred
Stockholder fails to be re-nominated as an Independent
Director by the Independent Director Nomination Committee
(as described above), such individual shall immediately
resign from the Board and if such individual fails to so
immediately resign from the Board, each of the Class I
Preferred Stockholders (including the Class I Preferred
Stockholder who has failed to so immediately resign from
the Board) shall promptly vote (or act by written consent
with respect to) their shares of Class I Preferred Stock to
immediately remove such individual from the Board, without
cause. A Terminated Independent Director who resigns from,
is removed from or otherwise ceases to be a member of the
Board and otherwise complies with the provisions of this
Section 5 shall no longer be deemed to be a party to this
Agreement.
6. Replacement Independent Directors.
Immediately upon the election or appointment (as the case
may be) of an individual to replace or succeed to any
Terminated Independent Director, such individual shall
execute and deliver to the Company, ALPA, the IAM and the
remaining parties hereto an agreement (in the form of
Exhibit A annexed hereto) agreeing to be bound by each of
the terms of this Agreement, and from and after the
execution and delivery of such agreement, such individual
shall be deemed to be a party to this Agreement. Should
any individual who has been elected or appointed, as the
case may be, as an Independent Director fail either
(i) to become a Class I Preferred Stockholder or (ii) to
execute and deliver an agreement in the form of Exhibit A
annexed hereto, each of the Class I Preferred
Stockholders shall vote (or act by written consent with
respect to) their shares of Class I Preferred Stock to
remove such person as an Independent Director, without
cause.
7. Mandatory Extensions. Not later than two
years prior to the date, if any, on which this Agreement
would otherwise expire pursuant to clause (i) of
Section 1 of this Agreement, the Company, the Class I
Preferred Stockholders, the ALPA and the IAM shall
execute and deliver to each other an extension of this
Agreement for a period of time equal to the longest
period then permitted by law, but in no event beyond the
Termination Date. Should any Class I Preferred
Stockholder fail to execute and deliver the extension of
this Agreement required by this Section 7 (a 'Non-
Extending Independent Director'), each Class I Preferred
Stockholder, including each Non-Extending Independent
Director, shall vote (or act by written consent with
respect to) their shares of Class I Preferred Stock to
remove such Non-Extending Independent Director from the
Board, without cause.
8. Waiver of Claims. Except as provided in
Section 12, each Class I Preferred Stockholder hereby
waives any and all claims, whether for damages or
otherwise, which such individual may otherwise have
against any person or entity in connection with such
person or entity performing the terms of, or otherwise
acting in accordance with, this Agreement.
9. Binding Effect. The provisions of this
Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
assigns (and, in the case of a deceased Class I Preferred
Stockholder, such individual's estate and heirs),
provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this
Agreement without the written consent of the Outside
Public Directors (as defined in Article FIFTH,
Section 2.3 of the Restated Certificate), ALPA and the
IAM.
10. Governing Law. This Agreement shall be
construed in accordance with and governed by the laws of
the State of Delaware, without regard to the conflicts of
laws principles thereof.
11. Counterparts. This Agreement may be
signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signature
thereto and hereto were upon the same instrument.
12. Specific Performance. The parties hereto
agree that if any of the provisions of this Agreement
were not performed in accordance with their specific
terms or were otherwise breached, irreparable damage
would occur, no adequate remedy of law would exist and
damages would be difficult to determine, and that the
parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or
equity.
13. Amendments. This Agreement may not be
amended or modified unless such amendment or modification
(i) is approved in writing by each of the ALPA, the IAM
and each then existing Class I Preferred Stockholder and
(ii) is consented to by the Outside Public Directors.
14. Entire Agreement. This Agreement
constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and,
except as otherwise contemplated hereby, supersedes all
other prior agreements and understandings, both written
and oral, between the parties hereto with respect to the
subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above
written.
UAL CORPORATION
By:/s/ Joseph R. O'Gorman
______________________________
Name: Joseph R. O'Gorman
Title: Executive Vice President
AIR LINE PILOTS ASSOCIATION,
INTERNATIONAL
By:/s/ Roger D. Hall
______________________________
Name: Roger D. Hall
Title: Chairman, UAL-MEC
INTERNATIONAL ASSOCIATION OF
MACHINISTS AND AEROSPACE
WORKERS
By:/s/ Ken Thiede
______________________________
Name: Ken Thiede
Title: President and General Chairman
/s/ Duane D. Fitzgerald
_________________________________
Duane D. Fitzgerald
/s/ Richard D. McCormick
_________________________________
Richard D. McCormick
/s/ John K. Van de Kamp
_________________________________
John K. Van de Kamp
/s/ Paul A. Volcker
_________________________________
Paul A. Volcker
EXHIBIT A TO THE
CLASS I PREFERRED
STOCKHOLDERS' AGREEMENT
In consideration of the receipt of the one share
of Class I Preferred Stock of the Company and other good and
valuable consideration the receipt of which is hereby
acknowledged, the undersigned hereby agrees to be bound by
and perform each of the terms of the Class I Preferred
Stockholders' Agreement, made as of the ____ day of July,
1994, by and among the Company, ALPA, the IAM and certain
individuals who currently serve or heretofore have served as
Independent Directors of the Company (the 'Agreement'), as
if the undersigned were an original Individual Party to the
Agreement. Capitalized terms not defined herein shall have
the meanings ascribed to them in the Agreement and Plan of
Recapitalization, dated as of March 25, 1994, as amended
from time to time, by and among the Company, ALPA and the
IAM.
IN WITNESS WHEREOF, the undersigned has executed
this Agreement to be bound by the Class I Preferred
Stockholders' Agreement as of the date set forth below.
Dated: ___________________________
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