Exhibit 10.25
As Amended
February 29, 1996
FIRST REFUSAL AGREEMENT
This Agreement (the "Agreement") has been made and entered
into as of this 12th day of July, 1994 by and among UAL
Corporation, a Delaware corporation (the "Company"), The Air Line
Pilots Association, International ("ALPA"), pursuant to its
authority as the collective bargaining representative for the
crafts or class of pilots employed by United Airlines, Inc.
("United"), and The International Association of Machinists and
Aerospace Workers ("IAM"), pursuant to its authority as the
collective bargaining representative for the crafts or classes of
mechanics and related employees, ramp and stores employees, food
service employees, dispatchers and security officers employed by
United, and the Salaried/Management Employee Director (as defined
in Article FIFTH, Section 1.66 of the Restated Certificate (as
defined below)) on behalf of the salaried and management
employees of United who are not represented by any collective
bargaining organization (the "XXX") (ALPA, IAM and the XXX,
together, the "Employee Groups").
WHEREAS, pursuant to the terms of and schedules to the
Agreement and Plan of Recapitalization, dated as of March 25,
1994, by and among the Company, ALPA and the IAM (as amended, the
"Recapitalization Agreement"), including the terms of the
restated certificate of incorporation of the Company to be
effective as of the Effective Time (as defined in the
Recapitalization Agreement) (the "Restated Certificate"), neither
(i) a Non-Dilutive Issuance (as defined in Article FIFTH, Section
3.4(b)(vii) of the Restated Certificate) nor (ii) the issuance of
Permitted Bankruptcy Equity (as defined in Article FIFTH, Section
3.4(b)(vii)(B) of the Restated Certificate) (a "Bankruptcy
Issuance") shall constitute an Other Extraordinary Matter (as
defined in Article FIFTH, Section 3.4(b) of the Restated
Certificate) if, among other things, such issuance is subject to
the right of first refusal provided for hereunder; and
WHEREAS, the parties hereto have entered into this Agreement
in order to effectuate the terms and intent of the
Recapitalization Agreement and the Restated Certificate with
respect to the Company's grant of such right of first refusal to
the Employee Groups in connection with such Non-Dilutive Issuance
and/or such Bankruptcy Issuance;
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual covenants herein contained and other good and valuable
consideration the receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Right of First Refusal.
A. If, during the term of this Agreement, the Company
proposes to issue Equity Securities (as defined in Article FIFTH,
Section 1.37 of the Restated Certificate) pursuant to a
transaction which would constitute an Other Extraordinary Matter
pursuant to Article FIFTH, Section 3.4(b) of the Restated
Certificate or would not constitute an Other Extraordinary Matter
pursuant to Article FIFTH, Section 3.4(b)(vii)(A) or (B) of the
Restated Certificate (a "Proposed Equity Issuance"), the Company,
prior to making such Proposed Equity Issuance, shall provide each
of the Employee Groups with a written statement of the specific
terms of such Proposed Equity Issuance (the "Proposed Sale
Notice"); provided, however, that the issuance of Equity
Securities in exchange for the Series A Convertible Preferred
Stock, without par value (the "Series A Preferred Stock") of the
Company, or any underlying Equity Security upon the conversion of
any Equity Security so issued in exchange, shall not constitute a
Proposed Equity Issuance; provided, further, that the issuance of
Equity Securities in the four-for-one stock split in the form of
a stock dividend of Common Stock, $.01 par value ("Common
Stock"), on or with respect to the Common Stock of the Company,
and approved at the February 29, 1996 meeting of the Board of
Directors of the Company (the "Stock Split"), shall not
constitute a Proposed Equity Issuance. Each of the Employee
Groups shall then have 30 days to provide to the Company a
binding commitment to purchase up to its respective Proportionate
Percentage (as defined in subsection D below) of the Equity
Securities proposed to be issued in such Proposed Equity Issuance
on terms that are Equivalent (as defined in subsection E below)
to the terms set forth in the Proposed Sale Notice (the "Purchase
Commitment"), and the Company shall not consummate the Proposed
Equity Issuance during such 30 day period. If the Company
consummates a Proposed Equity Issuance within 180 days of the end
of the 30 day notice period with respect thereto, it shall honor
all the timely Purchase Commitments and shall reduce the amount
of securities offered pursuant to the Proposed Equity Issuance by
the amount of securities covered by such Purchase Commitments.
B. In addition to and not in limitation of the foregoing,
if one or more Employee Groups submit a Purchase Commitment
within the 30 day period provided for in subsection A above and
any other Employee Group either (i) indicates in writing during
such period that it does not intend to submit a Purchase
Commitment for all of its Proportionate Percentage of the
Proposed Equity Issuance or (ii) does not submit a Purchase
Commitment for all of its Proportionate Percentage of the
Proposed Equity Issuance within such 30 day period, then the
Company, prior to consummating a Proposed Equity Issuance, must
provide each of the Employee Groups that submitted a Purchase
Commitment for all of its Proportionate Percentage of the
Proposed Equity Issuance with the opportunity to provide an
additional purchase commitment with respect to the portion of the
Proposed Equity Issuance that is not subject to a Purchase
Commitment (an "Additional Purchase Commitment") within the last
to expire of (a) 15 days after receipt of written notice from the
Company of the opportunity to make an Additional Purchase
Commitment and (b) the unexpired portion of the 30 day period
referred to in subsection A above which remains after receipt of
written notice from the Company that any portion of the Proposed
Equity Issuance is not subject to a Purchase Commitment from any
other Employee Group (such longer period, the "APC Period"). The
Company shall not consummate the Proposed Equity Issuance during
such APC Period and if the Company consummates a Proposed Equity
Issuance within 180 days of the end of the notice period referred
to in the preceding sentence, it shall honor all the timely
Additional Purchase Commitments and shall reduce the amount of
securities offered pursuant to the Proposed Equity Issuance to
any person or entity other than the Employee Groups by the amount
of securities covered by such Additional Purchase Commitments.
C. Notwithstanding anything set forth in subsection B to
the contrary, if more than one Employee Group submit Additional
Purchase Commitments which in the aggregate are in excess of the
securities being offered pursuant to the Proposed Equity
Issuance, the Company shall accept such Additional Purchase
Commitments in proportion to the relative proportion that such
Employee Groups Proportionate Percentages bear to each other;
provided, however, that in no event shall any Employee Group be
obligated to purchase Equity Securities in excess of the amount
set forth in its Additional Purchase Commitment.
D. For the purposes of this Agreement, "Proportionate
Percentage" shall mean, for each of the Employee Groups, the
following:
ALPA: 46.23%
IAM: 37.13%
XXX: 16.64%
E. For the purpose of this Agreement,"Equivalent" shall
mean, in connection with a Proposed Equity Issuance, a Purchase
Commitment on substantially the same terms as that set forth in a
Proposed Sale Notice. If any Proposed Sale Notice provides for
consideration other than cash to be paid to the Company (the "Non-
Cash Consideration"), a Purchase Commitment must provide for
consideration to be paid to the Company, whether in cash or
otherwise, with a fair market value, as determined by the board
of directors of the Company, equal to the Non-Cash Consideration
to be paid to the Company pursuant to the Proposed Sale Notice in
order for such Purchase Commitment to be deemed Equivalent for
the purpose of subsection A above.
F. In the event that no Employee Group submits a Purchase
Commitment within the time period provided for in subsection A
above or the Purchase Commitments and Additional Purchase
Commitments, if any, submitted are for less than all of the
securities being offered in the Proposed Equity Issuance, the
Company may then consummate the Proposed Equity Issuance of such
securities not subject to Purchase Commitments or Additional
Purchase Commitments only upon the terms set forth in the
Proposed Sale Notice. Such Proposed Equity Issuance may not be
consummated unless it is consummated (i) within 180 days after
the later of the 30 day period provided for in subsection A above
or, if applicable, the APC Period provided for in subsection B
above and (ii) on the specific terms set forth in the Proposed
Sale Notice. Any subsequent Proposed Equity Issuance proposed by
the Company shall be subject to each of the provisions and
requirements of this Section 1 as if the prior Proposed Equity
Issuance that was not consummated for any reason never was
proposed by the Company.
G. Notwithstanding anything contained in this Section 1 to
the contrary, the provisions of this Section 1 shall be
inapplicable to issuances of Equity Securities (a) in accordance
with Article FIFTH, Subsection 3.4(b)(vii)(C) of the Restated
Certificate, (b) in exchange for the Series A Preferred Stock or
upon the conversion of any Equity Security so issued in exchange,
or (c) in connection with the Stock Split.
H. The Salaried/Management Employee Director may consult
with the senior executive of United having responsibility for
human resources concerning the exercise of any rights under this
Agreement. The Company shall assist the Salaried/Management
Director in the exercise of such rights, including providing
administrative and logistical support in disseminating Proposed
Sale Notices to the Salaried/Management Employees and collating
and processing any Purchase Commitments and Additional Purchase
Commitments received from such employees and, if requested, shall
similarly assist ALPA and the IAM.
I. To the extent consistent with its policies and
practices, United may, but shall not be obligated to, assist the
XXX Employee Group (to the same extent that either of the other
Employee Groups assists its members) in the exercise of their
rights under this Agreement in order to enable them to consummate
their Purchase Commitments made hereunder.
2. Term. This Agreement shall terminate and be of no further
force or effect upon the Termination Date (as defined in the
Restated Certificate).
3. Assignments. All right, title and interest in and to, and
all benefits and obligations arising under, this Agreement may be
assigned in whole or in part by any of the Employee Groups to any
of the Existing Plans and/or the ESOPs (as defined in Article
FIFTH, Sections 1.41 and 1.39 of the Restated Certificate,
respectively) without the consent of any other party hereto and
may not otherwise be assigned.
4. Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns. This Agreement is being
entered into for the benefit of the parties hereto (other than
the Salaried/Management Director) and for the Employee Groups
named herein. The Salaried/Management Director is not a party to
this Agreement in a personal capacity but only in the capacity of
the Salaried/Management Director as the nominal representative of
the XXX Employee Group to acknowledge their acceptance of the
benefits of this Agreement. Upon the replacement of the
individual named herein as the Salaried/Management Director, each
such successor to the office of Salaried/Management Director,
rather than the individual named herein, shall be authorized to
act hereunder as the Salaried/Management Director. The parties
hereto, on behalf of themselves and the Employee Groups that they
represent, agree that the Salaried/Management Director, and the
successor Salaried/Management Directors, shall not have any
personal liability under this Agreement.
5. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware
without regard to the conflicts of laws principles thereof.
6. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same
effect as if the signature thereto and hereto were upon the same
instrument.
7. Specific Performance. The parties hereto agree that if any
of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached,
irreparable damage would occur, no adequate remedy of law would
exist and damages would be difficult to determine, and that the
parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
8. Amendments. This Agreement may not be amended or modified
unless such amendment or modification is approved in writing by
each of the parties hereto.
9. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject
matter hereof and, except as otherwise contemplated hereby,
supersedes all other prior agreements and understandings, both
written and oral, between the parties hereto with respect to the
subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
UAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
--------------------
AIR LINE PILOTS ASSOCIATION,
INTERNATIONAL
By: /s/ X. X. Xxxx
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INTERNATIONAL ASSOCIATION OF
MACHINISTS AND AEROSPACE
WORKERS
By: /s/ Xxx Xxxxxx
--------------
/s/ Xxxxxx X. Xxxxxxxx
----------------------
Xxxxxx X. Xxxxxxxx
Salaried/Management Employee
Director (not personally but as
representative of the
Salaried/Management Employees)
