FIRST REFUSAL AGREEMENT
This Agreement (the 'Agreement') has been made
and entered into as of this 12th day of July, 1994 by and
among UAL Corporation, a Delaware corporation (the
'Company'), The Air Line Pilots Association,
International ('ALPA'), pursuant to its authority as the
collective bargaining representative for the crafts or
class of pilots employed by United Airlines, Inc.
('United'), and The International Association of
Machinists and Aerospace Workers ('IAM'), pursuant to its
authority as the collective bargaining representative for
the crafts or classes of mechanics and related employees,
ramp and stores employees, food service employees,
dispatchers and security officers employed by United, and
the Salaried/Man-agement Employee Director (as defined in
Article FIFTH, Section 1.66 of the Restated Certificate
(as defined below)) on behalf of the salaried and
management employees of United who are not represented by
any collective bargaining organization (the 'SAM') (ALPA,
IAM and the SAM, together, the 'Employee Groups').
WHEREAS, pursuant to the terms of and schedules
to the Agreement and Plan of Recapitalization, dated as
of March 25, 1994, by and among the Company, ALPA and the
IAM (as amended, the 'Recapitalization Agreement'),
including the terms of the restated certificate of
incorporation of the Company to be effective as of the
Effective Time (as defined in the Recapitalization
Agreement) (the 'Restated Certificate'), neither (i) a
Non-Dilutive Issuance (as defined in Article FIFTH,
Section 3.4(b)(vii) of the Restated Certificate) nor (ii)
the issuance of Permitted Bankruptcy Equity (as defined
in Article FIFTH, Section 3.4(b)(vii)(B) of the Restated
Certificate) (a 'Bankruptcy Issuance') shall constitute
an Other Extraordinary Matter (as defined in Article
FIFTH, Section 3.4(b) of the Restated Certificate) if,
among other things, such issuance is subject to the right
of first refusal provided for hereunder; and
WHEREAS, the parties hereto have entered into
this Agreement in order to effectuate the terms and
intent of the Recapitalization Agreement and the Restated
Certificate with respect to the Company's grant of such
right of first refusal to the Employee Groups in
connection with such Non-Dilutive Issuance and/or such
Bankruptcy Issuance;
NOW, THEREFORE, in consideration of the
foregoing premises, the mutual covenants herein contained
and other good and valuable consideration the receipt of
which is hereby acknowledged, the parties hereto hereby
agree as follows:
1. Right of First Refusal.
A. If, during the term of this
Agreement, the Company proposes to issue Equity
Securities (as defined in Article FIFTH, Section 1.37 of
the Restated Certificate) pursuant to a transaction which
would constitute an Other Extraordinary Matter pursuant
to Article FIFTH, Section 3.4(b) of the Restated
Certificate or would not constitute an Other
Extraordinary Matter pursuant to Article FIFTH, Section
3.4(b)(vii)(A) or (B) of the Restated Certificate (a
'Proposed Equity Issuance'), the Company, prior to making
such Proposed Equity Issuance, shall provide each of the
Employee Groups with a written statement of the specific
terms of such Proposed Equity Issuance (the 'Proposed
Sale Notice'). Each of the Employee Groups shall then
have 30 days to provide to the Company a binding
commitment to purchase up to its respective Proportionate
Percentage (as defined in subsection D below) of the
Equity Securities proposed to be issued in such Proposed
Equity Issuance on terms that are Equivalent (as defined
in subsection E below) to the terms set forth in the
Proposed Sale Notice (the 'Purchase Commitment'), and the
Company shall not consummate the Proposed Equity Issuance
during such 30 day period. If the Company consummates a
Proposed Equity Issuance within 180 days of the end of
the 30 day notice period with respect thereto, it shall
honor all the timely Purchase Commitments and shall
reduce the amount of securities offered pursuant to the
Proposed Equity Issuance by the amount of securities
covered by such Purchase Commitments.
B. In addition to and not in limitation
of the foregoing, if one or more Employee Groups submit a
Purchase Commitment within the 30 day period provided for
in subsection A above and any other Employee Group either
(i) indicates in writing during such period that it does
not intend to submit a Purchase Commitment for all of its
Proportionate Percentage of the Proposed Equity Issuance
or (ii) does not submit a Purchase Commitment for all of
its Proportionate Percentage of the Proposed Equity
Issuance within such 30 day period, then the Company,
prior to consummating a Proposed Equity Issuance, must
provide each of the Employee Groups that submitted a
Purchase Commitment for all of its Proportionate
Percentage of the Proposed Equity Issuance with the
opportunity to provide an additional purchase commitment
with respect to the portion of the Proposed Equity
Issuance that is not subject to a Purchase Commitment (an
'Additional Purchase Commitment') within the last to
expire of (a) 15 days after receipt of written notice
from the Company of the opportunity to make an Additional
Purchase Commitment and (b) the unexpired portion of the
30 day period referred to in subsection A above which
remains after receipt of written notice from the Company
that any portion of the Proposed Equity Issuance is not
subject to a Purchase Commitment from any other Employee
Group (such longer period, the 'APC Period'). The
Company shall not consummate the Proposed Equity Issuance
during such APC Period and if the Company consummates a
Proposed Equity Issuance within 180 days of the end of
the notice period referred to in the preceding sentence,
it shall honor all the timely Additional Purchase
Commitments and shall reduce the amount of securities
offered pursuant to the Proposed Equity Issuance to any
person or entity other than the Employee Groups by the
amount of securities covered by such Additional Purchase
Commitments.
C. Notwithstanding anything set forth in
subsection B to the contrary, if more than one Employee
Group submit Additional Purchase Commitments which in the
aggregate are in excess of the securities being offered
pursuant to the Proposed Equity Issuance, the Company
shall accept such Additional Purchase Commitments in
proportion to the relative proportion that such Employee
Groups Proportionate Percentages bear to each other;
provided, however, that in no event shall any Employee
Group be obligated to purchase Equity Securities in
excess of the amount set forth in its Additional Purchase
Commitment.
D. For the purposes of this Agreement,
'Proportionate Percentage' shall mean, for each of the
Employee Groups, the following:
ALPA: 46.23%
IAM: 37.13%
SAM: 16.64%
E. For the purpose of this Agreement,
'Equivalent' shall mean, in connection with a Proposed
Equity Issuance, a Purchase Commitment on substantially
the same terms as that set forth in a Proposed Sale
Notice. If any Proposed Sale Notice provides for
consideration other than cash to be paid to the Company
(the 'Non-Cash Consideration'), a Purchase Commitment
must provide for consideration to be paid to the Company,
whether in cash or otherwise, with a fair market value,
as determined by the board of directors of the Company,
equal to the Non-Cash Consideration to be paid to the
Company pursuant to the Proposed Sale Notice in order for
such Purchase Commitment to be deemed Equivalent for the
purpose of subsection A above.
F. In the event that no Employee Group
submits a Purchase Commitment within the time period
provided for in subsection A above or the Purchase
Commitments and Additional Purchase Commitments, if any,
submitted are for less than all of the securities being
offered in the Proposed Equity Issuance, the Company may
then consummate the Proposed Equity Issuance of such
securities not subject to Purchase Commitments or
Additional Purchase Commitments only upon the terms set
forth in the Proposed Sale Notice. Such Proposed Equity
Issuance may not be consummated unless it is consummated
(i) within 180 days after the later of the 30 day period
provided for in subsection A above or, if applicable, the
APC Period provided for in subsection B above and (ii) on
the specific terms set forth in the Proposed Sale Notice.
Any subsequent Proposed Equity Issuance proposed by the
Company shall be subject to each of the provisions and
requirements of this Section 1 as if the prior Proposed
Equity Issuance that was not consummated for any reason
never was proposed by the Company.
G. Notwithstanding anything contained in
this Section 1 to the contrary, the provisions of this
Section 1 shall be inapplicable to issuances of Equity
Securities in accordance with Article FIFTH,
Subsection 3.4(b)(vii)(C) of the Restated Certificate.
H. The Salaried/Management Employee
Director may consult with the senior executive of United
having responsibility for human resources concerning the
exercise of any rights under this Agreement. The Company
shall assist the Salaried/Management Director in the
exercise of such rights, including providing
administrative and logistical support in disseminating
Proposed Sale Notices to the Salaried/Management
Employees and collating and processing any Purchase
Commitments and Additional Purchase Commitments received
from such employees and, if requested, shall similarly
assist ALPA and the IAM.
I. To the extent consistent with its
policies and practices, United may, but shall not be
obligated to, assist the SAM Employee Group (to the same
extent that either of the other Employee Groups assists
its members) in the exercise of their rights under this
Agreement in order to enable them to consummate their
Purchase Commitments made hereunder.
2. Term. This Agreement shall terminate and
be of no further force or effect upon the Termination
Date (as defined in the Restated Certificate).
3. Assignments. All right, title and
interest in and to, and all benefits and obligations
arising under, this Agreement may be assigned in whole or
in part by any of the Employee Groups to any of the
Existing Plans and/or the ESOPs (as defined in
Article FIFTH, Sections 1.41 and 1.39 of the Restated
Certificate, respectively) without the consent of any
other party hereto and may not otherwise be assigned.
4. Binding Effect. The provisions of this
Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
assigns. This Agreement is being entered into for the
benefit of the parties hereto (other than the Salaried/
Management Director) and for the Employee Groups named
herein. The Salaried/Management Director is not a party
to this Agreement in a personal capacity but only in the
capacity of the Salaried/Management Director as the
nominal representative of the SAM Employee Group to
acknowledge their acceptance of the benefits of this
Agreement. Upon the replacement of the individual named
herein as the Salaried/Management Director, each such
successor to the office of Salaried/Management Director,
rather than the individual named herein, shall be
authorized to act hereunder as the Salaried/Management
Director. The parties hereto, on behalf of themselves
and the Employee Groups that they represent, agree that
the Salaried/Management Director, and the successor
Salaried/Management Directors, shall not have any
personal liability under this Agreement.
5. Governing Law. This Agreement shall be
construed in accordance with and governed by the laws of
the State of Delaware without regard to the conflicts of
laws principles thereof.
6. Counterparts. This Agreement may be
signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signature
thereto and hereto were upon the same instrument.
7. Specific Performance. The parties hereto
agree that if any of the provisions of this Agreement
were not performed in accordance with their specific
terms or were otherwise breached, irreparable damage
would occur, no adequate remedy of law would exist and
damages would be difficult to determine, and that the
parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or
equity.
8. Amendments. This Agreement may not be
amended or modified unless such amendment or modification
is approved in writing by each of the parties hereto.
9. Entire Agreement. This Agreement
constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and,
except as otherwise contemplated hereby, supersedes all
other prior agreements and understandings, both written
and oral, between the parties hereto with respect to the
subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above
written.
UAL CORPORATION
By: /s/ James M. Guyette
_________________________
AIR LINE PILOTS ASSOCIATION,
INTERNATIONAL
By: /s/ Roger D. Hall
_________________________
INTERNATIONAL ASSOCIATION OF
MACHINISTS AND AEROSPACE
WORKERS
By: /s/ Ken Thiede
__________________________
/s/ Joseph V. Vittoria
______________________________
Joseph V. Vittoria
Salaried/Management Employee
Director (not personally but
as representative of the
Salaried/Management Employees)
First Refusal Agreement - UAL Corp. and the Air Line Pilots Association International
Was this helpful?