Document:

Section 1

Exhibit 10.1

 

 

 

UAL CORPORATION

2002 SHARE INCENTIVE PLAN

            
1.          Purpose of
the Plan

           
The purposes of the UAL Corporation 2002 Share Incentive Plan (the "Plan")
are (1) to attract and retain outstanding individuals as officers and key
employees of UAL Corporation (the "Company") and its subsidiaries, to further
align such persons' interests with those of the Company's shareholders
through compensation that is based on shares of the Company's common stock,
par value $.01 per share ("Common Stock"), and to furnish incentives to
such persons by providing such persons opportunities to acquire shares
of Common Stock or monetary payments based on the value of such shares
or both, on advantageous terms as herein provided; and (2) to provide for
the grant of equity-based awards to non-union employees pursuant to the
Company's recovery plan.
2.         Definitions

            
The following capitalized terms used in the Plan have the respective meanings
set forth in this Section:

 

(a)      Award: 
An Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation
Right, Restricted Share or Other Share-Based Award granted pursuant to
the Plan.

 

(b)      Board: 
The Board of Directors of the Company.

 

(c)      Code: 
The U.S. Internal Revenue Code of 1986, as amended, or any successor law.

 

(d)      Committee: 
As applicable, the Compensation Administration Committee or the Compensation
Committee of the Board.

 

(e)      Common Stock: 
The Company's common stock, par value $.01 per share.

 

(f)       Company:  
UAL Corporation.

 

(g)      Effective Date: 
The date specified in Section 5 of the Plan.

 

(h)      Exchange Act: 
The U.S. Securities Exchange Act of 1934, as amended, or any successor
law.

 

(i)       Exercise Price: 
The purchase price per share of Common Stock under the terms of an Incentive
Stock Option or Nonqualified Stock Option or Stock Appreciation Right as
determined pursuant to Section 6, 7 or 9, respectively, of the Plan.

 

(j)      Fair Market Value: 
Unless otherwise determined by the Committee, the fair market value of
the Company's shares of Common Stock as of any date shall be the mean between
the lowest and highest reported sale prices of the Common Stock on that
date on the New York Stock Exchange as reported in the Wall Street Journal.

 

(k)      Incentive Stock
Option:  A stock option granted pursuant to Section 6 of the Plan.

 

(l)       Nonqualified
Stock Option:  A stock option granted pursuant to Section 7 of
the Plan.

 

(m)      Other Share-Based
Awards:  Awards granted pursuant to Section 10 of the Plan.

 

(n)      Participant: 
Officers and other employees of the Company and its Subsidiaries as the
Committee in its sole discretion may designate from time to time to participate
hereunder.

 

(o)      Plan: 
The UAL Corporation 2002 Share Incentive Plan, as may be amended from time
to time.

 

(p)      Restricted Share:
A restricted share of Common Stock granted pursuant to Section 8 of the
Plan.

 

(q)      Stock Appreciation
Right:  A stock appreciation right granted pursuant to Section
9 of the Plan.

 

(r)      Subsidiary: 
United Air Lines, Inc., any other corporation all of the outstanding voting
stock of which is owned, directly or indirectly, by the Company, and any
other such entity, corporate or otherwise, as the Company in its sole discretion
from time to time determines to be a Subsidiary.

 

 
3.         Shares
Subject to the Plan
            
There is hereby reserved for issuance under the Plan the sum of: (i) 12,500,000
shares of Common Stock; (ii) all shares of Common Stock that are available
for the issuance of awards as of the Effective Date under the UAL Corporation
1998 Restricted Stock Plan (the "Restricted Stock Plan"); and (iii) shares
of Common Stock that, as of the Effective Date, are represented by awards
granted under the Restricted Stock Plan that are (A) subsequently forfeited,
expired or canceled without the delivery of shares of Common Stock or (B)
withheld by the Company to satisfy any applicable tax withholding obligations.
Such sum shall be reduced to the extent such shares of Common Stock
are used for the grant of  equity-based awards out of treasury shares
under the UAL Corporation Pilots Stock Option Plan as part of the Company's
recovery plan and the Company decides to use shares of Common Stock reserved
for issuance under this Plan.  In addition, any shares of Common Stock
that are represented by Awards granted under the Plan that are forfeited,
expired or canceled without delivery of shares of Common Stock or that
the Company withholds to satisfy any applicable tax withholding obligations
shall again be available for issuance under the Plan.  All of the
shares of Common Stock described in Section 3 above may, but need not be,
issued pursuant to the exercise of Incentive Stock Options.  If the
purchase price of any Incentive Stock Option or Nonqualified Stock Option
granted under the Plan is satisfied by tendering shares of Common Stock
to the Company (either by actual delivery or attestation), only the number
of shares of Common Stock issued net of the shares of Common Stock tendered
shall be deemed delivered for purposes of determining the maximum number
of shares of Common Stock available for delivery under the Plan. 
Until such date as this Plan is approved by the Company's Stockholders
("Shareholder Approval Date"), if any, shares of Common Stock issued under
this Award shall consist exclusively of treasury shares.  After the
Shareholder Approval Date, shares of Common Stock issued under the Plan
may consist of newly issued or treasury shares.

 

4.        
Administration

            
All Awards granted under the Plan shall be granted by either the Compensation
Administration Committee or the Compensation Committee of the Board. 
The Plan shall be administered by the Compensation Administration Committee
for all grants with respect to any "officer" as that term is defined in
Rule 16a-1(f) under the Exchange Act, or any other grant after the Shareholder
Approval Date to covered employees for purposes of Section 162(m) of the
Code to the extent necessary or proper to preserve deductibility of the
compensation expense associated with such grant under Section 162(m); and
the Compensation Committee for all other grants.  However, an Award
granted under the Plan shall not be ineffective solely because it is granted
by the Compensation Administration Committee or the Compensation Committee
not in accordance with the preceding sentence.  The Committee is authorized
to interpret the provisions of the Plan, to determine the terms and conditions
of Awards to be granted under the Plan and to make all other determinations
necessary or advisable for the administration of the Plan, but only to
the extent not contrary to or inconsistent with the express provisions
of the Plan.  Determinations, decisions and actions of the Committee
in connection with the construction, interpretation, administration or
application of the Plan will be final, conclusive and binding upon any
Participant and any person claiming under or through the Participant. 
No member of the Committee will be liable for any determination, decision
or action made in good faith with respect to the Plan or any Awards granted
under the Plan.  To the extent that the Committee determines that
the restrictions imposed by the Plan preclude the achievement of the material
purposes of the Awards in jurisdictions outside the United States, the
Committee will have the authority and discretion to modify those restrictions
as the Committee determines to be necessary or appropriate to conform to
applicable requirements or practices of jurisdictions outside of the United
States.  This Plan is not intended to modify or limit the powers,
duties or responsibilities of either the Board or the Committee as set
forth under the UAL Corporation Restated Certificate of Incorporation.

 

5.        
Term
of the Plan

            
The Plan shall be effective as of July 29, 2002 and shall remain in effect
as long as any Awards under it remain outstanding.  No Award may be
granted under the Plan after the tenth anniversary of the Effective Date,
but the term of any Award theretofore granted may extend beyond that date.

 

6.        
Incentive
Stock Options

            
Incentive Stock Options are intended to satisfy the requirements applicable
to "incentive stock options" described in Section 422(b) of the Code or
any successor provision.  Incentive Stock Options may be granted under
the Plan only if the Shareholder Approval Date is before the first anniversary
of the Effective Date.  Incentive Stock Options shall be subject to
the foregoing and the following terms and conditions and to such other
terms and conditions, not inconsistent therewith, as the Committee shall
determine:

 

(a)       The Exercise
Price shall not be less than the Fair Market Value of a share of Common
Stock on the date of grant of such Incentive Stock Option.  Options
shall be exercisable at such time and upon such terms and conditions, as
may be determined by the Committee.

 
 
(b)       The term of each
Option shall be fixed by the Committee; in no event, however, shall the
period for exercising an Incentive Stock Option extend more than 10 years
from the date of grant.

 
(c)        The aggregate
Fair Market Value (determined on the date of grant) of the shares of Common
Stock for which Incentive Stock Options are exercisable for the first time
in any calendar year (under all options plans of the Company and its parent
and subsidiary corporations) for any Participant shall not exceed $100,000.

 

(d)        Incentive
Stock Options shall not be transferable by a Participant other than by
will or the laws of decent and distribution and shall only be exercisable
by the Participant during his or her lifetime.

 

(e)        The Exercise
Price of Incentive Stock Options granted to any individual who at the time
of such grant, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or its parent or subsidiary
corporations (within the meaning of Section 422(b) of the Code) shall not
be less than 110% of the Fair Market Value of the Common Stock on the date
of grant and the term of any Incentive Stock Option granted to such individual
shall not exceed five years from the date of grant.

 

 
7.         

Nonqualified Stock Options

             
Nonqualified Stock Options are not intended to satisfy the requirements
applicable to "incentive stock options" described in Section 422(b) of
the Code or any successor provision, and shall be subject to the foregoing
and the following terms and conditions and to such other terms and conditions,
not inconsistent therewith, as the Committee shall determine:

 

(a)         The
Exercise Price shall not be less than the Fair Market Value of a share
of Common Stock on the date of grant of such Nonqualified Stock Option. 
Nonqualified Stock Options shall be exercisable at such time and upon such
terms and conditions, as may be determined by the Committee.

 

(b)         The
term of each Nonqualified Stock Option shall be fixed by the Committee;
in no event, however, shall the period for exercising a Nonqualified Stock
Option extend more than 10 years from the date of grant.

 

 
8.          

Restricted Shares
              
The Committee is hereby authorized to grant Awards of Restricted Shares
to Participants with the following terms and conditions.

 

(a)         During
the Restricted Period (as defined in Section 8(b)), Participant shall not
sell, assign, exchange, transfer, pledge, hypothecate or otherwise dispose
of or encumber any of the Restricted Shares.  Upon grant of the Award
of Restricted Shares, however, Participant shall thereupon be a stockholder
with respect to all shares of Common Stock subject to the Restricted Share
Award and shall have all the rights of a stockholder with respect to such
shares of Common Stock, including the right to vote such shares and to
receive all dividends and other distributions.

 

(b)         The
term "Restricted Period" shall mean any period as set by the Committee,
not to exceed ten years, said period to end sooner, upon the occurrence
of any of the following:

 

(i)        the dissolution
of the Company, or any merger or consolidation of the Company where the
Company is not the surviving corporation and the surviving corporation
does not agree to exchange the Restricted Shares outstanding hereunder
for shares of stock or securities of which it is the issuer having an aggregate
value equal to the aggregate value of such Restricted Shares; or

 

(ii)       a determination
by the Committee at any time to accelerate or terminate such Restricted
Period, but only to the extent of such determination.

 

(c)         
Unless and to the extent the Committee determines to end the Restricted
Period with respect to any such Restricted Shares pursuant to Section 8(b)(ii),
if a Participant ceases to be an employee of the Company or any Subsidiary
for any reason, all such Participant's Restricted Shares which at such
time remain subject to restrictions imposed hereunder shall be forfeited
and returned to the Company, and the reserve of shares of Common Stock
subject to the Plan, as described in Section 3, shall be increased by the
number of Restricted Shares returned and such shares of Common Stock may
again be subject to allocation under the Plan.

 

(d)         The
restrictions set forth in Section 8(c) shall lapse with respect to Restricted
Shares when the Restricted Period applicable to such shares expires, as
described in Section 8(b).

 

 
9.         

Stock Appreciation Rights
             
The Committee may, in its discretion, grant a Stock Appreciation Right
to the holder of any Nonqualified Stock Option granted hereunder. 
In addition, a Stock Appreciation Right may be granted independently of
and without relation to any Nonqualified Stock Option.  Stock Appreciation
Rights shall be subject to such terms and conditions consistent with the
Plan as the Committee shall impose from time to time including the following:

 

(a)          
A Stock Appreciation Right may be granted with respect to a Nonqualified
Stock Option at the time of its grant or at any time thereafter up to six
(6) months prior to its expiration.
(b)          
Each Stock Appreciation Right will entitle the Participant to elect to
receive in cash up to 100% of the appreciation in Fair Market Value of
the shares of Common Stock subject thereto up to the date the Stock Appreciation
Right is exercised.  In the case of a Stock Appreciation Right issued
in relation to a Nonqualified Stock Option, such appreciation will be measured
from the Nonqualified Stock Option's Exercise Price.  In the case
of a Stock Appreciation Right issued independently of any Nonqualified
Stock Option, the appreciation shall be measured from not less than the
Fair Market Value of a share of Common Stock on the date the Stock Appreciation
Right is granted.

(c)           
The Committee shall have the discretion to satisfy a Participant's right
to receive the amount of cash as determined in Section 9(b), in whole or
in part, by the delivery of shares of Common Stock valued as of the date
of the Participant's election.

(d)           
In the event of a Stock Appreciation Right, the number of shares of Common
Stock reserved for issuance hereunder (and the shares of Common Stock subject
to the related Nonqualified Stock Option, if any) shall be reduced by the
number of shares of Common Stock with respect to which the Stock Appreciation
Right is exercised.

 
10.       Other
Share-Based Awards

             
The Committee, in its sole discretion, may grant to Participants such other
Awards including, without limitation, dividends and dividend equivalents
and other Awards that are valued in whole or in part by reference to, or
are otherwise based on the Fair Market Value, of shares of Common Stock
("Other Share-Based Awards"). Such Other Share-Based Awards shall be in
such form, and dependent on such conditions, as the Committee shall determine,
including, without limitation, the right to receive one or more shares
of Common Stock (or the equivalent cash value of such shares of Common
Stock) upon the completion of a specified period of service, the occurrence
of an event and/or the attainment of performance objectives. Other Share-Based
Awards may be granted alone or in addition to any other Awards granted
under the Plan. Subject to the provisions of the Plan, the Committee shall
determine: (i) to whom and when Other Share-Based Awards will be made;
(ii) the number of shares of Common Stock to be awarded under (or otherwise
related to) such Other Share-Based Awards; (iii) whether such Other Share-Based
Awards shall be settled in cash, shares of Common Stock or a combination
of cash and shares of Common Stock; and (iv) all other terms and conditions
of such Other Share-Based Awards (including, without limitation, the vesting
provisions thereof and provisions ensuring that all shares of Common Stock
so awarded and issued shall be fully paid and nonassessable).

 
11.         Nontransferability
of Awards

             
Except as otherwise provided by the Committee, each Award granted under
this Plan shall not be transferable other than by will or the laws of descent
and distribution, and shall be exercisable, during the Participant's lifetime,
only by the Participant.

 

12.        
Other
Provisions

              
The grant of any Award under the Plan may also be subject to other provisions
(whether or not applicable to the grant of an Award to any other Participant)
as the Committee determines appropriate, including, without limitation,
provisions requiring that grants of Awards under the Plan be evidenced
by an agreement (in writing or other form deemed appropriate by the Committee);
provisions concerning vesting; provisions concerning exercise periods following
termination of employment; provisions for the payment of the Exercise Price
of Incentive Stock Options and Nonqualified Stock Options by delivery of
other shares of Common Stock having a then Fair Market Value equal to the
Exercise Price of such Incentive Stock Options or Nonqualified Stock Options;
restrictions on resale or other disposition of shares of Common Stock delivered
in connection with such Awards; such provisions or, as determined by the
Committee, modifications to outstanding Awards as may be appropriate to
comply with federal or state securities laws and stock exchange requirements;
and understandings or conditions as to the Participant's employment in
addition to those specifically provided for under the Plan.

 

13.        
Tax
Withholding

              
The Company shall be entitled to withhold the amount of taxes which the
Company deems necessary to satisfy any applicable federal, state and local
tax withholding obligations arising from Awards granted under the Plan,
or to make other appropriate arrangements with Participants to satisfy
such obligations.   At the discretion of the Committee, the Company
may satisfy its withholding obligations by deducting or withholding from
any transfer or payment to a Participant, or may require payment from a
Participant, in the form of cash or other property, including shares of
Common Stock prior to the exercise of an Award or prior to the delivery
of any shares of Common Stock pursuant to the Award.

 

14.         Limitation
of Implied Rights

 

(a) Neither a Participant nor any other person shall,
by reason of participation in the Plan or the grant of any Award hereunder,
acquire any right in or title to any assets, funds or property of the Company
or any Subsidiary whatsoever, including, without limitation, any specific
funds, assets or other property which the Company or any Subsidiary, in
its sole discretion, may set aside in anticipation of a liability under
the Plan.  A Participant shall have only a contractual right to the
shares of Common Stock or amounts, if any, payable under the Plan, unsecured
by any assets of the Company or any Subsidiary, and nothing contained in
the Plan shall constitute a guarantee that the assets of the Company or
any Subsidiary shall be sufficient to pay any amounts to any person.

 

(b) The Plan does not constitute a contract of employment,
and selection as a Participant will not give such Participant the right
to be so retained in the employ of the Company or any Subsidiary, nor any
right or claim to any benefit under the Plan, unless such right or claim
has specifically accrued under the terms of the Plan.  Except as otherwise
provided in the Plan, no Award granted under the Plan shall confer upon
any Participant any rights as shareholder of the Company prior to the date
on which the Participant fulfills all conditions for receipt of such rights.

 
15.         Successors
and Assigns
             
The Plan and any Award granted thereafter shall be binding on all successors
and assigns of the Company and a Participant, including, without limitation,
the estate of such Participant and the executor, administrator or trustee
of such estate, or any receiver or trustee in bankruptcy or representative
of the Participant's creditors.

 

16.        
Adjustment
Provisions

              
In the event of a corporate transaction involving the Company (including,
without limitation, any Common Stock dividend, Common Stock split, extraordinary
cash dividend, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination or exchange of shares), the Committee may
adjust Awards without enlargement or diminution to preserve the benefits
or potential benefits of the Awards intended to be made available under
the Plan.  Action by the Committee may include:  (i) adjustment
of the number and kind of shares which may be delivered under the Plan;
(ii) adjustment of the number and kind of shares subject to outstanding
Awards; (iii) adjustment of the Exercise Price of outstanding Incentive
Stock Options, Nonqualified Stock Options and Stock Appreciation Rights;
(iv) cancellation or termination of outstanding Awards in exchange for
a payment (in cash or property) to the Participant of an amount determined
by the Committee prior to such provision to be equitable; (v) substitution
of other awards or rights in place of outstanding Awards on terms and conditions
determined by the Committee prior to such provision to be equitable; and
(vi) any other adjustments that the Committee determines prior to such
provision to be equitable or appropriate.

 

17.        
Amendment
or Termination

              
The Board may amend the Plan from time to time or terminate the Plan at
any time, but no such action, without the Participant's consent, shall
adversely affect the rights of a Participant under any Award granted.

 

18.        
Choice
of Law

              
Unless otherwise specified, the Plan and any Award granted thereunder shall
be governed by and construed in accordance with the laws of the State of
Illinois, without regard to conflicts of laws.  In the event of any
conflict or inconsistency between the Plan and an Award document, the Plan
shall prevail.UAL CORPORATION

Exhibit 10.2

 

 

 

 

 

 

 

UAL CORPORATION 1995 DIRECTORS PLAN
(As Amended and Restated Effective as of October 24, 2002)

 

 

 

 

TABLE OF CONTENTS

                                                                                                                                                                                    
Page No.

	1.	General	1
	 	 	 
	 	1.1  Purpose, History and
Effective Date	1
	 	1.2  Participation	1
	 	1.3  Administration	1
	 	1.4  Shares Subject to the
Plan	2
	 	1.5  Compliance with Applicable
Laws	2
	 	1.6  Director and Shareholder
Status	3
	 	1.7  Definition of Fair Market
Value	3
	 	1.8  Source of Payments	3
	 	1.9  Nonassignment	3
	 	1.10 Elections	3
	 	 	 
	2.	Awards	3
	 	 	 
	 	2.1  Formula Stock Awards	3
	 	2.2  Deferred Stock Units.	3
	 	 	 
	3.	Receipt of Stock in Lieu of Eligible
Cash Fees	4
	 	 	 
	 	3.1  Election to Receive
Stock	4
	 	3.2  Revocation of Election
to Receive Stock	4
	 	3.3  Election Pursuant to
Retirement Plan Resolutions 	4
	 	3.4  Equivalent Amount of
Stock	4
	 	 	 
	4.	Deferral Elections	5
	 	 	 
	 	4.1  Deferrals of Fees	5
	 	4.2  Deferral of Stock Awards
and Deferred Stock Units	6
	 	4.3  Crediting and Adjustment
of Deferred Amounts	7
	 	4.4  Payment of Deferred
Compensation Account	9
	 	4.5  Payments in the Event
of Death	10
	 	4.6  Multiple Distribution
Dates	11
	 	 	 
	5.	Amendment and Termination	13

 

 

 

UAL CORPORATION

1995 DIRECTORS PLAN

(As Amended and Restated Effective as of October 24, 2002)

SECTION 1

General

           
1.1.     Purpose, History and Effective Date. 
UAL Corporation (the "Company") previously maintained the UAL Corporation
1992 Stock Plan for Outside Directors (the "Prior Plan") which provided
certain benefits to non-employee directors of the Company.  In order
to (i) encourage stock ownership by directors to further align their interests
with those of the stockholders of the Company, while at the same time providing
flexibility for directors who, due to their individual circumstances, may
be unable to take stock in lieu of cash compensation, and (ii) add certain
deferral features for fees and stock awards and other items of cash compensation
as determined by the Board of Directors, the Company authorized a variety
of compensation alternatives, including those set forth in the Prior Plan,
that would be available to Outside Directors (as defined in subsection
1.2) and established the UAL Corporation 1995 Directors Plan (the "Plan"). 
The Plan and any and all amendments thereto were effective immediately
upon the respective approval thereof by the Board of Directors, except
that subsections 1.4, 1.5, 1.7, 1.8, 2.1, 3.1, 3.2 and 3.4 and all references
to Stock Awards, Stock Deferrals and the Company Stock Subaccount were
first effective on and the Prior Plan was terminated as of July 3, 1995
(the "Initial Effective Date").  Stock deferrals made prior to the
Initial Effective Date under the Prior Plan were treated as deferrals under
subsection 4.2 of the Plan.  The following provisions constitute an
amendment, restatement and continuation of the Plan as in effect immediately
prior to October 24, 2002.

           
1.2.     Participation.  Only Outside Directors
shall be eligible to participate in the Plan.  As of any applicable
date, an "Outside Director" is a person who is serving as a director of
the Company who is not an employee of the Company or any subsidiary of
the Company as of that date.

           
1.3.     Administration.  The authority
to manage and control the operation and administration of the Plan shall
be vested in the Executive Committee of the Board (the "Committee"). 
Subject to the limitations of the Plan, the Committee shall have the sole
and complete authority to:

            
(a)      interpret the Plan and to adopt, amend
and rescind administrative guidelines and other rules and regulations relating
to the Plan;

            
(b)     correct any defect or omission and to reconcile
any inconsistency in the Plan or in any payment made hereunder; and

(c) to make all other determinations and to take
all other actions necessary or advisable for the implementation and administration
of the Plan.  The Committee's determinations on matters within its
control shall be conclusive and binding on the Company and all other persons. 
Notwithstanding the foregoing, no member of the Committee shall act with
respect to the administration of the Plan except to the extent consistent
with the exempt status of the Plan under Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended ("Rule 16b-3").

           
1.4.     Shares Subject to the Plan.  Shares
of stock which may be distributed under the plan are shares of common stock
of the Company, par value $.01 per share ("Stock").  The maximum number
of shares of Stock which shall be available for distribution or issuance
pursuant to the Plan shall be 400,000, all of which shall consist of treasury
shares of Stock (including, in the discretion of the Company, shares of
Stock purchased in the open market).  The number of such shares of
Stock to be distributed pursuant to (i) Outside Directors' elections to
receive shares of Stock in lieu of Eligible Cash Fees (as described in
subsection 3.1) shall be determined in accordance with Section 3, 
(ii) awards of Deferred Stock Units (as described in subsection 2.2) shall
be determined in accordance with subsection 2.2,  (iii) Outside Directors'
Deferral Elections (as described in Section 4) shall be determined in accordance
with Section 4 and (iv) stock awards (as described in subsection 2.1) shall
be determined in accordance with subsection 2.1; provided, however, that:

(a) in the event of any merger, consolidation, reorganization,
recapitalization, spinoff, stock dividend, stock split, reverse stock split,
rights offering, exchange or other change in the corporate structure or
capitalization of the Company affecting the Stock, the number and kind
of shares of Stock available for awards under Section 2 and the annual
awards of Stock and Deferred Stock Units provided thereunder shall be equitably
adjusted in such manner as the Committee shall determine in its sole judgment;
 

(b) in determining what adjustment, if any, is appropriate
pursuant to paragraph (a), the Committee may rely on the advice of such
experts as they deem appropriate, including counsel, investment bankers
and the accountants of the Company; and
 

(c) no fractional shares shall be granted pursuant to any
adjustment pursuant to paragraph (a), although cash payments may be authorized
in lieu of fractional shares that may otherwise result from such an equitable
adjustment.
           
1.5.     Compliance with Applicable Laws. 
Notwithstanding any other provision of the Plan, the Company shall have
no obligation to deliver any shares of Stock under the Plan unless such
delivery would comply with all applicable laws and the applicable requirements
of any securities exchange or similar entity.  Prior to the delivery
of any shares of Stock under the Plan, the Company may require a written
statement that the recipient is acquiring the shares for investment and
not for the purpose or with the intention of distributing the shares. 
If the redistribution of shares is restricted pursuant to this subsection
1.5, the certificates representing such shares may bear a legend referring
to such restrictions.
           
1.6.     Director and Shareholder Status. 
The Plan will not give any person the right to continue as a director of
the Company, or any right or claim to any benefits under the Plan unless
such right or claim has specifically accrued under the terms of the Plan. 
Participation in the Plan shall not create any rights in a director (or
any other person) as a shareholder of the Company until shares of Stock
are registered in the name of the director (or such other person).

           
1.7.     Definition of Fair Market Value. 
The "Fair Market Value" of a share of Stock on any date shall be equal
to the average of the high and low prices of a share of Stock reported
for New York Stock Exchange Composite Transactions for the applicable date
or, if there are no such reported trades for such date, for the last previous
date for which trades were reported.

           
1.8.     Source of Payments.  Except for
Stock actually delivered pursuant to the Plan, the Plan constitutes only
an unfunded, unsecured promise of the Company to make payments or awards
to directors (or other persons) or deliver Stock in the future in accordance
with the terms of the Plan.

           
1.9.     Nonassignment.  Neither a director's
nor any other person's rights to payments or awards under the Plan are
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment or garnishment by creditors of the director.

           
1.10.     Elections.  Any notice or document
required to be filed with the Committee under the Plan will be properly
filed if delivered or mailed by registered mail, postage prepaid, or sent
via facsimile or by electronic mail, to the Committee, in care of the Company's
Corporate Secretary's Office, at the Company's principal executive offices. 
The Committee may, by advance written notice to affected persons, revise
such notice procedure from time to time.  Any notice required under
the Plan may be waived by the person entitled thereto.

 

SECTION 2

Awards

           
2.1.     Formula Stock Awards.  As of the
first business day of January of each year commencing on and after January
1, 1997, each Outside Director shall be awarded 400 shares of Stock ("Stock
Award").

           
2.2.     Deferred Stock Units.  As of December
31, 2002 and each December 31st thereafter, each person who
was an Outside Director at any time during the calendar year ended on that
date shall be awarded 189 deferred stock units (each such unit representing
the right to receive a share of Stock at a future date) ("Deferred Stock
Units").  Notwithstanding the foregoing, the number of Deferred Stock
Units awarded to an Outside Director who is not an Outside Director for
the entire calendar year shall be prorated based on the number of whole
calendar months he or she was an Outside Director during such calendar
year.

 

SECTION 3

Receipt of Stock in Lieu of Eligible Cash Fees

           
3.1.     Election to Receive Stock.  Subject
to the terms and conditions of the Plan, including subsection 3.3, each
Outside Director may elect (but not retroactively) to forego receipt of
all or any portion of the Eligible Cash Fees (as defined below) payable
to him or her for any period and instead to receive whole shares of Stock
of equivalent value to the Eligible Cash Fees so foregone (determined in
accordance with subsection 3.4).  An election under this subsection
3.1 to have Eligible Cash Fees paid in shares of Stock shall be valid only
if it is in writing, signed by the Outside Director, and filed with the
Committee in accordance with uniform and nondiscriminatory rules adopted
by the Committee and shall be effective with respect to Eligible Cash Fees
payable after the date on which it is received by the Committee (or as
soon as practicable thereafter) or such later date specified in the election.
For purposes of the Plan, the term "Eligible Cash Fees" means the retainer
fees, meeting fees, committee fees, committee chair fees, and any other
items of cash compensation as designated by the Board of Directors that
would otherwise be payable to the Outside Director by the Company in cash
as established, from time to time, by the Board or any committee thereof,
including without limitation, the amounts credited to an Outside Director's
Deferred Compensation Account (as hereinafter defined) pursuant to resolutions
(the "Retirement Plan Resolutions") adopted by the Board on September 26,
1996 in respect of the cessation of benefit accruals under the UAL Corporation
Retirement Plan for Outside Directors (the "Retirement Plan").

           
3.2.     Revocation of Election to Receive Stock. 
Once effective, an election pursuant to subsection 3.1 to receive Stock
shall remain in effect until it is revised or revoked.  Any such revision
or revocation shall be in writing, signed by the Outside Director and filed
with the Committee and shall be effective with respect to Eligible Cash
Fees payable after the date on which it is received by the Committee (or
as soon as practicable thereafter) or such later date specified in such
notice.

           
3.3.     Election Pursuant to Retirement Plan Resolutions. 
If no election to have Eligible Cash Fees which have been credited to an
Outside Director's Deferred Compensation Account pursuant to the Retirement
Plan Resolutions deferred in the form of cash is received on or before
December 1, 1996, such Outside Director shall automatically be deemed to
have elected to have such fees deferred in the form of Stock.

           
3.4      Equivalent Amount of Stock.

(a) The number of whole shares of Stock to be distributed
to any Outside Director, or credited to his or her Deferred Compensation
Account (as defined in subsection 4.3) pursuant to a Deferral Election
made in accordance with Section 4, by reason of his or her election pursuant
to subsection 3.1 to receive Stock in lieu of Eligible Cash Fees or pursuant
to subsection 3.3 shall be equal to:

 
(i) the amount of the Eligible Cash Fees which the Outside
Director has elected to have paid to him or her in shares of Stock or credited
to his or her Company Stock Subaccount (as defined in subsection 4.3);
DIVIDED BY

(ii) (A)  the Fair Market Value of a share of Stock
as of the date on which such Eligible Cash Fees would otherwise have been
payable to the Outside Director or (B) in the case of Eligible Cash Fees
credited pursuant to the Retirement Plan Resolutions, the average Fair
Market Value of a share of Stock for the twenty consecutive trading days
ending December 31, 1996.

 
(b) The Fair Market Value of any fractional share shall be
paid to the Outside Director in cash; provided, however, that fractional
shares subject to a Deferral Election filed in accordance with subsection
4.1 shall be deferred and credited to the Company Stock Subaccount.
 

SECTION 4
Deferral Elections

           
4.1.     Deferrals of Fees.

(a) General.  Subject to the terms and conditions
of the Plan, each Outside Director, by filing a written "Deferral Election"
with the Committee in accordance with uniform and nondiscriminatory rules
adopted by the Committee, may elect to defer the receipt of all or any
portion of the Eligible Cash Fees otherwise payable to him or her for any
period (including any Eligible Cash Fees that he or she has elected to
receive in Stock pursuant to Section 3) until a future date (the "Distribution
Date") specified by the Outside Director in his or her Deferral Election
as of which payment of his or her Deferred Compensation Account attributable
to amounts deferred pursuant to his or her Deferral Election shall commence
in accordance with subsection 4.4; provided, however, that in no event
shall the Distribution Date elected pursuant to this subsection 4.1(a)
be different from the Distribution Date, if any, elected by the Outside
Director pursuant to subsection 4.2.  If no Distribution Date is specified
in an Outside Director's Deferral Election or has otherwise been elected
by the Outside Director pursuant to subsection 4.2, the Distribution Date
shall be deemed to be the first business day in January of the year following
the date on which the Outside Director ceases to be a director of the Company
for any reason. An Outside Director's Deferral Election shall be effective
with respect to Eligible Cash Fees (including any Eligible Cash Fees that
he or she has elected to receive in Stock pursuant to Section 3) and (i)
which are otherwise payable to him or her for services rendered after the
last day of the calendar year in which such election is made or (ii) which
are otherwise payable to him or her at least six months after the date
on which such election is filed with the Committee, as specified in the
Deferral Election.  Notwithstanding the foregoing, except as provided
in subsection 4.1(b):

 
(A) a Deferral Election which is filed with the Committee
within 45 days after the date on which a director first becomes an Outside
Director shall be effective with respect to all Eligible Cash Fees (including
any Eligible Cash Fees that he or she has elected to receive in Stock pursuant
to Section 3) otherwise payable to him or her after the date the Deferral
Election  is received by the Committee (or as soon as practicable
thereafter) or such later date specified in the Deferral Election; and
 

(B) by notice filed with the Committee in accordance with
uniform and nondiscriminatory rules established by it, an Outside Director
may terminate or modify any Deferral Election as to Eligible Cash Fees
which are payable at least six months after the date on which such notice
is filed with the Committee or which are payable to the Outside Director
for services rendered after the last day of the calendar year in which
the notice is filed with the Committee; provided, however, that no modification
may be made to the Distribution Date unless the Outside Director shall
file such notice with the Committee at least six months prior thereto.

Notwithstanding the foregoing provisions of this subsection
4.1(a), the Committee may, in its sole discretion, after considering all
of the pertinent facts and circumstances, approve a change to a Distribution
Date which is requested by an Outside Director less than six months prior
thereto.
 

(b) Deferral of Eligible Cash Fees Credited Pursuant to
Retirement Plan Resolutions and Subsection 2.2.   A Deferral
Election shall be deemed to have been made and shall be effective automatically
without the requirement of a written Deferral Election for the Eligible
Cash Fees credited to the Plan pursuant to (i) the Retirement Plan Resolutions,
the deferral of which is mandatory pursuant to the terms of such resolutions,
and (ii) subsection 2.2, the deferral of which is mandatory.  The
Distribution Date for such deferrals shall not be different than the Distribution
Date selected pursuant to subsections 4.1(a) and 4.2; provided, however,
that in no event shall the Distribution Date for such Eligible Cash Fees
be earlier than the first business day in January of the year following
the date on which the Outside Director ceases to be a director of the Company
for any reason.
           
4.2.     Deferral of Stock Awards and Deferred Stock
Units.  Subject to the terms and conditions of the Plan, each
Outside Director, by filing a written "Stock Deferral Election" with the
Committee in accordance with uniform and nondiscriminatory rules adopted
by the Committee, may elect to defer the receipt of all or any portion
of the Stock Award which is otherwise to be made to him or her for 1996
and subsequent years until the Distribution Date; provided, however, that
if no Distribution Date has been elected (or is deemed to have been elected)
pursuant to subsection 4.1, the "Distribution Date" shall be the date specified
by the Outside Director in his or her Stock Deferral Election or, if no
such date is specified, the first business day in January of the year following
the date on which the Outside Director ceases to be a director of the Company
for any reason.  An Outside Director's Stock Deferral Election shall
be effective with respect to Stock Awards otherwise to be made to him or
her pursuant to subsection 2.1 (i) after the last day of the calendar year
in which such election is filed with the Committee or (ii) at least six
months after the date on which such election is made, as specified in the
Stock Deferral Election.  Notwithstanding the foregoing, by notice
filed with the Committee in accordance with uniform and nondiscriminatory
rules established by it, an Outside Director may terminate or modify any
Stock Deferral Election as to Stock Awards to be made at least six months
after the date on which such notice is filed with the Committee or which
are to be made for services rendered after the last day of the calendar
year in which the notice is filed with the Committee; provided, however,
that no modification may be made to the Distribution Date unless the Outside
Director shall file such notice with the Committee at least six months
prior thereto.  Notwithstanding the provisions of this subsection
4.2, the Committee may, in its sole discretion, after considering all of
the pertinent facts and circumstances, approve a change to the Distribution
Date which is requested by an Outside Director less than six months prior
thereto.  The Distribution Date for Deferred Stock Units awarded pursuant
to subsection 2.2 shall be established, and may be modified, in the same
manner as the Distribution Date for Stock Awards as provided in this subsection
4.2; provided, however, that in no event shall the Distribution Date for
Deferred Stock Units be earlier than the first business day in January
of the year following the date on which the Outside Director ceases to
be a director of the Company for any reason.  Subject to the proviso
to the preceding sentence, the Distribution Date for Deferred Stock Units
awarded pursuant to subsection 2.2 shall be the same as the Distribution
Date, if any, for Stock Awards pursuant to this subsection 4.2.
           
4.3.     Crediting and Adjustment of Deferred Amounts. 
The amount of any Eligible Cash Fees (including any Eligible Cash Fees
that he or she has elected to receive in Stock pursuant to Section 3) deferred
pursuant to subsection 4.1 or the Retirement Plan Resolutions ("Deferred
Compensation"), and the amount of any Stock Award deferred by an Outside
Director pursuant to a Stock Deferral Election and any Deferred Stock Unit
(each, a "Stock Deferral"), shall be credited to a bookkeeping account
maintained by the Company in the name of the Outside Director (the "Deferred
Compensation Account"), which account shall consist of two subaccounts,
one known as the "Cash Subaccount" and the other as the "Company Stock
Subaccount."  Any Stock Deferrals and Eligible Cash Fees that the
Outside Director has elected or is deemed to have elected to receive in
Stock pursuant to Section 3 and which he or she has also elected to defer
pursuant to subsection 4.1 or is required to defer pursuant to subsection
2.2 or the Retirement Plan Resolutions shall be credited to his or her
Company Stock Subaccount.  Any other Deferred Compensation shall be
credited to his or her Cash Subaccount.  An Outside Director's Deferred
Compensation Account shall be adjusted as follows:

(a) As of the first day of February, May, August and
November, and as of the Initial Effective Date (each such date referred
to herein as an "Accounting Date"), the Outside Director's Cash Subaccount
shall be adjusted as follows:

 
(i) first, the amount of any distributions made since
the last preceding Accounting Date and attributable to the Cash Subaccount
shall be charged to the Cash Subaccount;
 

(ii) next, the balance of the Cash Subaccount after adjustment
in accordance with subparagraph (i) above shall be credited with interest
for the period since the last preceding Accounting Date computed at the
prime rate as reported by The Wall Street Journal for the current
Accounting Date, or if such date is not a business day, for the next preceding
business day, except that, for the February 1, 1997 Accounting Date, the
portion of the Cash Subaccount representing amounts credited pursuant to
the last sentence of this paragraph (a) shall be credited with interest
for only the period since December 31, 1996;
 

(iii) next, on the Accounting Date occurring on Initial Effective
Date, the balance in the Cash Subaccount shall be charged with a distribution
equal to that portion of the balance in the Cash Subaccount which is attributable
to Eligible Cash Fees payable prior to the Initial Effective Date which
the Outside Director has elected to receive in Stock pursuant to Section
3 and which were credited to the Cash Subaccount pursuant to the Outside
Director's Deferral Election (as adjusted in accordance with the terms
of the Plan through the Initial Effective Date); and
(iv) finally, after adjustment in accordance with the
foregoing provisions of this paragraph (a), the Cash Subaccount shall be
credited with the portion of the Deferred Compensation or Supplemental
Benefit (as defined in the Retirement Plan Resolutions) otherwise payable
to the Outside Director since the last preceding Accounting Date or, in
the case of the Accounting Date occurring on February 1, 1995, subsequent
to January 1, 1995, which is to be credited to the Cash Subaccount, excluding
amounts previously credited pursuant to the following sentence.

In addition, as of the close of business on December
31, 1996, the Cash Subaccount shall be credited with the Eligible Cash
Fees to be credited to such account pursuant to the Retirement Plan Resolutions
which the Outside Director has elected to receive in cash.
 

   (b) The Outside Director's Company Stock Subaccount
shall be adjusted as follows:

 
(i) as of the Initial Effective Date, the Company Stock
Subaccount shall be credited with that number of stock units ("Stock Units")
which is equal to the amount charged to the Cash Subaccount as of that
date pursuant to subparagraph (a) (iii) next above, divided by the Fair
Market Value of a share of Stock as of the Initial Effective Date;
 

(ii) as of any date on or after the Initial Effective Date
on which Eligible Cash Fees would have been payable to the Outside Director
in Stock but for his or her Deferral Election, and as of December 31, 1996,
in the case of the Eligible Cash Fees credited pursuant to the Retirement
Plan Resolutions which the Outside Director has elected to take in Stock
pursuant to Section 3, the Company Stock Subaccount shall be credited with
a number of Stock Units equal to the number of shares of Stock (including
any fractional shares) to which he or she would have been entitled pursuant
to Section 3;
 

(iii) as of the date on which a Stock Award would be made
to the Outside Director pursuant to subsection 2.1 but for his or her Stock
Deferral Election, the Company Stock Subaccount shall be credited with
a number of Stock Units equal to the number of shares of Stock that would
have been awarded to the Outside Director as of such date but for his or
her Stock Deferral Election;
 

(iv) as of December 31, 1997, and each December 31st thereafter,
the Company Stock Subaccount shall be credited with a number of Stock Units
equal to the number of Deferred Stock Units awarded pursuant to subsection
2.2;
 

(v) as of the date on which shares of Stock are distributed
to the Outside Director in accordance with subsection 4.4 below, the Company
Stock Subaccount shall be charged with an equal number of Stock Units;
and
 

(vi) as of the record date for any dividend (other than a
stock dividend) paid on Stock, the Company Stock Subaccount shall be credited
with that number of additional Stock Units which is equal to the number
obtained by multiplying the number of Stock Units then credited to the
Company Stock Subaccount by the amount of the cash dividend or the fair
market value (as determined by the Board of Directors) of any dividend
in kind payable on a share of Stock and dividing that product by the then
Fair Market Value of a share of Stock.

In the event of any merger, consolidation, reorganization,
recapitalization, spinoff, stock dividend, stock split, reverse stock split,
rights offering, exchange or other change in the corporate structure or
capitalization of the Company affecting the Stock, each Outside Director's
Company Stock Subaccount shall be equitably adjusted in such manner as
the Committee shall determine in its sole judgment.
           
4.4.     Payment of Deferred Compensation Account. 
Except as otherwise provided in this subsection 4.4 or subsection 4.5,
the balances credited to the Cash Subaccount and Company Stock Subaccount
of an Outside Director's Deferred Compensation Account shall each be payable
to the Outside Director in 10 annual installments commencing as of the
Distribution Date and continuing on each annual anniversary thereof. 
Notwithstanding the foregoing, an Outside Director may elect, by filing
a notice with the Committee at least six months prior to the Distribution
Date, to change the number of payments to a single payment or to any number
of annual payments not in excess of ten; provided, however, that the Committee
may, in its sole discretion, after considering all of the pertinent facts
and circumstances, approve a change to the payment form which is requested
by an Outside Director less than six months prior to the Distribution Date
..  Each such payment shall include a cash portion, if applicable,
and a Stock portion, if applicable, as follows:

(a) The cash portion to be paid as of the Distribution
Date or any anniversary thereof and charged to the Cash Subaccount shall
be equal to the balance of the Cash Subaccount multiplied by a fraction,
the numerator of which is one and the denominator of which is the number
of remaining payments to be made, including such payment.
 

(b) The Stock portion to be paid as of the Distribution Date
or any anniversary thereof and charged to the Company Stock Subaccount
shall be distributed in whole shares of Stock, the number of shares of
which shall be determined by rounding to the next lower integer the product
obtained by multiplying the number of Stock Units then credited to the
Outside Director's Company Stock Subaccount by a fraction, the numerator
of which is one and the denominator of which is the number of remaining
payments to be made, including such payment.  The Fair Market Value
of any fractional share of Stock remaining after all Stock distributions
have been made to the Outside Director pursuant to this paragraph (b) shall
be paid to the Outside Director in cash.
Notwithstanding the foregoing, the Committee, in its sole
discretion, may distribute all balances in any Deferred Compensation Account
and/or all of the balance in any Company Stock Subaccount to the Outside
Director (or former Outside Director) in a lump sum as of any date.
           
4.5.     Payments in the Event of Death. 
If an Outside Director dies before payment of his or her Deferred Compensation
Account commences, all amounts then credited to his or her Deferred Compensation
Account shall be distributed to his or her Beneficiary (as described below),
as soon as practicable after his or her death, in a lump sum.  If
an Outside Director dies after payment of his or her Deferred Compensation
Account has commenced but before the entire balance of such account has
been distributed, the remaining balance thereof shall be distributed to
his or her Beneficiary, as soon as practicable after his or her death,
in a lump sum.  Any amounts in the Cash Subaccount shall be distributed
in cash and any amounts in the Company Stock Subaccount shall be distributed
in whole shares of Stock determined in accordance with subsection 4.4(b),
and the Fair Market Value of any fractional share of Stock shall be distributed
in cash.  For purposes of the Plan, the Outside Director's "Beneficiary"
is the person or persons the Outside Director designates, which designation
shall be in writing, signed by the Outside Director and filed with the
Committee prior to the Outside Director's death.  A Beneficiary designation
shall be effective when filed with the Committee in accordance with the
preceding sentence.  If more than one Beneficiary has been designated,
the balance in the Outside Director's Deferred Compensation Account shall
be distributed to each such Beneficiary per capita (with cash distributed
in lieu of any fractional share of Stock).  In the absence of a Beneficiary
designation or if no Beneficiary survives the Outside Director, the Beneficiary
shall be the Outside Director's estate.

           
4.6.     Multiple Distribution Dates. 
If, as a result of the applicable proviso to the last sentence of subsection
4.1(b) or the penultimate sentence of 4.2 (the "Multiple Distribution Date
Rules"), there shall be more than one Distribution Date for an Outside
Director's Cash Subaccount or Company Stock Subaccount, then the Company
shall take all steps reasonably practicable to divide the respective subaccount
into two separate subaccounts, so that the credits, charges and payments
related to the different Distribution Dates are kept separate.  In
the event an Outside Director has attempted to elect more than one Distribution
Date pursuant to the provisions of subsections 4.1 and 4.2 (other than
under the circumstances contemplated by the preceding sentence), the following
rules of construction shall apply:

(a) the most recent Distribution Date election received
by the Company in accordance with the Plan shall constitute a revocation
of all prior Distribution Date elections; and
 

(b) with respect to contemporaneous elections, elections
made pursuant to subsection 4.2 shall take precedence over elections made
pursuant to subsection 4.1, elections made pursuant to subsection 4.1(a)
shall take precedence over elections made pursuant to subsection 4.1(b),
and elections made with respect to Stock Awards shall take precedence over
elections made with respect to Deferred Stock Units.
 

SECTION 5
Amendment and Termination

           
While the Company expects and intends to continue the Plan, the Board of
Directors of the Company reserves the right to, at any time and in any
way, amend, suspend or terminate the Plan; provided, however, that no amendment,
suspension or termination shall:

(a) be made without shareholder approval to the extent
such approval is required by law, agreement or the rules of any exchange
or automated quotation system upon which the Stock is listed or quoted;
 

(b) except as provided in subsection 4.4 (relating to lump
sum payments of amounts held in an Outside Director's Deferred Compensation
Account) or this Section 5, materially alter or impair the rights of an
Outside Director under the Plan without the consent of the Outside Director
with respect to rights already accrued hereunder; or
 

(c) make any change that would disqualify the Plan or any
other plan of the Company intended to be so qualified from the exemption
provided by Rule 16b-3 under the Securities Exchange Act of 1934, as amended.

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