United Airlines 2009 Annual Report Download - page 29

Table of Contents
sell common stock. In addition, this limitation may have the effect of delaying or preventing a change in control of UAL, creating a perception that a change in
control cannot occur or otherwise discouraging takeover attempts that some stockholders may consider beneficial, which could also adversely affect the
prevailing market price of the common stock. UAL cannot predict the effect that this provision in the UAL amended and restated certificate of incorporation may
have on the market price of the common stock.
In addition, under the terms of the Company’s 4.5% Senior Limited-Subordination Convertible Notes due 2021 (the “4.5% Notes”), 5% Senior
Convertible Notes due 2021 (the “5% Notes”) and 6% Senior Convertible Notes due 2029 (the “6% Senior Convertible Notes”) (collectively, the “Notes”),
noteholders have the option to require UAL to repurchase the Notes on certain dates. UAL may pay the repurchase price in cash, shares of UAL common stock,
or a combination thereof. If UAL is required to repurchase such Notes and elects to use shares of common stock rather than cash, a change in ownership within
the meaning of Section 382 of the Code could occur depending on the number of Notes repurchased and the number of shares of UAL common stock required to
repurchase the Notes. Further, under the terms of the 4.5% Notes, 5% Notes and 6% Senior Convertible Notes, noteholders have the option to convert the Notes
into shares of UAL’s common stock at a fixed conversion rate at any time prior to maturity. The conversion of a significant number of the Notes into UAL
common stock could, in combination with the shares (if any) used to repurchase the Notes or other transactions, cause a change in ownership within the meaning
of Section 382 of the Code to occur.
The Company is subject to economic and political instability and other risks of doing business globally.
The Company is a global business with operations outside of the United States from which it derives approximately one-third of its operating revenues, as
measured and reported to the DOT. The Company’s operations in Asia, Latin America, the Middle East and Europe are a vital part of its worldwide airline
network. Volatile economic, political and market conditions in these international regions may have a negative impact on the Company’s operating results and its
ability to achieve its business objectives. In addition, significant or volatile changes in exchange rates between the U.S. dollar and other currencies, and the
imposition of exchange controls or other currency restrictions, may have a material adverse impact upon the Company’s liquidity, revenues, costs and operating
results.
The Company could be adversely affected by an outbreak of a disease that affects travel behavior.
An outbreak of a disease that affects travel demand or travel behavior, such as Severe Acute Respiratory Syndrome, avian flu or H1N1 virus, or other
illness, could have a material adverse impact on the Company’s business, financial condition and results of operations.
Certain provisions of UAL’s Governance Documents could discourage or delay changes of control or changes to the Board of Directors.
Certain provisions of the restated certificate of incorporation and amended and restated bylaws of UAL (together, the “Governance Documents”) may
make it difficult for stockholders to change the composition of the Board of Directors and may discourage takeover attempts that some of its stockholders may
consider beneficial.
Certain provisions of the Governance Documents may have the effect of delaying or preventing changes in control if the Board of Directors determines
that such changes in control are not in the best interests of UAL and its stockholders.
These provisions of the Governance Documents are not intended to prevent a takeover, but are intended to protect and maximize the value of UAL’s
stockholders’ interests. While these provisions have the effect of encouraging persons seeking to acquire control of UAL to negotiate with the Board of Directors,
they could enable the Board of Directors to prevent a transaction that some, or a majority, of its stockholders might believe to be in their best interests and, in that
case, may prevent or discourage attempts to remove and replace incumbent directors.
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