\n (1) Assumed shares outstanding 28.9 million
\n (2) Base Market Value
\n<\/fn><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n—————————<\/p>\n
12\/20\/93<\/p>\n
EXHIBIT D<\/p>\n
ESOP CONVERTIBLE PREFERRED STOCK<\/p>\n
Summary of Terms<\/p>\n
Issuer: UAL Corporation (the “Company”).<\/p>\n
Securities Offered: ESOP Convertible Preferred Stock (the
\n “ESOP Preferred Shares” or “ESOP
\n Preferred”). Series A (and possibly
\n other Series to provide each
\n participating group with a separate
\n Series) will be issued to the joint
\n leveraged ESOP; Series B will be
\n issued to the pilot-only unleveraged
\n ESOP and any nonqualified
\n arrangements. Except for dividends
\n and voting arrangements (See “Vote”),
\n Series A and B (and possibly other
\n Series) shares are identical.<\/p>\n
Issue Date: The closing date of the Transaction.<\/p>\n
Maturity: Perpetual.<\/p>\n
Liquidation Value: Tied to the value of the ESOP Loan.<\/p>\n
Aggregate Amount A number of shares of ESOP Preferred
\n Issuable: equal to 53% of the number of common
\n shares (fully diluted).<\/p>\n
Dividends: A fixed rate, expected to be 5%, plus
\n the dividend paid on common shares,
\n for Series A; the fixed guaranteed
\n dividend will stop after a stated
\n period of years, expected to be the
\n term of the joint ESOP loan. Series
\n B gets the dividend paid on common
\n shares.<\/p>\n
Conversion: Each share of ESOP Preferred is
\n convertible at any time, at the
\n option of the ESOP Trustee acting on
\n instructions of a participant, at a
\n conversion ratio to be determined in
\n accordance with Exhibit C-3.
\n Converts automatically to the
\n publicly-traded common stock upon
\n sale by the ESOP Trustee, other
\n transfer to a third party or
\n distribution from the ESOP to a
\n participant or beneficiary.<\/p>\n
Redemption: Non-redeemable.<\/p>\n
Vote: Generally, as provided in the
\n “Governance” term sheet; subject to
\n paragraph 17 of “Governance”, ESOP
\n Preferred Shares shall always hold in
\n the aggregate voting power of the
\n Company determined in accordance with
\n Exhibit C-3. (The ESOP Preferred’s
\n vote may be assigned to separate,
\n possibly stapled, securities, one for
\n each employee group, to comply with
\n IRS rules governing ESOP loans, to
\n assure delivery of the vote in the
\n agreed proportions and, possibly, to
\n restrict the ESOP Preferred’s pass-
\n through vote to active employees.)
\n Subject to paragraph 17 of
\n “Governance,” the ESOP Preferred
\n Shares will vote as a single class
\n together with the holders of the
\n Common Stock of the Company on all
\n matters submitted to shareholders
\n other than the election of the
\n “Public Directors” and matters with
\n respect to which the ESOP Preferred
\n Shares would be entitled to a
\n separate class vote as follows:
\n (i) the right to elect and remove
\n three directors to the board of
\n directors (each of the three
\n participating employee groups shall
\n be entitled to elect and remove one
\n director); and (ii) the affirmative
\n vote of holders of a majority of each
\n and every series of ESOP Preferred
\n Shares shall be required for the
\n issuance of any preferred stock
\n having a preference as to dividends
\n or in liquidation over the ESOP
\n Preferred Shares or the adoption of
\n any amendment to the Restated
\n Certificate of Incorporation of the
\n Company if such amendment materially
\n affects any of the rights,
\n preferences or privileges of the
\n holders of ESOP Preferred Shares.<\/p>\n
Ranking: The ESOP Preferred Shares shall be
\n junior to the Public Preferred in the
\n payment of dividends and in
\n distributions on liquidation.<\/p>\n
General Overall, the ESOP Preferred Shares
\n Comment: are generally intended to behave like
\n convertible preferred stocks commonly
\n issued to leveraged ESOPs maintained
\n by substantial public companies. <\/p>\n
—————————<\/p>\n
12\/20\/93<\/p>\n
EXHIBIT E-1<\/p>\n
TERMS OF THE ALPA INVESTMENT<\/p>\n
In connection with the transaction described in this letter,
\n ALPA and United agree to amend the current ALPA-United collective
\n bargaining agreement (the “Agreement”) as follows: <\/p>\n
Pilot Wage Rate and B Plan Contribution Revisions<\/p>\n
1. Pilot wage rates will be reduced from their current
\n levels by 15.7%. Benefits under the Company’s defined benefit
\n retirement and disability plans will not be affected by these
\n wage rate reductions and will continue to be based on existing
\n book rates without regard to the wage rate reductions.<\/p>\n
2. The pilot B-Plan contribution will be reduced from 9%
\n of compensation as measured under the B-Plan to 1% of post-
\n investment compensation as measured under the B-Plan.<\/p>\n
Other Work Rule Revisions<\/p>\n
The Agreement will also be amended to include certain
\n systemwide pilot work rule revisions in connection with the pilot
\n contribution to the Competitive Action Plan as described in
\n Exhibit G to this letter.<\/p>\n
Job Security<\/p>\n
The job security provisions of the Agreement will be revised
\n to incorporate the ALPA\/United Job Security Terms dated December
\n 12, 1993, which redraft and combine (1) the 1981 scope side
\n letter signed, (2) section 1 of the Agreement, (3) Letter 91-14
\n concerning feeder flying, and (4) Letter 91-18 concerning
\n successorship, change in control, and substantial asset transfers
\n into a single job security section of the Agreement. The
\n following is a summary of the central terms of the ALPA\/United
\n Job Security Terms (which is the legally controlling document
\n between the parties):<\/p>\n
1. The Agreement will state that all commercial flight
\n operations conducted by the Company, UAL or any corporate
\n affiliate they manage or control or hold any equity interest in
\n will be performed by United pilots under the terms of the
\n Agreement. The Agreement will permit:<\/p>\n
a. feeder flying conducted by carriers that operate small
\n aircraft under Letter 91-18 as updated to the date of
\n the present agreement provided that feeder carriers can
\n operate jet aircraft under limited circumstances, and<\/p>\n
b. certain domestic code-sharing conducted under the
\n Company’s current agreements with Aloha Airlines, Inc.
\n and USAir, Inc. and additional domestic code sharing up
\n to one percent of the Company’s total domestic block
\n hours, and <\/p>\n
c. international code-sharing arrangements with foreign
\n carriers as long as the Company can demonstrate that
\n the arrangements do not cause a reduction in the
\n Company’s international flying and the Company does not
\n expand international code sharing once it reduces
\n international flying below a minimum level.<\/p>\n
2. The Agreement will provide that the Company cannot
\n transfer aircraft or international routes to other carriers that
\n use the assets to provide feed to the Company pursuant to an
\n agreement with the Company. <\/p>\n
3. The Agreement will be revised to explicitly prohibit
\n any successorship transaction unless the successor agrees to
\n adopt the agreement, to employ United pilots pursuant to the
\n agreement, to recognize the Association and, if the successor is
\n an air carrier, to provide the Company’s pilots with seniority
\n integration rights.<\/p>\n
4. The Agreement will continue to provide the change in
\n control protections contained in the present Letter 91-18. <\/p>\n
5. The Agreement will prohibit the furlough of pilots
\n employed by the Company as of the date of the Agreement for
\n 12 months, subject to the present exceptions contained in Letter
\n 91-18, once the Company makes a net disposition of (a) 25%
\n percent or more of its assets or (b) assets which produce 25% or
\n more of the Company’s block hours.<\/p>\n
6. The Agreement will provide that, if the Company
\n transfers aircraft or route authority which produce 25% or more
\n of the Company’s operating revenues or block hours to another air
\n carrier, the Company must require the purchasing carrier to hire
\n and integrate an appropriate number of United pilots into its
\n pilot seniority list. <\/p>\n
7. The Agreement will provide that, with certain
\n exceptions, the Company cannot, without the Association’s
\n consent, (a) sell, lease, transfer or dispose of the Denver
\n training center, or any successor training center (other than in
\n a sale-lease back or similar financing transaction) or
\n (b) contract with any person or entity other than United
\n employees or former United pilots acting as consultants to United
\n to conduct or supervise United pilot training (other than initial
\n training of United flight instructors on new equipment). <\/p>\n
8. The Agreement will prohibit the Company from
\n establishing a pilot domicile (other than a TDY domicile to the
\n extent permitted under the present agreement) outside the United
\n States without the Association’s consent. <\/p>\n
9. The Agreement will provide that no pilot employed by
\n United on the closing of the Transaction will be furloughed while
\n the new Agreement remains in effect except as a result of
\n explicitly defined circumstances beyond the Company’s control.<\/p>\n
Other Issues<\/p>\n
1. Effective December 1, 1994, the hourly twelfth year
\n book rates for A-320 aircraft will be $175.30 (captains) and
\n $119.35 (first officers), with corresponding rates for all other
\n longevity years. Actual rates will be 15.7% below book rates. <\/p>\n
2. Subject to the terms of Exhibit H, a process or means
\n will be established that will permit ALPA and the new management
\n to resolve issues creating disharmony between pilots and
\n management on a basis that will not reduce the value of the pilot
\n investment in the Transaction.<\/p>\n
3. Subject to other legal obligations, the Company will
\n make reasonable efforts to fill pilot vacancies with the
\n individuals who satisfy United’s hiring standards, who have
\n previously worked for carriers represented by ALPA, and who are
\n no longer working for those carriers for economic reasons such as
\n lay-offs or the shut down of that carrier.<\/p>\n
Duration<\/p>\n
The amended Agreement described in this Exhibit will become
\n effective on the closing date of the Transaction and will become
\n amendable under the Railway Labor Act five years and nine months
\n following the closing of the Transaction or such lesser period
\n (not less than five years) as may be appropriate as a result of
\n negotiations with the AFA. <\/p>\n
—————————<\/p>\n
12\/21\/93<\/p>\n
EXHIBIT E-2<\/p>\n
TERMS OF THE IAM INVESTMENT<\/p>\n
The IAM agrees to amend the collective bargaining agreements as
\n necessary to incorporate the following:<\/p>\n
1. Savings Period.<\/p>\n
Except as provided in paragraph 16 below, the collective
\n bargaining agreement set forth herein shall take effect on the
\n closing date of the transaction and become amendable six years
\n following the closing of the transaction or such lesser period
\n (not less than five years and three months) as may be appropriate
\n as a result of negotiations with AFA. <\/p>\n
2. Basic Wage Reductions.<\/p>\n
The wage adjustment scheduled for May 1, 1994 shall be
\n cancelled. In addition, IAM represented employees of the Company
\n under all IAM Agreements shall have their straight time hourly
\n rates reduced by 9.7%. Such reductions shall be applicable to
\n base rates of pay excluding license premium, line differentials,
\n skill premiums, shift differentials and longevity allowances.<\/p>\n
3. Progression and Longevity.<\/p>\n
All IAM represented employees shall remain eligible for
\n progression and longevity step increases over the term of the
\n savings period.<\/p>\n
4. Hours of Service.<\/p>\n
The hours of service of all IAM represented full-time
\n employees shall be amended to provide for eight consecutive hours
\n exclusive of one-half hour unpaid meal period.<\/p>\n
5. Job Security.<\/p>\n
No employee on the payroll or on leave of absence as of the
\n date of ratification and no employee currently on furlough with
\n right of recall as of the date of ratification who is
\n subsequently recalled, shall be laid-off during the term of this
\n agreement.<\/p>\n
This provision does not apply under the following
\n circumstances:<\/p>\n
a) to an employee who fails to exercise his seniority
\n in his classification on the system in filling a permanent
\n vacancy or bumping an employee not protected by this paragraph in
\n a job he is qualified to perform, or refuses to fill a permanent
\n job in a higher classification that the employee is qualified to
\n perform;<\/p>\n
b) to part-time or temporary employees;<\/p>\n
c) to employees who are being laid-off as a direct
\n result of:<\/p>\n
(i) an act of nature;<\/p>\n
(ii) a strike or labor dispute;<\/p>\n
(iii) a reduction of the Company’s operations
\n because of a decrease in available fuel supply or other critical
\n materials due to either governmental action or commercial
\n supplier being unable to meet the Company’s demands;<\/p>\n
(iv) a revocation of the Company’s operating
\n certificate(s) or the grounding of a substantial number of the
\n Company’s aircraft by government action;<\/p>\n
(v) a declared or undeclared war or national
\n emergency;<\/p>\n
(vi) compulsion by a government agency,
\n legislative or court action.<\/p>\n
d) to food service employees who lose their jobs as
\n the result of the sale of the UAL Flight Kitchens to Dobbs or
\n Caterair.<\/p>\n
6. The contracts will provide that no IAM work shall be
\n contracted out unless the Company can demonstrate that such
\n contracting out will not result in the lay-off of any IAM
\n represented employee unless the employee fails to exercise his
\n seniority in his classification on the system in filling a
\n permanent vacancy or bumping an employee not protected by
\n paragraph 5 in a job he is qualified to perform, or refuses to
\n fill a permanent job in a higher classification that the employee
\n is qualified to perform.<\/p>\n
7. The Ramp & Stores Agreement will provide that all Ramp
\n Serviceman work currently performed at the stations referred to
\n in Article II C shall be performed by Ramp Servicemen represented
\n by the IAM and shall not be contracted out.<\/p>\n
8. Article II C of the Ramp & Stores Agreement will be
\n amended to provide that in addition to the stations currently
\n referred to in that article, the Company will assign ramp
\n servicemen to any U.S. location which has a sustained flight
\n level of 40 or more daily departures for a minimum period of 6
\n months. If the number of daily departures at a location
\n established as a ramp service station pursuant to this provision
\n should drop below 30 for at least 6 months, and if such reduction
\n is forecast to be reasonably permanent in nature, the Company
\n will have a right to reverse the process and reclassify that
\n location to a non-ramp serviceman location. However, if such
\n action is necessary, there will be no lay-off to the street of a
\n ramp serviceman at such locations who has not first been given an
\n option on the system in his\/her classification or a higher
\n classification. At locations established as a Ramp Service
\n station pursuant to this paragraph, the number of part-time Ramp
\n Servicemen to be assigned by the Company will not exceed 25% of
\n the total number of full-time Lead Ramp Servicemen and Ramp
\n Servicemen in active service at that station.<\/p>\n
9. Modify the Mechanics’ Agreement to provide that the
\n Company will not sell, lease or otherwise transfer or dispose of
\n its maintenance facilities at its San Francisco Maintenance
\n Operations Center, Oakland Maintenance Center or Indianapolis
\n Maintenance Center. This includes the Company’s engine
\n maintenance facility located in San Francisco. The Company will
\n be permitted to enter into sale \/ lease back arrangements for
\n financing reasons. Modify the Food Services Agreement to provide
\n that the Company will not sell, lease or otherwise transfer or
\n dispose of the flight kitchen in Miami or the four (4) current
\n employee cafeterias at Chicago O’Hare, the Denver Flight Training
\n Center, the Executive Offices, and San Francisco. The Company
\n will be permitted to enter into sale\/lease back arrangements for
\n financing reasons. Notwithstanding the above, the Company may
\n (a) sell, lease or otherwise transfer the above facilities as
\n part of a sale, lease or transfer, within a twelve month period,
\n of all or substantially all the Company’s assets, and (b) subject
\n to Union approval, sell, lease or otherwise transfer portions of
\n the above facilities to the extent such portions constitute
\n unused excess capacity, provided that the Union shall not be
\n permitted unreasonably to withhold approval if the “unused excess
\n capacity” condition exists. “Unused excess capacity” does not
\n refer to those facilities or portions of those facilities which
\n are temporarily unused as a result of seasonal or temporary work
\n schedule changes.<\/p>\n
10. In the event that any of the facilities specified in
\n paragraph 9 become unavailable due to loss of lease (or other
\n circumstances beyond the Company’s control), or become
\n uninhabitable due to a natural disaster, the Company agrees to
\n make every reasonable effort to replace such facility unless it
\n is not financially reasonable to do so. <\/p>\n
11. The Company may contract out up to 20% of all
\n maintenance work annually as measured by the sum of the
\n Maintenance Operations Division’s gross annual budget plus those
\n portions of stations’ total gross annual budgets attributable to
\n building maintenance and ground equipment maintenance, provided
\n however this percentage may be exceeded in the event the Company
\n has fully utilized its existing equipment or facilities.<\/p>\n
12. Modify letter 87-7M of the Mechanics’ Agreement to add
\n Indianapolis Maintenance Center.<\/p>\n
13. Modify the Mechanics’ Agreement to provide that the
\n Company shall not perform any regularly scheduled heavy
\n maintenance in a non U.S. location without the Union’s approval.<\/p>\n
14. Any employee who is involuntarily transferred shall
\n receive moving expenses as currently provided under Company
\n policy for salaried employees.<\/p>\n
15. New York Air language, change of control provisions,
\n code sharing protections and successorship language as agreed
\n upon with ALPA, with those modifications necessary to apply their
\n terms to IAM represented employees.<\/p>\n
16. Amend Article XXVII (Effective Date & Duration Clause)
\n of the Mechanics’ Agreement and similar provisions of the Ramp
\n and Stores, Food Services’, Dispatchers’, and Security Officers’
\n Agreements to provide that all portions of the agreements, except
\n those portions pertaining to paragraphs 4, 6, 8, 11 & 25 shall
\n become amendable at the end of the savings period specified in
\n paragraph 1 above. Paragraphs 4, 6, 8, 11 & 25 shall become
\n amendable in 12 years.<\/p>\n
17. Revise Article XVII, Paragraph A of the Mechanics’
\n Agreement and similar provisions of the Ramp and Stores, Food
\n Services’, Dispatchers’, and Security Officers’ Agreements to
\n provide:
\n A. Any employee who is to be questioned by Company
\n Representatives in the investigation of an incident which may
\n result in disciplinary action being taken against him, will be
\n informed of his right to have a Union Representative present
\n before such questioning begins. Such Union Representative will
\n not interfere with the Company’s questioning of an employee.<\/p>\n
18. Amend Article XXI of the Mechanics’ Agreement and
\n similar provisions of the Ramp and Stores, Food Services’,
\n Dispatchers’, and Security Officers’ Agreements by the addition
\n of a new paragraph to provide: <\/p>\n
The Union will be permitted to participate in New-
\n Hire employee orientation or initial training
\n sessions which include Union-represented
\n employees.<\/p>\n
19. All letters of agreement will be renewed and
\n appropriate dates modified to conform to the new dates of the
\n collective bargaining agreement.<\/p>\n
20. The paycheck stub will reflect sick leave balances when
\n the Company otherwise acquires the technology to do so. The
\n Company will publish the details of each employee’s pass travel
\n charges on the paycheck stub within six months of the date of the
\n signing of this Agreement.<\/p>\n
21. A. All transfer requests to the Utility Employee
\n classification not filled in accordance with other provisions of
\n the Mechanics’ Agreement shall be filled in order of Company
\n Seniority by regular IAM-represented employees who have transfer
\n requests on file and who have the ability to satisfactorily
\n perform the work required for the job in question, ahead of other
\n transfer requests and outside hires.<\/p>\n
B. At least sixty-seven percent (67%) of all
\n permanent vacancies in the following classifications not filled
\n in accordance with other provisions of the IAM Agreements shall
\n be filled by regular IAM-represented employees who have the
\n appropriate transfer documents on file and who have the ability
\n to satisfactorily perform the work required for the job in
\n question. Vacancies for which no qualified regular IAM-
\n represented employee has a transfer document on file shall not be
\n counted in this calculation. This requirement will be measured by
\n classification on an annual basis. The classifications are:
\n mechanic, seamer, mechanic’s helper, ramp serviceman,
\n storekeeper, and vehicle driver. <\/p>\n
22. The Company will work with the Union to develop the
\n orderly transition of LHRDD work to IAM-represented dispatchers.
\n This will resolve all current grievances regarding Dispatcher
\n scope issues.<\/p>\n
23. In addition to the existing no strike clauses, through
\n the day before the amendable date of the Agreements, neither the
\n IAM nor IAM-represented employees will engage in or cause
\n sympathy strikes or work stoppages, or recognition of picket
\n lines, or an organized job action in support of picket lines
\n established at the Company. This commitment shall become null
\n and void on the day before the amendable date of the Agreements.
\n Once this commitment becomes null and void, it is agreed that the
\n Agreements will contain no contractual prohibition on the ability
\n of the IAM represented employees to honor lawful picket lines at
\n the Company.<\/p>\n
24. In addition to the pension increases previously
\n negotiated and effective on January 1, 1994 and November 1, 1994,
\n the monthly pension benefit for Group I, Group II and Group III
\n shall be increased 2.5%, effective on November 1, 1995, 2.5%
\n effective on November 1, 1996, 2.75% effective on November 1,
\n 1997 and 3% effective on November 1, 1998. Any eligible IAM-
\n represented employee who retires on or after December 1, 1993
\n shall receive all increases in benefits referred to in this
\n paragraph. Any eligible IAM-represented employee who retires
\n during the term of the 1989-94 agreement but before December 1,
\n 1993 shall only receive the future increases in benefits
\n effective on January 1, 1994 and November 1, 1994. <\/p>\n
25. Delete Article VII (D) of the Mechanics’ Agreement and
\n similar provisions of the Ramp and Stores, Food Services’,
\n Dispatchers’, and Security Officers’ Agreements, except that
\n employees who work overtime on a regularly scheduled day off will
\n have a normal lunch period.<\/p>\n
26. UAL Catering Division
\n Labor Protective Provisions<\/p>\n
Section 1. The fundamental scope and purpose of the
\n conditions hereinafter specified are to provide for compensatory
\n allowances to food service employees who lose their jobs as the
\n result of the sale of Flight Kitchens to Dobbs or Caterair (the
\n “Flight Kitchen sale”).<\/p>\n
Section 2. The term “employee” as used herein shall mean
\n an employee of United Airlines covered by the IAM Food Services
\n Agreement other than a probationary employee, temporary employee
\n or part-time employee as of November 1, 1993.<\/p>\n
Section 3.<\/p>\n
(a) Any employee who is deprived of employment with
\n United as a result of the Flight Kitchen sale, and who applies
\n for but does not receive a job from Dobbs or Caterair, at his
\n current United location, shall be accorded an allowance
\n (hereinafter termed a “dismissal allowance”), based on length of
\n service, which shall be a monthly allowance equivalent in each
\n instance to 60 percent of an amount equal to 173.33 hours times
\n the straight-time rate which would have applied to the employee
\n in question as of November 12, 1993. This dismissal allowance
\n will be made to each eligible employee while unemployed by United
\n during a period beginning at the date the employee is first
\n deprived of employment as a result of the sale (subject to the
\n conditions in Section 5 hereof), and extending in each instance
\n for a length of time determined and limited by the following
\n schedule:<\/p>\n
Length of Company Seniority Period of Payment Months
\n Years Months<\/p>\n
6 Months & less than 1 year 1.5
\n 1 and less than 2 4.5
\n 2 and less than 3 9
\n 3 and less than 5 13.5
\n 5 and less than 10 27
\n 10 and less than 15 36
\n 15 and over 45<\/p>\n
(b) Any employee who is deprived of employment
\n with United as a result of the Flight Kitchen sale, and who
\n receives a job offer from Dobbs or Caterair (whether accepted by
\n the employee or not) shall be provided flight passes for two
\n years, retention of recall rights to United, and a lump sum
\n “separation allowance” (and not a dismissal allowance),
\n calculated at the rate of pay as of November 12, 1993, as
\n follows:<\/p>\n
Years of Service Amount of Months Pay<\/p>\n
1 and less than 2 1.5
\n 2 and less than 3 3
\n 3 and less than 5 4.5
\n 5 and over 6<\/p>\n
(c) An employee shall not be regarded as deprived
\n of employment in case of resignation, death, or retirement as an
\n active employee in accordance with the agreement, or dismissal
\n for justifiable cause in accordance with the agreement: except
\n that, an employee who is eligible to retire and who elects to
\n retire during the period of December 1, 1993 to February 1, 1994
\n shall be eligible for the separation allowance as set forth in
\n 3(b) above in addition to his\/her contractual severance
\n allowance.<\/p>\n
(d) An employee covered by Letter 84-15F or
\n Letter 87-10F who elects not to relocate from his\/her current
\n United location to maintain a position at United as a result of
\n the Flight Kitchen sale shall be eligible for the separation
\n allowance.<\/p>\n
(e) As a condition of receiving a dismissal
\n allowance, employees shall keep the carrier informed of their
\n address and the name and address of any other person or entity by
\n whom they may be employed, and must annually provide to United a
\n copy of their federal tax returns.<\/p>\n
(f) An employee receiving a dismissal allowance
\n may be subject to call to return to service after being notified
\n in accordance with the agreement, and such employee may be
\n required to return to the service of United for other reasonably
\n comparable full time IAM represented employment (whether or not a
\n transfer request has been filed) for which the employee is
\n physically and mentally qualified whether or not such employment
\n requires a relocation, provided that United shall reimburse the
\n employee for a “salaried employee paid move” as presently
\n defined, and provided further that the employee’s return to
\n United does not infringe upon the employment rights of other
\n employees under the agreement. Failure of the employee to return
\n to service will result in the termination of the employee’s
\n dismissal allowance and benefits (but not the employee’s
\n contractual severance allowance), except that an employee who is
\n receiving a dismissal allowance and is offered and declines a
\n position with United that involves a relocation, will be eligible
\n to receive a partial separation allowance equal to the amount, if
\n any, by which b exceeds a, as defined below:<\/p>\n
a. Dollar amount of dismissal allowance
\n received as of the date he receives the job offer from United
\n plus up to twenty percent (20%) of that amount (to adjust for the
\n value of benefits actually received).<\/p>\n
b. Dollar amount of the separation
\n allowance the employee would have received if eligible, under
\n Section 3(b).<\/p>\n
Receipt of a dismissal allowance or failure
\n of the employee to return to service will not result in loss of
\n other contractual rights including seniority rights except as may
\n otherwise be provided for in the agreement.<\/p>\n
(g) If an employee who is receiving a dismissal
\n allowance returns to service at United, the dismissal allowance
\n shall cease while the employee is so re-employed and the period
\n of time during which the employee is so re-employed shall be
\n deducted from the total period for which the employee is entitled
\n to receive a dismissal allowance.<\/p>\n
(h) If an employee who is receiving a dismissal
\n allowance obtains other employment, the dismissal allowance shall
\n be reduced to the extent that the sum total of earnings in such
\n employment plus the allowance and any unemployment insurance
\n benefit (or similar benefit) exceed the amount upon which the
\n dismissal allowance is based.<\/p>\n
(i) The amount of the dismissal allowance will be
\n reduced by amounts received due to contractual severance pay.<\/p>\n
(j) A dismissal allowance shall cease prior to
\n the expiration of its prescribed period in the event of: <\/p>\n
1. Failure without a good cause to return to service
\n after being notified of a position for which the employee is
\n eligible and as provided in paragraphs (f) and (g).<\/p>\n
2. Resignation<\/p>\n
3. Death<\/p>\n
4. Retirement as an active employee in accordance
\n with the agreement<\/p>\n
5. Dismissal for justifiable cause.<\/p>\n
(k) Employees receiving a dismissal allowance
\n will be required as a condition of receiving the allowance to
\n participate in any United and\/or government-provided programs
\n (including but not limited to training) designed to assist them
\n in obtaining re-employment, so long as such programs are
\n scheduled at a time and place that does not interfere with
\n employment, job search or other similar obligations.<\/p>\n
(l) Employees eligible for a dismissal allowance
\n will be entitled to select the separation allowance referenced in
\n subsection 3(b) above in lieu of receiving the dismissal
\n allowance and continuation of benefits as provided in Section 4
\n below.<\/p>\n
Section 4. During the period an employee receives a
\n dismissal allowance, the employee shall not be deprived of the
\n following benefits attaching to the employee’s previous
\n employment: health care, life insurance and pass benefits,
\n provided that United shall not be required to provide such
\n benefits if they are provided to the employee by another
\n employer.<\/p>\n
Section 5. The benefits provided under this agreement
\n become effective and payable only when and if the IAM and ALPA
\n ratify the ESOP transaction terms on or before January 31, 1994.
\n The lump sum “separation allowance” will not be paid until a
\n final and complete closing of the transaction. The benefits under
\n this agreement will terminate if:<\/p>\n
a. Definitive documentation with respect to the
\n transaction is not executed on or before the date referred to in
\n Section 10 of the agreement in principle to which this Exhibit is
\n attached, or<\/p>\n
b. A final and complete closing of the
\n transaction has not occurred on or before the date referred to in
\n Section 10 of the agreement in principle to which this Exhibit is
\n attached.<\/p>\n
—————————<\/p>\n
12\/20\/93<\/p>\n
EXHIBIT E-3<\/p>\n
TERMS OF THE SALARIED AND MANAGEMENT EMPLOYEE INVESTMENT<\/p>\n
1. The U.S. salaried and management employee* contribution
\n over the five year and nine month investment period must equal
\n $509 million NPV** through a combination of wage reductions,
\n benefit changes, work practice changes and staffing level changes
\n as long as such changes create equivalent hard dollar value and
\n are reasonably acceptable to the participating unions. If the
\n investment period is reduced by nine (9) months due to
\n participation of the AFA, then the contribution must equal $453
\n million NPV. The participating unions will have the continuing
\n right to audit the implementation of the salaried and management
\n employee contribution under this paragraph.<\/p>\n
2. These investments are only applicable to the Company’s
\n U.S. salaried and management employees. In discussions with the
\n Company, we have explored the possibility of inviting the
\n participation of certain foreign employees in the Transaction,
\n although such participation would not increase the aggregate
\n investment of the Company’s employees under the Transaction.<\/p>\n
3. Management will be responsible for determining the
\n participation levels of specific U.S. salaried and management
\n employees at various pay and job levels in the Company, subject
\n to the requirement of achieving the overall hard dollar value
\n specified in paragraph 1 above.<\/p>\n
4. The U.S. salaried and management investment will become
\n effective on the closing date of the Transaction and will
\n continue for five years and nine months thereafter or such lesser
\n period (not less than five years) as may be appropriate as a
\n result of negotiations with the AFA. <\/p>\n
* The phrase U.S. salaried and management employees
\n refers to all U.S. payroll employees of the Company
\n (i.e., United Air Lines, Inc.) except those represented
\n by a U.S. labor union.<\/p>\n
** Assume semi-annual payments, first period not
\n discounted, and annual discount rate of 10%.<\/p>\n
—————————<\/p>\n
12\/20\/93<\/p>\n
EXHIBIT E-4<\/p>\n
AFA PARTICIPATION<\/p>\n
As described in Exhibits E-1, E-2 and E-3, the
\n ALPA, IAM and salaried and management investment period has
\n been extended by nine (9) months beyond the period otherwise
\n agreed upon. If, prior to the closing of the Transaction,
\n the AFA agrees to provide, in the sole judgment of the
\n Company, an investment equal to $416 million (present value
\n in January 1994 dollars for a five year AFA mainline
\n investment and a twelve year AFA U2 Investment)*, (i) the
\n nine (9) month extension of the ALPA, IAM and salaried and
\n management employee investment period shall be eliminated;
\n (ii) ALPA, IAM and salaried and management employees shall
\n make available 12.62 points of their ESOP stock to the AFA-
\n represented employees, on the following basis: 5.83 points
\n of the ALPA stock, 4.69 points of the IAM stock, and 2.10
\n points of the salaried and management employee stock; and
\n (iii) the parties will discuss appropriate adjustments to
\n other aspects of the Transaction (e.g., governance, ESOP
\n rules) as necessary to accommodate the participation of the
\n AFA.<\/p>\n
* Assume semi-annual payments, first period not
\n discounted, and annual discount rate of 10%.<\/p>\n
—————————<\/p>\n
12\/21\/93<\/p>\n
EXHIBIT F-1<\/p>\n
ALPA WAGE ADJUSTMENT PROCESS<\/p>\n
Pilot compensation for the fourth and later years
\n of the Agreement (the “Wage Adjustment Period”) will be
\n subject to adjustment as follows:<\/p>\n
1. At the end of the second year of the Agreement,
\n the parties will meet to establish increases, if any, in
\n both the book rates of pay and the actual rates of pay for
\n the Wage Adjustment Period. If the parties do not reach
\n agreement by the end of the thirtieth month of the
\n Agreement, the increases, if any, in such rates of pay will
\n be determined by expedited arbitration before a neutral
\n arbitrator (it being understood that the Company will retain
\n the right to contend that no increases of any type should be
\n granted). <\/p>\n
2. The neutral arbitrator will be selected by mutual
\n agreement of the parties or, in the absence of such
\n agreement, by alternative striking from a panel of nine (9)
\n labor arbitrators of national standing supplied by the
\n National Mediation Board. The arbitration will be completed
\n by the end of the thirty-third month of the Agreement. The
\n neutral arbitrator will issue his decision by the end of the
\n thirty-fourth month of the Agreement.<\/p>\n
3. If pay rates are submitted to arbitration under
\n this procedure, the neutral arbitrator will establish the
\n increases, if any, in pilot pay rates for the Wage
\n Adjustment Period as follows:<\/p>\n
a. The neutral arbitrator will first determine the
\n across-the-board percentage increases, if any, in
\n pilot book wage rates (i.e., the pilot wage rates
\n that do not include the 15.7% wage rates reduction
\n adopted by the Association in connection with the
\n transaction) of the mainline United operation for
\n the Wage Adjustment Period on the basis of
\n (i) airline industry trends, (ii) United’s
\n financial performance (including cumulative
\n profitability over the prior three years) and
\n (iii) the book wage rate levels for pilots of
\n Delta Airlines, Inc., American Airlines, Inc.,
\n USAir, Inc. and Northwest Airlines, Inc.
\n (collectively referred to as the “Comparison
\n Carriers”). Benefits under the Company’s defined
\n benefits retirement and disability plans will be
\n based on these new book rates.<\/p>\n
b. The neutral arbitrator will apply the percentage
\n increase in book rates determined under
\n paragraph 3.a above, if any, to the actual pilot
\n pay rates (i.e., the pilot wage rates net of the
\n 15.7% wage rate reduction adopted by the
\n Association in connection with the transaction)
\n paid only to pilots at the Mainline operation. <\/p>\n
c. The interest arbitration process described above
\n (i.e., the same arbitration) shall be applied to
\n determine the increases, if any, to actual pilot
\n pay rates applicable to pilots in the U2
\n operation, except that the U2 Comparison Carrier
\n shall be (a) Southwest Airlines (“Southwest”) or
\n (b) the Short Haul Carrier that operates the
\n largest number of B-737 or equivalent type
\n aircraft at the time of the interest arbitration
\n if that carrier is not Southwest. For the purpose
\n of this provision, a “Short Haul Carrier” is any
\n U.S.-flag carrier with an average domestic stage
\n length (i.e., an average miles per departure) of
\n 500 miles or less.<\/p>\n
d. The increases, if any, in book rates and actual
\n rates awarded by the arbitrator will be effective
\n at the end of the third year of the Agreement, and
\n the arbitrator may (if deemed appropriate) award
\n additional increases to take effect at the end of
\n the fourth year of the Agreement.<\/p>\n
e. For purposes of this midterm wage adjustment
\n process, the book wage rate of a Comparison
\n Carrier refers to the greater of (i) actual pay
\n rates at the Comparison Carrier or (ii) the pay
\n rates in effect at the Comparison Carrier prior to
\n any reduction from the pay rates in effect at the
\n same Comparison Carrier as of January 1, 1994.<\/p>\n
4. In no event will the arbitrator establish (i) any
\n pay rate that is less favorable to the pilots than the pay
\n rates in effect when wage rates for the Wage Adjustment
\n Period are submitted to interest arbitration under this wage
\n adjustment process or (ii) any pay rate in either the fourth
\n or fifth year that is more than five (5) percent above the
\n actual rate in effect in the previous year. <\/p>\n
5. In addition, the neutral arbitrator will determine
\n the increase, if any but not to exceed $.25 per hour, in
\n hourly expenses under section 4.A of the Agreement on the
\n basis of (i) airline industry trends, (ii) United’s
\n financial performance (including cumulative profitability
\n over the prior three years) and (iii) the hourly expense
\n rates for pilots of the Comparison Carriers.<\/p>\n
—————————<\/p>\n
12\/21\/93<\/p>\n
EXHIBIT F-2<\/p>\n
IAM WAGE ADJUSTMENT PROCESS<\/p>\n
The compensation of IAM-represented employees for
\n the fourth and later years of the Agreement (the “Wage
\n Adjustment Period”) will be subject to adjustment as
\n follows:<\/p>\n
1. At the end of the second year of the Agreement,
\n the parties will meet to establish increases, if any, in
\n both the book rates of pay and the actual rates of pay for
\n the Wage Adjustment Period. If the parties do not reach
\n agreement by the end of the thirtieth month of the
\n Agreement, the increases, if any, in such rates of pay will
\n be determined by expedited arbitration before a neutral
\n arbitrator (it being understood that the Company will retain
\n the right to contend that no increases of any type should be
\n granted).<\/p>\n
2. The neutral arbitrator will be selected by mutual
\n agreement of the parties or, in the absence of such
\n agreement, by alternative striking from a panel of nine (9)
\n labor arbitrators of national standing supplied by the
\n National Mediation Board. The arbitration will be completed
\n by the end of the thirty-third month of the Agreement. The
\n neutral arbitrator will issue his decision by the end of the
\n thirty-fourth month of the Agreement.<\/p>\n
3. If IAM pay rates are submitted to arbitration
\n under this procedure, the neutral arbitrator will establish
\n the increases, if any, in pay rates for IAM-represented
\n employees for the Wage Adjustment Period as follows:<\/p>\n
a. The neutral arbitrator will first determine the
\n across-the-board percentage increases, if any, in
\n IAM book wage rates (i.e., the wage rates of IAM-
\n represented employees that do not include the wage
\n rate reductions adopted by the IAM in connection
\n with the transaction) of the mainline United
\n operation for the Wage Adjustment Period on the
\n basis of (i) airline industry trends,
\n (ii) United’s financial performance (including
\n cumulative profitability over the prior three
\n years) and (iii) the book wage rate levels for
\n comparable employees of American Airlines, Inc.,
\n USAir, Inc. and Northwest Airlines, Inc.
\n (collectively referred to as the “Comparison
\n Carriers”). <\/p>\n
b. The neutral arbitrator will apply the percentage
\n increase in book rates determined under
\n paragraph 3.a above, if any, to the actual IAM pay
\n rates (i.e., the wage rates of IAM-represented
\n employees net of the wage rate reductions adopted
\n by the IAM in connection with the transaction)
\n paid to all IAM-represented employees.<\/p>\n
c. The increases, if any, in book rates and actual
\n rates awarded by the arbitrator will be effective
\n at the end of the third year of the Agreement, and
\n the arbitrator may (if deemed appropriate) award
\n additional increases to take effect at the end of
\n the fourth year of the Agreement.<\/p>\n
d. For purposes of this midterm wage adjustment
\n process, the book wage rate of a Comparison
\n Carrier refers to the greater of (i) the actual
\n pay rates maintained under the collective
\n bargaining agreements at such carriers or (ii) the
\n pay rates in effect at the Comparison Carrier
\n prior to any reduction from the pay rates in
\n effect at the same Comparison Carrier as of
\n January 1, 1994.<\/p>\n
4. In no event will the arbitrator establish (i) any
\n pay rate that is less favorable to IAM-represented employees
\n than the pay rates in effect when wage rates for the Wage
\n Adjustment Period are submitted to interest arbitration
\n under this wage adjustment process or (ii) any pay rate in
\n either the fourth or the fifth year that is more than five
\n (5) percent above the actual rate in effect in the previous
\n year.<\/p>\n
—————————<\/p>\n
12\/21\/93<\/p>\n
EXHIBIT F-3<\/p>\n
SALARIED AND MANAGEMENT EMPLOYEE
\n WAGE ADJUSTMENT PROCESS<\/p>\n
The Company’s U.S. Salaried and Management
\n employees may receive an appropriate wage rate increase
\n beginning in the fourth year (and, if applicable, fifth
\n year) following the closing of the Transaction, if any,
\n through a program determined by management whose criteria
\n are consistent with the standards stated in paragraph 3.a of
\n the Wage Adjustment Process provided for Union-represented
\n employees pursuant to Exhibits F-1 and F-2, taking into
\n account the wage rate increases, if any, provided
\n IAM-represented and ALPA-represented employees pursuant to
\n Exhibits F-1 and F-2.<\/p>\n
The average per capita increase due to a wage rate
\n increase, if any, for U.S. Salaried and Management Employees
\n pursuant to this Exhibit F-3 may not exceed five percent in
\n either the fourth or fifth year (i.e., the increase each
\n year may not exceed five percent of the total U.S. salaried
\n and management employee payroll in effect when the increase
\n is granted).<\/p>\n
Management will be responsible for determining the
\n participation levels in any such wage rate adjustment of
\n specific U.S. salaried and management employees at various
\n pay and job levels in the Company.<\/p>\n
—————————<\/p>\n
12\/20\/93<\/p>\n
EXHIBIT G<\/p>\n
THE ALPA\/IAM COMPETITIVE ACTION PLAN <\/p>\n
ALPA and the IAM at United Airlines are prepared to reach an
\n agreement with the company on the terms of the Competitive Action
\n Plan. This agreement would be subject to completing the
\n transaction for substantial majority employee ownership of United
\n and subject to union ratification procedures with regard to that
\n transaction.<\/p>\n
In connection with a transaction providing substantial
\n majority employee ownership of United, ALPA and the IAM would
\n modify existing collective bargaining agreements with United to
\n permit United, for the first time, to create a high frequency,
\n lower cost operation which could successfully compete against
\n other high frequency, lower cost carriers. The agreements would
\n produce dramatically reduced labor costs for this type of
\n operation, even compared to the labor costs already proposed by
\n ALPA and the IAM for the mainline operation under this
\n transaction.<\/p>\n
The inauguration of this new service would not be limited by
\n employee attrition from mainline United. Rather, the ALPA\/IAM
\n proposal will make sufficient employees available to commence a
\n fully ramped-up high frequency, lower cost operation, up to the
\n maximum authorized operating level, promptly following the
\n closing of the transaction.<\/p>\n
The agreements between ALPA\/IAM and the Company would permit
\n management to build a new lower cost operation that would have
\n the following characteristics:<\/p>\n
1. ALPA and IAM will amend existing agreements with United
\n to permit the operation of a new short-haul operation
\n characterized by high frequency, simplified cabin and ramp
\n service, rapid turn-arounds and high rates of aircraft
\n utilization. This operation is called “U2” in this document.
\n The agreements will result in dramatically reduced labor costs in
\n contrast to status quo United, and even in comparison to the
\n post-transaction mainline United operation. The terms of each
\n Union’s contractual modifications for the U2 operation as well as
\n the contributions of the Company’s salaried and management
\n employees are summarized on pages four through ten of this
\n Exhibit.<\/p>\n
2. The Company would be authorized to establish the new U2
\n operation as a distinct corporate division of United Airlines,
\n which will remain a single carrier for FAA and RLA purposes.
\n Employees in the U2 operation will be United Airlines employees
\n represented by the Coalition Unions in the respective United
\n Airlines crafts and classes.<\/p>\n
3. Ramp-up of the new U2 operation would not be
\n constrained by mainline attrition. United would be authorized to
\n staff the operation by incumbent United employees and new hires
\n in accordance with each union’s attached summary of terms.
\n United employees represented by ALPA and IAM as of the date of
\n closing would not be subject to furlough while U2 is in
\n operation.<\/p>\n
4. For all years of the U2 operation, United would be
\n authorized to operate annual block hour levels in the U2
\n operation as follows: (a) 20 percent of the consolidated
\n systemwide block hours of United inclusive of U2 up to and
\n including 2,000,000 block hours per year; and (b) 25 percent of
\n the consolidated systemwide block hours of United inclusive of U2
\n in excess of 2,000,000 block hours per year. For years 6 through
\n 12 following the closing of the Transaction, United would be
\n authorized to add additional U2 operations (“Additional U2
\n Flying”) — i.e., operations in addition to the level of U2
\n described in the preceding sentence — in any city pairs other
\n than city pairs that were served by mainline United on a nonstop
\n basis at any time during the twenty-four months prior to the
\n introduction of U2 into that city pair.<\/p>\n
5. United will be required to maintain 95 percent of the
\n annual consolidated systemwide wide body block hours as
\n identified in its October 1993 five year fleet plan. For the
\n purposes of this agreement, wide body aircraft shall include
\n B-757,B-767, DC-10, B-777, B-747, B-747-400 and any other
\n aircraft operated by United not identified in its October 1993
\n fleet plan which have an average seating configuration larger
\n than the B-757 aircraft. If the annual wide body block hours
\n flown by United for a twelve month period falls below such
\n thresholds, United will be required to reduce the annual block
\n hours flown in the U2 operation over the subsequent 12 month
\n period by such shortfall in wide body block hours.<\/p>\n
6. United would be authorized to operate up to ninety
\n percent (90%) of the U2 monthly block hours, exclusive of any
\n Additional U2 Flying as defined in paragraph 4 above, in city
\n pairs that were served by mainline United on a nonstop basis at
\n any time during the twenty-four months prior to the introduction
\n of U2 into that city pair.<\/p>\n
7. U2 would be authorized to operate nonstop service in
\n city pairs anywhere in the contiguous forty-eight states, with
\n stage lengths up to and including 750 miles, other than service
\n between current or future United hub or international gateway
\n cities (currently these cities are Chicago, Denver, New York
\n Area, Los Angeles Basin, San Francisco Bay, Miami, Washington,
\n D.C. Area). Nonetheless, U2 would be permitted to operate
\n between the San Francisco Bay airports and the Los Angeles Basin
\n airports pursuant to the terms of this proposal.<\/p>\n
8. U2 would be authorized to utilize aircraft having any
\n gross weight and seating capacity up to the gross weight and
\n seating capacity of the Company’s B-737-300 series aircraft.
\n Management would be free to determine whether such aircraft would
\n constitute a separate fleet from the mainline fleet. <\/p>\n
SUMMARY OF ALPA U2 TERMS<\/p>\n
1. The rates of pay, rules and working conditions for
\n United pilots in the U2 operation that differ from those of the
\n United pilots in the Mainline operation will be established in a
\n separate Supplemental Agreement to the new ALPA-United collective
\n bargaining agreement (the “U2 Supplement”). All pilots in the
\n employ of the Company, including the U-2 operations, shall be on
\n a single seniority list.<\/p>\n
2. United pilots in the U2 operation will receive the same
\n fringe benefits (e.g., life insurance, long-term disability, sick
\n leave, medical\/dental, workers compensation, A Plan and B Plan)
\n as pilots in the Mainline operation and will receive stock
\n allocation and profit sharing rights in connection with the
\n transaction.<\/p>\n
3. The Company will establish separate bid positions for
\n the U2 operation. United pilots shall be afforded the following
\n bid opportunities with respect to the U2 operation:<\/p>\n
a. All U2 Captain vacancies would be open for bid by all
\n United pilots.<\/p>\n
b. All U2 First Officer vacancies would be open for bid by
\n probationary pilots and by pilots who are incumbent
\n B-727 Second Officers as of the date of the closing.<\/p>\n
4. Training freezes for all United pilots would be
\n established as follows:<\/p>\n
a. All United bids that require training of 12 days or
\n more will result in a 24 month freeze from bid award.<\/p>\n
b. All United bids that require training of less than 12
\n days will result in a 12 month freeze from bid award.<\/p>\n
c. Pilots who voluntarily go to U2 will incur a freeze of
\n 24 months. Freezes will be served cumulatively except
\n any combined freeze will not exceed 36 months.<\/p>\n
d. Pilots who are involuntarily displaced shall not incur
\n a freeze.<\/p>\n
e. These freezes shall not prevent a pilot from bidding
\n and receiving passover pay.<\/p>\n
5. Incumbent United pilots (i.e., pilots employed by
\n United on the date of closing) may be displaced into U2 positions
\n under existing contractual displacement rules. All such
\n displaced pilots (a) will be “red circled” so that their monthly
\n yield in the U2 operation is no less than the monthly yield they
\n would have earned if not displaced from their Mainline position
\n and (b) will not be subject to any restrictions on their ability
\n to bid back into the Mainline vacancies. However, if such
\n displaced pilots choose to bypass bidding opportunities into
\n Mainline vacancies and to remain in the U2 operation, they will
\n become subject to the pay rates and bidding restrictions
\n applicable to U2 pilots. A displaced pilot will be identified as
\n having bypassed bidding to the Mainline if such pilot chooses not
\n to bid into an open position which would produce a monthly yield
\n equal to or greater than the pilot’s red circled yield in the
\n domicile in at least the same status from which the pilot was
\n originally displaced.<\/p>\n
6. Pilots hired directly into the Mainline operation
\n following the closing may also be displaced into the U2 operation
\n under the current displacement rules. All such displaced pilots
\n will be subject to the U2 Supplement in its entirety.<\/p>\n
7. United pilots in the U2 operation will receive hourly
\n pay rates for the B-737 aircraft equivalent to 78\/84ths of the
\n post-transaction United B-737 hourly pay rates. <\/p>\n
8. The following terms will be incorporated into the U2
\n Supplement: <\/p>\n
a. Lineholders and reserves shall receive a guarantee of
\n 78 hours per month.<\/p>\n
b. Lines of flying should be constructed to a maximum of
\n 85 credit hours per month.<\/p>\n
c. Lineholders can pick up flying up to 90 credit hours
\n per month, but cannot schedule himself below 12 days
\n off per month.<\/p>\n
d. Lines of flying in the U2 operation shall be
\n constructed with a minimum of 14 days free of duty per
\n month. Additionally, the average number of days free
\n of duty per month in line construction will be 16.<\/p>\n
e. U2 schedules shall contain a minimum of 5.5 hours of
\n flight time credit average for each duty period.<\/p>\n
f. Reserve lines of flying in the U2 operation shall be
\n constructed with a minimum of 14 days free of duty per
\n month.<\/p>\n
g. Reserve pilots shall be able to pick up flying on one
\n of his days off. Such flying shall contain a minimum
\n of 5.5 hours of flight time credit average.<\/p>\n
h. Modified 8 in 24 rest requirements to eliminate 2 for 1
\n requirement, maintaining all other contractual rest
\n provisions.<\/p>\n
9. The vacation accrual schedule in the United collective
\n bargaining agreement shall be adjusted to equal the Southwest
\n vacation accrual schedule for U2 and Mainline pilots in their
\n first ten years of longevity.<\/p>\n
10. The initial U2 Supplement will be amendable on the
\n amendable date of the new ALPA-United agreement (the “Basic
\n Agreement”). Following the amendable date of the Basic Agreement
\n and the U2 Supplement, the terms of the U2 Supplement governing
\n U2 pay rates and U2 work rules that are unique to U2 and that
\n differ from the pay rates and work rules applicable to the
\n Mainline — i.e., the pay rates and work rules described in
\n paragraphs 4.c, 7 and 8 above plus the work rules in sections
\n 4.A, 4.E (expense reimbursement), 5 (hours of service), 11
\n (vacation), and 20 (scheduling) of the Basic Agreement as and to
\n the extent they apply to the pilots in the U2 operation (such
\n terms being referred to in the aggregate as the “U2 Terms”) —
\n will be determined as follows: <\/p>\n
a. Upon the amendable date of the Basic Agreement and the
\n U2 Supplement (the “First Amendable Date”), the parties
\n will meet and attempt to negotiate the first successor
\n agreement governing the U2 Terms (the “First U2
\n Successor Agreement”). If the parties cannot reach
\n agreement on the First U2 Successor Agreement within
\n four (4) months following the First Amendable Date, the
\n parties will submit the unresolved U2 Terms to interest
\n arbitration under the following terms: <\/p>\n
(1) The arbitrator will establish the unresolved U2
\n Terms on the basis of the comparable pay rates
\n and\/or work rules in effect at the time of the
\n interest arbitration (including future pay rate
\n increases scheduled at the time of the interest
\n arbitration) at (a) Southwest Airlines
\n (“Southwest”) or (b) the Short Haul Carrier that
\n operates the largest number of B-737 or equivalent
\n type aircraft at the time of the interest
\n arbitration if that carrier is not Southwest. For
\n the purpose of this provision, a “Short Haul
\n Carrier” is any U.S.-flag carrier with an average
\n domestic stage length (i.e., an average miles per
\n departure) of 500 miles or less. <\/p>\n
(2) If U2 pay rates are submitted to interest
\n arbitration under this provision, the arbitrator
\n will determine 12th year captain and 12th year
\n first officer rates pursuant to the standard
\n established in paragraph 10.a(1) above and will
\n apply the percentage increase, if any, in twelfth
\n year rates to years one through eleven on the U2
\n longevity scale.<\/p>\n
(3) In no event shall the arbitrator establish any U2
\n Term that is less favorable to the pilots than the
\n U2 Term in effect when U2 Terms are submitted to
\n interest arbitration.<\/p>\n
(4) The interest arbitration proceeding for the First
\n U2 Successor will commence no later than four (4)
\n months following the First Amendable Date; the
\n proceeding will be concluded no later than five
\n (5) months following the First Amendable Date; and
\n the arbitrator will render his or her decision no
\n later than six (6) months following the First
\n Amendable Date. <\/p>\n
(5) The First U2 Successor Agreement will become
\n effective as of the First Amendable Date and will
\n be amendable (a) 42 months following the First
\n Amendable Date if the First Amendable Date is five
\n (5) years following the closing of the Transaction
\n or (b) 37.5 months following the First Amendable
\n Date if the First Amendable Date is five (5) years
\n and nine (9) months following the closing of the
\n Transaction.<\/p>\n
b. Upon the amendable date of the First U2 Successor
\n Agreement (the “Second Amendable Date”), the parties
\n will meet and attempt to negotiate the second successor
\n agreement governing the U2 Terms (the “Second U2
\n Successor Agreement”). If the parties cannot reach
\n agreement on the Second U2 Successor Agreement within
\n four (4) months following the First Amendable Date, the
\n parties will submit the unresolved pay rates and\/or
\n work rules of U2 Terms for the term of the Second U2
\n Successor Agreement to interest arbitration under the
\n interest arbitration terms applicable to the First U2
\n Successor Agreement except that the Second U2 Successor
\n Agreement will become effective as of the First
\n Amendable Date and will be amendable (a) 42 months
\n following the First Amendable Date if the First
\n Amendable Date is five (5) years following the closing
\n of the Transaction or (b) 37.5 months following the
\n Second Amendable Date if the First Amendable Date is
\n five (5) years and nine (9) months following the
\n closing of the Transaction.<\/p>\n
c. Neither party will take self-help of any kind over the
\n U2 Terms subject to the negotiation\/interest
\n arbitration process established in this paragraph,
\n provided that nothing in this paragraph shall prohibit
\n U2 pilots from engaging in self-help over rates of pay,
\n rules and working conditions other than U2 Terms.<\/p>\n
SUMMARY OF IAMAW U2 TERMS<\/p>\n
1. The employees assigned to U2 will remain covered by the same
\n collective bargaining agreements as cover current IAM-
\n represented employees. Assignment of employees to either
\n the mainline United operation or the U2 operation shall be
\n made to maximize capital utilization and manpower
\n utilization, but that assignment will be in accordance with
\n the terms of the collective bargaining agreements. The IAM
\n will modify those agreements as indicated below.<\/p>\n
2. The hours of service of all IAM represented full-time
\n employees shall be amended to provide for eight consecutive
\n hours exclusive of one-half hour unpaid meal period. This
\n provision shall not be amendable for 12 years.<\/p>\n
3. Article II (C) of the Ramp and Stores Agreement will be
\n amended to provide that in addition to the stations
\n currently referred to in that article, the Company will
\n assign ramp servicemen to any U.S. location which has a
\n sustained flight level of 40 or more daily departure for a
\n minimum period of 6 months. If the number of daily
\n departures at a location established as a ramp service
\n station pursuant to this provision should drop below 30 for
\n at least 6 months, and if such reduction is forecast to be
\n reasonably permanent in nature, the Company will have a
\n right to reverse the process and reclassify that location to
\n a non-ramp serviceman location. However, if such action is
\n necessary, there will be no lay-off to the street of a ramp
\n serviceman at such locations who has not first been given an
\n option on the system in his\/her classification or a higher
\n classification. At locations established as a Ramp Service
\n station pursuant to this paragraph, the number of part-time
\n Ramp Servicemen to be assigned by the Company will not
\n exceed 25% of the total number of full-time Lead Ramp
\n Servicemen and Ramp Servicemen in active service at the
\n station. This provision shall not be amendable for 12
\n years.<\/p>\n
4. The company may contract out up to 20% of all maintenance
\n work annually as measured by the sum of the Maintenance
\n Operations Division’s gross annual budget plus those
\n portions of stations’ total gross annual budgets
\n attributable to building maintenance and ground equipment
\n maintenance, provided however this percentage may be
\n exceeded in the event the Company has fully utilized its
\n existing equipment or facilities. This provision shall not
\n be amendable for 12 years.<\/p>\n
5. Delete Article VII (D) of the Mechanic’s Agreement and
\n similar provisions of the Ramp and Stores, Food Services’,
\n Dispatchers’, and Security Officers’ Agreements, except that
\n employees who work overtime on a regular scheduled day off
\n will have a normal lunch period. This provision shall not
\n be amendable for 12 years.
\n SUMMARY OF SALARIED AND MANAGEMENT EMPLOYEE U2 TERMS<\/p>\n
The Company’s salaried and management employees will
\n make a contribution to the Competitive Action Plan which is fair
\n and equitable in relation to the contributions to the Competitive
\n Action Plan made by employees represented by ALPA and the IAMAW.<\/p>\n
—————————<\/p>\n
12\/22\/93<\/p>\n
EXHIBIT H<\/p>\n
GOVERNANCE TERMS<\/p>\n
1. Board to be comprised of 12 directors (subject to the
\n rights of preferred stockholders upon default): 5
\n Public Directors elected solely by the public
\n stockholders (intended to include the CEO, one other
\n member of management and three other individuals who
\n are existing outside directors); 4 Independent
\n Directors nominated as provided in paragraph 5 below
\n and elected by a class of shares held solely by the
\n Independent Directors (who will be bound by a
\n Stockholders Agreement with the employee groups to
\n elect the persons so nominated); 2 Union Directors
\n (selected by each of the two participating unions); and
\n 1 Salaried\/Management Director (an additional director
\n selected solely by the salaried and management
\n employees).<\/p>\n
The initial Public Directors (excluding the CEO and the
\n other member of management serving as a Public
\n Director, “Outside Public Directors”) will be selected
\n by the existing Board of Directors of UAL and may be
\n from among the existing outside directors (excluding
\n employees and others who have provided professional
\n services to the Company). If any Outside Public
\n Directors are selected other than from the existing
\n outside directors, such persons will be selected prior
\n to execution of definitive documentation. At the
\n expiration of the term of each Outside Public Director
\n and to fill vacancies, Outside Public Directors would
\n be nominated or appointed, as appropriate, by a “Public
\n Director Nomination Committee” comprised of the Outside
\n Public Directors. The amendment of the terms or
\n authority of the Public Director Nomination Committee
\n and the deletion of any governance provision that
\n requires the inclusion of an Outside Public Director as
\n a member of a Board Committee or that affects their
\n power, authority or position on any committee shall, in
\n addition to the approval required under paragraph 13,
\n require the concurrence of a majority of the Outside
\n Public Directors.<\/p>\n
2. The IAM and ALPA shall identify the initial Independent
\n Directors and CEO prior to the signing of definitive
\n documentation and such identified persons shall have
\n agreed to serve and, in the case of the Independent
\n Directors, shall have agreed to enter into the
\n Stockholders Agreement referred to above. <\/p>\n
3. Each initial and replacement Independent Director shall
\n be a person of appropriate stature and experience and
\n may neither have a current or prior material
\n affiliation or business relationship with the Company
\n nor be an officer, director or trustee of any organized
\n labor group. In addition, at least 2 of the 4
\n Independent Directors at the time of their initial
\n nomination or appointment to the Board shall have
\n satisfied either or both of the following criteria:
\n (i) be a senior executive officer of a private or
\n public company with revenues in excess of $1 billion or
\n (ii) be a member of the board of directors of at least
\n one other public company with a market capitalization
\n in excess of $1 billion.<\/p>\n
4. In the event of a vacancy in the ranks of the
\n Independent Directors, they shall as a group continue
\n to have 4 votes (divided equally among the remaining
\n Independent Directors).<\/p>\n
5. At the expiration of each Independent Director term and
\n to fill vacancies, Independent Directors would be
\n nominated or appointed, as appropriate, by an
\n “Independent Director Nomination Committee” comprised
\n of the Independent Directors and the three
\n employee-elected directors (approval of such nomination
\n or appointment requiring a majority of the Independent
\n Directors plus at least one Union Director).<\/p>\n
6. A quorum at a Board meeting will exist if (a) directors
\n with at least a majority of the votes are present
\n (7 votes), and (b) unless waived by the two Union
\n Directors, if less than all votes are present, the
\n number of votes constituting a majority of the votes
\n present is no greater than the sum of (i) two plus
\n (ii) the number of Independent Director votes present
\n at the meeting.<\/p>\n
7. Except in those limited circumstances described in
\n paragraph 13 as “Extraordinary Matters”, approval of
\n all Board action shall require a majority vote of the
\n total number of director votes present at a meeting (a
\n quorum being present). The same principle would apply
\n to Committee votes. Notwithstanding the foregoing, any
\n purchases of shares of Common Stock by the Company or
\n sales of shares of Common Stock by the Company to
\n employee benefit trusts (other than pursuant to the
\n first refusal rights provided for in paragraph 13(h) or
\n in connection with the creation and operation of the
\n ESOP as contemplated by Exhibit C-1), whether for cash
\n or non-cash consideration, including, without
\n limitation, concessions, must be approved by a majority
\n of the Board, including a majority of the Outside
\n Public Directors.<\/p>\n
8. Directors may not be removed from office except (i) by
\n the class of stockholders that selected them, without
\n cause, or (ii) “for cause” as determined under Delaware
\n law by stockholders entitled to vote thereon. The
\n Shareholders Agreement will provide that any
\n Independent Director who fails to execute and deliver a
\n 10 year extension of the Shareholders Agreement within
\n 30 days following the eighth anniversary of the closing
\n date shall be removed.<\/p>\n
9. The “Executive Committee” and the “Compensation
\n Committee” shall be comprised of two Independent
\n Directors, two Public Directors (the CEO and one
\n Outside Public Director) and two Union Directors; a
\n quorum would require the presence of (a) four directors
\n and (b) at least one Independent Director. The
\n Executive Committee would not have the authority to act
\n with respect to any of the “Extraordinary Matters.”
\n The number of director votes that shall constitute a
\n majority of each Board Committee, other than the
\n Executive, Compensation, Independent Director
\n Nomination, Public Director Nomination, Labor, CAP and
\n Transaction Committees, shall not be greater than the
\n sum of (a) the number of Independent Director votes on
\n such Committee, plus (b) one. Except as otherwise
\n provided herein, each Board Committee shall include at
\n least one Union Director (on a rotating basis), one
\n Independent Director and one other Board member. The
\n “Labor Committee” (which shall include one Outside
\n Public Director) shall have the sole authority to
\n approve changes to the Company’s collective bargaining
\n agreements on behalf of the Company (and not on behalf
\n of the Company’s represented employees) and shall not
\n contain any Union or Salaried\/Management Directors. No
\n Board Committee shall have authority to act with
\n respect to any of the “Extraordinary Matters”.<\/p>\n
10. All decisions as to hiring or firing of senior
\n management will be taken by the Board of Directors or
\n pursuant to the revocable authority typically delegated
\n by it to the Chief Executive Officer. Approval of the
\n hiring of a new CEO (including a successor CEO) will
\n require the approval of a majority of the Board
\n following an affirmative recommendation by at least 4
\n of the members of the Executive Committee (which shall
\n act as the search committee), excluding the departing
\n CEO. If, at the first meeting of shareholders
\n following the hiring of a new CEO (including a
\n successor CEO) such CEO is not elected to the Board by
\n the public stockholders, such CEO shall be removed from
\n office and a successor CEO shall be selected in
\n accordance with the preceding sentence. Any such
\n successor CEO shall be appointed to fill the vacancy in
\n the Board resulting from the removal of the predecessor
\n CEO. No officer (other than an officer who is a
\n director of the Company) may be terminated for a period
\n of six months following the closing date of the
\n Transaction unless such termination shall be approved,
\n specifically as to such officer, by at least two
\n Outside Public Directors and the CEO.<\/p>\n
11. Shareholder approval shall not be a condition to any
\n action except as required by Delaware law or pursuant
\n to paragraph 13.<\/p>\n
12. Allocated shares held by the ESOPs shall be voted on a
\n confidential pass through basis. Unallocated shares
\n will be voted in proportion to allocated shares.<\/p>\n
13. In addition to the requirements of paragraphs 7 and 10,
\n the following Extraordinary Matters shall require the
\n approval of either (a) three-quarters of the entire
\n Board, including at least one of the Union Directors or
\n (b) 75% of the voting stock present and voting (except
\n with respect to approval of a “business combination”
\n referred to in clause (e) below, in which case the vote
\n of at least 66-2\/3% of the outstanding voting stock
\n which is not owned by an “interested stockholder” shall
\n be required under this clause (b), as provided by SECTION 203
\n of the Delaware G.C.L.):<\/p>\n
(a) Those matters upon which the approval of
\n UAL’s Stockholders is required under the Delaware
\n General Corporation Law (such as amendments to the
\n Certificate of Incorporation, mergers, consolidations,
\n etc.);<\/p>\n
(b) Substantive amendment of the By-laws;(1)<\/p>\n
(c) Entry into any new line of business, or the
\n making of any significant investments, outside the
\n airline business;<\/p>\n
(d) The making of any airline acquisition, or any
\n material investment in another airline;<\/p>\n
(e) Approval by the Board or stockholders of a
\n “business combination” or approval by the Board a
\n transaction in which a stockholder becomes an
\n “interested stockholder” under SECTION 203 of Delaware
\n G.C.L.;<\/p>\n
(f) Redemption of rights under the Shareholders
\n Rights Plan;<\/p>\n
(g) Approval of the sale, lease or other
\n disposition, in any 12-month period, of assets
\n (including stock of subsidiaries or the assets thereof)
\n for gross proceeds of more than $200 million (net of
\n taxes and sale expense). Such approval would not be
\n required for (i) secured aircraft financing; (ii)
\n aircraft sale-leasebacks for financing purposes; (iii)
\n foreclosure sales of assets subject to security
\n interests or (iv) other sales of assets if replacement<\/p>\n
1\/ Bylaws to be agreed upon prior to the Closing,
\n including definition of “substantive” amendment.<\/p>\n
assets have been or will be acquired within a
\n reasonable period before or after such disposition; or
\n (v) asset sales providing gross proceeds (net of taxes
\n and sales expense) in an amount up to 10% of the
\n carrying value (net of depreciation) of the Company’s
\n fixed assets if (A) three-quarters of the Board
\n (including all four Independent Directors) determines
\n that such asset sale is necessary to (i) cure a default
\n under material financing agreements binding upon the
\n Company, (ii) avoid an impending default thereunder, or
\n (iii) remedy a material adverse development in the
\n Company’s business or condition and (B) the net
\n proceeds of such asset sale are used to remedy the
\n condition referred to in clause (A); provided, that the
\n exception contained in clause (v) shall be available
\n not more than once in any rolling five-year period; and<\/p>\n
(h) Approval of the issuance of equity or equity
\n equivalent securities (including convertible debt, but
\n excluding non-voting, non-convertible preferred stock
\n the issuance of which shall be permitted without
\n limit); provided, that if three-quarters of the entire
\n Board (including all four of the Independent Directors)
\n determines that it is in the best interests of the
\n Company to issue common equity of the Company, then the
\n Company may issue shares of common stock (and
\n equivalents) of the same class as that held by the
\n public stockholders (a “Non-Dilutive Issuance”),
\n subject to the following conditions: (i) the shares
\n issued in accordance with this paragraph shall not be
\n included in calculating the percentage of the Company’s
\n outstanding common equity represented by the ESOP
\n Preferred for purposes of the “sunset” provision of
\n paragraph 17; and (ii) each of the three participating
\n employee groups (and their retirement plans) would have
\n a right of first refusal to acquire all or any such
\n shares on the same terms; and provided, further, that
\n if three-quarters of the entire Board (including all
\n four Independent Directors) determines that the Company
\n is bankrupt*\/ (or, absent a material positive change in
\n the Company’s results of operations over the
\n immediately succeeding 90 days from the results
\n contained in the Company’s regularly prepared
\n projections, that the Company will become bankrupt
\n within 90 days), which determination is confirmed by
\n written opinions of two nationally recognized
\n investment banking firms that further opine (giving
\n effect to the facts and circumstances applicable to the
\n Company, including discussions with prospective equity
\n investors) that the sale of equity securities that
\n would dilute the voting power of the ESOP Preferred is
\n necessary to avoid or remedy such insolvency (the
\n “Bankruptcy Opinions”), then the Board may authorize<\/p>\n
*\/ “Bankrupt” shall have the same meaning as “insolvent”
\n under Section 101(32) under the Bankruptcy Code. <\/p>\n
the issuance of additional common equity (and
\n equivalents) of the type held by the public (the
\n “Permitted Bankruptcy Equity”) if it further determines
\n by vote of 75% of the Board (including all four
\n Independent Directors) that, after giving effect to the
\n proposed issuance, the Company would no longer be
\n “insolvent” in the time frame referred to in the
\n Bankruptcy Opinions (the “Board Determination”).
\n However, the Company will only be permitted to issue
\n Permitted Bankruptcy Equity in an amount reasonably
\n necessary to obtain sufficient equity investor
\n participation so as to allow the Board to make the
\n Board Determination and only if a binding commitment
\n for the sale of such Permitted Bankruptcy Equity is
\n entered into within 90 days of the delivery of the
\n Bankruptcy Opinions. Any Permitted Bankruptcy Equity
\n issued in accordance with this provision (i) may be
\n included in calculating the percentage of the Company’s
\n outstanding common equity represented by the ESOP
\n Preferred for purposes of the “sunset” provision of
\n paragraph 17 and (ii) shall be subject to the right of
\n first refusal of each of the three participating
\n employee groups (and their retirement plans) to acquire
\n all or any such shares on the same terms.<\/p>\n
14. Exercise of “Shareholders’ Rights” triggered by 15%
\n “interested stockholder”; Stockholder Rights Plan
\n “carveout” for employee trusts from the definition of
\n 15% interested stockholder.<\/p>\n
15. The employee stock trusts will continue to hold the
\n percentage of voting power determined in accordance
\n with Exhibit C-3; provided that the rights, powers and
\n privileges of a class or series of stock held in the
\n employee trusts (including voting rights) may be
\n reduced by the majority vote of such class or series,
\n following appropriate Board approval.<\/p>\n
16. In addition to the requirements of Section 13, (a) the
\n merger or consolidation with, sale of substantial
\n assets to, or material business transaction (other than
\n the entering into of a collective bargaining agreement,
\n which shall be subject to the authority of the Labor
\n Committee) with, (i) any entity formed by or affiliated
\n with one or more organized labor groups representing
\n employees of the Company or (ii) any entity of which a
\n substantial group of employees of the Company own a
\n majority ownership interest, and (b) amendment of the
\n charter or bylaws, shall also require the affirmative
\n vote of either six directors (other than Union and
\n Salaried\/Management Directors) or a majority of shares
\n not held by employee trusts. The Board shall establish
\n a “Transaction Committee,” composed solely of Outside
\n Public and Independent Directors, to evaluate any
\n transaction referred to in clause (a) above, and such
\n Committee shall have the authority to retain
\n independent counsel and a financial advisor at Company
\n expense for purposes of evaluating such a transaction.<\/p>\n
17. If the economic interests of the employee trusts and
\n other Company sponsored retirement plans, in the
\n aggregate, are reduced below 20% of the Company’s
\n outstanding common equity (including in the calculation
\n the common equity represented by the ESOP Preferred
\n Shares then outstanding and the Permitted Bankruptcy
\n Equity but excluding from the calculation reductions
\n resulting from the issuance of stock in connection with
\n a Non-Dilutive Issuance), the corporate governance
\n provisions shall all revert to a “plain” charter, and
\n there shall be no special director or voting rights,
\n except that (a) in addition to voting together with all
\n other holders of common stock, two director seats will
\n be reserved for and elected by the Union stockholders;
\n and (b) the Union Directors would continue to serve on
\n Committees as provided above.<\/p>\n
18. Listing of the pro forma common stock on the New York
\n Stock Exchange and opinions from Delaware counsel that
\n governance provisions are valid under the Delaware
\n General Corporation Law shall be closing conditions.<\/p>\n
19. A “CAP Committee” comprised of four Public Directors
\n (the three Outside Public Directors and the CEO), two
\n Independent Directors and two Union Directors shall
\n serve as a committee to oversee the implementation of
\n the Competitive Action Plan. Such Committee shall have
\n the sole authority to approve changes in the
\n Competitive Action Plan on behalf of the Company (and
\n not on behalf of the Company’s represented employees)
\n and consistent with the protection of the interests of
\n the public shareholders. The two Union Directors on
\n such Committee shall be entitled to vote with respect
\n to changes to and implementation of the Competitive
\n Action Plan but shall not be entitled to vote with
\n respect to the Company’s position on changes to
\n collective bargaining agreement provisions that relate
\n to the Competitive Action Plan. Such Committee shall
\n also have authority to retain independent counsel and a
\n financial advisor at Company expense for purposes of
\n evaluating such changes.<\/p>\n
—————————<\/p>\n
12\/21\/93<\/p>\n
EXHIBIT I<\/p>\n
(a) The Company (the “Indemnitor”) shall
\n indemnify the International Association of Machinists and
\n Aerospace Workers and Air Line Pilots Association,
\n International (collectively, the “Unions”), their
\n controlling persons, and their respective directors,
\n officers, partners, affiliates, agents, representatives,
\n advisors and employees (an “Indemnified Person”) against and
\n hold each Indemnified Person harmless from any and all
\n liabilities, losses, claims, damages, actions, proceedings,
\n investigations or threats thereof (all of the foregoing, and
\n including expenses (including reasonable attorneys’ fees,
\n disbursements and other charges) incurred in connection with
\n the defense thereof, except as set forth below, being
\n referred to as “Liabilities”) based upon, relating to or
\n arising out of the execution, delivery or performance of
\n this letter or the transactions contemplated hereby;
\n provided, however, that the Indemnitor shall not be liable
\n in any such case to the extent that any such Liability
\n arises out of any inaccurate information supplied by any
\n such Indemnified Person specifically for inclusion in the
\n proxy materials related to such transactions or any other
\n filings made by the Company or any Indemnified Person with
\n any federal or state governmental agency in connection
\n therewith or if any such Liability is finally judicially
\n determined, not subject to further appeal, to have resulted
\n from bad faith, willful misconduct or negligence on such
\n Indemnified Person’s part. Notwithstanding anything to the
\n contrary contained herein, “Liabilities” shall not include
\n any losses, claims, damages or expenses (including
\n attorneys’ fees, disbursements and other charges) based
\n upon, relating to or arising out of any action, claim,
\n proceeding, investigation or threat thereof (i) brought by a
\n Union against the other Union, (ii) brought by any employee
\n of the Company or a subsidiary of the Company, as such,
\n represented by a Union or any member of a Union (whether or
\n not an employee of the Company or a subsidiary of the
\n Company), in his or her capacity as such, if, and only if,
\n the underlying action, claim, proceeding or threat is made
\n against (1) his or her Union or (2) against the other Union,
\n (iii) brought by any Union or any Indemnified Person against
\n the Company or any controlling persons, directors, officers,
\n partners, agents, representatives, advisors or employees of
\n the Company (a “Company Related Person”) or by the Company
\n or any Company Related Person against any Union or
\n Indemnified Person or (iv) which arise primarily as a result
\n of acts by an Indemnified Person following the closing of
\n the Transaction.<\/p>\n
(b) In connection with the Indemnitor’s
\n obligation to indemnify for expenses as set forth above in
\n subsection (a) of this Section, the Indemnitor further
\n agrees to reimburse each Indemnified Person for all such
\n expenses (including reasonable attorneys’ fees,
\n disbursements and other charges) as they are incurred by
\n such Indemnified Person, provided, however, that if an
\n Indemnified Person is reimbursed hereunder for any such
\n expenses, such reimbursement of expenses shall be refunded
\n to the extent it is finally judicially determined, not
\n subject to further appeal, that the Indemnified Person is
\n not entitled to indemnification by reason of the proviso
\n clause in the first sentence or the last sentence of
\n subsection (a) of this Section. The Company shall not be
\n required to reimburse any Indemnified Person for the
\n reasonable attorney’s fees, disbursements or other charges
\n of more than one counsel (plus local counsel, if
\n appropriate), or of more than one counsel (plus local
\n counsel, if appropriate) for any one Union (together with
\n Indemnified Persons who are controlling persons, directors,
\n officers, partners, affiliates, agents, representatives,
\n advisors and employees of such Union) who can be represented
\n by common counsel so long as no conflict of interest or
\n different or additional colorable defenses are reasonably
\n believed by such Indemnified Persons to exist between or
\n among them relative to the claims asserted.<\/p>\n
(c) Promptly after receipt by an Indemnified
\n Person of notice of any claim or the commencement of any
\n action, proceeding or investigation in respect of which
\n indemnity or reimbursement may be sought as provided in this
\n Section, such Indemnified Person will notify the Indemnitor
\n in writing of the receipt or commencement thereof, but the
\n failure to so notify shall not relieve the Indemnitor from
\n any obligation or liability which it may have pursuant to
\n this Section or otherwise except to the extent that the
\n Indemnitor is materially prejudiced thereby. In case any
\n such action, proceeding or investigation is brought or
\n threatened against an Indemnified Person, the Indemnitor
\n will be entitled to participate therein and, to the extent
\n that it may wish, to assume the defense thereof, with
\n counsel selected by the Indemnitor and approved by the
\n Indemnified Person (such approval not to be unreasonably
\n withheld). After notice from the Indemnitor to such
\n Indemnified Person of its election to assume the defense
\n thereof, the Indemnitor will not be liable to such
\n Indemnified Person for any legal expense subsequently
\n incurred for services rendered by any other counsel retained
\n by such Indemnified Person in connection with the defense
\n unless such Indemnified Person, in the opinion of its
\n counsel, has colorable defenses which are different from or
\n in addition to defenses available to the Indemnitor or the
\n Indemnitor has an interest which conflicts with the
\n interests of such Indemnified Person and which makes
\n separate representation advisable, in which event all legal
\n expenses of such Indemnified Person (subject to the last
\n sentence of subsection (b) above) shall continue to be paid
\n by the Indemnitor. The indemnification provided for in this
\n Section shall include reimbursement for all expenses
\n (including reasonable attorneys’ fees, disbursements and
\n other charges) incurred by Indemnified Persons to enforce
\n their rights under this Section. The Indemnitor shall not
\n settle any action, claim, proceeding or investigation which
\n is the subject of this Section without the prior written
\n approval of the Indemnified Person (such approval not to be
\n unreasonably withheld), unless such settlement involves
\n solely the payment of money and the Indemnitor is not
\n contesting any right of an Indemnified Person to receive
\n indemnification hereunder. References to Indemnified
\n Persons shall in all cases include the controlling persons,
\n directors, officers, affiliates, agents, representatives,
\n advisors and employees of each Indemnified Person.<\/p>\n
(d) If the indemnification provided for in this
\n Section is finally judicially determined, not subject to
\n further appeal, to be unavailable to an Indemnified Person,
\n then the Indemnitor shall, in lieu of indemnifying such
\n Indemnified Person, contribute to the amount paid or payable
\n in respect of any Liability by such Indemnified Person in
\n such proportion as shall be fair and equitable after taking
\n into account the relative benefits received by the parties,
\n the relative fault of the parties and such other equitable
\n considerations as any court of competent jurisdiction shall
\n determine. For purposes of the preceding sentence, the
\n benefits received by an Indemnified Person that is an
\n advisor shall not be deemed to exceed the amount of fees
\n payable to such Indemnified Person. The rights accorded to
\n the Indemnified Persons under this Exhibit I shall be in
\n addition to any rights that any Indemnified Person may have
\n at common law, by separate agreement or otherwise.<\/p>\n
—————————<\/p>\n
12\/14\/93<\/p>\n
EXHIBIT J-1<\/p>\n
Conduct of the Company. From the date hereof
\n until the closing of the Transaction, without the consent of
\n the Unions, the Company and its Subsidiaries shall, except
\n as specifically provided below, conduct their business in
\n the ordinary course consistent with past practice and shall
\n use their best efforts to preserve intact their business
\n organizations and relationships with third parties and to
\n keep available the services of their present officers and
\n employees. Without limiting the generality of the
\n foregoing, from the date hereof until the closing of the
\n transaction, neither the Company nor any Subsidiary shall,
\n without the prior written consent of the Unions, except as
\n otherwise expressly provided in this agreement in principle:<\/p>\n
(a) issue, sell, dispose of, pledge or
\n otherwise encumber, or authorize or propose the issuance,
\n sale, disposition, pledge or other encumbrance of, any
\n shares of capital stock or any other direct or indirect
\n ownership or voting interest in the Company or any
\n Subsidiary other than pursuant to the exercise of options
\n outstanding as of the date hereof under the Company’s 1981
\n Incentive Stock Program or the issuance of Rights in
\n connection with the issuance of Shares upon exercise of such
\n options, or, with respect to securities of Subsidiaries, to
\n the Company;<\/p>\n
(b) reclassify, combine, split, subdivide,
\n redeem, purchase or otherwise acquire, or propose to
\n purchase or otherwise acquire, any capital stock or any
\n other direct or indirect ownership or voting interest in the
\n Company or any Subsidiary; except repurchases of Company
\n securities, (x) pursuant to employee stock purchase, stock
\n option, stock grant or other employee arrangements and
\n (y) pursuant to rules or requirements under the Employee
\n Retirement Income Security Act of 1974, as amended;<\/p>\n
(c) declare or pay any dividend or
\n distribution on the Shares;<\/p>\n
(d) (i) increase the compensation of any of
\n its directors, officers or key employees, except in the
\n ordinary course of business and consistent with past
\n practice or pursuant to the terms of agreements or plans
\n currently in effect; (ii) pay or agree to pay any pension,
\n retirement allowance or other employee benefit that is
\n either not required or specifically permissible by any
\n existing plan, agreement or arrangement to any director,
\n officer or key employee, other than in the ordinary course
\n of business and consistent with past practice; (iii) commit
\n itself to any additional pension, profit-sharing, bonus,
\n extra compensation, incentive, deferred compensation, stock
\n purchase, stock option, stock appreciation right, group
\n insurance, severance pay, retirement or other employee
\n benefit plan, agreement or arrangement, or to any employment
\n or consulting agreement with or for the benefit of any
\n director, officer, or key employee whether past or present,
\n except in the ordinary course of business consistent with
\n past practice; or (iv) except as required by applicable law,
\n amend in any material respect any such plan, agreement or
\n arrangement; provided that the foregoing shall not be deemed
\n to restrict necessary and reasonable actions taken in
\n connection with (aa) retention of personnel other than
\n executive officers or (bb) promotions and new hires in the
\n ordinary course of business consistent with past practice;
\n provided, further, that nothing herein shall preclude the
\n Company or any of its subsidiaries from taking any action
\n reasonably designed to permit any employee to realize vested
\n benefits under any existing plan, agreement or arrangement
\n referred to above.<\/p>\n
(e) except in the ordinary course of
\n business and consistent with past practice and except for
\n refinancings or pursuant to existing plans of the Company
\n disclosed to the Unions in writing prior to the execution of
\n this agreement in principle (i) incur any material amount of
\n long-term indebtedness for borrowed money or issue any
\n material amount of debt securities (other than trade debt
\n and commercial paper) or assume, guarantee or endorse the
\n obligations of any other person except for obligations of
\n wholly owned Subsidiaries; (ii) make any material loans,
\n advances or capital contributions to, or investments in, any
\n other person (other than to wholly owned Subsidiaries or
\n customary loans or advances to employees in amounts not
\n material to the maker of such loan or advance); or
\n (iii) mortgage or pledge any of its material assets,
\n tangible or intangible, or create or suffer to exist any
\n lien thereupon, other than any purchase money mortgage or
\n lien; or<\/p>\n
(f) enter into any agreement or arrangement
\n to do any of the foregoing.<\/p>\n
—————————<\/p>\n
12\/21\/93<\/p>\n
EXHIBIT J-2<\/p>\n
1. Purchase and financing of two B747-400 aircraft<\/p>\n
2. Any sale, lease, pledge, conditional sale, or other
\n financing arrangements (including arrangements that may
\n be deemed loans by United) associated with the sale,
\n leaseback, or other transfer for value of aircraft or
\n their related spare engines and parts not in the active
\n fleet or scheduled for release from the active fleet<\/p>\n
3. Advance purchases of Air Wisconsin convertible bonds
\n for sinking fund or other purposes<\/p>\n
4. Repurchase or hedging (via derivatives) of outstanding
\n convertible preferred stock<\/p>\n
5. Recognition of unrealized gains or losses on portfolio
\n in the equity accounts required by FASB 115<\/p>\n
6. Sale of remaining portion of Air Wisconsin<\/p>\n
7. Payment of scheduled dividends on preferred stock<\/p>\n
8. Payment of scheduled payments on Air Wisconsin
\n convertible bonds<\/p>\n
9. Issuance of asset-based intermediate debt securitizing
\n existing mortgages (which may remain outstanding in a
\n pass-through trust)<\/p>\n
10. Issuance of unsecured medium-term notes, or asset-
\n backed securities (secured by receivables), with
\n maturities not in excess of seven years<\/p>\n
11. Planned defeasance of up to $25 million of debt into
\n German leveraged lease<\/p>\n
12. Planned financing (with SNECMA – supported debt) of
\n three B737s delivered earlier in 1993<\/p>\n
13. Any “refinancing” of existing debt, which includes
\n different terms and conditions or maturities, but also
\n includes any increase in the amount of debt (not to
\n exceed lessor’s cost) into a leveraged lease (to the
\n extent such increase results from optimization of tax
\n benefits of the interim structures)<\/p>\n
14. Any obligations related to interest rate swaps
\n (including collateralization obligations) on existing
\n debt or refinancings or debt permitted by the status
\n quo provisions of the Agreement<\/p>\n
15. Any obligations relating to foreign exchange hedging
\n activities (of a type customary for companies of the
\n same size and type as United) to hedge accounting and
\n economic foreign exposures (which may include loans in
\n one currency with offsetting deposits in another
\n currency, swaps, options, and other derivatives)<\/p>\n
16. Return of capital distributions to Galileo partnership
\n pursuant to Section 6.2 of Galileo partnership
\n agreement<\/p>\n
17. Deletion of Sydney-Brisbane tag flight and Taipei-
\n Bangkok, Paris-Geneva, Paris-Athens flights to be
\n replaced by code shares, provided that all such
\n code-sharing activity will be subject to the
\n ALPA-United Job Security Terms dated December 12, 1993<\/p>\n
18. Stay, toll or dismiss without prejudice the Lufthansa
\n litigation and any grievances over code-sharing<\/p>\n
19. Other arrangements similar to or for the same purposes
\n or objectives as the arrangements described in items
\n 1-5 and 7-16 above which are reasonable or appropriate
\n in the judgment of management<\/p>\n
20. Conversion of UAL convertible preferred stock and Air
\n Wisconsin convertible debentures outstanding on the
\n date hereof and the issuance of shares of Old Common
\n Stock to each member of the Board of Directors pursuant
\n to the 1992 Stock Plan for Outside Directors consistent
\n with past practice.<\/p>\n
21. Issuance of an aggregate of up to 20,000 shares of Old
\n Common Stock and\/or options to buy shares of Old Common
\n Stock under the 1988 Restricted Stock Plan and the 1981
\n Incentive Stock Program, in each case in the ordinary
\n course of business and consistent with past practice in
\n connection with new hires and promotions (other than
\n officers and directors).<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[9136],"corporate_contracts_industries":[9521],"corporate_contracts_types":[9539,9547],"class_list":["post-40057","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-ual-corp","corporate_contracts_industries-transportation__air","corporate_contracts_types-compensation","corporate_contracts_types-compensation__labor"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/40057","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=40057"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=40057"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=40057"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=40057"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}