<PAGE> 1
- - -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-Q
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-7815
TRANS WORLD AIRLINES, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-1145889
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One City Centre
515 N. 6th Street
St. Louis, Missouri 63101
(Address of principal executive offices, including zip code)
(314) 589-3000
(Registrant's telephone number, including area code)
---------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /x/ No / /
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes /x/ No / /
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Outstanding as of
Class November 1, 1995
----------- ------------------
<S> <C>
Common Stock, par value 32,217,732
$0.01 per share
</TABLE>
In addition, as of November 1, 1995 there were 6,425,118 shares of Employee
Preferred Stock outstanding.
- - -------------------------------------------------------------------------------
<PAGE> 2
[This page intentionally left blank]
<PAGE> 3
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Trans World Airlines, Inc. and Subsidiaries
STATEMENTS OF CONSOLIDATED OPERATIONS
For the One Month Ended September 30, 1995, the Two Months Ended August 31, 1995
and the Three Months Ended September 30, 1994.
(Amounts in Thousands Except Per Share Amounts)
(Unaudited)
REORGANIZED
COMPANY PREDECESSOR COMPANY
------------ ----------------------------
ONE MONTH TWO MONTHS THREE MONTHS
ENDED ENDED ENDED
SEPTEMBER 30, AUGUST 31, SEPTEMBER 30,
1995 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Operating Revenues:
Passenger.................................. $ 250,669 | $ 588,038 $ 840,273
Freight and mail........................... 11,957 | 23,849 37,460
All other.................................. 31,264 | 53,642 112,538
------------ | ------------ ------------
Total................................. 293,890 | 665,529 990,271
------------ | ------------ ------------
|
Operating Expenses: |
Salaries, wages and benefits............... 95,926 | 193,142 320,520
Earned stock compensation (Note 5)......... 418 | 55,767 -
Aircraft fuel and oil...................... 38,561 | 83,517 132,884
Passenger sales commissions................ 23,634 | 53,499 84,434
Aircraft maintenance materials and repairs. 10,298 | 19,945 34,494
Depreciation and amortization.............. 13,964 | 25,607 48,138
Operating lease rentals.................... 23,818 | 44,842 69,954
Passenger food and beverages............... 9,052 | 17,599 35,793
Special charges (Note 3) .................. - | 1,730 13,337
All other.................................. 68,911 | 133,360 216,022
------------ | ------------ ------------
Total................................. 284,582 | 629,008 955,576
------------ | ------------ ------------
|
Operating Income............................ 9,308 | 36,521 34,695
------------ | ------------ ------------
|
Other Charges (Credits): |
Interest expense .......................... 11,283 | 16,361 49,142
Interest and investment income ............ (1,574) | (3,148) (2,975)
Disposition of assets, gains and |
losses-net ............................... 50 | (132) (435)
Reorganization items (Note 4).............. - | 242,243 -
Other charges and credits-net ............. 1,864 | 1,804 (2,867)
------------ | ------------ ------------
Total................................ 11,623 | 257,128 42,865
------------ | ------------ ------------
|
Loss Before Income Taxes and |
Extraordinary Items........................ (2,315) | (220,607) (8,170)
Provision (Credit) For Income Taxes ........ 32 | (21) (158)
------------ | ------------ ------------
|
Loss Before Extraordinary Items............. (2,347) | (220,586) (8,012)
Extraordinary Items, net of income |
taxes (Note 6)............................. - | 140,898 -
------------ | ------------ ------------
Net Income (Loss)........................... (2,347) | (79,688) (8,012)
|
Preferred Stock Dividend |
Requirements (Note 1)...................... 1,163 | 3,818 3,750
------------ | ------------ ------------
Loss Applicable to Common Shares............ $ (3,510) | $ (83,506) $ (11,762)
============ | ============ ============
|
Per Share Amounts (Note 1): |
Loss Before Extraordinary Item............. $ (.16) | $ (11.21) $ (.59)
Extraordinary Item......................... - | 7.04 -
------------ | ------------ ------------
|
Net Loss................................... $ (.16) | $ (4.17) $ (.59)
============ | ============ ============
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 4
<TABLE>
<CAPTION>
Trans World Airlines, Inc. and Subsidiaries
STATEMENTS OF CONSOLIDATED OPERATIONS
For the One Month Ended September 30, 1995, the Eight Months Ended August 31, 1995
and the Nine Months Ended September 30, 1994.
(Amounts in Thousands Except Per Share Amounts)
(Unaudited)
REORGANIZED
COMPANY PREDECESSOR COMPANY
------------ ----------------------------
ONE MONTH EIGHT MONTHS NINE MONTHS
ENDED ENDED ENDED
SEPTEMBER 30, AUGUST 31, SEPTEMBER 30,
1995 1995 1994
------------ ------------ ------------
Operating Revenues:
<S> <C> <C> <C>
Passenger.................................. $ 250,669 | $ 1,929,166 $ 2,220,567
Freight and mail........................... 11,957 | 94,784 111,280
All other.................................. 31,264 | 194,405 303,596
------------ | ------------ ------------
Total................................. 293,890 | 2,218,355 2,635,443
------------ | ------------ ------------
|
Operating Expenses: |
Salaries, wages and benefits............... 95,926 | 755,708 967,044
Earned stock compensation (Note 5)......... 418 | 55,767 -
Aircraft fuel and oil...................... 38,561 | 296,833 360,305
Passenger sales commissions................ 23,634 | 185,981 221,241
Aircraft maintenance materials and repairs. 10,298 | 95,657 111,788
Depreciation and amortization.............. 13,964 | 106,474 141,505
Operating lease rentals.................... 23,818 | 182,548 195,368
Passenger food and beverages............... 9,052 | 68,137 96,871
Special charges (Note 3)................... - | 1,730 13,337
All other.................................. 68,911 | 454,878 591,459
------------ | ------------ ------------
Total................................. 284,582 | 2,203,713 2,698,918
------------ | ------------ ------------
|
Operating Income (Loss)..................... 9,308 | 14,642 (63,475)
------------ | ------------ ------------
|
Other Charges (Credits): |
Interest expense .......................... 11,283 | 123,247 146,357
Interest and investment income ............ (1,574) | (10,366) (8,582)
Disposition of assets, gains and |
losses-net ............................... 50 | 206 (648)
Reorganization items (Note 4).............. - | 242,243 -
Other charges and credits-net ............. 1,864 | (2,379) (13,171)
------------ | ------------ ------------
Total................................ 11,623 | 352,951 123,956
------------ | ------------ ------------
|
Loss Before Income Taxes and |
Extraordinary Items........................ (2,315) | (338,309) (187,431)
Provision (Credit) For Income Taxes ........ 32 | (96) 1,168
------------ | ------------ ------------
|
Loss Before Extraordinary Items............. (2,347) | (338,213) (188,599)
Extraordinary Items, net of income |
taxes (Note 6)............................. - | 140,898 (2,005)
------------ | ------------ ------------
Net Income (Loss)........................... (2,347) | (197,315) (190,604)
|
Preferred Stock Dividend |
Requirements (Note 1)...................... 1,163 | 11,554 11,250
------------ | ------------ ------------
Loss Applicable to Common Shares............ $ (3,510) | $ (208,869) $ (201,854)
============ | ============ ============
|
Per Share Amounts (Note 1): |
Loss Before Extraordinary Item............. $ (.16) | $ (17.48) $ (9.99)
Extraordinary Item......................... - | 7.04 (.10)
------------ | ------------ ------------
|
Net Loss................................... $ (.16) | $ (10.44) $ (10.09)
============ | ============ ============
</TABLE>
See Notes to Consolidated Financial Statements
- 2 -
<PAGE> 5
TRANS WORLD AIRLINES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(AMOUNTS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
Reorganized Predecessor
Company Company
------------- ------------
September 30, December 31,
1995 1994
------------- ------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 251,312 | $ 121,306
Receivables, less allowance for doubtful accounts, |
$15,809 in 1995 and $14,832 in 1994 308,344 | 240,804
Spare parts, materials and supplies, less |
allowance for obsolescence, $558 in 1995 |
and $20,928 in 1994 147,993 | 156,662
Prepaid expenses and other 60,903 | 48,768
----------- | -----------
Total 768,552 | 567,540
----------- | -----------
|
Property: |
Property owned, at cost: |
Flight equipment 283,782 | 399,924
Land, buildings and improvements 55,060 | 74,383
Other property and equipment 35,269 | 48,540
----------- | -----------
Total owned property 374,111 | 522,847
Less accumulated depreciation 4,825 | 95,696
----------- | -----------
Property owned - net 369,286 | 427,151
----------- | -----------
|
Property held under capital leases, |
at capitalized value: |
Flight equipment 172,622 | 206,652
Land, buildings and improvements 54,761 | 96,169
Other property and equipment 6,880 | 10,784
----------- | -----------
Total property held under capital leases 234,263 | 313,605
Less accumulated amortization 3,131 | 47,711
----------- | -----------
Property held under capital leases - net 231,132 | 265,894
----------- | -----------
Total property - net 600,418 | 693,045
----------- | -----------
|
Investments and Other Assets: |
Investments in affiliated companies 109,545 | 107,986
Other investments and receivables 158,736 | 180,340
Routes, gates and slots - net 456,565 | 762,174
Reorganization value in excess of amounts |
allocable to identifiable assets - net 835,555 | 159,485
Prepayments, deferred charges and other assets 22,218 | 24,640
----------- | -----------
Total 1,582,619 | 1,234,625
----------- | -----------
|
Total $2,951,589 | $2,495,210
=========== | ===========
</TABLE>
See Notes to Consolidated Financial Statements
- 3 -
<PAGE> 6
<TABLE>
<CAPTION>
Trans World Airlines, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
September 30, 1995 and December 31, 1994
(Amounts in Thousands Except Per Share Amounts)
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Reorganized Predecessor
Company Company
------------ -------------
September 30, December 31,
1995 1994
------------- ------------
(Unaudited)
<S> <C> <C>
Current Liabilities:
Current maturities of long-term debt $ 73,454 | $1,102,146
Current portion of capital lease obligations 38,481 | 47,593
Advance ticket sales 266,616 | 172,044
Accounts payable, principally trade 149,216 | 117,461
Accounts payable to affiliated companies 3,554 | 3,092
Accrued expenses: |
Employee compensation and vacations earned 101,152 | 109,715
Contributions to retirement and pension trusts 17,874 | 20,704
Interest on debt and capital leases 41,535 | 68,717
Taxes 19,459 | 16,968
Other accrued expenses 221,423 | 188,557
----------- | -----------
Total 932,764 | 1,846,997
----------- | -----------
|
|
Noncurrent Liabilities and Deferred Credits: |
Long-term debt, less current maturities 757,086 | -
Obligations under capital leases 270,975 | 339,895
Postretirement benefits, other than pensions 457,926 | 489,216
Noncurrent pension liabilities 21,074 | 30,059
Other noncurrent liabilities and deferred |
credits 184,833 | 206,519
----------- | -----------
Total 1,691,894 | 1,065,689
----------- | -----------
|
Mandatorily Redeemable Preferred Stock, (aggregate |
liquidation value of $108,999) 58,860 | -
----------- | -----------
|
Shareholders' Equity (Deficiency): |
Employee Preferred Stock, $0.01 liquidation |
preference; special voting rights; 5,277 shares |
issued and outstanding 53 | -
New Common Stock, $0.01 par value; 17,203 shares |
issued and outstanding 172 | -
Cumulative Preferred Stock, $0.01 par value; limited |
voting; 12,500 shares issued and outstanding - | 125
Common Stock, $0.01 par value, 20,000 shares |
authorized, issued and outstanding - | 200
Additional paid-in capital 270,193 | 105,925
Deficit (2,347) | (523,726)
----------- | -----------
Total 268,071 | (417,476)
----------- | -----------
|
Total $2,951,589 | $2,495,210
=========== | ===========
</TABLE>
See Notes to Consolidated Financial Statements
- 4 -
<PAGE> 7
<TABLE>
<CAPTION>
Trans World Airlines, Inc. and Subsidiaries
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the One Month Ended September 30, 1995, the Eight Months Ended August 31, 1995
and the Nine Months Ended September 30, 1994.
(Amounts in Thousands--Unaudited)
Reorganized
Company Predecessor Company
------------ ---------------------------
One Month Eight Months Nine Months
Ended Ended Ended
September 30, August 31, September 30,
1995 1995 1994
------------ | ------------ ------------
<S> <C> | <C> <C>
Cash Flows from Operating Activities |
- - ------------------------------------ |
Net Loss ....................................... $ (2,347) | $(197,315) $ (190,604)
Adjustments to reconcile to net cash |
provided (used) by operating activities: |
Depreciation and amortization ................ 13,964 | 106,474 141,505
Amortization of discount and expense on debt.. 728 | 12,472 13,334
(Gains) and losses - net, from translation of |
capital lease obligations and certain other |
liabilities payable in foreign currencies.... - | 2 7
Equity in undistributed earnings of affiliates |
not consolidated............................. 780 | (2,339) (334)
Gain on cancellation of debt.................. - | (140,898) -
Reorganization items.......................... - | 242,243 -
Employee earned stock compensation............ 418 | 55,767 -
(Gains) and losses-net, on disposition of fixed, |
intangible and noncurrent investment assets.. 50 | 206 (648)
Change in assets and liabilities, exclusive of |
investing and financing activity transactions: |
Decrease (Increase) in: |
Receivables ............................... (12,772) | (62,094) (50,936)
Inventories ............................... (2,378) | 5,866 ( 6,551)
Other current assets ...................... 506 | (2,505) (13,299)
Other noncurrent assets and deferred charges (154) | 3,163 (3,375)
Increase (Decrease) in: |
Accounts payable and accrued expenses ..... 8,580 | 128,082 50,357
Advance ticket sales....................... 12,974 | 81,598 37,246
Other noncurrent liabilities and deferred |
credits.................................. 2,754 | (50,667) 32,822
---------- | ----------- ----------
Net cash provided ....................... 23,103 | 180,055 9,524
---------- | ----------- ----------
|
Cash Flows from Investing Activities |
- - ------------------------------------ |
Proceeds from disposition of fixed and/or |
intangible assets ............................. 209 | 2,221 64,133
Capital expenditures ........................... (1,788) | (16,554) (39,020)
Net Decrease (Increase) in noncurrent |
investments and receivables other than sales |
included in proceeds above .................... 4,780 | 14,926 7,286
---------- | ---------- ----------
Net cash provided ....................... 3,201 | 593 32,399
---------- | ---------- ----------
|
Cash Flows from Financing Activities |
- - ------------------------------------ |
Proceeds from long-term debt issued ............ - | - 6,213
Principal payments on long-term debt and capital |
lease obligations ............................. (11,346) | (62,158) (104,427)
Fees paid in connection with Equity Rights |
offering (Note 7).............................. (3,442) | - -
---------- | ---------- ----------
Net cash provided (used)................. (14,788) | (62,158) (98,214)
---------- | ---------- ----------
|
Net Increase (Decrease) in Cash and Cash Equivalents 11,516 | 118,490 (56,291)
Balance at beginning of period ................... 239,796 | 121,306 170,404
---------- | ---------- ----------
Cash and Cash Equivalents at end of period........ $ 251,312 | $ 239,796 $ 114,113
========== | ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
- 5 -
<PAGE> 8
<TABLE>
<CAPTION>
Trans World Airlines, Inc. and Subsidiaries
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the One Month Ended September 30, 1995, the Eight Months Ended August 31, 1995
and the Nine Months Ended September 30, 1994.
(Amounts in Thousands)
SUPPLEMENTAL CASH FLOW INFORMATION
Reorganized
Company Predecessor Company
------------ ---------------------------
One Month Eight Months Nine Months
Ended Ended Ended
September 30, August 31, September 30,
1995 1995 1994
------------ | ------------ ------------
<S> <C> | <C> <C>
Cash Paid During the Period for |
- - ------------------------------- |
Interest $ 11,646 | $ 55,878 $ 93,025
=========== | =========== ===========
|
Income taxes $ 27 | $ 39 $ 22
=========== | =========== ===========
Information About Noncash Operating, Investing and Financing Activities
- - -----------------------------------------------------------------------
Property acquired and obligations recorded
under new capital lease transactions $ - | $ 12,690 $ 7,000
=========== | =========== ===========
|
Partial interest on debt paid in kind, |
issued and valued at principal amount $ - | $ 18,946 $ 37,287
=========== | =========== ===========
</TABLE>
Accounting Policy
For purposes of the Statements of Consolidated Cash Flows, TWA considers
all highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
See Notes to Consolidated Financial Statements
- 6 -
<PAGE> 9
TRANS WORLD AIRLINES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
FORM 10-Q
1. INTERIM RESULTS OF OPERATIONS; BASIS OF PRESENTATION:
The consolidated financial statements include the accounts of
Trans World Airlines, Inc. ("TWA" or the "Company") and its
subsidiaries. The results of Worldspan, L.P., a 25% owned affiliate,
are recorded by the equity method and are included in the Statements
of Operations in Other Charges (Credits). Certain amounts previously
reported have been reclassified to conform with the revised
presentation.
The results for the periods ended September 30, 1995 and 1994
include all adjustments, which are, in the opinion of management,
necessary for a fair statement of the results for these interim
periods. The airline industry generally, and TWA specifically, has
historically recorded seasonal changes between quarterly periods, with
the second and third quarters usually out-performing the first and
fourth. Accordingly, the results for the periods ended September 30
should not be interpreted as an indicator of future results for the
full year. The balance sheet at December 31, 1994 has been derived
from the audited financial statements at that date.
In connection with the consummation of the restructuring as
further described below, TWA has applied fresh start reporting (see
Note 4), and accordingly, the financial statements for periods after
September 1, 1995 (the "Reorganized Company") are not comparable in
all respects to the financial statements for periods prior to
September 1, 1995 (the "Predecessor Company").
These financial statements and related notes should be read in
conjunction with the consolidated financial statements and related
notes contained in the Company's Annual Report on Form 10-K for the
year ended December 31, 1994 (the "1994 10-K").
In computing the loss applicable to common shares for the one
month ended September 30, 1995, the net loss has been increased by
dividend requirements on the mandatorily redeemable preferred stock
(including amortization of the difference between the fair value of
the preferred stock on the date of issuance and the redemption value).
In computing the related net loss per share, the loss applicable to
common shares has been divided by the aggregate number of common
shares and Employee Preferred Shares which, with the exception
- 7 -
<PAGE> 10
of certain special voting rights, are the functional equivalent of
common stock. No effect has been given to stock options, warrants or
potential issuances of additional common stock or Employee Preferred
Stock (see Note 2) as the impact would have been anti-dilutive.
2. RESTRUCTURING INITIATIVES AND PREPACKAGED BANKRUPTCY PETITION:
On June 26, 1995, Company stockholders authorized the Company
to amend its Restated Certificate of Incorporation to authorize the
issuance of up to 150,000,000 shares of Common Stock, 137,500,000
shares of an additional class of preferred stock and approved a
proposal to permit a one-for-46.8722 reverse split of then outstanding
Common Stock. Additionally, on June 28, 1995 the Company's creditors
approved the proposed capital restructuring, to be accomplished
through a prepackaged plan of reorganization, which was described and
proposed in the Company's October 11, 1994 filing of a Registration
Statement on Form S-4 (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") which, after further
amendment, was declared effective on May 12, 1995.
On June 30, 1995 the Company filed a prepackaged plan of
reorganization under Chapter 11 of the U.S. Bankruptcy Code (the "'95
Plan") with the United States Bankruptcy Court for the Eastern
District of Missouri, Eastern Division (the "St. Louis Bankruptcy
Court"). On August 4, 1995 the St. Louis Bankruptcy Court confirmed
the '95 Plan, as modified, and the Company emerged from bankruptcy on
August 23, 1995 (the "Effective Date").
Pursuant to the '95 Plan, as modified, and related agreements,
on the Effective Date TWA issued approximately 17.2 million common
shares, 6.4 million shares of Employee Preferred Stock (including
approximately 1.7 million shares which were attributable to ALPA
represented employees, see Note 5), Equity Rights for the purchase of
approximately 13.2 million shares of common stock (see Note 7),
warrants for the purchase of approximately 1.7 million shares of
common stock (exercisable over a seven year period at $14.40 per
share), warrants for the purchase of up to 1.15 million shares of
common stock (for nominal consideration), $170 million in principal
amount of 12% Senior Secured Reset Notes due 1998 (the "12% Notes"),
$244.3 million in principal amount of Pension Benefit Guarantee
Corporation Notes (the "PBGC Notes"), $109 million aggregate
liquidation value of mandatorily redeemable preferred stock, $30
million in Ticket Vouchers and certain contingent payment rights (the
"Contingent Payment Rights") which, under certain conditions, provide
for the payment of up to $18 million.
The terms of the '95 Plan provide for the distribution of
additional common stock, warrants and Ticket Vouchers by the
- 8 -
<PAGE> 11
end of 1995, based upon the operation of various measurements
involving the value of consideration initially distributed for periods
following the Effective Date. While the ultimate amount of any
required additional distributions of common stock, warrants or Ticket
Vouchers cannot be determined at this time, using the closing market
prices of the relevant TWA securities on November 1, 1995, TWA would
be required to issue approximately 2.2 million additional shares of
common stock. Additionally, employees would be entitled to receive an
aggregate of approximately 0.4 million additional shares of common and
Employee Preferred Stock. Based upon the closing market prices of the
relevant TWA securities on November 1, 1995, no additional Ticket
Vouchers or warrants would be distributable.
Additionally, the '95 Plan provided for the distribution of
certain Contingent Payment Rights. Under the Contingent Payment
Rights, aggregate payments of up to $11.3 million could be payable in
1996 and up to $6.8 million could be payable in 1997, depending on the
trading prices of the 12% Notes and the value of consideration
initially distributed on the Effective Date through the end of 1995.
Based on the closing market prices of TWA securities on November 1,
1995, aggregate payments under the Contingent Payment Rights could
be as much as $11.3 million, excluding interest in 1996, while no
payments will be required in 1997.
Further information on the '95 Plan, as modified, is provided
in Item 2. - "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Part II, Item 1, Legal
Proceedings.
For the three months and nine months ended September 30, 1995,
approximately $3.6 million and $19.3 million, respectively, were paid
for certain professional and advisory fees relating to the Company's
financial restructuring initiatives.
On September 1, 1995 TWA announced that it had elected to pay
interest due and payable on the 12% Notes for the period from
February 1, 1995 through August 1, 1995, in common stock. The
distribution of 1,886,984 shares of common stock was made on
October 6, 1995, to holders of record on September 29, 1995.
3. TRANS WORLD EXPRESS, INC.
On September 6, 1995 TWA announced that the operations of its
wholly owned subsidiary, Trans World Express, Inc. ("TWE"), would be
discontinued on November 6, 1995. TWA has entered into an agreement
with Trans States Airlines, Inc. ("Trans States") to provide feeder
service into TWA's JFK hub beginning on November 7, 1995. TWE also
has agreed to sell to Trans States certain take-off and landing
commuter slots.
- 9 -
<PAGE> 12
In connection with the decision to discontinue the operations
of TWE and liquidate its remaining assets and liabilities, the
operating results for the two months ended August 31, 1995 include
special charges of approximately $1.7 million for shut-down related
expenses.
TWE is proceeding with an orderly liquidation and shut-down,
and has reached agreement with substantially all of its creditors
relating to the settlement of obligations and claims. TWA does not
currently expect that the liquidation of TWE will have a material
adverse impact on the financial position or results of operations of
TWA.
4. FRESH START REPORTING:
Pursuant to "Statement of Position 90-7 of the American
Institute of Certified Public Accountants", titled "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code",
TWA adopted fresh start reporting which has resulted in the creation
of a new reporting entity and the Company's assets and liabilities
being adjusted to reflect fair values on the Effective Date. For
accounting purposes, the Effective Date was deemed to be September 1,
1995. In the fresh start reporting, an aggregate value of $270
million was assigned to TWA's New Common Stock and Employee Preferred
Stock. These values were established by management with the
assistance of its financial advisors. These valuations considered
TWA's expected future performance, relevant industry and economic
conditions, and analyses and comparisons with comparable companies.
The reorganization value of TWA has been allocated to the
Reorganized Company's assets and liabilities in a manner similar to
the purchase method of accounting for a business combination.
Management obtained valuations from independent third parties which,
along with other market and related information and analyses, were
utilized in assigning fair values to assets and liabilities. A
summary of the impact of the '95 Plan and the related fresh start
adjustments is presented below. The fresh start adjustments result
in, among other things, the allocation of substantial amounts to
Reorganization Value in Excess of Amounts Allocable to Identifiable
Assets, the amortization of which, while not requiring the use of
cash, will significantly affect future operating results.
- 10 -
<PAGE> 13
<TABLE>
<CAPTION>
SEPTEMBER 1, 1995
-------------------------------------------------------------------------------------
Predecessor Debt Fresh Start Other Reorganized
Company Discharge(a) Adjustments(b) Adjustments(c) Company
----------- ------------ --------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash
equivalents.............. $ 239,796 $ - $ - $ - $ 239,796
Receivables............... 297,022 (1,449) - - 295,573
Spare parts, materials
and supplies............. 146,191 - - - 146,191
Prepaid expenses
and other................ 60,947 - - - 60,947
----------- ----------- ---------- ---------- -----------
Total Current Assets.. 743,956 (1,449) - 742,507
----------- ----------- ---------- ---------- -----------
Property and Equipment..... 631,087 - (24,239) - 606,848
----------- ----------- ---------- ---------- -----------
Other Assets:
Investment in
affiliated companies..... 110,325 - - - 110,325
Other investments
and receivables.......... 163,715 - - - 163,715
Routes, gates and slots... 737,171 - (278,722) - 458,449
Reorganization value in
excess of amounts
allocable to iden-
tifiable assets.......... 153,840 - - 685,224 839,064
Other assets.............. 28,531 - ( 9,392) - 19,139
----------- ----------- ---------- ---------- -----------
Total Other........... 1,193,582 - (288,114) 685,224 1,590,692
----------- ----------- ---------- ---------- -----------
Total...................... $2,568,625 $ (1,449) $(312,353) $ 685,224 $2,940,047
=========== =========== ========== ========== ===========
Current Liabilities:
Current maturities of
long-term debt........... $ 472,510 $ (404,665) $ - $ - $ 67,845
Current obligations
under capital leases..... 42,643 - (647) - 41,996
Advance ticket sales...... 253,642 - - - 253,642
Accounts payable and
other accrued expenses... 518,030 24,466 3,739 - 546,235
----------- ----------- ---------- ---------- -----------
Total................. 1,286,825 (380,199) 3,092 - 909,718
----------- ----------- ---------- ---------- -----------
Liabilities Subject To
Chapter 11 Reorgan-
ization Proceedings....... 748,855 (748,855) - - -
----------- ----------- ---------- ---------- -----------
Noncurrent Liabilities
and Deferred Credits:
Long-term debt, less
current maturities...... - 765,435 - - 765,435
Obligations under
capital leases.......... 317,196 - (42,440) - 274,756
Other noncurrent
liabilities and
deferred credits........ 673,428 18,612 (30,762) - 661,278
----------- ----------- ---------- ---------- -----------
Total................. 990,624 784,047 (73,202) - 1,701,469
----------- ----------- ---------- ---------- -----------
Redeemable Preferred Stock. - 58,860 - - 58,860
----------- ----------- ---------- ---------- -----------
Shareholders' Equity
(Deficiency):
Old Preferred Stock...... 125 - - (125) -
Old Common Stock......... 200 - - (200) -
Employee Preferred Stock. - - - 53 53
New Common Stock......... - - - 172 172
Additional Paid-in Capital 161,692 143,800 - (35,717) 269,775
Accumulated Deficit...... (619,696) 140,898 (242,243) 721,041 -
----------- ----------- ---------- ---------- -----------
Total................. (457,679) 284,698 (242,243) 685,224 270,000
----------- ----------- ---------- ---------- -----------
Total...................... $2,568,625 $ (1,449) $(312,353) $ 685,224 $2,940,047
=========== =========== ========== ========== ===========
</TABLE>
- 11 -
<PAGE> 14
(a) To record the discharge of indebtedness pursuant to the
'95 Plan and reclassification of debt between current and non-current
based upon their revised terms. Debt securities, mandatorily
redeemable preferred stock, Ticket Vouchers and contingent payment
rights issued pursuant to the '95 Plan have been recorded at their
estimated fair values. The excess of indebtedness eliminated over the
fair value of securities issued in settlement of those claims,
approximately $140.9 million, is reflected as an extraordinary item in
the two months ended August 31, 1995.
(b) To record adjustments to reflect assets and liabilities at
fair values. The adjustments to record the fair values of assets and
liabilities resulted in a nonrecurring charge to reorganization items
of approximately $228.8 million in the two months ended August 31,
1995. Charges to reorganization items were recorded for various fees
and expenses related to the consummation of the '95 Plan aggregating
approximately $13.4 million. Significant elements of the adjustments
to record the fair value of assets and liabilities are summarized
below:
-- Adjustments to reflect the fair value of owned property and
equipment under capital leases.
-- Adjustments to reflect the fair value of TWA's inter-national
route authorities, take-off and landing time slots and airport gate
leaseholds.
-- Adjustments to record the present value of the liabilities for
postretirement medical and life insurance benefits and certain foreign
pension plans to reflect the current postretirement benefit obligation
and projected benefit obligation, respectively, utilizing current
discount rates.
-- An adjustment to reduce the deferred income tax liability to
reflect the impact of the preceding adjustments.
(c) To record adjustments to reflect the elimination of the
remaining deficit in shareholders' equity after the adjustments
arising from (a) and (b) above and to reflect the associated
Reorganization Value in Excess of Amounts Allocable to Indentifiable
Assets.
- 12 -
<PAGE> 15
5. EARNED STOCK COMPENSATION
In August 1994, the Company entered into amendments to
existing collective bargaining agreements with its unions which
generally provided for more flexible work rules and certain other
changes to benefit programs. The agreements entered into with the
unions generally provided that the employees would receive 30% of the
common equity of the Company on a post-restructured basis in exchange
for these concessions (as well as in consideration for their prior
equity ownership, which was 45% prior to the restructuring). On the
Effective Date, approximately 4.7 million shares of Employee Preferred
Stock and 1.0 million shares of common stock were distributed and
allocated to employees through employee stock ownership plans for the
benefit of union (other than the Air Line Pilots Association ("ALPA")
represented employees) and noncontract employees, respectively. The
distribution of these shares resulted in a charge to operations in the
two months ended August 31, 1995 of $43.2 million, based upon the
market price of TWA's common stock at the time.
Additionally, a "Rabbi Trust" was established to receive the
distribution of approximately 1.7 million shares of Employee Preferred
Stock attributable to ALPA represented employees. The Rabbi Trust
will distribute to the ESOP one-third of the shares annually beginning
August 1995, subject to certain conditions. Accordingly, operating
results in the two months ended August 31, 1995 include a charge of
approximately $4.3 million, representing the value of the shares
allocated at such time, based upon the market price of TWA's common
stock. The operating results for the one month ended September 30,
1995 includes a proportionate charge of approximately $0.4 million for
the shares to be distributed to the ESOP in 1996, based upon the
current market price of TWA's common stock. The charge to earnings
for shares to be distributed to the ESOP in the future will be based
upon the value of the shares at that time. Accordingly, material
changes in this non-cash charge may occur in periods prior to the
distribution of the shares and such changes may be unrelated to the
Company's operating performance during such periods.
Operating results for the two months ended August 31, 1995 and
the one month ended September 30, 1995 include non-cash charges of
approximately $240,000 and $57,000, respectively, related to employee
stock options granted. The charge is to reflect the excess of the
market price of TWA's common stock over the exercise price for the
options granted, covering approximately 2.0 million shares of common
stock, over the vesting period. The number of shares of common stock
covered by these options is subject to adjustment for final
distributions under the '95 plan, as described in Note 2.
- 13 -
<PAGE> 16
Operating results for the two months ended August 31, 1995
include a non-cash charge of approximately $8.0 million,
representing the excess of the fair market value of the shares
distributed to employees over the purchase price paid for shares which
were sold to employees pursuant to the Equity Rights offering.
6. EXTRAORDINARY ITEM:
In the quarter ended March 31, 1994, TWA sold and leased back
four McDonnell Douglas MD-80 aircraft and prepaid the outstanding
indebtedness associated with such aircraft, including a prepayment
premium of approximately $2.0 million.
The extraordinary item in 1995 represents the gain on
discharge of indebtedness pursuant to the consummation of the '95 Plan
(See Note 4).
7. SUBSEQUENT EVENTS:
Pursuant to the restructuring TWA issued 13,206,247
nontransferable Equity Rights which entitled the holder to purchase,
for each such Equity Right, one share of common stock. The
subscription price established by the Company was $4.1875 per share.
On October 10, 1995, TWA received approximately $55.2 million in gross
proceeds from the exercise of the rights, representing substantially
all of the related proceeds. A total of 13,206,247 shares of common
stock were issued in connection with the Equity Rights offering.
Separately, the Company previously entered into an agreement pursuant
to which certain parties agreed to purchase any shares not subscribed
pursuant to the Equity Rights offering to ensure that the 13,206,247
shares would be fully subscribed, and paid a fee of approximately $3.4
million in September 1995, in connection therewith. Accordingly, the
net proceeds from the issuance of the common shares of approximately
$52 million will be reflected in shareholders' equity in the fourth
quarter of 1995.
- 14 -
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
On August 23, 1995, TWA emerged from the protection of Chapter 11 of
the Bankruptcy Code, approximately eight weeks after filing its prepackaged
Plan of Reorganization with the St. Louis Bankruptcy Court. Leading up to the
June 30, 1995 filing were many negotiated agreements with groups and
organizations which had been party to the previous bankruptcy proceeding from
which TWA emerged on November 3, 1993.
TWA had previously filed a voluntary petition for relief under Chapter
11 in the United States Bankruptcy Court for the District of Delaware (the
"Delaware Bankruptcy Court") on January 31, 1992 (the "'93 Reorganization"). A
final decree closing those Chapter 11 proceedings was entered by the Delaware
Bankruptcy Court on June 21, 1995.
Since emerging from the '93 Reorganization, the Company has undertaken
the following significant actions: (i) relocated its corporate headquarters to
St. Louis, Missouri; (ii) refocused its domestic operations around its St.
Louis hub, building to 348 departures per day during the peak summer months
while eliminating a number of unprofitable routes and services; (iii)
eliminated unprofitable international routes and targeted higher-yielding
international customers; (iv) formulated a new fleet plan designed to replace
older three engine aircraft with newer two engine aircraft; (v) sold
subsidiaries World Marketing Services, Inc., Travel Marketing Corporation, and
Midcoast Aviation, Inc. ("Midcoast") and announced the shut-down of TWE
operations effective November 6, 1995 and (vi) renegotiated the '92 Labor
Agreements to provide for further modification of pay rates, work rules and
benefits packages, the issuance to employees of additional equity securities
and the enactment of certain additional provisions as to corporate governance
of the Company (the "'94 Labor Agreements").
On October 11, 1994 the Company filed a registration statement with
the SEC and announced a proposed plan of recapitalization for the Company (the
"Restructuring") in order to reduce or satisfy certain of the Company's current
and future financial obligations. The proposed capital restructuring was
described and proposed in the Company's filing of the Registration Statement on
Form S-4 with the SEC, which was subsequently amended and declared effective on
May 12, 1995. The recapitalization of the Company was proposed to be
accomplished through either (i) an out-of-court restructuring consisting of the
proposed exchange of certain of the Company's outstanding debt securities for
new notes, debt and/or equity, a recapitalization of the Company's outstanding
preferred stock and a reverse stock split of currently outstanding common
shares which would have substantially diluted the ownership of existing common
stockholders or (ii) a prepackaged plan of reorganization, pursuant to Chapter
11 of the U.S. Bankruptcy Code encompassing (as it relates to the holders of
such securities) generally the same
- 15 -
<PAGE> 18
elements as the proposed out-of-court restructuring and for which
acceptances were being sought. Other elements of the proposed restructuring
included: (i) modification offers to flight equipment lessors; (ii) extension
of loans payable to affiliates of Carl Icahn (the "Icahn Loans"); (iii) an
equity rights offering; (iv) distribution of warrants to current equity
holders; (v) changes to labor agreements and (vi) amendments to the Company's
Certificate of Incorporation.
The Company, having received sufficient acceptances from the holders
of impaired claims and equity securities to effectuate the prepackaged
bankruptcy, on June 30, 1995, filed the '95 Plan. (See "Part II. Item 1.
Legal Proceedings"). After a hearing on August 2, 1995, at which the merits
and objections were presented to the St. Louis Bankruptcy Court, the '95 Plan,
as modified, was confirmed by the Court on August 4, 1995. Such confirmation
and the Effective Date of such, August 23, 1995, are the culmination of the
Company's restructuring initiatives that commenced with the filing of the
Registration Statement. The Restructuring has resulted in the cancellation of
all of the Company's outstanding capital stock and certain of its outstanding
indebtedness in exchange for new securities and other consideration issuable
pursuant to the '95 Plan, as modified, as of the Effective Date. The '95 Plan,
as modified, also provided for certain changes to the Certificate of
Incorporation of the Company including authorizing the issuance of up to
150,000,000 shares of Common Stock, and 137,500,000 of an additional class of
preferred stock.
TWA continues to be highly leveraged. Substantially all of TWA's
assets are subject to various liens and security interests, which significantly
limit TWA's ability to obtain additional financing from external sources or
from the sale of assets. TWA has historically experienced substantial
operating losses. TWA's future viability will be dependent upon its ability to
increase revenues and improve its results of operations. No assurance can be
given that the Company will be successful in generating the operating revenues
required for future viability. See "Liquidity and Capital Resources."
- 16 -
<PAGE> 19
LIQUIDITY AND CAPITAL RESOURCES
The following is a discussion of the impact of significant factors
affecting TWA's liquidity position and capital resources. These comments
should be read in conjunction with, and are qualified in their entirety by, the
Consolidated Financial Statements and Notes thereto and other more detailed
financial information appearing elsewhere in this report.
LIQUIDITY
The Company's consolidated cash and cash equivalents for the nine
months ended September 30, 1995 increased by $130.0 million to $251.3 million
(including approximately $41.9 million in cash and cash equivalents held in its
international operations and by its subsidiaries). The increase was due to
$203.2 million provided by operations, as the result of improved operating
performance and working capital management (including approximately $17.0
million in aircraft lease deferrals, net of deferral repayments), cash provided
by investing activities of $3.8 million, partially offset by cash used for
financing activities of $76.9 million. Credit card deposits of $15.0 million
were returned to TWA following its emergence from bankruptcy as the result of
its successful restructuring and stronger cash position.
Pursuant to the restructuring TWA issued 13,206,247 nontransferable
Equity Rights which entitled the holder to purchase, for each such Equity
Right, one share of common stock. The subscription price established by the
Company was $4.1875 per share. On October 10, 1995, TWA received approximately
$55.2 million in gross proceeds from the exercise of the rights, representing
substantially all of the related proceeds. A total of 13,206,247 shares of
common stock were issued in connection with the Equity Rights offering.
Separately, the Company previously entered into an agreement pursuant to which
certain parties agreed to purchase any shares not subscribed pursuant to the
Equity Rights offering to ensure that the 13,206,247 shares would be fully
subscribed, and paid a fee of approximately $3.4 million in September 1995, in
connection therewith.
Pursuant to the Company's '95 Plan, and as partial consideration for
the claims of the holders of the Company's 8% Senior Secured Notes due 2000
(the "8% Notes"), distribution of new securities to those creditors included an
aggregate number of 600,000 Ticket Vouchers, each with a face value of $50.00,
which may be used for up to 50% discount off the cost of a TWA airline ticket
for transportation on TWA flights. In conjunction with the issuance of these
Ticket Vouchers, the Company entered into a Stand-By Purchase Agreement (the
"Stand-By") with a group of private investment funds managed by M. D. Sass
Investors Services (collectively, the "Purchasers") whereby they agreed to
purchase, for cash, all untendered TWA Ticket Vouchers issued pursuant to the
'95 Plan for $26.00 per $50.00 face amount voucher. This
- 17 -
<PAGE> 20
commitment by the Purchasers extended from the Effective Date through October
15, 1995.
Pursuant to the Stand-By, the Company agreed to redeem the Ticket
Vouchers from the Purchasers for an amount of $33.00 face amount (less a
discount if redeemed prior to March 1996), with payment dates by the Company
extending through June 1996, until all such vouchers have been redeemed by the
Company.
On October 18, 1995, the Company announced that it had entered into a
Voucher Purchase Agreement with the same investors to increase the stand-by
purchase price from $26.00 to $32.00, for the 30-day period commencing on
October 19, 1995, and expiring on November 17, 1995. The Company also
announced that each person who tendered in the previous stand-by purchase
arrangement would also receive the $32.00 cash per $50.00 Ticket Voucher.
Holders who wish to sell their Ticket Vouchers for $32.00 cash must tender
their vouchers to the Purchasers' designated agent before the November 17, 1995
termination date. This new Voucher Purchase Agreement also stipulates that the
Company will redeem the vouchers from the Purchasers for the amount of $39.00
per voucher (less a discount if redeemed on or before February 15, 1996). The
Company must redeem all remaining unredeemed purchased Ticket Vouchers on March
15, 1996.
The prior offer resulted in vouchers being tendered with a face value
of approximately $2.9 million, for which the Company will pay a redemption
amount of approximately $2.2 million to the Purchasers.
Aircraft lease payment deferrals were undertaken concurrently with
the Company's restructuring initiatives which were intended to increase
liquidity and improve its financial condition. Gross lease deferrals
aggregated $74.5 million at September 30, 1995. The aircraft lease payment
deferrals contemplated in the Company's proposed restructuring generally
anticipated six month deferrals, with various payback periods, extending in
some instances over the remaining life of the lease, and others over a
specified period. Cash repayments of lease deferrals, including interest, are
expected to be $9.5 million in the fourth quarter of 1995 and $23.2 and $8.7
million in 1996 and 1997, respectively.
On March 9, 1995, the Company signed an agreement with certain
business enterprises in the St. Louis, Missouri community. The agreement with
the St. Louis Coalition for Air Service, a Missouri not-for-profit corporation
(the "Coalition"), provided for the receipt by the Company of approximately
$37.2 million, such amount representing the advance payment for tickets to be
purchased by the Coalition for a period beginning March 9, 1995 and continuing
to August 31, 1995. On March 14, 1995, the Company received $18.6 million, and
on July 7, 1995 received the second installment amounting to $18.6 million. In
consideration for these advance payments, the Company agreed to issue tickets
to participating members of the Coalition having a value of 10% in excess of
such
- 18 -
<PAGE> 21
amount. At September 30, 1995, substantially all of these advance payments had
been used.
Substantially all of TWA's strategic assets, including owned aircraft,
ground equipment, gates, slots and overhaul facilities, have been pledged to
secure the various issues of outstanding indebtedness of the Company. Sales of
such assets which are not replaced would, under the terms of applicable
financing agreements, generally require payment of the indebtedness secured
thereby, which indebtedness would in many cases likely exceed the immediately
realizable value of such assets. TWA has relatively few non-strategic assets
remaining which it could monetize, substantially all of such assets being
subject to various liens and security interests which restrict and/or limit the
ability of TWA to realize any significant proceeds from the potential sale
thereof.
On June 14, 1995, the Company signed an agreement with Karabu
Corporation ("Karabu") to extend the term of the Icahn Loans, from January 8,
1995, to January 8, 2001, to obtain the consent of Karabu and the Icahn
Entities to certain modifications to the PBGC Notes and to obtain agreement
with the Icahn Entities to refrain from exercising the right to terminate the
Pension Plans prior to December 31, 1995 (the "Extension and Consent
Agreement"). Collateral for the Icahn Loans include a number of aircraft,
engines and related equipment, along with substantially all of the Company's
receivables. On June 26, 1995, the Company made a $12.6 million interest
payment on the Icahn Loans. At September 30, 1995 the outstanding balance was
$194.5 million (including approximately $4.5 million in accrued and unpaid
interest). The notes evidencing the Icahn Loans are security for certain
obligations of the Icahn Entities to the PBGC.
On June 14, 1995, as one of the transactions contemplated by the
Extension and Consent Agreement to extend the terms of the Icahn Loans from
January 8, 1995 to January 8, 2001, TWA and Karabu entered into the Karabu
Ticket Program Agreement (the "Ticket Agreement"). There are two categories of
tickets under the Karabu Ticket Program: (1) "Domestic Consolidator Tickets"
which are subject to a cap of $610 million, based on the full retail price of
the ticket ($120 million in the first fifteen months and $70 million per year
for seven consecutive years through the term of the Ticket Agreement) and (2)
"System Tickets" and "Matching Tickets" which are not subject to any cap
throughout the term of the Ticket Agreement.
Tickets sold to Karabu pursuant to the Ticket Agreement shall be
priced at various levels which are intended to approximate current competitive
discount fares available in the airline industry. Considering the number of
restrictions placed on Karabu's resale of tickets to the public, this agreement
is intended to produce net incremental revenue to TWA. No commissions will be
paid by TWA for tickets sold under the Ticket Agreement, and in general these
tickets may not be marketed through travel agents. In addition, no ticket shall
be included with an origin or destination of St. Louis nor shall any ticket
include flights on
- 19 -
<PAGE> 22
other carriers. Tickets sold pursuant to this Agreement shall be at fares
specified in said Agreement, net to TWA, and shall be exclusive of tax.
Domestic Consolidator Tickets sold under the Ticket Agreement are
limited to certain origin/destination city markets in which TWA has less than a
5% market share, except for the origin city/New York market, which has a 10%
market share limit. These restricted markets will be reviewed from time to time
to determine any change in TWA's market share, and other markets may be
designated as necessary.
The purchase price for the tickets purchased by Karabu shall either,
at Karabu's option, be retained by Karabu and the amount so retained shall be
credited as prepayments against the outstanding balance of the Icahn Loans, or
be paid over to the Settlement Trust by Karabu for TWA's account as prepayments
on the PBGC Notes as defined within the Prospectus.
Pursuant to various agreements under the '93 Reorganization: (i) the
Company's Pension Plans were assumed by Pichin Corporation, a Delaware
corporation and an Icahn Entity and (ii) the Company issued three promissory
notes in the aggregate principal amount of $300 million to a trust for the
benefit of the Pension Plans in full satisfaction of all of TWA's obligations
with respect to the Pension Plans and in full settlement of the approximately
$1.1 billion PBGC claim. Mr. Icahn has advised TWA that Pichin Corporation is
entitled to terminate the Pension Plans in a non-standard termination at any
time after January 1, 1995, however has agreed to forebear through December 31,
1995. Since TWA's liability in respect of its former obligations to the
Pension Plans is reflected solely by the PBGC Notes, termination of the Pension
Plans by Pichin Corporation should not, in and of itself, give rise to any
additional obligations on the part of the Company in respect thereof.
TWA reached an agreement with representatives of ALPA, the
International Association of Machinists and Aerospace Workers ("IAM"), and the
Independent Federation of Flight Attendants ("IFFA"), that provided for the
deferral of the Company's obligation to make the 1994 pension contribution
payment to June 20, 1995. In addition, commencing on July 1, 1995 and
continuing each month thereafter, TWA is required to make specified monthly
contributions to such plans aggregating on an annual basis approximately 2% of
W-2 earnings of covered employees (estimated by the Company to be approximately
$15.6 million in respect of 1995).
LITIGATION AND CLAIMS
For a description of the potential effect on the Company's future
liquidity and operating results of the settlement of certain administrative
expense claims, see discussion in "Part II. Other Information -- Item 1.
Legal Proceedings."
- 20 -
<PAGE> 23
CAPITAL RESOURCES
TWA has renegotiated the purchase agreements (collectively, the "AVSA
Agreement") previously entered into with AVSA, S.A.R.L. ("AVSA"), a subsidiary
of Airbus Industries, C.I.E., relating to the purchase of certain A330 aircraft
and engines, modules and spare parts to support those aircraft. TWA and AVSA
have entered into letter agreements and amendments (collectively, the
"Amendments"), which modified certain terms of the AVSA Agreement, including
the quantities of A330 aircraft to be acquired by TWA. As a result of the
Amendments, TWA now has on order 10 "firm" aircraft as well as options for an
additional 10 aircraft.
During July 1995 TWA and AVSA amended the AVSA Agreement to reschedule
the delivery dates for the 10 "firm" Aircraft and the ten "option" Aircraft.
Current delivery schedules call for the 10 "firm" aircraft to be delivered
commencing in April of 1999 through September 2000. Additionally, delivery
dates for the "option" aircraft have been rescheduled to commence in December
1999 through April 2001, subject to TWA's exercise thereof.
In accordance with the AVSA Agreement, TWA was to have resumed
issuance of promissory notes to AVSA in the aggregate principal amount of $17.0
million between January and April 1995, but that requirement was subsequently
postponed. As a result of the rescheduling of delivery dates, the requirement
to resume issuance of promissory notes was deferred until April 1996, and TWA
agreed to make a cash payment on October 1, 1996 in the principal amount of
$893,025 plus interest.
TWA has not yet made arrangements for the permanent financing of the
A330 aircraft ordered pursuant to the AVSA Agreement. In the event of
cancellation of the AVSA Agreement, prepayments amounting to approximately $14
million would be subject to forfeiture.
TWA has also renegotiated the agreements (collectively, the "Equipment
Agreement") with Rolls-Royce plc ("RR") relating to the purchase of RR Trent
772 engines, modules, and spare parts to support the A330 aircraft described
above. During July 1995, RR consented to the deferral and rescheduling by TWA
and AVSA of A330 aircraft delivery dates, which will defer performance by RR
under the Equipment Agreement. In the event of cancellation of the Equipment
Agreement, predelivery payments amounting to approximately $3.9 million made by
TWA with respect to the Equipment Agreement would be subject to forfeiture.
In March 1995, the Company consummated agreements for lease and debt
restructuring with regard to eight aircraft owned and mortgaged by TWA and two
aircraft leased to TWA. This resulted in the release of one aircraft from
existing mortgage and transfer of title to the Company of two aircraft formerly
leased to the Company, cancellation of approximately $8.5 million in debt,
approximately $8.6 million of capital lease obligation and deferral of certain
rentals. This restructuring also resulted in title to seven aircraft being
transferred and leased back by TWA. A
- 21 -
<PAGE> 24
security interest in the aircraft transferred to TWA was given to secure the
leases.
In July 1995, the Company finalized the lease of three additional
MD-83 aircraft, two of which were delivered to TWA during the third quarter.
The third aircraft was delivered during October 1995. The lease terms are for
nine years from the respective delivery dates. TWA has returned one B727 and
one L1011 aircraft to their lessors during 1995 upon termination of their
respective lease terms. TWA continues to pursue acquisition of additional
aircraft which complement its fleet plan as new market opportunities become
available.
In order to comply with Federal Aircraft Noise Regulations, the
Company's Board of Directors has authorized the expenditure of approximately
$78.1 million during 1996 for installation of engine "hush-kits" on 39 DC-9
aircraft currently in the Company's fleet. By December 31, 1996, hush-kits
must be installed on 28 of these aircraft. The Company is negotiating various
financing options to fund the majority of such expenditure.
The FAA is requiring and is expected to continue to require
inspection, modification and/or replacement of certain aircraft parts, as well
as the implementation of additional maintenance programs or changes to current
programs, with respect to various types of aircraft over a certain age. These
requirements vary, depending on the type of aircraft covered. In 1993 and
1994, TWA spent approximately $8.5 million and $5.7 million, respectively, to
comply with those requirements. Based on information currently available to
TWA and its current fleet plan, TWA estimates that costs associated with
complying with these FAA requirements may approximate $8.4 million in 1995,
$8.4 million in 1996, $2.9 million in 1997, $1.4 million in 1998, $1.8 million
in 1999, and $3.2 million beyond 1999. These cost estimates assume, among
other things, that newer aircraft will replace certain of TWA's existing
aircraft and as a result the average age of TWA's fleet will be significantly
reduced. There can be no assurance that TWA will be able to fully implement
its fleet plan.
CERTAIN OTHER CAPITAL REQUIREMENTS. Expenditures for facilities and
equipment, other than aircraft, generally are not committed prior to purchase
and, therefore, no such significant commitments exist at the present time.
TWA's ability to finance such expenditures will depend in part on TWA's
financial condition at the time of the commitment.
TWA cannot predict whether or to what extent any change in its planned
capital expenditures may adversely affect its future ability to operate or its
financial condition. In addition, if TWA were to acquire further additional
aircraft, as it currently plans to do, it cannot predict how any such
acquisitions, together with the related obligations to make rental payments or
repay any indebtedness incurred in connection therewith, ultimately may affect
its profitability and relative market share.
- 22 -
<PAGE> 25
RESULTS OF OPERATIONS
Significant variations in annual operating revenues and operating
expenses have been experienced historically by TWA and are expected to occur in
the future. While numerous uncertainties concerning the level of revenues and
expenses always exist, the nature of such uncertainties is constantly changing,
and it is not possible to predict the potential impact of any of such
uncertainties upon TWA's income from operations. Among the uncertainties that
might adversely impact TWA's future earnings are: (i) competitive pricing
initiatives; (ii) competitive flights added by competing airlines; (iii)
changes in the cost of fuel; (iv) reduced levels of air passenger traffic
resulting from war, threat of war, international terrorism and changes in the
economy and (v) limitations on the ability of TWA to service certain airports
as a result of noise abatement practices or regulations imposed on carriers
operating at such airports. These are only some of the risks for TWA and the
airline industry.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995
The operating profit of $45.8 million for the quarter ended September
30, 1995 was $11.1 million better than the operating profit of $34.7 million in
the third quarter of 1994. The 1995 operating profit includes a $56.2 million
charge primarily related to the distribution of stock to employees as part of
the Company's financial restructuring. The net loss of $82.0 million for the
third quarter of 1995 was $74.0 million higher than the net loss of $8.0
million for the third quarter of 1994. This increased net loss is directly
attributable to non-recurring charges resulting from TWA's emergence from
bankruptcy on August 23, 1995. Such charges, in addition to the $56.2 million
charge to operating expenses mentioned above, include $242.2 million in
reorganization items included in other charges (credits), offset by an
extraordinary gain related to debt extinguishment of $140.9 million.
Total operating revenues of $959.4 million for the third quarter of
1995 were $30.9 million (3.1%) less than the comparable 1994 period. The
decrease was primarily reflected in non-transport revenues which were $27.6
million lower than in 1994 due primarily to the absence of subsidiary
companies, which were sold in the third and fourth quarters of 1994. The
decrease was also affected by a decline in tour operation revenues. TWA
passenger revenues for the third quarter of 1995 increased $5.0 million over
1994, however this increase was offset by a $6.5 million decrease in the
passenger revenues of TWE.
System capacity, as measured by available seat miles (ASM's) in
scheduled service, decreased 4.8% during the third quarter of 1995 as compared
to 1994 (reflecting a decrease in international capacity of 11.2% and an
increase in domestic capacity of 1.8%). Passenger traffic volume, as measured
by revenue passenger miles (RPM's) in scheduled service, during the third
quarter of 1995
- 23 -
<PAGE> 26
decreased 2.0% compared to the same period of 1994. International traffic
decreased 5.1% while domestic traffic decreased slightly (.36%). TWA's yield
per passenger mile for the third quarter of 1995 increased 2.6% over the
comparable 1994 period to 11.25 cents from 10.96 cents (reflecting a domestic
increase of 4.1% to 12.75 cents from 12.25 cents and an international decrease
of 2.8% to 8.29 cents from 8.66 cents).
Passenger load factor for the third quarter ended September 30, 1995
was 69.9% compared to 67.9% in the same period of 1994. The breakeven
passenger load factor for the third quarter of 1995 decreased to 62.8% as
compared to 67.6% for the third quarter of 1994.
Operating expenses of $913.6 million in the third quarter of 1995
decreased $42.0 million (4.4%) compared to the third quarter of 1994
representing a net change in the following expense groups:
Employment costs for the third quarter of 1995 were $31.5 million
(9.8%) less than 1994 primarily due to a decrease in the average number of
employees. The average number of employees during the third quarter of 1995
was 23,126 compared to 25,216 during 1994.
During the third quarter of 1995, the Company distributed shares of
stock to employees as part of its financial restructuring, which together with
certain other non-cash compensation charges resulted in an aggregate charge of
$56.2 million to operating expense. For a further discussion of this charge
and future charges related to non-cash compensation, see Item 1, Notes to
Consolidated Statements.
Aircraft fuel and oil expense in the third quarter of 1995 was $10.8
million (8.1%) less than the third quarter of 1994. The decrease is
attributable to a 6.1% decrease in fuel consumption related to the reduced
system capacity, and a reduction in the average price per gallon to 55.39
cents from 56.62 cents.
Passenger sales commission expense was $7.3 million (8.6%) lower in
the third quarter of 1995 compared to 1994. The decrease is principally due to
a reduction in the commission rate on international tickets.
Aircraft maintenance materials and repairs decreased $4.3 million
(12.3%) in the third quarter of 1995 compared to 1994. The reduction is
primarily due to a decrease in the active number of aircraft from 194 in 1994
to 185 in 1995.
Depreciation and amortization decreased $8.6 million (17.8%) in the
third quarter of 1995 compared to 1994. The decrease is principally due to the
return of two leased aircraft and the sale (and simultaneous leaseback) of five
B727 and two B747 aircraft since the beginning of 1995.
- 24 -
<PAGE> 27
Operating lease rental expenses decreased $1.3 million for the third
quarter of 1995 compared to the same period during 1994. The quarterly expense
was $68.7 million and $70.0 million for 1995 and 1994, respectively.
Passenger food and beverage expense decreased $9.1 million (25.5%) in
the third quarter of 1995 compared to 1994, primarily as a result of decreased
international traffic and cost savings as a result of the closing of the JFK
and Los Angeles dining units in the fourth quarter of 1994.
Special charges of $1.7 million were recorded in the third quarter of
1995 for shut-down related expenses of Trans World Express.
All other operating expenses were $13.8 million (6.4%) lower in the
third quarter of 1995 as compared to 1994, primarily due to operating
subsidiaries sold in 1994 and the decrease in the level of TWE's operations.
Other charges (credits) were a net charge of $268.8 million in the
third quarter of 1995 compared to $42.9 million in 1994. This unfavorable
change of $225.9 million was due to a non-recurring $242.2 million charge
related to the Company's restructuring, offset by a $21.5 million decrease in
interest expense.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
The Company's operating profit of $24.0 million for the nine months
ended September 30, 1995 represented an $87.5 million improvement over the
operating loss of $63.5 million during the same period of 1994. The 1995
operating profit includes a $56.2 million charge primarily related to the
distribution of stock to employees as part of the Company's financial
restructuring. The net loss of $199.7 million for the first nine months of
1995 was $9.1 million unfavorable to the net loss of $190.6 million for the
first nine months of 1994. The increase in the net loss is directly
attributable to non-recurring charges resulting from TWA's emergence from
bankruptcy on August 23, 1995. Such charges, in addition to the $56.2 million
charge to operating expenses mentioned above, include $242.2 million in
reorganization items included in other charges (credits), offset by an
extraordinary gain related to debt extinguishment of $140.9 million.
Total operating revenues of $2,512.2 million for the first nine months
of 1995 were $123.2 million (4.7%) less than the comparable 1994 period,
primarily due to a $77.9 million (25.7%) decrease in non-transport revenues.
The decrease in non-transport revenues was primarily related to the absence of
certain subsidiary companies which were sold in the third and fourth quarters
of 1994. The change in operating revenues also reflects decreases of $40.7
million (1.8%) in passenger revenues and $11.6 million (19.6%) in tour
operation revenues.
- 25 -
<PAGE> 28
System capacity, as measured by available seat miles (ASM's) decreased
3.6% during the first nine months of 1995 compared to 1994. International
capacity decreased 13.7% due to the termination of flights to several
international destinations while domestic capacity increased slightly (.70%).
During the first nine months of 1995, system passenger traffic volume, as
measured by revenue passenger miles (RPM's) in scheduled service improved
slightly (.34%), the result of a decrease in international traffic by 6.2% and
an increase in domestic traffic by 2.3%.
Passenger load factor for the nine months ended September 30, 1995 was
66.5% compared to 64.3% in the same period of 1994. The breakeven passenger
load factor for the first nine months of 1995 declined to 67.2% as compared to
71.4% for 1994.
Operating expenses of $2,488.3 million in the first nine months of
1995 decreased $210.6 million (7.8%) compared to the first nine months of 1994
representing a net change in the following expense groups:
Employment costs for the first nine months of 1995 were $115.4 million
(11.9%) less than 1994 due to a decrease in the average number of employees.
The Company had an average of 22,814 employees during the first nine months of
1995 compared to 25,924 in 1994.
During the third quarter of 1995, the Company distributed shares of
stock to employees as part of its financial restructuring, which together with
certain other non-cash compensation charges resulted in an aggregate charge of
$56.2 million to operating expense. For a further discussion of this charge
and future charges related to non-cash compensation, see Item 1, Notes to
Consolidated Statements.
Aircraft fuel and oil expense in the first nine months of 1995 was
$24.9 million (6.9%) less than 1994 primarily due to a 6.4% decline in fuel
usage and a nominal decrease in the average price per gallon of fuel to 55.5
cents from 55.8 cents per gallon.
Passenger sales commission expense was $11.6 million (5.3%) lower in
the first nine months of 1995 compared to 1994 due to decreases in passenger
revenue and commissionable sales in addition to a reduction in the commission
rate on international tickets.
Aircraft maintenance materials and repairs expense decreased $5.8
million (5.2%) in the first nine months of 1995 compared to 1994. The decrease
is primarily due to the decrease in the active number of aircraft from 194 in
1994 to 185 in 1995.
Depreciation and amortization decreased $21.1 million (14.9%) in the
first nine months of 1995 compared to 1994, generally due to the normal decline
in depreciation as property reaches the end of its projected economic life and
the sale (and simultaneous leaseback) of five B727 and two B747 aircraft in
March 1995.
- 26 -
<PAGE> 29
Operating lease rentals were $11.0 million more in the first nine
months of 1995 compared to 1994, primarily due to a net increase in the average
number of aircraft under operating lease.
Special charges of $1.7 million were recorded in the third quarter of
1995 for shut-down related expenses of Trans World Express.
Passenger food and beverage expenses decreased $19.7 million (20.3%)
in the first nine months of 1995 compared to 1994, primarily as a result of
decreased international traffic and cost savings as a result of the closing of
the JFK and Los Angeles dining units in the fourth quarter of 1994.
All other operating expenses were $67.7 million (11.4%) lower in the
first nine months of 1995 as compared to 1994, primarily because of the
operating subsidiaries sold in 1994 ($31.7 million) and the termination of
flights to certain international destinations.
Other charges (credits) were a net charge of $364.6 million in the
first nine months of 1995 compared to $124.0 million during the same period of
1994. This unfavorable change of $240.6 million was primarily due to a $242.2
million non-recurring charge related to the Company's restructuring.
Additionally, interest expense declined by $11.8 million in the first nine
months of 1995 compared to 1994 and TWA's share of net earnings of Worldspan
increased $1.2 million in 1995 over 1994.
- 27 -
<PAGE> 30
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS *
1993 Reorganization Proceedings. The Registration Statement, the 1994
10-K and Form 10-Q for the quarterly periods ended March 31, 1995 and June 30,
1995, describe in detail matters related to the '93 Reorganization which began
on January 31, 1992 when TWA filed a voluntary petition for relief under
Chapter 11 in the Delaware Bankruptcy Court. All claims that were before the
Delaware Bankruptcy Court in the '93 Reorganization have been resolved,
provided certain claims being liquidated in a non-bankruptcy forum continue to
be processed after which time, some such claims may result in distributions
made in accordance with the Company's plan of reorganization filed in the '93
Reorganization (the "'93 Plan") as impacted by the plan of reorganization filed
June 30, 1995, as hereafter discussed in greater detail (the "'95 Plan"), as
modified. That is, ultimately some such claims may result in distributions
under the '95 Plan, as modified.
In addition to the foregoing, certain claims have been asserted as
administrative expense claims against TWA's estate in the '93 Reorganization.
Administrative expense claims are those postpetition expenses defined in
Section 503 of the Bankruptcy Code. Such claims are for, among other things,
aircraft return condition, unpaid rent and professional fees. TWA believes
that many such administrative expense claims are substantially overstated and
that those for aircraft return conditions relating to aircraft subject to
rejected leases are not entitled to administrative expense treatment. TWA has
filed objections to some alleged administrative claims. An allowed
administrative claim requires a cash payment pursuant to the terms of the '93
Plan and the '95 Plan, as modified. TWA has accrued amounts which it believes
will be adequate to satisfy such claims. TWA expects that payments of
administrative expense claims in 1995 could be as much as $2.8 million.
On June 21, 1995 the Delaware Bankruptcy Court entered an order finding
the bankruptcy estate had been fully administered and entered a final decree
closing this case.
1995 Reorganization Proceedings. As discussed in the 1994 10-K, on
October 11, 1994, the Company filed a Registration Statement on Form S-4 with
the SEC and announced a proposed plan of recapitalization for the Company. The
Registration Statement, as amended, was declared effective May 12, 1995. The
recapitalization of the Company was proposed to be accomplished through either
(i) an out-of-court restructuring (the "Out-of-Court Restructuring")
- 28 -
<PAGE> 31
consisting of the proposed exchange of certain of the Company's outstanding
debt securities for new notes, debt and/or equity, a recapitalization of the
Company's outstanding preferred stock and a reverse stock split of currently
outstanding common shares which would substantially dilute the ownership of
existing common stockholders or (ii) the '95 Plan, pursuant to the Bankruptcy
Code encompassing (as it relates to the owners of such securities) generally
the same elements as the foregoing and for which acceptances were sought.
The solicitation period for the Out-of-Court Restructuring and the '95
Plan ended on June 27, 1995. On June 28, 1995, the Company announced that it
had received sufficient acceptances from the holders of impaired claims and
equity securities to effectuate the '95 Plan, but not enough tenders to
effectuate the Out-of-Court Restructuring.
Following authorization by its Board of Directors, the Company filed
its Chapter 11 petition with the United States Bankruptcy Court for the Eastern
District of Missouri, Eastern Division (the "Court") on June 30, 1995 (In Re:
Trans World Airlines, Inc., Debtor, Case No. 95-43748- 399). Also on that
date, the Company filed with the Court the '95 Plan and the final Registration
Statement which included a Proxy Statement/Prospectus, Solicitation of Proxies,
Offers to Exchange, Offering of Common Stock and Employee Preferred Stock,
Solicitation of Consents and Solicitation of Acceptances (collectively the
"Prospectus"). Further, the Company filed a motion requesting the Court to
set a hearing date on approval of the solicitation process, adequacy of
disclosure and confirmation of the '95 Plan and certain other matters. The
Court set August 2, 1995 as the hearing date on these matters. Additionally,
on June 30, 1995, the Company filed and the Court granted several motions to
allow the Company to continue to operate in the ordinary course of business
during the Chapter 11 case and to pay most of its pre- petition ordinary course
liabilities, other than those related to the impaired claims and equity
interests as provided for within the '95 Plan. These pleadings included
authorization for the Company to pay prepetition wage and employee benefits,
and trade creditor's claims, honor prepetition tickets, continue the use of its
cash management system, assume executory contracts and unexpired leases with
certain parties and to use cash collateral. The Court also entered an order
implementing the automatic stay under the Bankruptcy Code, with exceptions for
certain labor-related proceedings, certain workers' compensation proceedings
and pending proceedings from the Company's prior bankruptcy case.
On July 14, 1995 and August 2, 1995, the Company filed with the Court
modifications to the '95 Plan. In connection with each of the modifications
the Company requested the Court to find that the modifications did not
adversely change the treatment to be received on account of the claim or equity
interest of any holder
- 29 -
<PAGE> 32
under the '95 Plan, that all holders that had accepted the '95 Plan prior to
the modifications be deemed to have accepted the '95 Plan, as so modified, and
that no additional disclosure was required.
On August 4, 1995, the Court entered an order approving the Company's
solicitation process for the '95 Plan and the adequacy of disclosure related to
the '95 Plan, making the findings requested by the Company relating to the
modifications and confirming the '95 Plan, as modified (the "Findings of Fact,
Conclusions of Law and Order Confirming Modified Joint Plan of Reorganization"
or the "Confirmation Order").
The Prospectus describes the '95 Plan in considerable detail. The
description of the restructuring herein is intended only to inform of the
existence of the '95 Plan, and modifications thereto, and the Prospectus
pursuant to which, among other things, solicitation of consents to the '95 Plan
was conducted. Any statement herein concerning the '95 Plan or the Prospectus
is qualified in its entirety by the more detailed information appearing in the
'95 Plan, the Prospectus, the Appendices thereto, and the other documents
referenced therein.
As a result of the '93 Plan, the ownership of the Common Stock of the
Company was divided between various TWA employee trusts (which received
approximately 9,000,000 shares, or 45% of the total outstanding) and the
Company's unsecured creditors (who received approximately 11,000,000 shares, or
55% of the total). In order to achieve a balance between the significant equity
ownership and voting rights of the employee trusts, on the one hand, and the
unsecured creditors, on the other hand, the approximately 11,000,000 shares
designated for the unsecured creditors were placed in a Voting Trust created
under a Voting Trust Agreement (the "Voting Trust Agreement"), under which
LaSalle National Trust, N.A. ("LaSalle" or the "Voting Trustee") was named the
trustee. In lieu of certificates for Common Stock, the unsecured creditors
received Voting Trust Certificates ("VTCs") issued pursuant to the Voting Trust
Agreement, representing beneficial ownership of the shares of Common Stock
placed in the Voting Trust. The Voting Trust Agreement provided that the
Voting Trustee would vote all approximately 11,000,000 shares of the Common
Stock with respect to any matter requiring a vote in the manner set forth
therein.
The '95 Plan, as modified, provided for, among other things, the
Voting Trustee to receive in exchange for each share of Common Stock held in
the Voting Trust (a) 0.0213 shares of new Common Stock of the Company, (b)
0.0246 Warrants and (c) 0.0107 Equity Rights. Pursuant to the '95 Plan, all
shares of old Common Stock were canceled, and the Voting Trustee, as a holder
of old Common Stock, was to receive a distribution of the new Common Stock,
Warrants and Equity Rights, while the VTCs would continue to represent the
beneficial ownership of the securities for which the old Common Stock was
exchanged.
- 30 -
<PAGE> 33
Because, as a result of the confirmation of the '95 Plan, the Voting
Trustee was to become the holder of less than 1.0% of the aggregate outstanding
voting shares of new Common Stock of the Company, it became apparent after
confirmation that the Voting Trust would no longer serve the purpose for which
it was created. Therefore, at the request of certain holders of VTCs, the
Company and LaSalle sought an order from the Bankruptcy Court authorizing the
cancellation of the Voting Trust Agreement and the VTCs and authorizing the
Company to make the distribution otherwise owing to the Voting Trustee as a
holder of old Common Stock to the Voting Trustee solely as the Disbursing Agent
for making further distribution of the securities directly to the record
holders of VTCs.
On August 17, 1995, the Bankruptcy Court entered an order approving the
request made by LaSalle and the Company. Accordingly, on the Effective Date of
the '95 Plan, the Company distributed the new Common Stock, Warrants and Equity
Rights to be exchanged for old Common Stock held by the Voting Trust to LaSalle
as a Disbursing Agent, for further distribution to the holders of record of
VTCs, and the Voting Trust Agreement (except for the provisions thereof
relating to distribution, indemnity and compensation) and the VTCs issued
thereunder were canceled.
Other Actions. On June 28, 1995, a Motion for Judgment was filed in the
Circuit Court for the County of Loudoun, Virginia against Trans World Express,
Inc., a wholly-owned second-tier subsidiary of the Company (British Aerospace
Holdings, Inc., and Jet Acceptance Corporation, Plaintiffs v. Trans World
Express, Inc., Defendant, Law No. 16633). The action sought damages for breach
of leases of eight Jet Stream J-31 aircraft and a spare parts lease and claimed
damages on various contract theories. This case has been concluded by a
voluntary dismissal filed by the plaintiffs. TWA was not a party to this
litigation and had no obligation for the same, by guarantee or otherwise.
In February of 1995, a number of actions were commenced in various
federal district courts against TWA and six other major airlines alleging that
the companies conspired and agreed to fix, lower and maintain travel agent
commissions on the sale of tickets for domestic air travel in violation of the
United States antitrust laws. Generally the complaints in these actions seek
treble damages and injunctive relief on behalf of a nationwide class of travel
agents. Certain of these actions also claim violations of various state laws.
TWA believes that these cases are without merit. On May 9, 1995 TWA announced
settlement, subject to court approval, of the referenced actions and reinstated
the traditional 10 percent commission on domestic air fares. A final
appealable court order has not yet been entered, however there has been entered
an interim order approving the settlement.
- 31 -
<PAGE> 34
Certain other specific claims, complaints and legal proceedings were
discussed in the 1994 10-K. Other than as noted herein, there have been no
material developments in any such other proceedings since filing of the 1994
10-K.
*All terms not otherwise defined herein, or otherwise in this report, are as
set forth and defined within the Registration Statement or within the 1994
10-K.
ITEM 2. CHANGES IN SECURITIES
The Company proposed a financial restructuring (the "Restructuring")
in order to reduce or satisfy certain of the Company's current and future
financial obligations. As discussed above, on October 11, 1994 the Company
filed the Registration Statement in connection with its current financial
reorganization in accordance with the Securities Act of 1933. That
registration statement was amended from time to time before being declared
effective on December 30, 1994. There have also been filed post-effective
amendments to that registration statement, the last of which was Post-Effective
Amendment No. 6 filed with the Securities and Exchange Commission on May 11,
1995. There have also been filed a second registration statement and certain
pre-effective amendments to the second registration statement. Following the
filing of the second registration statement, subsequent filings for the initial
registration statement were incorporated as a part thereof. The final
Registration Statement was declared effective on May 12, 1995. As described
above, such filing by the Company related to a proposed restructuring through
either (i) the Out-of-Court Restructuring, itself consisting of the herein
described proposed exchange of certain of the Company's outstanding debt
securities for new notes, debt and/or equity and a recapitalization of the
Company's outstanding preferred stock or (ii) the '95 Plan encompassing (as it
relates to the holders of such securities) generally the same elements as the
Out-of-Court Restructuring and for which acceptances were sought pursuant to
the Prospectus. The Company having received sufficient acceptances from the
holders of impaired claims and equity securities to effectuate the '95 Plan,
filed with the Court a Chapter 11 petition along with the '95 Plan and the
Prospectus on June 30, 1995. (See "Part II. Item 1. Legal Proceedings" above).
The restructuring resulted in the cancellation of all of the Companys'
outstanding capital stock and certain of its outstanding indebtedness in
exchange for new securities and other consideration issuable pursuant to the
'95 Plan, as modified, as of the effective date of the '95 Plan.
The Prospectus describes in considerable detail the proposed
Restructuring. The Restructuring is also described in the 1994 10-K.
- 32 -
<PAGE> 35
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The 1994 10-K and Form 10-Q filed for the quarterly period ended June
30, 1995 described certain matters related to the Company's then outstanding
10% Senior Secured Notes due 1998 (the "10% Notes"), the 8% Notes and the
Company's 11% Senior Secured Notes due 1997 (the "11% Notes"). The Prospectus
describes in considerable detail the effect of the '95 Plan upon the 10% Notes
and the 8% Notes.
With regard to the 11% Notes, on March 31, 1995, the Company failed to
make an approximately $4.5 million mandatory sinking fund payment. Under the
11% Notes Indenture, such failure to pay is an "Event of Default" permitting
the acceleration of such 11% Notes by the holders of at least 25% in principal
amount of such 11% Notes or by the 11% Notes trustee on its own volition or
upon instruction of the holders of at least 25% in principal amount of such 11%
Notes. On March 31, 1995, a letter of credit was established in the amount of
$4,565,189.00, representing the 11% Notes principal payment due on March 31,
1995 plus interest through June 1, 1995. On June 2, 1995 the full amount was
drawn on the letter of credit and such letter of credit is no longer in effect.
The Company has made all payments due under the 11% Notes Indenture since June
2, 1995.
Pursuant to Section 6.02 of the 11% Notes Indenture, the occurrence of
an Event of Default as a result of the commencement by the Company of a
voluntary bankruptcy case causes an automatic acceleration of the due date of
all principal and interest on the 11% Notes. However, the '95 Plan, as
modified, provides for the rescinding of such acceleration and the
reinstatement of the original scheduled maturity of the 11% Notes. The Company
has entered into an amendment to the Indenture and the Pledge and Security
Agreement securing the 11% Notes in connection with the '95 Plan. These
amendments permit a substitute subordinate Lien on the Collateral securing the
11% Notes in favor of the 12% Notes to be issued pursuant to the 12% Notes
Indenture (as defined in the '95 Plan) in lieu of the subordinate Lien on the
Collateral which had secured TWA's 10% Notes.
The Prospectus describes in considerable detail the effect the '95 Plan
has upon the Company's former and current senior securities and the matters
described in this Item 3.
ITEM 5. OTHER INFORMATION
On September 5, 1995, the Board of Directors of TWE unanimously voted
in favor of liquidation of TWE and also voted to discontinue operations
effective as of November 6, 1995. TWA Group, Inc., a wholly owned subsidiary
of TWA, Inc., as sole
- 33 -
<PAGE> 36
shareholder of TWE, approved the Board's decision. TWE is proceeding with an
orderly liquidation.
The Board of TWE also approved the sale to Trans States of the IFR
take-off and landing commuter slots owned by TWE. Trans States will endeavor
to provide feeder service into TWA's JFK hub beginning on November 7, 1995.
TWA has inaugurated service or has announced inauguration of jet
service to Jackson, Mississippi and Reno, Nevada as of October 1, 1995, Mexico
City as of October 29, 1995 and Santa Domingo, Dominican Republic on December
1, 1995. In addition, on various dates in December 1995, jet service is to
commence to Cancun, Puerto Vallarta, Zihuatenejo, Mexico and Montego Bay,
Jamaica. A tour operator, Apple Vacations, has purchased the majority of the
seats on the flights described in the previous sentence. The expansion of
service into Mexico is part of a program to make the Company's flight
operations less seasonal. All new destinations, with the exception of Santa
Domingo, will be served from St. Louis. Santa Domingo will be served from JFK.
In July 1995 TWA reached agreement for the lease of three new MD-83
aircraft. Two of these aircraft were delivered to TWA during the third quarter.
The third aircraft was delivered to TWA in October 1995. The first aircraft
entered service in September 1995, the second aircraft entered service in
October 1995, and the third aircraft is scheduled to enter service in November
1995. The Company also intends to take possession of one B-767-231ETOPS
aircraft prior to January 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
*2.1.1 Second Amended Plan of Reorganization, dated May 28, 1993
(Exhibit 28.1 to 6/93 8-K)
*2.1.2 Modifications to the Second Amended Plan of Reorganization,
dated August 10, 1993; Supplemental Modifications to the
Second Amended Plan of Reorganization, dated August 11,
1993; and Second Supplemental Modifications to the Second
Amended Plan of Reorganization, dated August 12, 1993
(Exhibit 2.1 to 6/93 10-Q)
*2.2 Confirmation Order, dated August 12, 1993, with Exhibits
A-L attached (Exhibit 2.2 to 6/93 10-Q)
*2.3 Final Decree, dated June 21, 1995, related to the '93
Plan (Exhibit 2.3 to 6/95 10-Q)
- 34 -
<PAGE> 37
*2.4 Joint Plan of Reorganization, dated May 12, 1995
(Appendix B to the Prospectus herein, as amended.)
*2.5 Modifications to Joint Plan of Reorganization, dated
July 14, 1995 and Supplemental Modifications to Joint
Plan of Reorganization dated August 2, 1995 (Exhibit
2.5 to 6/95 10-Q)
*2.6 Findings of Fact, Conclusions of Law and Order
Confirming Modified Joint Plan of Reorganization,
dated August 4, 1995, with Exhibits A-B attached
(Exhibit 2.6 to 6/95 10-Q)
*3(i) Amended and Restated Certificate of Incorporation of
Trans World Airlines, Inc. (Exhibit 3.1.3 to
Post-Effective Amendment No. 3 to the Prospectus,
itself described herein as Exhibit 99.1.9
*3(ii) Amended and Restated By-Laws of Trans World Airlines,
Inc., effective July 25, 1995 (Exhibit 3(ii) to 6/95
10-Q)
*4.1 Voting Trust Agreement, dated November 3, 1993,
between TWA and LaSalle National Trust, N.A. as
trustee (Exhibit 4.3 to 9/93 10-Q)
*4.2 IAM Trans World Employees' Stock Ownership Plan and
related Trust Agreement, dated August 31, 1993,
between TWA, the IAM Plan Trustee Committee and the
IAM Trustee (Exhibit to 9/93 10-Q)
*4.3 IFFA Trans World Employees' Stock Ownership Plan and
related Trust Agreement, dated August 31, 1993,
between TWA, the IFFA Plan Trustee Committee and the
IFFA Trustee (Exhibit 4.5 to 9/93 10-Q)
*4.4 Trans World Airlines, Inc. Employee Stock Ownership
Plan, dated August 31, 1993, First Amendment thereto,
dated October 31, 1993, and related Trust Agreement,
dated August 31, 1993, between TWA and the ESOP
Trustee (Exhibit 4.6 to 9/93 10-Q)
*4.5 ALPA Stock Trust, dated August 31, 1993, between TWA
and the ALPA Trustee (Exhibit 4.7 to 9/93 10-Q)
*4.6 Stockholders Agreement, dated November 3, 1993, among
TWA, LaSalle National Trust, N.A., as Voting Trustee
and the ALPA Trustee, IAM Trustee, IFFA Trustee and
Other Employee Trustee (each as defined therein), as
amended by the Addendum to Stockholders dated
November 3, 1993 (Exhibit 4.8 to 9/93 10-Q)
- 35 -
<PAGE> 38
*4.7 Registration Rights Agreement, dated November 3,
1993, between TWA and the Initial Significant Holders
(Exhibit 4.9 to 9/93 10-Q)
*4.8 Indenture between TWA and Shawmut Bank, National
Association, dated November 3, 1993 relating to
TWA's 10% Senior Secured Notes Due 1998 (Exhibit 4.10
to 9/93 10-Q)
*4.9 Indenture between TWA and Harris Trust and Savings
Bank, dated November 3, 1993 relating to TWA's 8%
Senior Secured Notes Due 2000 (Exhibit 4.11 to 9/93
10-Q)
*4.10 Indenture between TWA and American National Bank and
Trust Company of Chicago, N.A., dated November 3,
1993 relating to TWA's 8% Secured Notes Due 2001
(Exhibit 4.12 to 9/93 10-Q)
*4.11 Indenture between TWA and Shawmut Bank Connecticut,
National Association, dated November 3, 1993 relating
to TWA's 11% Senior Secured Notes Due 1997 (Exhibit
4.13 to 9/93 10-Q)
4.12 The TWA Air Line Pilots 1995 Employee Stock Ownership
Plan, effective as of January 1, 1995.
4.13 TWA Air Line Pilots Supplemental Stock Plan, effective
September 1, 1994.
4.14 TWA Air Line Pilots Supplemental Stock Plan Trust,
effective August 23, 1995.
4.15 TWA Air Line Pilots Supplemental Stock Plan Custodial
Agreement, effective August 23, 1995.
*10.1.1 Icahn Receivables Facility Loan documents, dated
January 5, 1993 (Exhibit 10(iv)(4) to '92 10-K)
*10.1.2 Icahn Asset-Based Facility Loan documents, dated
January 5, 1993 (Exhibit 10(iv)(5) to '92 10-K)
*10.2.1 Asset Purchase Agreement, dated as of November 4,
1993, between TWA and St. Louis (Exhibit 10.2 to 9/93
10-Q)
*10.2.2 Equipment Operating Lease Agreement, dated November
4, 1993, between TWA and St. Louis (Exhibit 10.2 to
9/93 10-Q)
- 36 -
<PAGE> 39
*10.2.3 Cargo Use Amendment, dated November 4, 1993 between TWA and
St. Louis (Exhibit F to the Asset Purchase Agreement)
(Exhibit 10.2 to 9/93 10-Q)
*10.2.4 Use Amendment 1993, dated November 4, 1993, between TWA and
St. Louis (Exhibit E to the Asset Purchase Agreement)
(Exhibit 10.2 to 9/93 10-Q)
*10.3.1 Amendment Number One to the Note Purchase and Security
Agreement, dated October 26, 1993, between TWA and
Rolls-Royce (Exhibit 10.3 to 9/93 10-Q)
*10.3.2 Amendment Number One to the Equipment Purchase Contract,
dated October 26, 1993, between TWA and Rolls-Royce
(Exhibit 10.3 to 9/93 10-Q)
*10.4 Amendment Number Two to the AVSA Agreement dated June
1, 1989 between TWA and AVSA, dated August 25, 1993
(Exhibit 10.4 to 9/93 10-Q)
*10.5.1 First Amendment to Aircraft Installment Sale Agreement,
dated November 1, 1993, among TWA, the Vendors, and ITOCHU
with respect to aircraft N605TW (Exhibit 10.5 to 9/93 10-Q)
*10.5.2 First Amendment to Aircraft Installment Sale Agreement,
dated November 1, 1993, among TWA, the Vendors, and ITOCHU
with respect to aircraft N603TW (Exhibit 10.5 to 9/93 10-Q)
*10.5.3 First Amendment to Security Agreement and Chattel Mortgage,
dated November 1, 1993, among TWA, the Vendors, and ITOCHU,
as to ITOCHU Amendment No. 1 (Exhibit 10.5 to 9/93 10-Q)
*10.5.4 First Amendment to Security Agreement and Chattel Mortgage,
dated November 1, 1993, among TWA, the Vendors, and ITOCHU,
as to ITOCHU Amendment No. 2 (Exhibit 10.5 to 9/93 10-Q)
*10.6.1 Deferral Agreement and First Amendment to Aircraft
Installment Sale Agreement No. 1, dated November 1, 1993,
among TWA, the Vendors, and ORIX with respect to aircraft
N601TW (Exhibit 10.6 to 9/93 10-Q)
*10.6.2 Deferral Agreement and First Amendment to Aircraft
Installment Sale Agreement, dated November 1, 1993, among
TWA, the Vendors, and ORIX with respect to aircraft N603TW
(Exhibit 10.6 to 9/93 10-Q)
- 37 -
<PAGE> 40
*10.6.3 First Amendment to Security Agreement and Chattel Mortgage,
dated November 1, 1993, among TWA, the Vendors, and ORIX,
as to ORIX Amendment No. 1 (Exhibit 10.6 to 9/93 10-Q)
*10.6.4 First Amendment to Security Agreement and Chattel Mortgage,
dated November 1, 1993, among TWA, the Vendors, and ORIX,
as to ORIX Amendment No. 2 (Exhibit 10.6 to 9/93 10-Q)
*10.7.1 Purchase Agreement, dated October 5, 1993, between TWA and
Pacific AirCorp 747, Inc. with respect to aircraft N93107
and N93108 (Exhibit 10.7 to 9/93 10-Q)
*10.7.2 Lease Agreement 107, dated October 5, 1993, between Pacific
AirCorp 747, Inc. and TWA with respect to aircraft N93107
(Exhibit 10.7 to 9/93 10-Q)
*10.7.3 Lease Agreement 108, dated October 5, 1993, between Pacific
AirCorp 747, Inc. and TWA with respect to aircraft N93108
(Exhibit 10.7 to 9/93 10-Q)
*10.8 '92 Labor Agreements (Exhibits 2.1, 2.2 and 2.3 to 9/92 8-K)
*10.9 Comprehensive Settlement Agreement, dated January 5, 1993
(Exhibit 10(iv)(1) to '92 10-K)
10.9.1 Omnibus Amendment and Supplement to Agreements between TWA
and Karabu Corp. dated as of March 28, 1994(1)
*10.10.1 Orders of the Bankruptcy Court, dated October 29, 1993 and
September 8, 1993, respectively, relating to employment and
severance of Glenn R. Zander (Exhibit 10.10 to '93 10-K)
*10.l0.2 Order of the Bankruptcy Court, dated January 12, 1993,
designating Glenn R. Zander and Robert H. H. Wilson as
Responsible Persons of TWA (Exhibit 10.10 to '93 10-K)
*10.10.3 Amended Letter Agreement, dated January 7, 1993, between
TWA and Glenn R. Zander relating to employment by TWA
(Exhibit 10.10 to '93 10-K)
*10.11 Amended Letter Agreement, dated January 7, 1993, between
TWA and Robert H. H. Wilson relating to employment by TWA
(Exhibit 10.11 to '93 10-K)
- 38 -
<PAGE> 41
*10.12 Agreement, dated January 6, 1994, between TWA and William
R. Howard relating to resignation and termination of
employment agreement (Exhibit 10.12 to '93 10-K)
*10.13 Memorandum of Understanding, dated April 13, 1994, between
TWA and Jeffrey H. Erickson relating to employment by TWA
(Exhibit 10.13 to 3/94 10-Q)
*10.14 Letter Agreement, dated April 15, 1994, between TWA and
Richard P. Magurno relating to employment by TWA (Exhibit
10.14 to 3/94 10-Q)
*10.15 Letter Agreement, dated June 29, 1994, between TWA and Mark
J. Coleman relating to employment by TWA (Exhibit 10.15 to
6/94 10-Q)
*10.16 Form of Indemnification Agreement between TWA and
individual members of the TWA Board of Directors relating
to indemnification of director (Exhibit 10.16 to 6/94 10-Q)
*10.17 Form of Stock Appreciation Right Agreement between TWA and
certain executive officers of TWA relating to the grant of
certain stock appreciation rights (Exhibit 10.17 to 6/94
10-Q)
*10.18 Letter Agreement, dated August 10, 1994, between TWA and
Robert H. Wilson ("Wilson") relating to a severance
agreement between TWA and Wilson (Exhibit 10.18 to 6/94
10-Q)
10.19 Letter Agreement, dated August 30, 1994, between TWA and
Robert A. Peiser relating to employment by TWA(1)
10.20.1 Purchase Agreement, dated as of December 15, 1993 between
TWA and Pacific AirCorp DC9, Inc. with respect to aircraft
N927L and N928L(1)
10.20.2 Lease Agreement 927, dated as of December 15, 1993, between
Pacific AirCorp DC9, Inc. and TWA with respect to aircraft
N927L(1)
10.20.3 Lease Agreement 928, dated as of December 15, 1993, between
Pacific AirCorp DC9, Inc. and TWA with respect to aircraft
N928L(1)
10.21.1 Aircraft Purchase Agreement between TWA and Mitsui & Co.
(U.S.A.), Inc. dated March 31, 1994, with respect to
aircraft N950U(1)
- 39 -
<PAGE> 42
10.21.2 Aircraft Purchase Agreement between TWA and Mitsui & Co.
(U.S.A.), Inc., dated March 31, 1994, with respect to
aircraft N953U(1)
10.21.3 Lease Agreement, dated as of March 31, 1994 between Mitsui
& Co. (U.S.A.), Inc. and TWA with respect to aircraft N950U
and N953U(1)
10.21.4 Aircraft Purchase Agreement between TWA and McDonnell
Douglas Finance Corporation, dated March 31, 1994, with
respect to aircraft N951U(1)
10.21.5 Aircraft Purchase Agreement between TWA and McDonnell
Douglas Finance Corporation, dated March 31, 1994, with
respect to aircraft N952U(1)
10.21.6 Lease Agreement, dated as of March 31, 1994 between
McDonnell Douglas Finance Corporation and TWA with respect
to aircraft N951U and N952U(1)
10.22.1 Aircraft Purchase Agreement, dated March 31, 1994, between
McDonnell Douglas Finance Corporation and TWA with respect
to aircraft N306TW (formerly N534AW)(1)
10.22.2 Purchase Money Chattel Mortgage, dated as of March 31,
1994, by TWA, as Mortgagor, and McDonnell Douglas Finance
Corporation, as Mortgagee, with respect to N306TW (formerly
N534AW)(1)
10.22.3 Chattel Mortgage, dated as of March 31, 1994 by TWA as
Mortgagor, in favor of McDonnell Douglas Finance
Corporation, as Mortgagee, with respect to aircraft N306TW
(formerly N534AW)(1)
10.23 Commuter Air Service Agreement dated July 22, 1992, between
TWA and Trans World Express, Inc.(1)
10.24 Commuter Air Service Agreement dated October 27, 1993,
between TWA and Alpha Air(1)
10.25 Air Service Agreement dated October 1, 1994, between TWA
and Trans States Airlines, Inc.(1)
10.26 Consulting Agreement between TWA and Fieldstone, Private
Capital Group, L.P. dated July 11, 1994(1)
10.27 Consulting Agreement dated July 15, 1994, between TWA and
Simat, Helliesen & Eichner, Inc.(1)
- 40 -
<PAGE> 43
10.28.1 Agreement for Purchase and Sale dated as of August 29,
1994, between TWA and Browsh & Associates, Inc.(1)
10.28.2 Agreement for Purchase and Sale dated as of August 29,
1994, between TWA and Travel Marketing Holding Corporation
(1)
10.29.1 Term Sheet dated September 13, 1994 relative to sale of
Midcoast Aviation, Inc. executed by Midcoast Aviation, Inc.
and Sabreliner Corporation(1)
10.29.2 Acquisition Agreement dated as of October 31, 1994 relative
to the sale of Midcoast Aviation, Inc. executed by Midcoast
Aviation, Inc., and Sabreliner Corporation(2)
*10.29.3 Addendum to Stock Purchase Agreement (identified in
10.29.2) dated October 31, 1994 (Exhibit 10.29.3 to 9/94
10-Q)
*10.29.4 Addendum to Stock Purchase Agreement (identified in
10.29.2) dated November 2, 1994 (Exhibit 10.29.4 to 9/94
10-Q)
10.30 Acquisition Agreement for sale of Airport Terminal
Services, Inc. dated September 9, 1994, among TWA, Airport
Terminal Services, Inc., Richard S. Hawes, III, Richard B.
Hawes, and Midcoast Aviation, Inc.(1)
10.31.1 Form of Agreement dated as of August 31, 1994, between TWA
and the Air Line Pilots Association, International(1)
10.31.2 Form of Agreement dated as of September 1, 1994, between
TWA and the International Association of Machinists and
Aerospace Workers(1)
10.31.3 Form of Agreement dated as of September 1, 1994, between
TWA and the Independent Federation of Flight Attendants(1)
*10.31.4 Form of Agreement dated as of September 1, 1994, between
TWA and the Transport Workers Union of America (Exhibit
10.31.4 to 9/94 10-Q)
- 41 -
<PAGE> 44
10.32.1 Trust Agreement dated as of August 24, 1994 between and
among TWA, the International Association of Machinists and
Aerospace Workers, the Independent Federation of Flight
Attendants, the Air Line Pilots Association, International,
United States Trust Company of New York(1)
10.32.2 Stock Pledge and Intercreditor Agreement dated as of August
24, 1994 among TWA, TWA Stock Holding Company, Inc. and
United States Trust Company of New York(1)
10.33.1 Key Employee Stock Incentive Plan(3)
10.33.2 Form of Option Agreements for options issued pursuant to
the 1994 Key Employee Stock Incentive Plan(4)
10.34 Form of Pledge and Security Agreement dated as of, 1995 by
TWA Gate Holdings, Inc. in favor of First Security Bank of
Utah, National Association, as trustee for the 12% Senior
Preferred Stock(5)
*10.35 Letter Agreement, dated January 25, 1995 between TWA and
Don Monteath relating to employment by TWA and March 9,
1995 letter amending such Agreement (Exhibit 10.35 to '94
10-K)
*10.36 Letter Agreement, dated March 24, 1995 between TWA and
Joseph R. Vilmain relating to employment by TWA (Exhibit
10.36 to 6/95 10-Q)
10.37 Extension, Refinancing and Consent Agreement between TWA,
Karabu Corp, Pichin Corp, and Carl C. Icahn and the "Icahn
Entities" dated as of June 14, 1995.
10.38 Trans World Airlines, Inc. Stock Purchase Warrant to
Purchase Shares of Common Stock, dated August 23, 1995.
10.39 Stand-By Purchase Agreement dated as of August 8,
1995 between Trans World Airlines, Inc., M.D. Sass
Re/Enterprise Partners L.P., a Delaware limited
partnership and M.D. Sass Re/Enterprise International
Ltd. a British Virgin Islands Company.
- 42 -
<PAGE> 45
10.40 Voucher Purchase Agreement dated as of October 18,
1995 between TWA and M.D. Sass Re/Enterprise Partners
L.P., a Delaware limited partnership and M.D. Sass
Re/Enterprise International Ltd. a British Virgin
Islands Company.
10.41 Equity Rights Put Agreement dated as of September 15,
1995 between TWA and Elliott Associates L.P., a
Delaware limited partnership.
10.42 Equity Rights Put Agreement dated as of September 15,
1995 between TWA and Westgate International L.P., a
Cayman Islands limited partnership.
10.43 Equity Rights Put Agreement dated as of September 15,
1995 between TWA and United Equities (Commodities)
Company, a New York general partnership.
10.44 Equity Rights Put Agreement dated as of September 15,
1995 between TWA and Grace Brothers, Ltd., an
Illinois limited partnership.
10.45 Equity Rights Put Agreement dated as of September 15,
1995 between TWA and First Capital Alliance, L.P., an
Illinois limited partnership.
10.46 Equity Rights Put Agreement dated as of September 15,
1995 between TWA and Romulus Holdings Corp., a
Delaware Corporation.
10.47 Letter Agreement, dated August 22, 1995 between TWA
and Marilyn M. Hoppe relating to employment by TWA.
11.1 Statement re Computation of Per Share Earnings.
27.1 Financial Data Schedule (Submitted only in electronic
format)
99.1.1 Trans World Airlines, Inc. Proxy Statement/Prospectus dated
and filed with the Securities and Exchange Commission on
October 11, 1994 (herein referred to as the Registration
Statement, S-4 or Prospectus) (Incorporated by Reference to
such document as filed)
99.1.2 Amendment No. 1 to the said Prospectus (at 99.1.1) dated
and filed with the Securities and Exchange Commission on
November 2, 1994 (Incorporated by Reference to such
document as filed)
99.1.3 Amendment No. 2 to the said Prospectus dated and filed with
the Securities and Exchange Commission on November 25, 1994
(Incorporated by Reference to such document as filed)
- 43 -
<PAGE> 46
99.1.4 Amendment No. 3 to the said Prospectus dated and filed with
the Securities and Exchange Commission on December 20, 1994
(Incorporated by Reference to such document as filed)
99.1.5 Amendment No. 4 to the said Prospectus dated and filed with
the Securities and Exchange Commission on December 29, 1994
(Incorporated by Reference to such document as filed)
99.1.6 Amendment No. 5 to the said Prospectus dated and filed with
the Securities and Exchange Commission on December 30, 1994
(Incorporated by Reference to such document as filed)
99.1.7 Post-Effective Amendment No. 1 to the said Prospectus dated
and filed with the Securities and Exchange Commission on
January 4, 1995 (Incorporated by Reference to such document
as filed)
99.1.8 Post-Effective Amendment No. 2 to the said Prospectus dated
and filed with the Securities and Exchange Commission on
January 13, 1995 (Incorporated by Reference to such
document as filed)
99.1.9 Post-Effective Amendment No. 3 to the said Prospectus dated
and filed with the Securities and Exchange Commission on
February 24, 1995 (Incorporated by Reference to such
document as filed)
99.1.10 Post-Effective Amendment No. 4 to the said Prospectus dated
and filed with the Securities and Exchange Commission on
April 10, 1995 (Incorporated by Reference to such document
as filed)
99.1.11 Post-Effective Amendment No. 5 to the said Prospectus dated
and filed with the Securities and Exchange Commission on
May 5, 1995 (Incorporated by Reference to such document as
filed).
- 44 -
<PAGE> 47
99.1.12 Post-Effective Amendment No. 6 to the said Prospectus dated
and filed with the Securities and Exchange Commission on
May 11, 1995 (Incorporated by Reference to such document as
filed).
__________
* Incorporated by reference
(1) Previously filed with Amendment No. 1 to the Registration
Statement No. 33-84944 on November 2, 1994 and incorporated by
reference to such document.
(2) Previously filed with Amendment No. 2 to the Registration
Statement No. 33-84944 on November 25, 1994 and incorporated
by reference to such document.
(3) Previously filed with Amendment No. 3 to the Registration
Statement No. 33-84944 on December 20, 1994 and incorporated
by reference to such document.
(4) Previously filed with Amendment No. 4 to the Registration
Statement No. 33-84944 on December 29, 1994 and incorporated
by reference to such document.
(5) Previously filed with Post-Effective Amendment No. 3 to the
Registration Statement No. 33-84944 on February 24, 1995 and
incorporated by reference to such document.
(b) Reports on Form 8-K.
--------------------
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
- 45 -
<PAGE> 48
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANS WORLD AIRLINES, INC.
Dated: November 13, 1995
By: /s/ Robert A. Peiser
--------------------------
Executive Vice President-Finance
and Chief Financial Officer
(duly authorized officer
of registrant and principal
financial officer)
- 46 -
<PAGE> 1
EXHIBIT 4.12
<PAGE> 2
THE TWA AIR LINE PILOTS
1995 EMPLOYEE STOCK OWNERSHIP PLAN
(Effective as of January 1, 1995)
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 2 Plan Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.1 Commencement of Participation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.2 Termination of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
SECTION 3 Contributions and Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.1 Company Contributions and Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.2 Timing of Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.3 Participant Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.4 Accounting for Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.5 Limitation on Allocations to Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.6 Valuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4 Investment of Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1 Investment in Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Fiduciary Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Pre-Retirement Diversification Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.1 Timing of Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2 Required Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Manner and Form of Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.4 Direct Rollover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.5 Facility of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.6 Interests Not Transferable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.7 Absence of Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.8 Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.9 Missing Participants or Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.10 Qualified Domestic Relations Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7 Voting and Certain Dispositions of
Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.1 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.2 Control Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 No Illegal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 8 Rights, Restrictions and Options on
Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1 Put Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.2 Share Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.3 Nonterminable Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 10 Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.2 ESOP Committee Membership and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.3 Delegation by ESOP Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.4 Information To Be Furnished to ESOP Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.5 ESOP Committee's Decision Final . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.6 Compensation and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.7 Indemnification of the ESOP Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.8 Resignation or Removal of ESOP Committee Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.9 Appointment of Successor ESOP Committee Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.10 Interested ESOP Committee Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.12 Expenses of the Plan and Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.13 Stock Bonus Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 11 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.1 Written Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.2 Notice of Denial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.3 Review Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12 Amendment and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.3 Merger and Consolidation of Plan; Transfer of Plan Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.4 Distribution on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 13 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.1 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.2 Reversions to Supplemental Stock Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.5 Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.6 Participation Not Guarantee of Employment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.7 Exclusive Benefit of Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C> <C>
13.8 Action by . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
13.9 Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
</TABLE>
iii
<PAGE> 6
THE TWA AIR LINE PILOTS
1995 EMPLOYEE STOCK OWNERSHIP PLAN
(EFFECTIVE AS OF JANUARY 1, 1995)
The purpose of the TWA Air Line Pilots 1995 Employee Stock Ownership
Plan is to enable employees of the Company who are represented by ALPA to have
an opportunity to acquire stock ownership interest in the Company. The Plan is
designed to invest exclusively in Company Stock (except for de minimis
investments and cash pending investments in Company Stock or pending
distribution to participants and to comply with diversification requirements of
Code Section 401(a)(28)), and to invest primarily in "qualified employer
securities" (as defined in Code Section 4975(e)(8)). The Plan is intended to
be qualified under Code Section 401(a). The trust holding the assets of the
Plan is intended to be exempt from taxation under Code Section 501(a). The
Plan is part of an overall program which includes the initial transfer of 30
percent of the ownership of the Company to the employees as contemplated by the
Company's Plan of Reorganization confirmed by the Federal Bankruptcy Court on
August 4, 1995.
SECTION 1
DEFINITIONS
In this Plan whenever the context so indicates, the singular or plural
number and the masculine or feminine gender shall be deemed to include the
other, the terms "he," "his," and "him" shall refer to a Participant or
Beneficiary, as the case may be, and, except as otherwise provided, or unless
the context otherwise requires, the capitalized terms shall have the following
meanings:
1.1 "Account" means the account established and maintained in
the name of each Participant or Beneficiary to reflect his interest in the
Plan.
1.2 "Affiliate" means any corporation, trade or business,
which, at the time of reference, is together with the Company, a member of a
controlled group of corporations, a group of trades or businesses (whether or
not incorporated) under common control or an affiliated service group, as
described in Code Section Section 414(b), 414(c) and 414(m), respectively, or
any other organization treated as a single employer under Code Section 414(o);
provided, however, that where the context so requires, the term "Affiliate"
shall be construed to give full effect to the provisions of Code Section
Section 409(1)(4) and 415(h).
1.3 "Allocation Date" means August 31 of any Plan Year.
1
<PAGE> 7
1.4 "Allocation Period" means for each Plan Year, the twelve
consecutive month period ending on the August 31 that occurs within such Plan
Year.
1.5 "ALPA" means the Air Line Pilots Association, International.
1.6 "Available Contribution" means the Company Stock and other
assets available to be contributed to the Plan each Plan Year as determined
under Section 4.2 of the Supplemental Stock Plan.
1.7 "Beneficiary" means the person or persons to whom a
deceased Participant's benefits are payable under the Plan, as provided in
Section 6.8.
1.8 "Board of Directors" means the board of directors of the
Company.
1.9 "Code" means the provisions of the Internal Revenue Code of
1986, as amended, and all successor laws thereto. Where the Plan refers to a
particular section of the Code, such reference shall also apply to any
successor to that section.
1.10 "Company" means Trans World Airlines, Inc. and any
successor thereof.
1.11 "Company Stock" means shares of common stock issued by the
Company that meets the requirements of Code Section 409(l).
1.12 "Compensation" means with respect to any Plan Year the
Eligible Employee's Rate of Pay as of the Allocation Date (or if earlier, such
date the Employee ceases to be an Eligible Employee for all pay elements other
than the rate table) multiplied by a fraction, the numerator of which is the
number of days the Employee is an Eligible Employee during the Allocation
Period and the denominator of which is 365 (366 for the Allocation Period
ending August 31, 1996 and each 4 years ending thereafter).
1.13 "Control Transaction" means (a) any tender offer or
exchange offer for Company Stock or any other opportunity or series of
opportunities for the Plan to dispose of (or convert in connection with a sale,
exchange or disposition) at least 3% of its Company Stock (other than
conversions or dispositions to effectuate distributions or diversification
elections under the Plan), and (b) any transaction or series of related
transactions pursuant to which any person or group (as defined in Rule 13d-3
under the Exchange Act) acquires or seeks to acquire, directly or indirectly,
"control" (as defined in the Exchange Act) of the Company or of all or a
substantial portion of the tangible or intangible assets of the Company and its
subsidiaries, whether by merger, consolidation, share exchange, tender offer,
exchange offer, sale, lease,
2
<PAGE> 8
exchange, conversion, voting trust, proxy or otherwise. For purposes of Plan
provisions relating to a "Control Transaction," "person" means an individual,
corporation, association, partnership, joint venture, limited liability
company, trust, estate, unincorporated organization, governmental authority,
judicial entity or other entity.
1.14 "Diversification Election Period" means the ninety day
period following the close of each Plan Year in the Diversification Period.
1.15 "Diversification Period" means the six Plan Year period
beginning with the first Plan Year in which the individual first becomes a
Qualified Participant.
1.16 "Effective Date" means January 1, 1995.
1.17 "Eligible Employee" means any Employee who is represented
by ALPA and is (a) in an active pay status or (b) on military leave entitled to
reemployment rights under Chapter 43 of Title 38 of the United States Code.
For purposes of this definition, active pay status means whenever a pilot is
receiving compensation under any section of the Agreement between the Company
and ALPA effective September 1, 1994, and successor agreements thereto.
1.18 "Employee" means any individual employed by the Company or
an Affiliate.
1.19 "ERISA" means the provisions of the Employee Retirement
Income Security Act of 1974, as amended, and all successor laws thereto. Where
the Plan refers to a particular section of ERISA, such reference shall also
apply to any successor to that section.
1.20 "ESOP Committee" means the committee appointed to
administer the Plan pursuant to Section 10.
1.21 "Highly Compensated Employee" means
(a) An Employee described in Code Section 414(q) who is
an Employee and performs service during the determination year and is described
in one or more of the following groups:
(i) An Employee who is a 5% owner, as
defined in Code Section 416(i)(1)(A)(iii) at any time during the
determination year or the look-back year;
(ii) An Employee who received Statutory
Compensation in excess of $75,000.00 (indexed in accordance with Code
Section 415(d)) during the look-back year;
3
<PAGE> 9
(iii) An Employee who received Statutory
Compensation in excess of $50,000.00 (indexed in accordance with Code
Section 415(d)) during the look-back year and is a member of the
top-paid group for the look-back year;
(iv) An Employee who is an officer within
the meaning of Code Section 416(i)), during the look-back year and
receives Statutory Compensation in the look-back year greater than 50%
of the dollar limitation in effect under Code Section 415(b)(1)(A) for
the calendar year in which the look-back begins; and
(v) An Employee who is both described in
clause (ii), (iii) or (iv) above, when the clauses are modified to
substitute the determination year for the look-back year, and one of
the 100 employees who receives the most Statutory Compensation during
the determination year.
(b) The top-paid group consists of the top 20% of
Employees ranked on the basis of Statutory Compensation received during the
year. For purposes of determining the number of Employees in the top-paid
group, Employees described in Code Section 414(q)(8) and Q&A 9(b) of section
1.414(q)-1T of the regulations are excluded.
(c) The determination year is the current Plan Year for
which the determination of who is highly compensated is being made. The
look-back year is the 12-month period immediately preceding the determination
year, or, if the Company elects, the calendar year ending with or within the
determination year.
(d) The number of officers is limited to 50 (or, if
lesser, the greater of three Employees or 10% of Employees) excluding those
Employees who may be excluded in determining the top-paid group. When no
officer has Statutory Compensation in excess of 50% of the Code Section
415(b)(1)(A) limit, the highest paid officer is treated as a Highly Compensated
Employee.
(e) Statutory Compensation includes elective or salary
reduction contributions to a plan described in Code Section Section 125,
401(k) or 403(b). Companies aggregated under Code Section Section 414(b), (c),
(m), or (o) are treated as a single employer.
(f) Family Members of either a 5% owner or a Highly
Compensated Employee in the group consisting of the ten highest paid Employees
shall be deemed to be a Highly Compensated Employee and Statutory Compensation
paid to such Family Members or contributions made on their behalf shall be
treated as if it were paid to or contributed for the benefit of the 5% owner or
Highly Compensated Employee.
4
<PAGE> 10
1.22 "Limitations" means the compensation and contribution and
benefit limitations imposed by Code Section Section 401(a)(17) and 415(b), (c)
and (e).
1.23 "MEC" means the ALPA Master Executive Council of Trans
World Airlines, Inc.
1.24 "Normal Retirement Date" means the date on which a
Participant attains age 60.
1.25 "Participant" means any Employee who has become a
Participant in accordance with Section 2 or any other person with an Account
balance under the Plan.
1.26 "Plan" means The TWA Air Line Pilots 1995 Employee Stock
Ownership Plan, as amended from time to time.
1.27 "Plan Administrator" means the Company.
1.28 "Plan Year" means the calendar year.
1.29 "Qualified Participant" means a Participant who has
attained at least age 55 and has at least 10 years of participation under the
Plan.
1.30 "Rate of Pay" means the hourly rate of pay (including
highest gross weight and mileage pay), based on TWA pay seniority, status and
TWA equipment bid award, and calculated at 1/2 day and 1/2 night for each
narrow body (e.g. DC9, MD80, 727) equipment, and at 1/2 domestic and 1/2
international for each wide body (e.g. 767, L1011, 747) equipment. If an
Eligible Employee does not have a current equipment type bid award, the hourly
rate of pay (including highest gross weight and mileage pay) will be based on
TWA pay seniority, status and TWA equipment bid award such Eligible Employee
would be eligible to hold. For other categories, not currently in effect, the
Company shall amend the Plan pursuant to Section 12.1 to provide the applicable
rate of pay.
1.31 "Statutory Compensation" means
(a) All compensation paid by the Company or an Affiliate
to a Participant while an Employee which is reportable on Form W-2 for Federal
income tax purposes. In no instance shall the Statutory Compensation of any
Participant for any Plan Year considered under this Plan exceed $150,000 (as
adjusted by the IRS for increases in the cost of living in accordance with Code
Section 401(a)(17)(B)).
(b) For purposes of applying the $150,000 (as indexed)
limit on compensation of a Highly Compensated Employee, the Highly Compensated
Employee's family unit will be treated as a single
5
<PAGE> 11
employee with one compensation and the $150,000 limit (as indexed) will be
allocated among the members of the family unit in proportion to each member's
compensation. For purposes of this paragraph, family unit is the Highly
Compensated Employee, the Highly Compensated Employee's spouse and the Highly
Compensated Employee's lineal descendant's who have not attained age 19 before
the end of the Plan Year.
1.32 "Supplemental Stock Plan Trust" means the trust established
in connection with the Supplemental Stock Plan.
1.33 "Supplemental Stock Plan" means the TWA Air Line Pilots
Supplemental Stock Plan.
1.34 "Trust" means The TWA Air Line Pilots 1995 Employee Stock
Ownership Plan Trust created in connection with the establishment of the Plan.
1.35 "Trust Agreement" means the trust agreement establishing
the Trust.
1.36 "Trust Fund" means the assets held in the Trust for the
benefit of the Participants and their Beneficiaries.
1.37 "Trustee" means the trustee or trustees in office from time
to time under the Trust Agreement.
1.38 "Valuation Date" means the last day of each Plan Year and
any other date selected by the ESOP Committee as they deem necessary for the
operation of the Plan.
6
<PAGE> 12
SECTION 2
PLAN PARTICIPATION
2.1 Commencement of Participation.
-----------------------------
An Employee shall become a Participant in the Plan on the
first day such Employee is an Eligible Employee on or after the Effective Date.
2.2 Termination of Participation.
----------------------------
A Participant shall cease to be a Participant as of the
date his benefits are determined for distribution to him, or if earlier, on the
date of his death.
7 SECTION 2
<PAGE> 13
SECTION 3
CONTRIBUTIONS AND ALLOCATIONS
3.1 Company Contributions and Allocations.
-------------------------------------
(a) Each Plan Year the Company, or the Supplemental Stock
Plan Trust on behalf of the Company, shall contribute to the Plan the total of
all Participant allocations as determined in Section 3.1(b).
(b) Each Participant's allocation shall be determined as
follows:
(i) The Available Contribution shall be
multiplied by a fraction, the numerator of which is the Participant's
Compensation and the denominator of which is the total Compensation of all
Supplemental Stock Plan participants, and reduced by
(ii) the amount which may not be
contributed to the Plan on behalf of the Participant due to the Limitations.
(c) The amount determined under Section 3.1(b) shall be
credited to each Participant's Account as of the last day of the Plan Year for
which the contribution is made.
(d) For purposes of the allocations under this Section a
Participant's annualized Compensation is limited to $150,000 as adjusted
pursuant to Code Section 401(a)(17).
(e) The Company shall be responsible for calculating the
allocation under Section 3.1(b).
3.2 Timing of Contributions.
-----------------------
Contributions made to the Plan by the Company, or the
Supplemental Stock Plan Trust on behalf of the Company, for any Plan Year shall
be made no later than the March 1 following the Plan Year to which such
contributions are attributable.
3.3 Participant Contributions.
-------------------------
Contributions by Participants are neither required nor
permitted.
8 SECTION 3
<PAGE> 14
3.4 Accounting for Allocations.
--------------------------
(a) The ESOP Committee shall establish the (i) Accounts
(and sub-accounts, if deemed necessary) for each Participant, and (ii)
accounting procedures for the purpose of making the allocations to the
Participants' Accounts provided for in this Section 3.
(b) The ESOP Committee shall maintain adequate records
of the cost basis of shares of Company Stock allocated to each Participant's
Account.
(c) From time to time, the ESOP Committee may modify its
accounting procedures for the purposes of achieving equitable and
nondiscriminatory allocations among the Accounts of Participants, in accordance
with the provisions of this Section 3 and the applicable requirements of the
Code and ERISA.
(d) In accordance with Section 10, the ESOP Committee
may delegate the responsibility for maintaining Accounts and records.
3.5 Limitation on Allocations to Participants.
-----------------------------------------
(a) GENERAL. Subject to the provisions of this Section
3.5, Code Section 415, including the effect of any transitional rule, shall be
incorporated by reference into the terms of the Plan. No allocation shall be
made under Section 3.1 that would result in a violation of Code Section 415.
(b) CODE SECTION 415 COMPENSATION. For purposes of
this Section 3.5, Compensation shall be adjusted to reflect the general rule of
Treasury Regulation section 1.415-2(d).
(c) LIMITATION YEAR. The "limitation year" (within the
meaning of Code Section 415) shall be the calendar year.
(d) MULTIPLE PLANS. In any case where a corrective
adjustment is needed in the aggregate annual additions to a Participant's
Account in this Plan, and any other defined contribution plan maintained by the
Company or an Affiliate that would be aggregated with this Plan during the
limitation year, or a corrective adjustment is needed in the aggregate benefits
from defined contribution plans and defined benefit plans maintained by the
Company or an Affiliate, in order to comply with the Code Section 415 limits,
then such adjustment shall be made in the following manner and order in the
amounts necessary to comply with Code Section 415:
(i) by reduction in the Participant contributions to the TWA Pilots
Directed Account Plan;
9
<PAGE> 15
(ii) then, by reduction in the
contributions to this Plan;
(iii) then, by reduction in the
Participant's Salary Deferred Contributions to the Section 401(k) Plan for
Pilots of Trans World Airlines, Inc.;
(iv) then, by reduction in Company
contributions to the TWA Pilots Directed Account Plan; and
(v) then, by reduction in the benefits
accrued under the Retirement Plan for Pilots of Trans World Airlines, Inc.
(e) EXCESS ALLOCATIONS. If, after applying the
provisions of this Section 3.5, allocations under Section 3.1 would otherwise
result in a violation of Code Section 415, the ESOP Committee shall reduce the
allocation of contributions under this Plan for this limitation year and hold
the contribution in suspense to reduce Company contributions for the next
limitation year (and succeeding limitation years, as necessary) for the
affected Participant in accordance with Regulation section 1.415-6(b)(6)(ii).
3.6 VALUATIONS.
----------
All valuations of shares of Company Stock that are not
readily tradeable on an established securities market shall be valued by an
independent appraiser selected by the ESOP Committee.
10
<PAGE> 16
SECTION 4
INVESTMENT OF TRUST FUND
4.1 INVESTMENT IN COMPANY STOCK.
---------------------------
The Trust Fund shall be invested primarily in shares of
Company Stock, subject to the Trustee's power to hold cash pending investment
in Company Stock or pending distribution to Participants or pursuant to
diversification rights under Code Section 401(a)(28) as set forth in Section
4.3. Accordingly, the Trustee may invest and hold up to 100% of the Trust Fund
in Company Stock.
4.2 FIDUCIARY CONCERNS.
------------------
With respect to the exercise of any fiduciary
responsibility with respect to the Plan or Trust, including, without
limitation, the voting, sale, exchange, other disposition or conversion of
Company Stock, the relevant fiduciary may, to the extent permitted by law, take
into consideration any relevant economic factors affecting the interests of
current and future Participants (and Beneficiaries), including, but not limited
to, the prospect for continued Employee enfranchisement through the voting
power of Company Stock held in the Plan and the prospect for future employment
with the Company and its Affiliates.
4.3 PRE-RETIREMENT DIVERSIFICATION RIGHTS.
-------------------------------------
(a) GENERAL. Any Qualified Participant may elect to
diversify the investment of a portion of his Account under this Section 4.3.
During the Diversification Period such Qualified Participant shall be entitled
to request, within the Diversification Election Period, the diversification of
up to 25% of the balance of his Account, to the extent such amount exceeds the
amount to which any prior election under this Section 4.3 applies. During the
last Diversification Election Period, the preceding sentence shall be applied
by substituting "50%" for "25%".
(b) AMOUNT. In the case of a Qualified Participant who
has made one or more elections during such Participant's Diversification
Periods, the extent to which a subsequent election exceeds the amount to which
any prior election applies shall be 25% or 50%, as the case may be, of the sum
of the balance of his Account as of the Valuation Date of the Plan Year with
respect to which the subsequent election is made and the amounts or number of
shares of Company Stock diversified pursuant to prior elections, less the
amounts diversified pursuant to prior elections. The diversification of a
Participant's Account under this Section 4.3 shall only be effected within 90
days following the applicable
11
<PAGE> 17
Diversification Election Period in which the Qualified Participant makes his
request. Notwithstanding the foregoing, if the fair market value of the
Company Stock allocated to the Account of a Qualified Participant is $5OO or
less as of the Valuation Date immediately preceding the first day of a
Diversification Election Period, such Qualified Participant shall not be
entitled to an election under this Section 4.3 for that Diversification
Election Period.
(c) A Participant's election to diversify pursuant to
this Section 4.3 shall only be effected by having the ESOP Committee direct the
Trustee to sell the portion of stock in the Participant's Account to be
diversified, and to transfer the proceeds of such sale to the Participant's
account in the TWA Pilots Directed Account Plan.
12
<PAGE> 18
SECTION 5
VESTING
A Participant's Account shall be fully vested (nonforfeitable) at all
times, and will be distributed to him or, in the event of his death, to his
Beneficiary, in accordance with the applicable provisions of Section 6.
13
<PAGE> 19
SECTION 6
DISTRIBUTIONS
6.1 TIMING OF DISTRIBUTIONS.
-----------------------
(a) REGULAR DISTRIBUTIONS. Subject to the following
provisions of this Section 6, a Participant (or, in the case of a Participant's
death, his Beneficiary) may elect (but shall not be required) to receive a
distribution of the balance of his Account, as of the Valuation Date coincident
with or next following the date the Participant's employment with the Company
and its Affiliates terminates for any reason.
(b) DEFERRED DISTRIBUTIONS. A Participant (or a spousal
Beneficiary) may elect to defer the commencement of his distribution to any
date on or prior to the April 1 of the calendar year next following the
calendar year in which such Participant attains (or would have attained) age 70
1/2.
6.2 REQUIRED DISTRIBUTIONS.
----------------------
(a) Notwithstanding any provision herein to the
contrary, unless the Participant otherwise elects under Section 6.1(b), the
distribution of the Account of a Participant whose employment with the Company
and its Affiliates terminates shall commence no later than 60 days following
the close of the Plan Year in which the latest of the following occurs: (A) a
Participant reaches his Normal Retirement Date, (B) the Participant's
employment with the Company and its Affiliates terminates and (C) the 10th
anniversary of the year in which the Participant commenced participation in the
Plan.
(b) Notwithstanding any provision herein to the
contrary, the distribution of a Participant's Account balance shall commence no
later than the April 1 of the calendar year next following the calendar year in
which such Participant attains age 70 1/2. Any amount distributed pursuant to
this Section 6.2(b) shall, in the case of a Participant who is an Employee, be
limited to the minimum amount required to be distributed pursuant to Code
Section 401(a)(9).
(c) Notwithstanding any provision herein to the
contrary, if a Participant's employment with the Company and its Affiliates
terminates by reason of death, or if a Participant dies after his employment
terminates but before a distribution commences from the Plan, then, unless the
Participant's spouse is the Beneficiary, all of the Participant's interest in
the Plan must be completely distributed within five years after the date of his
death.
14
<PAGE> 20
(d) To the extent permitted by law, Code Section 401
(a)(9) and any related transitional rules are incorporated by reference into
the terms of the Plan.
6.3 MANNER AND FORM OF DISTRIBUTIONS.
--------------------------------
(a) Participants shall receive their benefits in a
single distribution.
(b) All distributions shall be made in shares of Company
Stock except for fractional shares and the portion of benefits attributed to a
diversification election under Section 4.3.
6.4 DIRECT ROLLOVER.
---------------
To the extent required by Code Section 401(a)(31), the
Participant (or a spousal Beneficiary) shall have the right to elect to have
any distribution that constitutes an eligible rollover distribution (as defined
in Code Section 401(a)(31)(C)) paid directly to an "eligible retirement plan"
(as defined in Code Section 401(a)(31)(D)) specified by such Participant (or a
spousal Beneficiary). If a Participant (or a spousal Beneficiary) fails to
make the foregoing election he shall be deemed to have not made such election.
The provisions of this Section 6.4 shall be administered in accordance with,
and subject to, such rules as the ESOP Committee may prescribe, which rules may
include any limitations permitted under Code Section 401(a)(31).
6.5 FACILITY OF PAYMENT.
-------------------
(a) GENERAL. Subject to Section 6.5(b), if, in the
opinion of the Plan Administrator, a Participant or Beneficiary is under a
legal disability or is in any way incapacitated so as to be unable to manage
his financial affairs, the Plan Administrator may (but shall not be required
to), until claim is made by a conservator or other person legally charged with
the care of his person or of his estate, direct the Trustee to make payment to
a relative or friend of such person for his benefit. Thereafter, any benefits
under the Plan to which such Participant or Beneficiary is entitled shall be
paid to such conservator or other person legally charged with the care of his
person or his estate.
(b) MINORS. In the event any amount is payable under
the Plan to a minor, payment shall not be made to the minor, but instead shall
be paid (i) to that person's then living parent(s) to act as custodian, (ii) if
that person's parents are then divorced, and one parent is the sole custodial
parent, to such custodial parent, or (iii) if no parent of that person is then
living, to a custodian selected by the Plan Administrator to hold the funds for
the minor under the Uniform Transfers or Gifts to Minors Act in
15
<PAGE> 21
effect in the jurisdiction in which the minor resides. If no parent is living
and the Plan Administrator decides not to select another custodian to hold the
funds for the minor, payment shall be made to the duly appointed and currently
acting guardian of the estate for the minor or, if no guardian of the estate
for the minor is duly appointed and currently acting within 60 days after the
date the amount becomes payable, payment shall be deposited with the court
having jurisdiction over the estate of the minor.
(c) DISCHARGE. Any payment made under this Section 6.5
shall fully discharge, to such extent, the obligation of the Trustee to pay
benefits under the Plan with respect to such Participant, Beneficiary or minor.
6.6 INTERESTS NOT TRANSFERABLE.
--------------------------
The interests of Participants and their Beneficiaries under
the Plan are not subject to the claims of their creditors and may not be
voluntarily or involuntarily assigned, alienated or encumbered, except as
otherwise provided in Section 6.10.
6.7 ABSENCE OF GUARANTY.
-------------------
The Trustee, the ESOP Committee and the Company in no way
guarantee the Trust Fund from loss or depreciation. Moreover, the Company does
not guarantee any payment to any person. The liability of the Trust to make
any payment is limited to the available Trust Fund.
6.8 DESIGNATION OF BENEFICIARY.
--------------------------
(a) GENERAL. In the event of the death of a married
Participant, the Participant's Account balance will be paid to his surviving
spouse, except as otherwise provided below. Each Participant may, by signing a
form furnished by the Plan Administrator, designate or change a Beneficiary to
whom his benefits are to be paid if he dies before he receives all of his
benefits; provided, however, that if a married Participant designates a
Beneficiary other than his spouse, his spouse must consent in writing to such
designation and acknowledge in writing the effect of such designation, and such
consent and acknowledgement must be witnessed by a notary public. Any
designation by an unmarried Participant shall be rendered ineffective by any
subsequent marriage and any consent of a spouse shall be effective only as to
that spouse.
(b) BENEFICIARY DESIGNATION. A Beneficiary designation
form will be effective only when the signed form is filed with the Plan
Administrator while the Participant is alive and will cancel all Beneficiary
designation forms signed earlier.
16
<PAGE> 22
(c) NO DESIGNATED BENEFICIARY. If a Participant dies
without having a designated Beneficiary as provided above (or if the designated
Beneficiary dies before the Participant), the ESOP Committee shall direct the
Trustee to pay the deceased Participant's benefits as follows:
(i) first, to the surviving spouse of
the Participant, if any;
(ii) second, to the children (including
any adopted children) of the Participant, per stirpes; and
(iii) third, if the Participant leaves no
surviving spouse and has no descendants pursuant to paragraph (ii)
above, to the estate of the Participant.
If the designated Beneficiary survives the Participant, but dies prior to the
date benefits are distributed, the benefits shall be deemed payable to the
designated beneficiary and distributed to the estate of the designated
beneficiary.
(d) DISSOLUTION OF MARRIAGE. Upon the dissolution of
marriage of a Participant, any designation of the Participant's former spouse
as a Beneficiary shall be treated as though the Participant's former spouse had
predeceased the Participant, unless (i) the Participant executes another
Beneficiary designation that complies with this Section 6.8 which clearly names
such former spouse as a Beneficiary, or (ii) a court order, presented to the
Plan Administrator prior to distribution on behalf of the Participant,
explicitly requires the Participant to continue to maintain the former spouse
as the Beneficiary. In any case in which the Participant's former spouse is
treated under the Participant's Beneficiary designation as having predeceased
the Participant, no heirs or other beneficiaries of the former spouse shall
receive benefits from the Plan as a Beneficiary of the Participant except as
otherwise provided in the Participant's Beneficiary designation.
6.9 MISSING PARTICIPANTS OR BENEFICIARIES.
Each Participant and each Beneficiary must file with the
Plan Administrator from time to time in writing his post office address and
each change of post office address. Any communication, statement or notice
addressed to a Participant or Beneficiary at his last post office address filed
with the Plan Administrator, or if no address is filed with the Plan
Administrator, then, at the Participant's last post office address as shown on
the Company's records, will be binding on the Participant and his Beneficiary
for all purposes of the Plan. The Company, the Plan Administrator and the
Trustee will not be required to search for or locate a
17
<PAGE> 23
Participant or his Beneficiary. In the event that all, or any portion, of the
distribution payable to a Participant or his Beneficiary hereunder shall, at
the expiration of five years after it shall become payable, remain unpaid
solely by reason of the inability of the ESOP Committee, after sending a
communication, statement or notice to the last post office address filed with
the Plan Administrator, to ascertain the whereabouts of such Participant or his
Beneficiary, the amount so distributable shall be reallocated to the remaining
participants proportionate to their Account balances. In the event a
Participant or his Beneficiary is located subsequent to his benefit being
reallocated, such benefit shall be restored first from Trust earnings and
second from a Company contribution made solely for restoration purposes.
6.10 QUALIFIED DOMESTIC RELATIONS ORDER.
----------------------------------
In addition to payments made under Section 6.1 on account
of a Participant's termination of employment, payments may also be made to an
Alternate Payee (as defined below) prior to, coincident with, or after a
Participant's termination of employment if made pursuant to a qualified
domestic relations order (as defined in Code Section 414(p)). The Plan
Administrator shall establish reasonable procedures to determine the qualified
status of domestic relations orders and to administer distributions under such
qualified orders, including, in its sole discretion, the establishment of
segregated accounts for Alternate Payees. The term "Alternate Payee" means any
spouse, former spouse, child or other dependent of a Participant who is
recognized by a Qualified Domestic Relations Order as having a right to receive
all, or a portion of, the benefits payable under the Plan with respect to the
Participant.
18
<PAGE> 24
SECTION 7
VOTING AND CERTAIN DISPOSITIONS OF COMPANY STOCK
7.1 VOTING.
------
(a) IN GENERAL. Each Participant or Beneficiary, as a
named fiduciary within the meaning of ERISA section 403(a)(1), in accordance
with the procedures hereinafter set forth, may direct the Trustee with respect
to the vote of the shares of Company Stock allocated to his Account, and the
Trustee shall follow the directions of those Participants (and Beneficiaries)
who provide timely instructions to the Trustee.
(b) UNINSTRUCTED SHARES. The ESOP Committee shall vote
shares of Company Stock allocated to any Participant's Account for which no
instructions were timely received by the Trustee in the best interest of the
Plan Participants and Beneficiaries as it determines in its sole discretion.
(c) PROCEDURE. Such directions shall be provided
directly to the Trustee and shall be held in confidence and not be divulged or
released to any other person. Within a reasonable time prior to each annual or
special meeting of holders of Company Stock, the Company, as directed by the
ESOP Committee, shall furnish to all Participants (and Beneficiaries) entitled
to direct the Trustee as to the voting of shares of Company Stock copies of any
proxy solicitation material provided to holders of voting Company Stock
generally together with appropriate instruction forms or cards and information
concerning the method of providing such instructions to the Trustee. To the
extent permitted by law, if the Trustee cannot follow directions of
Participants (or Beneficiaries), the ESOP Committee shall direct the Trustee.
7.2 CONTROL TRANSACTION.
-------------------
(a) GENERAL. The provisions of this Section 7.2 shall
apply in the event a Control Transaction is commenced or proposed by a person
or persons. In the event a Control Transaction is commenced or proposed, the
ESOP Committee, promptly after receiving notice, shall transfer certain of the
ESOP Committee's record keeping functions under the Plan to an independent
record keeper (which if the Trustee consents in writing, may be the Trustee).
The functions so transferred shall be those necessary to preserve the
confidentiality of any directions given by the Participants (and Beneficiaries)
in connection with the Control Transaction. Within a reasonable time after a
Control Transaction is commenced, the Company, as directed by the ESOP
Committee, shall furnish to all Participants (and Beneficiaries) entitled, as
hereinafter set forth, to direct the Trustee with respect to the Control
19
<PAGE> 25
Transaction, copies of all offering material provided to holders of Company
Stock generally, together with appropriate instruction forms or cards and
information concerning the method of providing such instructions to the
Trustee. Except as otherwise required by ERISA, the Trustee shall have no
discretion or authority to sell, exchange, transfer, convert or otherwise
dispose of any shares of Company Stock pursuant to such Control Transaction
except to the extent that the Trustee is timely directed to do so in writing as
follows:
(i) IN GENERAL. Each Participant (or
Beneficiary) to whose Account shares of Company Stock have been
allocated may, as a named fiduciary within the meaning of ERISA
section 403(a)(1), direct the Trustee with respect to the sale,
exchange, transfer, conversion or other disposition of the shares of
Company Stock allocated to his Account, and the Trustee shall follow
the directions of those Participants (and Beneficiaries) who provide
timely instructions to the Trustee.
(ii) UNINSTRUCTED SHARES. Each active
Participant who directed the Trustee with respect to shares allocated
to his Account in accordance with Section 7.2(a)(i) may, again as a
named fiduciary, direct the Trustee with respect to a portion of the
number of shares of Company Stock allocated to any Participant's
Account for which no instructions were timely received by the Trustee.
Such portion shall be determined as follows:
(A) Such portion shall be
limited to the number of shares of Company Stock
allocated to the Accounts of Participants for which
no instructions were timely received.
(B) The number of shares of
Company Stock determined under clause (A) shall be
multiplied by a fraction, the numerator of which is
the number of shares of Company Stock that such
Participant directed the Trustee in accordance with
Section 7.2(a)(i) and the denominator of which is
the aggregate number of shares that were directed by
active Participants in accordance with Section
7.2(a)(i).
(C) Such Participant, as a named
fiduciary, shall be entitled to direct the Trustee
with respect to the number of shares determined
under clause (B).
All such instructions from Participants (and Beneficiaries) shall be provided
directly to the independent record keeper which, if
20
<PAGE> 26
different from the Trustee, shall then instruct the Trustee as to the amount of
shares to be sold, tendered, exchanged, transferred, converted or otherwise
disposed of in accordance with the above directions. To the extent the Trustee
cannot follow Participant (or Beneficiary) instructions, the ESOP Committee, as
a named fiduciary, shall direct the Trustee. Except as contemplated by the
foregoing or as required to facilitate the making of Plan distributions or
diversification elections or as required by law, the Trustee shall have no
authority to dispose of Company Stock in a Control Transaction or otherwise.
(b) RECORDS. Following any Control Transaction that has
resulted in the sale or exchange of any shares of Company Stock held in the
Plan, the record keeper shall continue to maintain on a confidential basis the
Accounts of Participants (and Beneficiaries) to whose Accounts shares of
Company Stock were allocated at any time during such offer, until complete
distribution of such Accounts or such earlier time as the record keeper
determines that the transfer of the record keeping functions back to the ESOP
Committee will not violate the confidentiality of the directions given by the
Participants (and Beneficiaries). In the event that there is no sale or
exchange of any shares of Company Stock held in the Plan pursuant to the
Control Transaction, the record keeper shall transfer back to the ESOP
Committee the record keeping functions; provided, however, that the record
keeper shall keep confidential any instructions which it may receive from
Participants (and Beneficiaries) relating to the Control Transaction.
(c) PROCEEDS. For purposes of allocating the proceeds
of any sale or exchange pursuant to a Control Transaction, the ESOP Committee
or the independent record keeper, as the case may be, shall determine the
portion, expressed as a percentage, of shares of each class of Company Stock
tendered by the Trustee that were actually sold or exchanged. The adjustments
to individual Accounts shall be made by the ESOP Committee or the independent
record keeper, as the case may be, on information supplied by the Company, the
ESOP Committee or the Trustee.
(d) ACTIONS TO BE TAKEN FOLLOWING A CONTROL TRANSACTION.
Notwithstanding Section 4.2 or any other provision of this Plan or the Trust
Agreement that requires that the Trust Fund be invested primarily in shares of
Company Stock, this Section 7.2(d) shall apply if a Control Transaction results
in the sale or exchange or other disposition of any shares of Company Stock
held in the Plan. If the consideration received by the Trust as a result of the
Control Transaction consists solely of "appropriate securities" (as defined
below), the terms of the Plan shall continue as if the Control Transaction had
not occurred. If the consideration received includes cash, property or
securities, other than appropriate securities, the Trustee shall invest the
proceeds
21
<PAGE> 27
in appropriate securities to the extent possible; if the Trustee is able to
reinvest all such proceeds in appropriate securities, the Plan, shall continue
as if the Control Transaction had not occurred; if the Trustee is unable to
reinvest all such proceeds in appropriate securities, then the Company shall
make appropriate arrangement (which shall be reasonably satisfactory to ALPA to
protect the substantive interests of the Participants and Beneficiaries. For
purposes of this Section 7.2(d), "appropriate securities" shall mean stock (i)
that is described in Code Section 409(1), (ii) that is either common stock
described in Code Section 409 (1)(1) or preferred stock that converts into
such common stock, (iii) is readily tradable on an established securities
market and (iv) the issuer of which stock has a Moody's senior long-term debt
rating which is at least as good as the Moody's senior long-term debt rating of
the Company at such time.
7.3 NO ILLEGAL ACTIONS.
------------------
Notwithstanding any other provision of this Plan, the
Trustee shall not be obligated to follow the direction of a named fiduciary
unless such direction is in accordance with the terms of the Plan and is proper
under ERISA section 403(a)(2) and not contrary to Title I of ERISA.
22
<PAGE> 28
SECTION 8
RIGHTS, RESTRICTIONS AND OPTIONS ON COMPANY STOCK
8.1 PUT OPTION.
----------
If Company Stock distributed is not readily tradable on an
established market (within the meaning of Code Section 409(h)), the Company
shall issue a "Put Option" to each Participant (or his Beneficiary) receiving a
distribution of such Company Stock from the Plan. The Put Option shall permit
the Participant (or his Beneficiary) to sell such Company Stock to the Company,
at any time during two put option periods (described below), at the then fair
market value, such fair market value to be determined at least annually as of
the respective Valuation Date by an independent appraiser selected by the ESOP
Committee. The first put option period shall be a period of at least 60 days
beginning on the date of distribution of Company Stock to the Participant (or
his Beneficiary). The second put option period shall be a period of at least
60 days beginning after the new determination of the fair market value of
Company Stock is made by an independent appraiser (and notification is given to
the Participant or his Beneficiary) in the next following Plan Year. The
Company shall permit the Trustee, in its discretion, to purchase the Company
Stock tendered to the Company under a Put Option. If the Company purchases
Company Stock tendered under a Put Option and the Company Stock was distributed
to the Participant (or his Beneficiary) in the form of a lump sum, the payment,
at the discretion of the Company, may be made (a) in five substantially equal
annual installments commencing not later than 30 days after the exercise of the
Put Option; provided, however, that the purchaser provides adequate security
and reasonable interest (as determined by the ESOP Committee) on unpaid
installments, or (b) in a lump sum. If the Company purchases Company Stock
tendered under a Put Option and the Company Stock was distributed as part of an
installment distribution, the payment, in the form of a lump sum, must be made
not later than 30 days after the exercise of the Put Option. The Trustee, on
behalf of the Trust, may offer to purchase any shares of Company Stock (which
are not sold pursuant to a Put Option) from any former Participant or
Beneficiary at any time in the future, at its then fair market value.
8.2 SHARE LEGEND.
------------
Shares of Company Stock held or distributed by the Trustee
may include such legend restrictions on transferability as the Company may
reasonably require in order to assure compliance with applicable federal and
state securities laws. Except as otherwise provided in this Section 8, no
shares of Company Stock
23
<PAGE> 29
held or distributed by the Trustee may be subject to a put, call or other
option or buy-sell or similar arrangement.
8.3 NONTERMINABLE RIGHTS.
--------------------
The provisions of this Section 8 shall continue to be
applicable to Company Stock even if the Plan ceases to be an "employee stock
ownership plan" (as defined under Code Section 4975(e)(7)).
24
<PAGE> 30
SECTION 9
DIVIDENDS
9.1 IN GENERAL.
----------
Any dividends paid with respect to shares of Company Stock
allocated to the Participants' Accounts shall be allocated to such Accounts,
pro rata, according to the number of shares of Company Stock held in such
Accounts on the dividend record date; any cash dividends shall be used by the
Trustee to purchase shares of Company Stock.
25
<PAGE> 31
SECTION 10
ADMINISTRATION
10.1 GENERAL.
-------
The Company shall be the administrator of the Plan and
shall have the rights, duties and obligations of an "administrator" as that
term is defined in ERISA section 3(16)(A) and of a "plan administrator" as that
term is defined in Code Section 414(g). Some administrative functions have
been allocated to the ESOP Committee, which shall have the rights, duties and
obligations set forth herein. The ESOP Committee shall be the "named
fiduciary," as described in ERISA section 402, with respect to its authority
under the Plan, except to the extent provided in Section 7, for which each
Participant (or Beneficiary) shall be the named fiduciary.
10.2 ESOP COMMITTEE MEMBERSHIP AND AUTHORITY.
---------------------------------------
(a) GENERAL. The ESOP Committee shall consist of three
or more individuals appointed by the MEC and one non-voting member appointed by
the Company. The MEC shall give written notice of its appointment to ALPA, the
Company and the Trustee. The Company shall give written notice of its
appointment to the MEC, ALPA and the Trustee. Meetings of the ESOP Committee
shall be held at a location to be determined by ESOP Committee. Meetings may
be held telephonically and the ESOP Committee may act by unanimous written
consent. The ESOP Committee is the named fiduciary with respect to the
management and disposition of assets held in the Trust Fund. The ESOP
Committee shall have the following powers, rights and duties:
(i) to adopt such rules of procedure and
regulations for the proper and efficient administration of the Plan
and as are consistent with the provisions of the Plan;
(ii) to enforce the Plan in accordance
with its terms and with such applicable rules and regulations as may
be adopted by the ESOP Committee;
(iii) to determine all questions arising
under the Plan, to resolve all ambiguities, to correct defects, to
supply omissions, including the power to determine the rights or
eligibility of Employees or Participants and their Beneficiaries and
their respective benefits; provided, however, that the ESOP Committee
will not have jurisdiction or power to add to or subtract from the
Plan or any amendments thereto;
26
<PAGE> 32
(iv) to give such directions to the
Trustee with respect to the Trust Fund as may be provided in this Plan
or in the Trust Agreement;
(v) to maintain and keep adequate books,
records and other data as shall be necessary to administer the Plan,
except those that are maintained by the Company or by the Trustee;
(vi) to direct all payments of benefits
to Participants and Beneficiaries, consistent with the terms of the
Plan and the Trust Agreement;
(vii) to establish an investment policy
and objective for the Plan, except that it is understood that the Plan
is designed to invest primarily in Company Stock;
(viii) to elect a Chairman and to appoint a
Secretary, who need not be a member of the ESOP Committee, who shall
keep minutes of the proceedings and have custody of all records and
documents pertaining to administration of the Plan;
(ix) to be agent for the service of legal
process on behalf of the Plan;
(x) to authorize one or more of its
members to execute any documents on behalf of the ESOP Committee, in
which event the ESOP Committee shall notify the Trustee in writing of
such action (the certificate of the Secretary or any authorized member
of the ESOP Committee that the ESOP Committee has taken or authorized
any action shall be conclusive in favor of any person relying on such
certificate);
(xi) to obtain, as necessary, an
independent appraisal of the fair market value of the Company Stock
held by the Trust from an independent appraiser who meets the
requirements of Code Section 170(a)(1);
(xii) to perform any other acts,
consistent with the Plan and Trust Agreement, necessary or appropriate
to the administration of the Plan and the discharge of its duties.
(b) SPECIAL PROVISIONS.
------------------
(i) As set forth in Section 11.3, the
ESOP Committee will have the exclusive power to hear and determine all
appeals of claims denied under Section 11.2 of the Plan pursuant to
the procedures hereinafter provided. With respect to such disputes,
the following provisions will govern:
27
<PAGE> 33
(A) The jurisdiction of the ESOP
Committee will be exclusive. Appeals may be
submitted to the ESOP Committee either by a
Participant, a Beneficiary or by ALPA on behalf of
one of more Participants or Beneficiaries.
(B) The ESOP Committee will establish
rules of procedure for the conduct of appeals before
it, which rules will not be inconsistent with the
provisions of the Plan. Insofar as possible, such
procedures will follow the procedure of the American
Arbitration Association. The Chairman will promptly
advise the Company and ALPA of such rules of
procedure.
(C) All appeals properly referred to the
ESOP Committee for consideration will be addressed
to the Chairman in the form of a submission as
prescribed by the rules of procedure. Each
submission, including all papers and exhibits in
connection therewith, will be forwarded to the
Chairman, who will promptly transmit one copy
thereof to the members of the ESOP Committee. The
submission in each dispute will include the question
to be decided by the ESOP Committee, the provisions
of the Plan involved in the dispute, the position of
the petitioner and all asserted facts supporting
such position.
(D) The submission will state the names
of the parties to whom the petitioner sent copies of
the submission. A copy of the submission will be
served by the petitioner upon ALPA and the Company.
(E) The submission will state whether or
not the petitioner requests both a hearing on the
facts and oral argument, or only oral argument. The
answer of each party may request a hearing on the
facts and oral argument or only oral argument. If
neither the submission nor any answer requests a
hearing, the ESOP Committee may waive a hearing and
dispose of the dispute on the basis of the
submission and answers.
(F) When a hearing has been requested in
a dispute, the ESOP Committee will fix a date for
such hearing as soon as reasonably possible after
receipt of the submission. The hearing will be held
and the ESOP Committee shall notify the Participant
of the disposition of the matter within 60 days
after receipt of the submission (unless
circumstances require a longer period which can be
28
<PAGE> 34
no more than an additional 60 days, unless the
Participant requests a delay). If two or more
members of the ESOP Committee consider the question
involved in the dispute to be of sufficient urgency,
the ESOP Committee may fix an earlier date, which
will not be less than ten days after filing of the
answer. If requested by the ESOP Committee or the
Participant, a transcript of each proceeding will be
made and retained in the files of the ESOP
Committee. Such hearing will be heard at the
location determined by the ESOP Committee.
(G) Appeals before the ESOP Committee
shall be decided by a majority vote of the members
of the ESOP Committee (excluding for all purposes
the non-voting members). However, a majority of the
members of the ESOP Committee (excluding for all
purposes the non-voting members) has the power to
require that any submission be referred for decision
to a neutral arbitrator. Further, if the ESOP
Committee deadlocks in the case of any vote, the
matter shall be referred for decision to a neutral
arbitrator. In any case in which a neutral
arbitrator is to be appointed, the ESOP Committee
will, within 10 days after notice of the need to
appoint a neutral arbitrator, agree upon a neutral
arbitrator. If the ESOP Committee fails to agree
upon the selection of a mutually acceptable neutral
arbitrator, an arbitrator with knowledge of employee
stock ownership plans will be supplied by the
American Arbitration Association. When a neutral
arbitrator is selected, the power to take further
action with respect to the dispute shall rest with
the neutral arbitrator until the final decision is
made in the dispute.
(H) When a neutral arbitrator is
selected, any party to a dispute may make a written
request to the neutral arbitrator for a further
hearing or oral argument provided it is made within
15 days after such selection. The neutral
arbitrator will decide such requests. If no further
hearing or argument is held, the neutral arbitrator
will consider and review the prior record in the
dispute. The decision of the neutral arbitrator
will be rendered within 30 days after the close of
any further hearing or argument. The neutral
arbitrator shall decide the matter based upon the
record before him and the terms of the Plan and
shall not give weight to any previous votes of the
ESOP Committee concerning the matter.
29
<PAGE> 35
(I) The decision of the ESOP Committee,
or neutral arbitrator, if any, will be final and
binding upon the Company, ALPA, a Participant or
Beneficiary and any other person claiming under the
Plan.
(J) Subject to Section 10.12, the
expenses and reasonable compensation of the neutral
arbitrator selected as provided herein shall be paid
by the Company.
(ii) Except as provided in Section
10.2(b)(i), for all other purposes under the Plan, a majority of the
members (excluding non-voting members) of the ESOP Committee will
constitute a quorum. All actions and decisions of the ESOP Committee
under this Section 10 shall be by (A) the affirmative vote of a
majority of the members present at the meeting at which the vote is
being taken or (B) the unanimous written consent of all members then
in office. If the ESOP Committee deadlocks in the case of any vote,
the matter shall be referred for decision to a neutral arbitrator.
The procedures set forth in subsections 10.2(b)(i)(G) through (J)
shall apply.
10.3 DELEGATION BY ESOP COMMITTEE.
----------------------------
The ESOP Committee may establish procedures for allocation
of fiduciary responsibilities among its members and delegation of fiduciary
responsibilities to persons other than named fiduciaries; provided, however,
that the delegation of the power to manage or control the assets of the Trust
Fund may only be delegated to an "investment manager" (as defined in ERISA
section 3(38)). In exercising its authority to control and manage the
operation and administration of the Plan, the ESOP Committee may employ agents
and counsel (who may also be employed by or represent ALPA or the Company) and
to delegate to them such powers as the ESOP Committee deems desirable. Any
such delegation or appointment shall be in writing and shall reflect the
unanimous action of the ESOP Committee members then acting. The writing
contemplated by the foregoing sentence shall fully describe the advice to be
rendered or the functions and duties to be performed by the delegate.
10.4 INFORMATION TO BE FURNISHED TO ESOP COMMITTEE.
---------------------------------------------
The Company shall furnish the ESOP Committee such data and
information as may be reasonably required to administer this Plan; provided,
however, that the preceding phrase shall not in any case restrict the ability
of ESOP Committee members to see individual Account data with respect to
Participants and, provided, further, that individualized information shall be
treated in a
30
<PAGE> 36
confidential manner. The ESOP Committee shall be entitled to rely on any
information furnished by the Company that is needed for calculation of benefits
due under the Plan, or any matters relating to administration of the Plan. A
Participant or Beneficiary entitled to benefits under the Plan must furnish to
the ESOP Committee such evidence, data or information as the ESOP Committee
considers desirable to carry out its obligations under the Plan. Any benefits
under the Plan may be conditional upon the prompt submission of such
information.
10.5 ESOP COMMITTEE'S DECISION FINAL.
-------------------------------
Except as otherwise provided herein, to the extent
permitted by law, any interpretation of the Plan and any decision on any matter
within the discretion of the ESOP Committee made by the ESOP Committee in good
faith is binding on all persons. Except as provided in ERISA section 405, a
dissenting member is not responsible for any action or failure to act if within
a reasonable time he registers his dissent with the other members, the Company
and the Trustee.
10.6 COMPENSATION AND EXPENSES.
-------------------------
The Company shall pay the flight pay loss for trips missed
by pilot Committee members, all fees and expenses (including, but not limited
to, reasonable travel and travel related living expenses of the ESOP Committee,
the fees and expenses of the Trustee, legal counsel and Plan Administrator)
incurred or charged in connection with the establishment or operation of the
Plan. No remuneration shall be paid to any ESOP Committee member for services
performed hereunder by the Plan or Trust.
10.7 INDEMNIFICATION OF THE ESOP COMMITTEE.
-------------------------------------
The MEC and ALPA and their representatives, the ESOP
Committee, each member thereof, and each of their respective agents and
delegates, shall be indemnified and held harmless by the Company to the fullest
extent permitted by law against any and all liabilities, settlements,
judgments, losses, costs and expenses (including reasonable legal fees and
expenses) of whatever kind and nature which may be imposed on, incurred by or
asserted against them by reason of the establishment, administration and
implementation of the Plan and Trust or by reason of being, or having been, a
member of the ESOP Committee including, but not limited to, (i) performance or
nonperformance of their duties in connection with the Plan, or (ii) acting in
good faith or in reliance on a written direction or certification of the
Company. The foregoing right of indemnification shall be in addition to other
rights such persons may have by law or by reason of insurance coverage of any
kind. The Company may, at its own expense, settle
31
<PAGE> 37
any claim asserted or proceeding brought against any such persons when such
settlement appears to be in the best interests of the Company. The Company
shall secure fidelity bonding for the fiduciaries of the Plan as required by
ERISA section 412 and shall secure fiduciary liability insurance for ESOP
Committee members not less favorable than any ERISA insurance coverage provided
to any fiduciary of any Company qualified plan. Indemnification provided under
this Section 10.7 shall apply until, and in excess of any amount, paid by the
insurance provided hereunder.
10.8 RESIGNATION OR REMOVAL OF ESOP COMMITTEE MEMBER.
-----------------------------------------------
An ESOP Committee member may resign at any time by
delivering his written resignation to the Company and the MEC. The MEC may
remove an ESOP Committee member for any reason.
10.9 APPOINTMENT OF SUCCESSOR ESOP COMMITTEE MEMBERS.
-----------------------------------------------
The MEC shall promptly fill any vacancy in the membership
of the ESOP Committee and shall give written notice thereof to the other ESOP
Committee members, ALPA, the Company and the Trustee.
10.10 INTERESTED ESOP COMMITTEE MEMBER.
--------------------------------
A member may not decide or determine any matter or question
concerning his own benefits under the Plan or as to how they are to be paid to
him unless either such decision could be made by him under the Plan if he were
not a member of the ESOP Committee, or such decision applies to all affected
Participants similarly. If a member is disqualified to act, and the remaining
members of the ESOP Committee cannot agree on a decision, the MEC may appoint a
temporary member to exercise the powers of the interested member concerning the
matter as to which he is disqualified.
10.11 COMPLIANCE WITH LAWS.
--------------------
Notwithstanding anything in the Plan or the Trust Agreement
to the contrary, every individual who is a fiduciary with respect to the Plan
shall exercise his responsibilities with respect to the Plan in a manner
consistent with ERISA and other applicable laws.
10.12 EXPENSES OF THE PLAN AND TRUST.
------------------------------
All expenses of administering the Plan and Trust shall be
charged to and paid by the Company and its Affiliates. Payment of expenses
shall not be deemed to be Company contributions.
10.13 STOCK BONUS PLAN.
----------------
32
<PAGE> 38
The Plan is a stock bonus plan.
33
<PAGE> 39
SECTION 11
CLAIMS PROCEDURE
11.1 WRITTEN CLAIM.
-------------
The Company, which may delegate its authority, shall be the
fiduciary for the initial decision on claims for benefits under the Plan. A
Participant (or Beneficiary) may present a claim to the Company for any unpaid
benefits. The Company shall establish procedures for action upon claims
initially made and the communication of a decision to the claimant promptly
and, in any event, not later than 90 days after the claim is received, unless
special circumstances require an extension of time for processing the claim.
If an extension is required, notice of the extension shall be furnished to the
claimant prior to the end of the initial 90 day period, which notice shall
indicate the reasons for the extension and the expected decision date. The
extension shall not exceed 90 days. The claim may be deemed by the claimant to
have been denied for purposes of further review described below in the event a
decision is not furnished to the claimant within the period described in the
three preceding sentences. If the claim for benefits is wholly or partially
denied, the Company shall notify the Participant (or Beneficiary) in writing of
such denial of benefits within 90 days after the Company initially received the
benefit claim. Such 90-day period may be extended for an additional 90 days if
the Company provides written notice of the extension to the claimant prior to
the termination of such 90 day period and the extension is based on special
circumstances.
11.2 NOTICE OF DENIAL.
----------------
A notice of a denial of benefits shall advise the
Participant (or Beneficiary) of:
(a) the specific reason or reasons for the denial;
(b) the specific provisions of the Plan on which the
denial is based;
(c) any additional material or information necessary for
the Participant (or Beneficiary) to perfect his claim and an explanation of why
such material or information is necessary; and
(d) the steps which the Participant (or Beneficiary)
must take to have his claim for benefits reviewed.
34
<PAGE> 40
11.3 REVIEW PROCEDURE.
----------------
Each Participant (or Beneficiary) whose claim for benefits
has been denied shall have the opportunity to file a written request pursuant
to Section 10.2(b)(i) for a full and fair review of his claim by the ESOP
Committee, to review all documents pertinent to his claim, and to submit a
written statement regarding issues relative to his claim. Such written request
for review of his claim must be filed pursuant to the procedure set forth in
Section 10.2(b)(i) by the Participant (or Beneficiary) within 60 days after
receipt of written notification of the denial of his claim.
11.4 NOTICES.
-------
All notices denying a claim for benefits, and all decisions
on requests for a review of the denial of a claim for benefits, shall be
written in a manner calculated to be understood by the Participant (or
Beneficiary) filing the claim or requesting the review.
35
<PAGE> 41
SECTION 12
AMENDMENT AND TERMINATION
12.1 AMENDMENT.
---------
While the Company expects and intends to continue the Plan,
the Company must necessarily reserve, and does hereby reserve, the right to
amend the Plan, at any time; provided, however, no amendment may be adopted
without the prior approval of ALPA.
12.2 TERMINATION.
-----------
The Plan will terminate as to all of the Company on any
date specified by the Company; provided, however, the Company may not terminate
the Plan without the prior approval of ALPA.
12.3 MERGER AND CONSOLIDATION OF PLAN; TRANSFER OF PLAN ASSETS.
---------------------------------------------------------
No merger or consolidation with, or transfer of assets to,
any other plan may be effected without the prior approval of ALPA. In the case
of any merger or consolidation with, or transfer of assets and liabilities to,
any other plan, provision shall be made so that each Participant in the Plan on
the date thereof, if the Plan was then terminated, would receive a benefit
immediately after the merger, consolidation or transfer that is equal to or
greater than the benefit he would have been entitled to receive immediately
prior to the merger, consolidation or transfer, if the Plan had then
terminated. Notwithstanding the preceding language, in the event of a merger,
if the surviving corporation of the merger agrees to continue the Plan, no
termination or partial termination will be deemed to have occurred. This
Section 12.3 does not apply to transfers or rollovers described in Section 6.4.
12.4 DISTRIBUTION ON TERMINATION.
---------------------------
If, on termination of the Plan, a Participant remains an
Employee of the Company or any of its Affiliates, the amount of the
Participant's benefits may be retained in the Trust until after the
Participant's termination of employment with the Company or any of its
Affiliates and shall be paid to such Participant or, in the event of the
Participant's death, to his Beneficiary, in a lump sum. The benefits payable
to a Participant whose employment with the Company or any of its Affiliates is
terminated coincident with the termination of the Plan shall be paid to the
Participant or, in the event of the Participant's death, to his Beneficiary, in
a lump sum. All appropriate accounting provisions of the Plan will continue to
apply until the benefits of all affected persons have
36
<PAGE> 42
been distributed to them. Affected Participants will be notified of an
amendment, termination or partial termination of the Plan, as required by law.
37
<PAGE> 43
SECTION 13
MISCELLANEOUS
13.1 QUALIFICATION.
-------------
The Plan is designed and intended to comply with the
requirements of Code Section 401(a) so that contributions and the income on
assets in Participants' Accounts will be exempt from Federal income tax until
distributed. Accordingly, the adoption of the Plan and the implementing Trust
and contributions hereunder are contingent upon and subject to obtaining a
written determination of the Internal Revenue Service that the Plan complies
with the requirements of Code Section 401(a) and that the Trust is exempt from
taxation under Code Section
501(a). Return of contributions, if any, shall be made pursuant to Section
13.2.
13.2 REVERSIONS TO SUPPLEMENTAL STOCK PLAN.
-------------------------------------
All contributions hereunder are expressly conditioned on
their deductibility under Code Section 404 and the initial qualification of
the Plan. Notwithstanding anything to the contrary contained in the Plan, or
in any amendment hereto, if (a) any contribution has been made by the Company
by a mistake of fact, or (b) the initial qualification of the Plan under Code
Section 401(a) has been denied, or (c) any deduction for a contribution has
been disallowed, the Trustee shall return the entire Trust assets if clause (b)
applies or such contribution (or the value thereof if lower than the amount of
such contribution) if clauses (a) or (c) apply to the Supplemental Plan trust,
but in no event shall any such return be made after the expiration of one year
following (i) the payment thereof in the case of clause (a) above, (ii) the
denial of qualification in the case of clause (b) above, or (iii) the
disallowance of the deduction in the case of clause (c) above; provided,
however, that prior to any such return, appropriate arrangements shall be made
with ALPA to protect the substantive rights of Participants and Beneficiaries
under the Plan.
13.3 GOVERNING LAW.
-------------
The Plan shall be construed and administered according to
the laws of the State of Missouri to the extent that such laws are not
preempted by the laws of the United States of America.
13.4 NOTICES.
-------
Any notice, communication or document required hereunder to
be given to, or filed with, the ESOP Committee, ALPA, the Company or any other
person shall be properly given or filed if it
38
<PAGE> 44
is in writing and delivered in person or by mail (including federal express,
telex and facsimile transmission) addressed,
If to ALPA, to:
Elizabeth Koby, Esq.
Air Line Pilots Association, International
535 Herndon Parkway
Herndon, VA 22070
Telephone: (703) 689-4125
Facsimile: (703) 689-4370
If to the ESOP Committee, to:
ESOP Committee
TWA MEC
3221 McKelvey Road, Suite 200
Bridgeton, MO 63044
Telephone: (314) 770-8500
Facsimile: (314) 770-8510
If to the MEC, to:
Chairman, TWA MEC
3221 McKelvey Road, Suite 200
Bridgeton, MO 63044
Telephone: (314) 770-8500
Facsimile: (314) 770-8510
If to the Company, to:
Trans World Airlines, Inc.
One City Centre
515 N. Sixth Street
St. Louis, MO 63101
Telephone: (314) 589-3000
Facsimile: (314) 589-3267
Attention: Corporate Secretary
If to Plan Administrator:
Trans World Airlines, Inc.
Administrative Center
P.O. Box 20007
Kansas City, MO 64195
Telephone: (816) 464-6570
Facsimile: (816) 464-6960
Attention: Director of Employee Benefits
39
<PAGE> 45
If to any other person, to such address or facsimile number as such
person may hereafter specify for such purpose, or such other address or
facsimile number as any of the above may hereafter specify for such purpose by
notice in accordance with the foregoing.
Each such notice, request or other communication shall be effective (i) if
given by facsimile, when received by the addressee using the facsimile number
specified in this Section, as evidenced by an automated confirmation receipt
from the sending facsimile machine or (ii) if given by any other means, when
delivered at the address specified in this Section.
13.5 EVIDENCE.
--------
Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting
on it considers pertinent and reliable, and signed, made or presented by the
proper party or parties.
13.6 PARTICIPATION NOT GUARANTEE OF EMPLOYMENT.
-----------------------------------------
Participation in the Plan does not constitute a guarantee
or contract of employment and will not give any Employee the right to be
retained in the employ of the Company or any of its Affiliates nor any right or
claim to any benefit under the terms of the Plan unless such right or claim has
specifically accrued under the terms of the Plan.
13.7 EXCLUSIVE BENEFIT OF PARTICIPANTS.
---------------------------------
All contributions made to the Plan by the Company and
Company Stock acquired with such contributions and dividends and distributions
thereon, shall become a part of the Trust Fund and shall be held and disbursed
by the Trustee in accordance with the provisions of the Plan and Trust
Agreement. No person shall have any interest in or right to assets held in the
Trust Fund except as provided in the Plan and Trust Agreement. The Trust Fund
shall be held for the exclusive benefit of the Participants and their
Beneficiaries, and shall be used solely to pay benefits to such persons. The
Trust Fund shall not revert to the benefit of the Company or any of its
Affiliates, except as provided in Section 13.2.
13.8 ACTION BY COMPANY.
-----------------
Any action required or permitted to be taken by the Company
under the Plan (including any power of the Company to amend or to terminate the
Plan as provided herein) shall be by resolution of the Board of Directors or by
a person or persons authorized by the Board of Directors.
40
<PAGE> 46
13.9 EXECUTION.
---------
To record the adoption of this Plan, the undersigned duly
authorized officers of the Company have caused this document to be executed and
to bear the corporate seal of the Company, all as of the Effective Date.
TRANS WORLD AIRLINES, INC.
Dated: By:________________________________
Its_____________________
AIR LINE PILOTS ASSOCIATION
WITNESSED: INTERNATIONAL
_________________________ By:________________________________
WILLIAM F. COMPTON J. RANDOLPH BABBITT
Its President
41
<PAGE> 1
EXHIBIT 4.13
<PAGE> 2
TWA AIR LINE PILOTS
SUPPLEMENTAL STOCK PLAN
<PAGE> 3
<TABLE>
TABLE OF CONTENTS
Page
SECTION 1
Purpose and Establishment of Plan
<S> <C> <C>
1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Establishment of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2
Definitions
2.1 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Allocation Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Allocation Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 ALPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Claimant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.8 Company or TWA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 Compensation Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.11 Contribution and Benefits Limitations . . . . . . . . . . . . . . . . . . . . . . . . 3
2.12 Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.14 Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.15 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.16 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.17 ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.18 Excess Plan Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.19 Incentive Excess Plan Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.20 Incentive Unallocated Plan Account . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.21 Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.22 Initial Unallocated Plan Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.23 Initial Excess Plan Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.24 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.25 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.26 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.27 Plan of Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.28 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.29 Rate of Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.30 Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.31 Supplemental Stock Plan Committee . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.32 TWA-MEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.33 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.34 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.35 Other Capitalized Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3
Participation
3.1 Commencement of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Termination of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 4
<TABLE>
SECTION 4
Contributions and Allocations
<S> <C>
4.1 Plan Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 ESOP Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.4 Credit to the Excess Plan Account . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.5 Form of Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.6 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.7 Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5
Distribution of Benefits
SECTION 6
Administration
6.1 Duties of the Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2 Appointment and Removal of Supplemental Stock Plan Committee . . . . . . . . . . . . . 14
6.3 Powers of Supplemental Stock Plan Committee . . . . . . . . . . . . . . . . . . . . . 14
6.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.5 Compensation and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7
Resolution of Disputes
SECTION 8
Amendment and Termination
8.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.2 Plan Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9
Miscellaneous
9.1 Benefits Unfunded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.2 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.3 Nonassignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.4 Taxation of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE> 5
TWA AIR LINE PILOTS
SUPPLEMENTAL STOCK PLAN
SECTION 1
PURPOSE AND ESTABLISHMENT OF PLAN
---------------------------------
1.1 PURPOSE. The purpose of the TWA Air Line Pilots
Supplemental Stock Plan is to provide Participants with TWA stock benefits and
specify the manner in which the stock benefits are allocated under the TWA Air
Line Pilots 1995 Employee Stock Ownership Plan and the TWA Air Line Pilots
Supplemental Stock Plan Trust. The TWA Air Line Pilots Supplemental Stock Plan
provides those TWA stock benefits notwithstanding the limitations imposed by
the Internal Revenue Code of 1986, as amended, on contributions to and benefits
from qualified plans.
1.2 ESTABLISHMENT OF PLAN. Trans World Airlines, Inc. hereby
establishes the Plan effective as of September 1, 1994.
<PAGE> 6
SECTION 2
DEFINITIONS
-----------
As used herein, the following terms shall have the meanings set forth
below:
2.1 PLAN ADMINISTRATOR. Trans World Airlines, Inc. which shall
be responsible for the administration of the Plan except as otherwise
specifically provided herein.
2.2 AFFILIATE. Any corporation, trade or business, which, at
the time of reference, is together with the Company, a member of a controlled
group of corporations, a group of trades or businesses (whether or not
incorporated) under common control or an affiliated service group, as described
in Code Section Section 414(b), 414(c) and 414(m), respectively, or any other
organization treated as a single employer under Code Section 414(o); provided,
however, that where the context so requires, the term "Affiliate" shall be
construed to give full effect to the provisions of Code Section Section
409(1)(4) and 415(h).
2.3 ALLOCATION DATES. August 31 of 1995, 1996, 1997, 1998,
1999, 2000, 2001 and 2002. A specific allocation date is referred to by its
year (e.g. August 31, 1995 is the 1995 Allocation Date).
2.4 ALLOCATION PERIOD. For each Allocation Date, the twelve
consecutive month period ending on such Allocation Date.
2.5 ALPA. Air Line Pilots Association, International.
2.6 CLAIMANT. Any Participant (or beneficiary of a deceased
Participant) who claims to be aggrieved by an application and interpretation of
the Plan.
2.7 CODE. The Internal Revenue Code of 1986, as amended.
2
<PAGE> 7
2.8 COMPANY OR TWA. Trans World Airlines, Inc. and any
successor thereof.
2.9 COMPENSATION. The Eligible Employee's Rate of Pay as of
the applicable Allocation Date (or, if earlier, such date the Employee ceases
to be an Eligible Employee for all pay elements other than the rate table)
multiplied by a fraction, the numerator of which is the number of days the
Employee is an Eligible Employee during the Allocation Period and the
denominator of which is 365 (366 for the Allocation Periods ending August 31,
1996 and 2000).
2.10 COMPENSATION LIMITATIONS. The limitations imposed by Code
Section 401(a)(17).
2.11 CONTRIBUTION AND BENEFITS LIMITATIONS. The limitations
imposed by Code Section 415(b), (c) and (e).
2.12 CUSTODIAN. The custodian appointed by ALPA.
2.13 EFFECTIVE DATE. September 1, 1994.
2.14 ELIGIBLE EMPLOYEE. Any Employee who is represented by ALPA
and is (a) in an active pay status or (b) on military leave entitled to
reemployment rights under Chapter 43 of Title 38 of the United States Code.
For purposes of this definition, active pay status means whenever a pilot is
receiving compensation under any section of the Agreement between the Company
and ALPA effective September 1, 1994, and successor agreements thereto.
2.15 EMPLOYEE. Any individual employed by the Company or an
Affiliate.
2.16 ERISA. The Employee Retirement Income Security Act of
1974, as amended.
3
<PAGE> 8
2.17 ESOP. The TWA Air Line Pilots 1995 Employee Stock
Ownership Plan.
2.18 EXCESS PLAN ACCOUNT. The account, which includes the
Initial Excess Plan Account and the Incentive Excess Plan Account, established
for a Participant under the Plan to credit the Participant with amounts under
Section 4.4 that exceed the Limitations.
2.19 INCENTIVE EXCESS PLAN ACCOUNT. The account established for
a Participant under the Plan as an Excess Plan Account to credit the
Participant with amounts resulting from the allocation under Section 4.2(b) and
crediting under Section 4.4(b).
2.20 INCENTIVE UNALLOCATED PLAN ACCOUNT. The account in the
Plan to which the Company's contribution of shares of Stock pursuant to the
Incentive Plan is initially allocated.
2.21 INCENTIVE PLAN. The Trans World Airlines Employee Stock
Incentive Program adopted pursuant to the Plan of Reorganization.
2.22 INITIAL UNALLOCATED PLAN ACCOUNT. The account in the Plan
to which the Company's contribution of shares of Stock and other assets made
pursuant to the Plan of Reorganization is initially allocated.
2.23 INITIAL EXCESS PLAN ACCOUNT. The account established for a
Participant under the Plan as an Excess Plan Account to credit the Participant
with amounts resulting from the allocation under Section 4.2(a) and crediting
under Section 4.4(a).
2.24 LIMITATIONS. The Contribution and Benefits Limitations and
Compensation Limitations.
4
<PAGE> 9
2.25 PARTICIPANT. An Eligible Employee who is participating in
the Plan pursuant to Section 3.
2.26 PLAN. The TWA Air Line Pilots Supplemental Stock Plan.
2.27 PLAN OF REORGANIZATION. The Plan of Reorganization of
Trans World Airlines, Inc. confirmed by the Bankruptcy Court on August 4, 1995.
2.28 PLAN YEAR. The first Plan Year shall be the period
beginning September 1, 1994, and ending December 31, 1994; thereafter, each
calendar year during which the Plan is in effect.
2.29 RATE OF PAY. The hourly rate of pay (including highest
gross weight pay and mileage pay), based on TWA pay seniority, status and TWA
equipment type bid award, and calculated at 1/2 day and 1/2 night for each
narrow body (e.g. DC9, MD80, 727) equipment, and at 1/2 domestic and 1/2
international for each wide body (e.g. 767, L1011, 747) equipment. If an
Eligible Employee does not have a current equipment type bid award, the hourly
rate of pay (including highest gross weight pay and mileage pay) will be based
on TWA pay seniority, status and TWA equipment type bid award such Eligible
Employee would be eligible to hold. For categories not currently in existence,
the Company shall amend the Plan in compliance with Section 8.1 to provide the
applicable rate of pay.
2.30 STOCK. The Company's common or employee preferred stock,
and any Company security received as a dividend from or upon conversion
thereof.
2.31 SUPPLEMENTAL STOCK PLAN COMMITTEE. The Committee appointed
by the TWA-MEC for the purposes established in Section 6.
5
<PAGE> 10
2.32 TWA-MEC. The ALPA Master Executive Council of Trans World
Airlines, Inc.
2.33 TRUST. The trust agreement or agreements entered into
between the Company and the Trustee forming part of this Plan, together with
any amendments thereto.
2.34 TRUSTEE. The Chairman, Vice-Chairman and Secretary/
Treasurer of the TWA-MEC.
2.35 OTHER CAPITALIZED TERMS. Any other capitalized term that
is used herein and that is defined in the ESOP shall have in this Plan the same
meaning ascribed to such term in the ESOP unless the context clearly indicates
a different meaning.
6
<PAGE> 11
SECTION 3
PARTICIPATION
-------------
3.1 COMMENCEMENT OF PARTICIPATION. An Employee shall become a
Participant in the Plan on the first day such Employee is an Eligible Employee
on or after the Effective Date.
3.2 TERMINATION OF PARTICIPATION. An Eligible Employee who
becomes a Participant in the Plan in accordance with Section 3.1 above shall be
considered to continue as a Participant until he or she has received a total
distribution of the Participant's Excess Plan Account, or August 31, 2002, if
no allocation has been made to the Participant's Excess Plan Account as of
August 31, 2002.
7
<PAGE> 12
SECTION 4
CONTRIBUTIONS AND ALLOCATIONS
-----------------------------
4.1 PLAN CONTRIBUTIONS.
-------------------
(a) The Company shall contribute to the Plan the
shares of Stock required pursuant to the Plan of Reorganization. Such stock
shall be allocated to the Initial Unallocated Plan Account.
(b) The Company shall contribute to the Plan the
shares of Stock required under the Incentive Plan. Such stock shall be
allocated to the Incentive Unallocated Plan Account.
4.2 ALLOCATIONS.
------------
(a) INITIAL ALLOCATIONS.
(i) As of the 1995 Allocation Date, the
Plan Administrator shall allocate one-third of the shares of Stock (and any
other asset pursuant to Section 1.2(d) of the Trust) in the Initial Unallocated
Plan Account as of such date.
(ii) As of the 1996 Allocation Date, the
Plan Administrator shall allocate one-half of the shares of Stock (and any
other asset pursuant to Section 1.2(d) of the Trust) in the Initial Unallocated
Plan Account as of such date.
(iii) As of the 1997 Allocation Date, the
Plan Administrator shall allocate all of the shares of Stock (and any other
asset pursuant to Section 1.2(d) of the Trust) in the Initial Unallocated Plan
Account as of such date.
(iv) Each such allocation shall be made
among all Participants who were Eligible Employees at any time
8
<PAGE> 13
during the applicable Allocation Period with each such Participant's percentage
of the shares being determined by dividing such Participant's Compensation for
the applicable Allocation Date by the total Compensation of all Participants
for the applicable Allocation Date.
(v) The Plan Administrator shall
complete the allocation within six months after the applicable Allocation Date.
(b) INCENTIVE ALLOCATIONS.
(i) The Plan Administrator shall
allocate shares of stock in the Incentive Unallocated Plan Account as of the
Allocation Date which first follows the July 15 when such shares are issued
pursuant to the Incentive Plan.
(ii) The allocation shall be made among
all Participants who were Eligible Employees at any time during the applicable
Allocation Period with each Participant's percentage of the shares being
determined by dividing such Participant's Compensation for the applicable
Allocation Date by the total Compensation of all Participants.
(iii) The Plan Administrator shall
complete the allocation within six months after the applicable Allocation Date.
4.3 ESOP CONTRIBUTION. To the extent permitted under the
Limitations as applied to each Participant, the individual allocations
determined under Section 4.2 shall be contributed to the ESOP by the Company
and allocated thereunder to each Participant (who participates in the ESOP) up
to the Limitations
9
<PAGE> 14
for the ESOP plan year which ends coincident with or first following the
Allocation Date. Thereafter all rights of Participants to Stock or other
assets contributed to the ESOP shall be governed by the ESOP. To the extent
the amount to be contributed for a Participant to the ESOP is subject to the
Limitations, the contribution to the ESOP first shall be made for the
allocation pursuant to Section 4.2(a).
4.4 CREDIT TO THE EXCESS PLAN ACCOUNT. In the event that, with
respect to any Allocation Date, the allocation under the ESOP for a Participant
cannot be made or is limited by the Limitations, such Participant's Excess Plan
Account shall be credited with an allocation under the Plan as of the
Allocation Date equal to the amount not allocated to the Participant under the
ESOP.
(a) The excess allocation attributable to Section 4.2(a)
shall be credited to the Participant's Initial Excess Plan Account under the
Plan.
(b) The excess allocation attributable to Section 4.2(b)
shall be credited to the Participant's Incentive Excess Plan Account under the
Plan.
(c) Amounts credited to a Participant's Excess Plan
Account which are not the result of the Contribution and Benefits Limitations
shall be accounted for separately and segregated within the Excess Plan
Account.
4.5 FORM OF ALLOCATION. The allocation under Section 4.4 shall
be in the form of Stock and other assets not contributed to the ESOP.
10
<PAGE> 15
4.6 VESTING. Excess Plan Accounts and any earnings thereon
shall be fully vested and nonforfeitable at all times.
4.7 DESIGNATION OF BENEFICIARY. A Participant may designate a
beneficiary to receive the unpaid portion of the Participant's Excess Plan
Account in the event of the Participant's death. The designation shall be made
on a form prescribed by the Plan Administrator and filed with the Plan
Administrator before the Participant's death. If no effective designation of
beneficiary is on file with the Company when the Excess Plan Account otherwise
would be distributable to a beneficiary or if the designated Beneficiary dies
before the Participant, then such Excess Plan Account shall be distributed as
follows:
(a) first, to the surviving spouse of the Participant, if
any;
(b) second to the children (including any adopted
children) of the Participant, per stirpes; and
(c) third, if the Participant leaves no surviving spouse
and has no descendants pursuant to Section 4.7(b), to the estate of the
Participant.
If the designated beneficiary survives the Participant, but dies
prior to the date benefits are distributed, the benefits shall be deemed
payable to the designated beneficiary and distributed to the estate of the
designated beneficiary.
11
<PAGE> 16
SECTION 5
DISTRIBUTION OF BENEFITS
------------------------
(a) The first distribution to Participants, or
their Beneficiaries, from the Initial Excess Plan Account shall be made in
1999. As soon as administratively possible after January 1, 1999, each
Participant, or the Participant's Beneficiary if the Participant is deceased,
shall receive one-third of the Stock (rounded up to whole shares) and 100% of
other assets credited to such Participant's Initial Excess Plan Account on
December 31, 1998.
(b) As soon as administratively possible after
January 1, 2000, each Participant, or the Participant's Beneficiary if the
Participant is deceased, shall receive one-half of the Stock (rounded up to
whole shares) and 100% of other assets credited to such Participant's Initial
Excess Plan Account on December 31, 1999.
(c) As soon as administratively possible after
January 1, 2001, each Participant, or the Participant's Beneficiary if the
Participant is deceased, shall receive the remainder of the Stock and all other
assets credited to such Participant's Initial Excess Plan Account.
(d) As soon as administratively possible after
March 1, 2003, each Participant, or the Participant's Beneficiary if the
Participant is deceased, shall receive all the Stock and all other assets
credited to such Participant's Incentive Excess Plan Account.
12
<PAGE> 17
(e) If on the distribution dates under paragraph
(a) and (b) of this Section, the number of shares of Stock in a Participant's
Initial Excess Plan Account is less than 50, then all such shares of Stock
shall be distributed to the Participant, or the Participant's Beneficiary if
the Participant is deceased.
13
<PAGE> 18
SECTION 6
ADMINISTRATION
--------------
6.1 DUTIES OF THE PLAN ADMINISTRATOR. The Plan Administrator
shall be responsible for all matters relating to the administration of the Plan
which are not delegated to the Supplemental Stock Plan Committee under Sections
6.3.
6.2 APPOINTMENT AND REMOVAL OF SUPPLEMENTAL STOCK PLAN
COMMITTEE.
(a) The Supplemental Stock Plan Committee shall
consist of three or more individuals appointed by the TWA-MEC.
(b) A Supplemental Stock Plan Committee member
may resign at any time by delivering his written resignation to the Company and
the TWA-MEC. The TWA-MEC may remove a Supplemental Stock Plan Committee member
for any reason.
(c) The TWA-MEC shall promptly fill any vacancy
in the membership of the Supplemental Stock Plan Committee and shall give
written notice thereof to the other Supplemental Stock Plan Committee members,
the Company and the Trustee.
6.3 POWERS OF SUPPLEMENTAL STOCK PLAN COMMITTEE.
(a) The Supplemental Stock Plan Committee shall
make a periodic review of the status of the Plan including, but not limited to,
the administration and the expenses of the Plan and the Trust.
(b) The Supplemental Stock Plan Committee shall
hear all disputes arising out of the application and interpretation of the Plan
which are properly submitted to it in accordance with Section 7 hereof.
14
<PAGE> 19
(c) The Supplemental Stock Plan Committee shall
establish such rules and procedures as it shall determine are necessary or
appropriate for performing its duties hereunder.
(d) In administering the Plan, a member of the
Supplemental Stock Plan Committee may not decide or determine any matter or
question concerning his or her own benefits under the Plan or as to how they
are to be paid the member unless either such decision could be made by the
member under the Plan if the member were not a member of the Supplemental Stock
Plan Committee, or such decision applies to all affected participants
similarly. If the member is disqualified to act, and the remaining members of
the Supplemental Stock Plan Committee cannot agree on a decision, the TWA-MEC
may appoint a temporary member to exercise the powers of the interested member
concerning the matter as to which the member is disqualified.
6.4 INDEMNIFICATION. The Company agrees to indemnify and hold
harmless the trustees of the Trust as provided in the Trust. The Company
agrees to indemnify and hold harmless each member of the Supplemental Stock
Plan Committee, MEC, ALPA and their representatives in connection with their
performance or non-performance of any duties under the Plan or Trust. The
Company agrees to procure and maintain in force a fiduciary liability insurance
policy or policies under which the individuals and the entities indemnified
hereunder are covered in an aggregate amount that is not less than $3,000,000
with no deductibles or exception to coverage.
15
<PAGE> 20
6.5 COMPENSATION AND EXPENSES. The Company shall pay the
flight pay loss for trips missed by pilot Committee members, all fees and
expenses (including, but not limited to reasonable travel and travel related
living expenses of the Supplemental Stock Plan Committee, the fees and expenses
of the Trustee, Custodian, legal counsel and Plan Administrator) incurred or
charged in connection with the establishment or operation of the Plan, Trust
and ESOP. No member of the Supplemental Stock Plan Committee shall receive any
compensation for the member's services to the Plan from the Plan or Trust.
16
<PAGE> 21
SECTION 7
RESOLUTION OF DISPUTES
----------------------
(a) A Claimant must follow the provisions of this
Section 7 if the Claimant has a dispute as to benefits or any provision of the
Plan. A Claimant shall be afforded a hearing on such dispute before the
Supplemental Stock Plan Committee to appeal any prior determination providing:
(i) that such Claimant personally serves
written notice by mail of a request
for hearing on the Supplemental
Stock Plan Committee, TWA MEC, 3221
McKelvey Road, Suite 200, Bridgeton,
Missouri 63044;
(ii) that such notice is so served within
one hundred and twenty (120) days
from the earliest date such Claimant
first had or reasonably should have
had knowledge of the existence of
the dispute; and
(iii) that such notice contains a complete
and specific statement of (1) the
facts giving rise to the dispute;
(2) the issues to be considered by
the Supplemental Stock Plan
Committee; and (3) the relief
requested.
ALPA may request a hearing on behalf of one or more Participants or
Beneficiaries under this Section.
(b) Upon receipt of a proper and timely notice of
request for hearing, the Supplemental Stock Plan Committee shall promptly
(within 60 days) convene to hear the dispute.
(c) Notice of the time and place of hearing shall
be served by mail on the Claimant.
17
<PAGE> 22
(d) The parties may present testimony and
exhibits, and may examine and cross-examine witnesses. The Supplemental Stock
Plan Committee shall rule upon the admissibility of evidence to the end that a
fair, prompt and orderly hearing of the dispute is afforded.
(e) The Company, the Trustee, ALPA and any
Claimant may be represented before the Supplemental Stock Plan Committee by an
attorney or other designated representative.
(f) The Claimant will pay the Claimant's expenses.
(g) The Supplemental Stock Plan Committee shall
maintain a complete record of all matters submitted to it for hearing and of
all findings and decisions issued by it.
(h) The decision by the Supplemental Stock Plan
Committee shall be by a majority vote of all its members.
(i) Subsequent to the hearing, the Supplemental
Stock Plan Committee shall issue a notice, to be served by mail, upon the
Claimant stating the results of the hearing.
(j) All notices in writing shall be served by use
of certified mail, return receipt requested.
(k) This is the sole method of resolving disputes
under the Plan and the resolution of the dispute by the Supplemental Stock Plan
Committee shall be final and binding upon the Company, the Trustee, ALPA, the
Claimant and any other person or entity having any claim under this Plan.
18
<PAGE> 23
SECTION 8
AMENDMENT AND TERMINATION
-------------------------
8.1 AMENDMENT. The Company may not amend the terms of this
Plan at any time in any manner absent the prior approval of ALPA, (and the
Trustee, if the effect of such amendment would be to increase the Trustee's
duties).
8.2 PLAN TERMINATION. The Company may not terminate the Plan,
in whole or in part absent the prior approval of ALPA.
8.3 LIQUIDATED DAMAGES. The Company agrees that should any or
all of the Stock not be contributed to the Trust or should any or all of the
Stock held in Trust be used to satisfy creditor claims (the "Untendered
Stock"), the Company will pay to the Participants in lieu of the Untendered
Stock (to be allocated in accordance with the terms of Section 4 hereof) an
amount equal to the value of Untendered Stock determined on the date Stock was
to be contributed or the date used to satisfy creditor claims, whichever is
applicable.
19
<PAGE> 24
SECTION 9
MISCELLANEOUS
-------------
9.1 BENEFITS UNFUNDED. It is the intention of the parties that
this Plan constitutes an unfunded deferred compensation plan and that the
benefits payable hereunder are not to be included in the gross income of the
Participant until the taxable year in which the benefits are actually received
by or otherwise made available to the Participant, whichever occurs earlier.
The Company, however, may segregate assets which are intended to be a source
for payment of benefits hereunder. Each Participant shall have the status of
an unsecured general creditor of the Company and the Plan, subject to the
provisions of the Trust, constitutes a mere promise by the Company to make
benefit payments in the future.
9.2 ERISA. This Plan is being established with the express
intention that it is not an employee benefit plan as defined in ERISA Section
3(3). If it is determined that the Plan is an employee benefit plan under
Section 3(3) of ERISA, the Plan provides only benefits payable directly to
Participants which may not be contributed to the ESOP due to the Limitations
and shall constitute an unfunded excess benefit plan for purposes of Section
4(b)(5) of ERISA. Accordingly, the Plan is being treated as a Plan exempt from
Title I of ERISA.
9.3 NONASSIGNABILITY. No Participant shall have the right to
assign, pledge or otherwise dispose of any benefits payable to the Participant
hereunder nor shall any Participant's benefits be subject to garnishment,
attachment, transfer by operation of law, or any legal process.
20
<PAGE> 25
9.4 TAXATION OF BENEFITS. If, due to changes in federal tax
law, contributions to this Plan become taxable to Participants prior to
distribution, the Company and ALPA shall negotiate in good faith to implement
an alternative arrangement.
9.5 GOVERNING LAW. This Plan shall be governed by the laws of
the State of Missouri.
TRANS WORLD AIRLINES, INC.
By:
-------------------------------
Its:
-------------------
AIR LINE PILOTS ASSOCIATION,
WITNESSED: INTERNATIONAL
By:
- - ----------------------- -------------------------------
WILLIAM F. COMPTON J. RANDOLPH BABBITT
Chairman TWA MEC Its President
21
<PAGE> 1
EXHIBIT 4.14
<PAGE> 2
TWA AIR LINE PILOTS
SUPPLEMENTAL STOCK PLAN TRUST
Effective August 23, 1995
<PAGE> 3
TABLE OF CONTENTS
Page
SECTION 1
Establishment of Trust and Accounts
1.1 Establishment of Trust . . . . . . . . . . . . . . . . . 3
1.2 Establishment and Operation of Trust Accounts . . . . . 3
1.3 Trust Irrevocable . . . . . . . . . . . . . . . . . . . 7
1.4 Grantor Trust . . . . . . . . . . . . . . . . . . . . . 7
1.5 Segregation of Trust Assets . . . . . . . . . . . . . . 7
SECTION 2
Transfers and Payments to Participants
and Their Beneficiaries
2.1 Transfers from Unallocated Trust Account . . . . . . . . . 8
2.2 Distribution from the Excess Trust Account . . . . . . . . 8
2.3 Withholding . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Benefit Determinations . . . . . . . . . . . . . . . . . . 9
2.5 Direct Payment . . . . . . . . . . . . . . . . . . . . . . 10
2.6 Stock Distribution and Sales by the Trustee . . . . . . . 10
SECTION 3
Trustee Responsibility Regarding Payments to
Trust Beneficiary When the Company Is Insolvent
3.1 Insolvency . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Determination of Insolvency; Discontinuance of Benefit
Payments . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Resumption of Benefit Payments . . . . . . . . . . . . . 12
SECTION 4
Payments to Company;
Investment Authority; Disposition of Income
4.1 Payments to Company . . . . . . . . . . . . . . . . . . . 13
4.2 Investment Authority . . . . . . . . . . . . . . . . . . . 13
4.3 Disposition of Income . . . . . . . . . . . . . . . . . 14
SECTION 5
Accounting by the Trustee
5.1 Valuation of Trust . . . . . . . . . . . . . . . . . . . . 15
5.2 Valuation of Participant Accounts . . . . . . . . . . . 15
5.3 Periodic Reports . . . . . . . . . . . . . . . . . . . . 15
5.4 Special Reports . . . . . . . . . . . . . . . . . . . . 15
SECTION 6
Responsibility of the Trustee
6.1 Trustee Powers . . . . . . . . . . . . . . . . . . . . . . 17
6.2 Limitation on Responsibility . . . . . . . . . . . . . . . 17
<PAGE> 4
SECTION 7
Compensation and Expenses of the Trustee
SECTION 8
Appointment and Removal of the Trustee and Custodian
8.1 Trustee . . . . . . . . . . . . . . . . . . . . . . . . 20
8.2 Notice . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.3 Removal and Appointment of Custodian . . . . . . . . . . 20
SECTION 9
Amendment and Termination
9.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 21
9.2 Termination . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 10
Miscellaneous
10.1 Severability . . . . . . . . . . . . . . . . . . . . . . . 22
10.2 Non-Alienation of Benefits . . . . . . . . . . . . . . . . 22
10.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . 22
10.4 Defined Terms . . . . . . . . . . . . . . . . . . . . . . 22
10.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.6 Delegation to Custodian . . . . . . . . . . . . . . . . . 23
10.7 Effective Date . . . . . . . . . . . . . . . . . . . . . . 24
10.8 Execution in Counterparts . . . . . . . . . . . . . . . . 24
<PAGE> 5
TWA AIR LINE PILOTS
SUPPLEMENTAL STOCK PLAN TRUST AGREEMENT
THIS AGREEMENT, made and entered into as of August 23, 1995,
by and among TRANS WORLD AIRLINES, INC., a Delaware Corporation (the
"Company"), the AIR LINE PILOTS ASSOCIATION, INTERNATIONAL ("ALPA") and the
Chairman, Vice Chairman and Secretary/Treasurer of the Master Executive Council
of Trans World Airlines, Inc. in their capacity as trustees under this
agreement (the "Trustee").
W I T N E S E T H :
------------------
WHEREAS, pursuant to collective bargaining with ALPA, the
Company has established the TWA Air Line Pilots Supplemental Stock Plan (the
"Plan"), a nonqualified deferred compensation plan for the benefit of eligible
employees ("Participants"); and
WHEREAS, pursuant to collective bargaining with ALPA, the
Company has established the TWA Air Line Pilots 1995 Employee Stock Ownership
Plan (the "ESOP") for the benefit of certain employees; and
WHEREAS, the Company has incurred or expects to incur
liability under the terms of the Plan with respect to Participants and wishes
to establish a trust (the "Trust") to provide a source of funds to assist it in
meeting its liabilities under the Plan; and
WHEREAS, pursuant to an agreement between the Company and
ALPA, the Company has transferred shares of Company employee preferred stock
("Preferred Stock") pursuant to the Plan of
<PAGE> 6
Reorganization of Trans World Airlines, Inc. confirmed by the Bankruptcy Court
on August 4, 1995 (the "Initial Allocation"), and under the Trans World
Airlines Employee Stock Incentive Program may transfer shares of Company common
stock (the "Incentive Allocation"), both of which, together with any Company
securities obtained as a dividend or upon conversion of Preferred Stock, are
referred to herein as "Company Stock"; and
WHEREAS, the Trustee has agreed to serve as Trustee hereunder
with respect to Company Stock and such other assets transferred to or acquired
by the Trust (the "Trust Assets"); and
WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not affect the status
of the Plan as an unfunded plan maintained for the purpose of providing
deferred compensation to Participants; and
WHEREAS, American Stock Transfer & Trust Company (the
"Custodian") shall retain physical custody of Trust Assets and perform certain
administrative and reporting functions on behalf of the Trust, as provided
herein and in that certain custodial agreement with, among others, the Company
and the Custodian first effective as of August 23, 1995 (the "Custodial
Agreement"); and
WHEREAS, it is intended that the Trust is not established as
an employee benefit plan as that term is defined under Title I of the Employee
Retirement Income Security Act of 1974, as amended;
NOW, THEREFORE, the parties do hereby establish the Trust and
agree that the Trust shall be comprised, held and disposed of as follows:
2
<PAGE> 7
SECTION 1
Establishment of Trust and Accounts
-----------------------------------
1.1 ESTABLISHMENT OF TRUST. The Company hereby establishes with
the Trustee and the Trustee hereby accepts a trust, consisting of 1,721,764
shares of Company Stock transferred to the Trust on August 23, 1995, and such
other assets as shall be transferred to, or acquired by, the Trustee from time
to time on behalf on the Plan. The Trustee shall invest Trust Assets in
accordance with the provisions of this Agreement, as may be amended from time
to time. Except to the extent otherwise provided herein, the Trustee shall
have the exclusive authority to manage and control Trust Assets and shall not
be subject to the direction of any person in the discharge of its duties, nor
shall its authority be subject to delegation or modification except by formal
amendment of this Agreement. The Trust hereby established shall be
irrevocable.
1.2 Establishment and Operation of Trust Accounts.
----------------------------------------------
(a) The Trustee shall divide the Trust into two Accounts
(i) the "Unallocated Trust Account" and (ii) the "Excess Trust Account";
(b) The Unallocated Trust Account shall consist of two
subaccounts; the "Initial Unallocated Trust Account" which first holds assets
attributable to the Initial Allocation prior to their allocation under the Plan
and the "Incentive Unallocated Trust Account" which first holds assets
attributable to the Incentive Allocation prior to their allocation under the
Plan;
(c) The Excess Trust Account shall consist of two
subaccounts; the "Initial Excess Trust Account" which holds assets
3 SECTION 1
<PAGE> 8
attributable to the Initial Allocation and the "Incentive Excess Trust Account"
which holds assets attributable to the Incentive Allocation.
(d) (i) As of August 31, 1995, the Trustee shall
transfer one-third of the shares of Company Stock and one-third of any other
Trust Assets held in the Initial Unallocated Trust Account as of August 31,
1995 from the Initial Unallocated Trust Account. Pursuant to the Plan such
transferred Company Stock and other Trust Assets shall be contributed to the
ESOP for the ESOP plan year ending December 31, 1995 and/or (to the extent the
allocation to a Participant under the ESOP will be in excess of the
Limitations, as that term is defined in the Plan) transferred to the Initial
Excess Trust Account under the Trust. Company Stock and other Trust Assets
transferred to the Initial Excess Trust Account shall be accounted for in an
individual Participant's name as of August 31, 1995, as specified by the
Company pursuant to the Plan.
(ii) As of August 31, 1996, the Trustee shall
transfer one-half of the shares of Company Stock and one-half of any other
Trust Assets held in the Initial Unallocated Trust Account as of August 31,
1996 from the Initial Unallocated Trust Account. Pursuant to the Plan such
transferred Company Stock and other Trust Assets shall be contributed to the
ESOP for the ESOP plan year ending December 31, 1996 and/or transferred to the
Initial Excess Trust Account under the Trust as described in subparagraph (i)
above. Company Stock and other Trust Assets transferred to the Initial Excess
Trust Account shall be accounted
4 SECTION 1
<PAGE> 9
for in an individual Participant's name as of August 31, 1996, as specified by
the Company pursuant to the Plan.
(iii) As of August 31, 1997, the Trustee shall
transfer the remaining shares of Company Stock and the remaining other Trust
Assets held in the Initial Unallocated Trust Account from the Initial
Unallocated Trust Account. Pursuant to the Plan such transferred Company Stock
and other Trust Assets shall be contributed to the ESOP for the ESOP plan year
ending December 31, 1997, and/or transferred to the Initial Excess Trust
Account under the Trust as described in subparagraph (i) above. Company Stock
and other Trust Assets transferred to the Initial Excess Trust Account shall be
accounted for in an individual Participant's name as of August 31, 1997, as
specified by the Company pursuant to the Plan.
(iv) As of August 31, 1997, 1998, 1999, 2000, 2001
and 2002, the Trustee shall transfer from the Incentive Unallocated Trust
Account any Company Stock issued by the Company in accordance with the Employee
Stock Incentive Program as a contribution to the ESOP or transfer to the
Incentive Excess Trust Account as follows. Pursuant to the Plan such Company
Stock shall be contributed to the ESOP for the ESOP plan year ending coincident
with or first following the applicable August 31, and/or transferred to the
Incentive Excess Trust Account under the Trust as described in subparagraph (i)
above. Company Stock transferred to the Incentive Excess Trust Account shall
be accounted for in an individual Participant's name as of the applicable
August 31 as specified by the Company pursuant to the Plan.
5 SECTION 1
<PAGE> 10
(e) The Trustee shall determine, in its sole and absolute
discretion, how to vote, or whether to tender, the Company Stock held in (or
entitled to be received by) the Trust (whether in the Excess Trust Account or
Unallocated Trust Account). The Trustee may make that determination based
solely on the purpose of providing employee job security. As used in this
section, employee job security shall mean long term jobs for employees as a
group, rather than preservation of any particular individual's or particular
group of individuals' jobs. If consistent with the purpose of providing
employee job security, the Trustee may consider benefits for pilot retirees in
voting, or tendering, the Company Stock. Obtaining financial gains from,
maximizing the value of, or maximizing the proceeds from, the Company Stock are
not primary purposes of this Trust and may be considered only in conjunction
with consideration of the other purposes set forth in this Section. The
Trustee's decision on the manner of voting the Company Stock shall be final and
binding on all Participants, employees, pilot retirees, beneficiaries and any
parties hereto.
(f) The Trustee shall not be liable for the manner in
which the Trustee votes the Company Stock, or the result thereof including, but
not limited to, any decrease in, or failure to increase, the value of the
Company Stock, or the Trust Assets or job loss by an employee or group of
employees. The Trustee may employ professionals to provide the Trustee advice
regarding voting issues and shall not be liable to any party for any action
taken in reliance on such professional advice.
6 SECTION 1
<PAGE> 11
1.3 TRUST IRREVOCABLE. The Trust hereby established shall
be irrevocable.
1.4 GRANTOR TRUST. The Trust is intended to be a grantor trust,
of which the Company is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as
amended (the "Code"), and shall be construed accordingly.
1.5 SEGREGATION OF TRUST ASSETS. Trust Assets and any earnings
thereon shall be held separate and apart from other funds of the Company and
shall be used exclusively for the uses and purposes for Participants, subject
to the rights of the Company's general creditors as herein set forth.
Participants and their beneficiaries shall have no preferred claim on, or any
beneficial ownership interest in, any assets of the Trust. Any rights created
under the Plan and this Trust Agreement shall be mere unsecured contractual
rights of Participants and their beneficiaries against the Company. Trust
Assets will be subject to the claims of the Company's general creditors under
federal and state law in the event of Insolvency, as defined in Section 3.1
herein.
7 SECTION 1
<PAGE> 12
SECTION 2
Transfers and Payments to Participants
--------------------------------------
and Their Beneficiaries
-----------------------
2.1 TRANSFERS FROM UNALLOCATED TRUST ACCOUNT. The transfers from
the Unallocated Trust Account shall be made in accordance with Section 1.2(d).
2.2 DISTRIBUTION FROM THE EXCESS TRUST ACCOUNT.
(a) The first distribution to Participants or their
beneficiaries shall be made as of January 1, 1999. As of January 1, 1999, the
Trustee shall distribute to the Participant, or the Participant's beneficiary
if the Participant is deceased, one-third of the Company Stock (rounded up to
whole shares) and all other Trust Assets, held in such Participant's Initial
Excess Trust Account on such date.
(b) As of January 1, 2000, the Trustee shall distribute
to the Participant, or the Participant's beneficiary if the Participant is
deceased, one-half of the Company Stock (rounded up to whole shares) and all
other Trust Assets, held in such Participant's Initial Excess Trust Account on
such date.
(c) As of January 1, 2001, the Trustee shall distribute
to the Participant, or the Participant's beneficiary if the Participant is
deceased, the remainder of the Company Stock and all other Trust Assets, held
in such Participant's Initial Excess Trust Account on such date.
(d) As of March 1, 2003, the Trustee shall distribute to
the Participant, or the Participant's beneficiary if the
8 SECTION 2
<PAGE> 13
Participant is deceased, the entire amount of the Participant's Incentive
Excess Trust Account on such date.
(e) If on the distribution dates in paragraphs (a) and
(b) of this Section the number of shares of Company Stock in a Participant's
Initial Excess Trust Account is less than 50, then all such Company Stock shall
be distributed.
2.3 WITHHOLDING. The Trustee shall cause the Custodian to report
and withhold any federal or state taxes that may be required to be withheld
with respect to the payment of benefits pursuant to the terms of the Plan and
to pay amounts withheld to the appropriate taxing authorities or determine that
such amounts have been reported, withheld and paid by the Company. If the
Employee is receiving wages from the Company at the time a payment of benefits
is made, the Company agrees to withhold appropriate amounts from such wages and
provide to the Custodian and Trustee notice of such amount of withholding. To
the extent required, the Custodian shall be authorized to withhold from the
distribution shares of Company Stock if necessary to comply with withholding
requirements. The Trustee is authorized to convert any Preferred Stock and to
direct the Custodian to sell any securities, including those obtained by
conversion, to satisfy withholding obligations.
2.4 BENEFIT DETERMINATIONS. The entitlement of a Participant or
his or her beneficiary to benefits under the Plan shall be determined by the
Company, or such party as may be designated under the Plan, and any claim for
such benefits shall be considered and reviewed under the procedures set out in
the Plan.
9 SECTION 2
<PAGE> 14
2.5 DIRECT PAYMENT. The Company may make payment of benefits
directly to Participants or their beneficiaries as they become due under the
terms of the Plan. The Company shall notify the Trustee of its decision to
make payment of benefits directly prior to the time amounts are payable to
Participants or their beneficiaries. In addition, if the principal of the
Trust, and any earnings thereon, are not sufficient to make payments of
benefits in accordance with the terms of the Plan, the Company shall make the
balance of each such payment as it falls due. The Trustee shall notify the
Company where principal and earnings are not sufficient for the Trustee to make
payment in accordance with the terms of the Plan.
2.6 STOCK DISTRIBUTION AND SALES BY THE TRUSTEE. The amounts
credited to Participants under the Plan and held by the Trustee shall be paid
or distributed by the Trustee to a Participant or beneficiary in accordance
with the terms of Section 2.2 of the Trust.
10 SECTION 2
<PAGE> 15
SECTION 3
Trustee Responsibility Regarding Payments to
--------------------------------------------
Trust Beneficiary When the Company Is Insolvent
-----------------------------------------------
3.1 INSOLVENCY. The Trustee shall cease payment of benefits to
Participants, their beneficiaries and the ESOP if the Company is Insolvent.
The Company shall be considered "Insolvent," for purposes of this Trust
Agreement if (a) the Company is unable to pay its debts as they become due, or
(b) the Company is subject to a pending proceeding as a debtor under the United
States Bankruptcy Code.
3.2 DETERMINATION OF INSOLVENCY; DISCONTINUANCE OF BENEFIT
PAYMENTS. At all times during the continuance of this Trust, as provided in
Section 1.5 hereof, the principal and income of the Trust shall be subject to
claims of general creditors of the Company under federal and state law as set
forth below.
(a) The Board of Directors and the Chief Executive
Officer of the Company shall have the duty to inform the Trustee in writing of
the Company's Insolvency. If a person claiming to be a creditor of the Company
alleges in writing to the Trustee that the Company has become Insolvent, the
Trustee shall determine whether the Company is Insolvent and, pending such
determination, the Trustee shall discontinue payment of benefits to
Participants and their beneficiaries and the ESOP.
(b) Unless the Trustee has actual knowledge of the
Company's Insolvency, or has received notice from the Company or a person
claiming to be a creditor alleging that the Company is Insolvent, the Trustee
shall have no duty to inquire whether the Company is Insolvent. The Trustee
may in all events rely on such
11 SECTION 3
<PAGE> 16
evidence concerning the Company's solvency as may be furnished to the Trustee
and that provides the Trustee with a reasonable basis for making a
determination concerning the Company's solvency.
(c) If at any time the Trustee has determined that the
Company is Insolvent, the Trustee shall discontinue payments to Participants,
their beneficiaries and the ESOP and shall hold the assets of the Trust for the
benefit of the Company's general creditors. Nothing in this Trust Agreement
shall in any way diminish any rights of Participants or their beneficiaries to
pursue their rights as general creditors of the Company with respect to
benefits due under the Plan or otherwise.
3.3 RESUMPTION OF BENEFIT PAYMENTS.
(a) The Trustee shall resume the payment of benefits to
Participants, their beneficiaries and the ESOP only after the Trustee has
determined that the Company is not Insolvent (or is no longer Insolvent).
(b) Provided that there are sufficient assets in the
Trust, if the Trustee discontinues the payment of benefits from the Trust
pursuant to Section 3.2 hereof and subsequently resumes such payments, the
first payment following such discontinuance shall include the aggregate unpaid
amount of all payments due to Participants, their beneficiaries and the ESOP
under the terms of the Plan for the period of such discontinuance.
12 SECTION 3
<PAGE> 17
SECTION 4
Payments to Company;
--------------------
Investment Authority; Disposition of Income
-------------------------------------------
4.1 PAYMENTS TO COMPANY. Except as provided in Section 3 hereof,
the Company shall have no right or power to direct the Trustee to return to the
Company or to divert to others any of the Trust assets before all payments of
benefits have been made to Participants and their beneficiaries pursuant to the
terms of the Plan.
4.2 INVESTMENT AUTHORITY.
(a) The Trustee shall invest in Company Stock, cash or
assets received in connection with Company Stock. All rights associated with
Trust Assets shall be exercised by the Trustee or the person designated by the
Trustee, and shall in no event be exercisable by or rest with Participants.
The Company shall have the right at any time, and from time to time in its sole
discretion, to substitute assets of equal fair market value for any asset held
by the Trust. This right is exercisable by the Company in a nonfiduciary
capacity without the approval or consent of any person in a fiduciary capacity.
(b) The Trustee shall invest Trust Assets in accordance
with the provisions of this Trust Agreement, as it may be amended from time to
time, without the Trustee being limited to the classes of property in which
trustees are authorized to invest trust funds by any law or any rule of court
of any state, and without regard to the proportion any such property may bear
to the entire amount of the Trust.
13 SECTION 4
<PAGE> 18
4.3 DISPOSITION OF INCOME. During the term of this Trust, all
income received by the Trust, net of expenses and taxes, shall be accumulated
and reinvested in cash or other liquid assets.
14 SECTION 4
<PAGE> 19
SECTION 5
Accounting by the Trustee
--------------------------
5.1 VALUATION OF TRUST. The net fair market value of the Trust
shall be determined by the Trustee as of each December 31, or such other date
as determined by the Trustee (the "Valuation Date"). For purposes of
determining the fair market value of Company securities held in the Trust which
are not publicly traded, the Trustee shall select an independent, nationally
recognized investment banking firm which shall perform an appraisal in
accordance with applicable requirements to determine the fair market value of
such Company securities.
5.2 VALUATION OF PARTICIPANT ACCOUNTS. A record of the amount
credited to the Account of each Participant in the Trust shall be maintained by
the Company. Each Participant's interest in the Trust shall be adjusted as of
each Valuation Date to reflect the Participant's proportionate share of the
total net fair market value of the Trust.
5.3 PERIODIC REPORTS. The Trustee shall render to the
Company and the Supplemental Stock Plan Committee an account and report within
ninety (90) days after each Valuation Date showing all transactions affecting
the administration of the Plan and the Trust, including but not necessarily
limited to, such information concerning the Plan and the Trust and the
administration thereof by the Trustee as shall be requested in writing by the
Company or the Supplemental Stock Plan Committee.
5.4 SPECIAL REPORTS. The Trustee shall render such further
reports from time to time as may be reasonably requested by the
15 SECTION 5
<PAGE> 20
Company or the Supplemental Stock Plan Committee and shall submit its
final report and account to the Company and the Supplemental Stock Plan
Committee within 90 days after it ceases to be Trustee hereunder, whether by
resignation or other cause.
16 SECTION 5
<PAGE> 21
SECTION 6
Responsibility of the Trustee
-----------------------------
6.1 TRUSTEE POWERS. The Trustee shall have, without exclusion,
all powers conferred on trustees by applicable law, unless expressly provided
otherwise herein; PROVIDED, HOWEVER, that notwithstanding any powers granted to
the Trustee pursuant to this Trust Agreement or applicable law, the Trustee
shall not have any power that could give this Trust the objective of carrying
on a business and dividing the gains therefrom, within the meaning of section
301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant
to the Code.
6.2 LIMITATION ON RESPONSIBILITY.
(a) The responsibilities and obligations of the Trustee
shall be strictly limited to those set forth in this Trust Agreement. The
Trustee shall have no duty or authority to enforce payment of any Employer
contribution under the Plan. The Trustee shall not have the responsibility nor
the obligation to determine the existence, nature or extent of any individual's
rights in the Trust or under the Plan. The Trustee shall not be responsible in
any way for the manner in which the Company or the Custodian carries out its
responsibilities under this Trust Agreement, under the Plan or the Custodial
Agreement.
(b) To the fullest extent permitted by law, the Company
agrees to indemnify any person or entity acting as Trustee and hold that person
or entity harmless from and against any claim, liability, cost and expense
(including, without limitation, reasonable attorney's fees) (a "Claim"), that
arises out of or in
17 SECTION 6
<PAGE> 22
connection with that person or entity's performance or nonperformance of duties
as Trustee (including any exercise of any investment decision), unless the
Claim arose from the gross negligence, willful misconduct or willful disregard
of fiduciary responsibilities of the Trustee, its officers, employees or
agents.
(c) Within sixty (60) days after receipt by the Trustee
of a notice of any Claim or the commencement of any action involving the Plan,
the Trustee shall, if a Claim in respect thereof is to be made against the
Trustee, notify the Company in writing of the Claim or the commencement of that
action. The Company shall pay all costs of the defense (including costs and
expenses) thereof and the Company shall be entitled to assume the defense
thereof.
18 SECTION 6
<PAGE> 23
SECTION 7
Compensation and Expenses of the Trustee
----------------------------------------
The Trustee shall be entitled to receive compensation for its services
hereunder as may be agreed upon from time to time by the Company and the
Trustee, PROVIDED, HOWEVER, that no employee of the Company or ALPA shall
receive any compensation from the Trust for his services hereunder. The
Trustee (whether corporate or individual Trustee) shall be entitled to receive
reimbursement for reasonable expenses, fees, costs and other charges incurred
by it or payable by it on account of the establishment or administration of the
Trust. Such compensation and reimbursement, including reasonable counsel fees,
shall be paid by the Company.
19 SECTION 7
<PAGE> 24
SECTION 8
Appointment and Removal of the Trustee and Custodian
----------------------------------------------------
8.1 TRUSTEE. The Chairman, Vice-Chairman and Secretary/ Treasurer
of the TWA-MEC shall serve as Trustee. Any individual who resigns or is
removed as such an officer, shall be considered to have resigned or been
removed as a Trustee without any further action. Any person appointed as such
an officer shall be considered a Trustee without any further action.
8.2 NOTICE. ALPA shall notify the Company and the Committee of
any change in the Chairman, Vice-Chairman or Secretary/Treasurer of the TWA-MEC
within ten (10) business days thereof.
8.3 REMOVAL AND APPOINTMENT OF CUSTODIAN. ALPA may remove the
Custodian by giving thirty (30) days prior written notice of its intention to
do so to the Custodian, the Trustee and the Company. ALPA may appoint a
successor Custodian.
20 SECTION 8
<PAGE> 25
SECTION 9
Amendment and Termination
-------------------------
9.1 AMENDMENT. The Company hereby reserves the power to amend
this Trust Agreement in any respect with the prior approval of ALPA; PROVIDED,
HOWEVER, that the Company and ALPA shall not amend any provision of this Trust
Agreement without the written consent of the Trustee if the effect of such
amendment is to alter the duties of the Trustee hereunder (which consent shall
not be unreasonably withheld), unless in the sole determination of ALPA such
amendment is necessary to avoid the current taxation of Participants.
Notwithstanding the foregoing, no such amendment shall conflict with the terms
of the Plan or shall make the Trust revocable.
9.2 TERMINATION. The Trust shall not terminate until the date on
which Participants and their beneficiaries are no longer entitled to benefits
pursuant to the terms of the Plan. Upon termination of the Trust, any assets
remaining in the Trust shall be returned to the Company after payment of all
benefits under the Plan.
21 SECTION 9
<PAGE> 26
SECTION 10
Miscellaneous
-------------
10.1 SEVERABILITY. Any provision of this Trust Agreement
prohibited by law shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
10.2 NON-ALIENATION OF BENEFITS. Benefits payable to Plan
participants and their beneficiaries under this Trust Agreement may not be
anticipated, assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy, execution or other
legal or equitable process.
10.3 GOVERNING LAW. This Trust Agreement shall be governed by and
construed in accordance with the laws of the State of Missouri.
10.4 DEFINED TERMS. Capitalized terms used herein shall have the
meaning ascribed to such terms in the Plan, unless the context clearly
indicated a different meaning.
10.5 NOTICES.
(a) All notices and other communications hereunder to the
following entities shall be in writing and shall be delivered or mailed, first
class postage prepaid, to those entities at the following addresses (or at such
other address for a party as shall be specified by like notice):
If to Trustees, to:
Trustees
TWA Air Line Pilots Supplemental Stock Plan Trust
Suite 200
3221 McKelvey Road
Bridgeton, MO 63044
22 SECTION 10
<PAGE> 27
If to the Company, to:
Trans World Airlines, Inc.
One City Centre
515 N. Sixth Street
St. Louis, MO 63101
If to the Committee, to:
The Supplemental Stock Plan Committee
TWA MEC
Suite 200
3221 McKelvey Road
Bridgeton, MO 63044
If to ALPA, to:
Air Line Pilots Association, International
535 Herndon Parkway
Herndon, VA 22070
Attn: Director of Retirement and Insurance
No such notice or communication shall be binding until received by the
recipient.
(b) All notices and other communications hereunder to the
Participant or beneficiary, if the Participant is deceased, shall be delivered
or mailed first class postage prepaid, to the Participant or the beneficiary at
the last known address of such Participant or beneficiary as provided to the
Trustees by the Company, the Participant, or beneficiary. Such notices or
communications shall be binding as of the date delivered or the third calendar
day following the date placed with the mail service.
10.6 DELEGATION TO CUSTODIAN. Notwithstanding any provision herein
to the contrary, to the extent that any Trustee duties hereunder are provided
for in a custodial agreement with the Custodian or any successor thereto, such
duties shall be deemed to have been delegated to, and shall be performed by,
such custodian.
23 SECTION 10
<PAGE> 28
10.7 EFFECTIVE DATE. The effective date of this Trust Agreement
shall be August 23, 1995.
10.8 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which, without production of the others,
shall be deemed to be an original.
IN WITNESS WHEREOF, each of the parties hereto has caused these
presents to be executed, all as of the date and year first above written.
TRANS WORLD AIRLINES, INC.
By:
--------------------------------
Its
-----------------------------
AIR LINE PILOTS ASSOCIATION
WITNESSED: INTERNATIONAL
- - ------------------------- By:
WILLIAM F. COMPTON --------------------------------
Chairman TWA-MEC J. RANDOLPH BABBITT
Its President
TRUSTEES
-------------------------------------
--------------, TWA-MEC Chairman
-------------------------------------
--------------, TWA-MEC Vice-Chairman
-------------------------------------
, TWA-MEC Secretary/Treasurer
--------------
24
SECTION 10
<PAGE> 1
EXHIBIT 4.15
<PAGE> 2
TWA AIR LINE PILOTS
SUPPLEMENTAL STOCK PLAN CUSTODIAL AGREEMENT
Effective August 23, 1995
<PAGE> 3
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1
Establishment of Custodial Arrangement and Accounts
1.1 Establishment of Custodial Arrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 Establishment and Operation of Custodial Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Segregation of Custodial Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2
Payments to Participants and Their Beneficiaries
2.1 Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Benefit Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Direct Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Stock Distributions by the Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3
Custodian's Responsibility Regarding Payments to
Trust Beneficiary When the Company is Insolvent
3.1 Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Determination of Insolvency; Discontinuance of Benefit Payments . . . . . . . . . . . . . . . . . . 7
3.3 Resumption of Benefit Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4
Payments to Company
SECTION 5
Accounting by the Custodian
5.1 Valuation of Custodial Arrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Valuation of Participant Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.3 Periodic Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.4 Special Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 6
Responsibility of the Custodian
6.1 Custodial Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2 Limitation on Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 7
Compensation and Expenses of the Custodian
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 8
Resignation and Removal of the Custodian
8.1 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.3 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.4 Surviving Custodians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 9
Amendment and Termination
9.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 10
Miscellaneous
10.1 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.2 Non-Alienation of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.4 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.6 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.7 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
<PAGE> 5
TWA AIR LINE PILOTS
SUPPLEMENTAL STOCK PLAN CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT, made and entered into as of August 23, 1995,
by and between TRANS WORLD AIRLINES, INC., a Delaware Corporation (the
"Company"), the AIR LINE PILOTS ASSOCIATION INTERNATIONAL ("ALPA"), the
trustees (the "Trustees") of the TWA Air Line Pilots Supplemental Stock Plan
(the "Plan"), and American Stock Transfer & Trust Company, as Custodian (the
"Custodian").
W I T N E S E T H :
- - - - - - - - -
WHEREAS, pursuant to collective bargaining with ALPA, the Company has
established the Plan, a nonqualified deferred compensation plan for the benefit
of eligible employees ("Participants") providing benefits to Participants
primarily in the form of the Company's common or employee preferred stock
("Company Stock"); and
WHEREAS, pursuant to collective bargaining with ALPA, the
Company has established the TWA Air Line Pilots 1995 Employee Stock Ownership
Plan (the "ESOP") for the benefit of certain employees; and
WHEREAS, the Company has incurred or expects to incur liability under
the terms of the Plan with respect to Participants and wishes to establish a
trust to provide a source of funds to assist it in meeting its liabilities
under the Plan; and
WHEREAS, the Custodian has agreed to serve as Custodian with respect
to Plan assets (the "Custodial Assets") for which another
<PAGE> 6
trustee has been appointed, in accordance with the terms of the Plan, by ALPA;
and
WHEREAS, it is the intention of the parties that this custodial
arrangement (the "Custodial Arrangement") shall constitute an unfunded
arrangement and shall not affect the status of the Plan as an unfunded plan
maintained for the purpose of providing deferred compensation to Participants;
NOW, THEREFORE, the parties do hereby establish the Custodial
Arrangement and agree that the Custodial Arrangement shall be comprised, held
and disposed of as follows:
2
<PAGE> 7
SECTION 1
ESTABLISHMENT OF CUSTODIAL ARRANGEMENT AND ACCOUNTS
1.1 ESTABLISHMENT OF CUSTODIAL ARRANGEMENT. The Company and the
Trustees hereby establish with the Custodian and the Custodian hereby accepts
the Custodial Arrangement, consisting of Custodial Assets. The Custodian shall
hold Custodial Assets in accordance with the provisions of this Custodial
Agreement, as may be amended from time to time. Notwithstanding anything else
herein to the contrary, the Custodian shall be considered only the Custodian
and not a trustee of the Custodial Assets, and shall have no fiduciary
responsibility or liability as a trustee in any way with respect to Custodial
Assets.
1.2 ESTABLISHMENT AND OPERATION OF CUSTODIAL ACCOUNTS.
(a) The Custodian shall create in the Custodial
Arrangement the following custodial accounts (collectively, the "Custodial
Accounts"): (i) the Unallocated Custodial Account consisting of two
subaccounts, the "Initial Unallocated Custodial Account" and the "Incentive
Unallocated Custodial Account", and (ii) the Excess Custodial Account,
consisting of two subaccounts, the "Initial Excess Custodial Account" and the
"Incentive Excess Custodial Account".
(b) Each Custodial Account shall consist of assets
transferred by the Company. Contributions transmitted to the Trustees on
behalf of Participants in the form of Company Stock which constitute Custodial
Assets shall be designated as such by the Company and, upon receipt by the
Custodian, shall be allocated
3
<PAGE> 8
to the Custodial Account so designated. Custodial Assets which are Company
securities shall be voted or tendered by the Custodian as directed by the
Trustees.
(c) Notwithstanding any other provision herein to the
contrary, the Custodian shall have no investment management responsibility for
Custodial Assets and shall not have any fiduciary responsibility as a trustee
with respect to the management and control of Custodial Assets.
1.3 SEGREGATION OF CUSTODIAL ASSETS. Custodial Assets and any
earnings thereon shall be held separate and apart from other funds of the
Company and shall be used exclusively for the uses and purposes of Participants
and general creditors as herein set forth. Participants and their
beneficiaries shall have no preferred claim on, or any beneficial ownership in,
any assets of the Custodial Arrangement. Any rights created under the Plan and
this Agreement shall be mere unsecured contractual rights of Participants and
their beneficiaries against the Company. Custodial Assets will be subject to
the claims of the Company's general creditors under federal and state law in
the event of Insolvency, as defined in Section 3.1, herein.
4
<PAGE> 9
SECTION 2
PAYMENTS TO PARTICIPANTS AND THEIR BENEFICIARIES
2.1 DISTRIBUTION.
(a) The Custodian shall distribute Custodial Assets as
directed by the Trustee.
(b) The Custodian shall make provision for the reporting
and withholding of any federal or state taxes that may be required to be
withheld with respect to the payment of benefits pursuant to the terms of the
Plan and shall pay amounts withheld to the appropriate taxing authorities or
determine that such amounts have been reported, withheld and paid by the
Company.
(i) If the Participant is receiving wages from
the Company at the time a payment of benefits is made, the Company agrees to
withhold appropriate amounts from such wages and to provide to the Custodian
and Trustee notice of such amount of withholding.
(ii) To the extent required, the Custodian shall
be authorized to withhold from the distribution shares of Company Stock if
necessary to comply with the withholding requirements. The Trustee is
authorized to convert any Preferred Stock and to direct the Custodian to sell,
and the Custodian shall sell, any securities, including those obtained by
conversion, to satisfy withholding obligations.
2.2 BENEFIT DETERMINATIONS. The entitlement of a Participant, or
his or her beneficiary, to benefits under the Plan shall be determined in
accordance with the Plan by the Plan
5
<PAGE> 10
Administrator or such party as shall be designated under the Plan, and any
claims for such benefits shall be considered and reviewed under the procedures
set forth in the Plan.
2.3 DIRECT PAYMENT. The Company may make payment of benefits
directly to Participants or their beneficiaries or make contributions directly
to the ESOP, as they become due under the terms of the Plan. The Company shall
notify the Custodian of its decision to make payment of benefits or
contributions directly prior to the time amounts are payable to Participants or
their beneficiaries. In addition, if the principal of the Custodial
Arrangement, and any earnings thereon, are not sufficient to make payments of
benefits in accordance with the terms of the Plan, the Company shall make the
balance of each such payment as it falls due. The Custodian shall notify the
Company where principal and earnings are not sufficient for the Custodian to
make payment in accordance with the Plan.
2.4 STOCK DISTRIBUTIONS BY THE CUSTODIAN. The amounts credited to
Participants under the Plan and held by the Custodian shall be paid or
distributed by the Custodian to a Participant or beneficiary in accordance with
the terms of the Plan.
6
<PAGE> 11
SECTION 3
CUSTODIAN'S RESPONSIBILITY REGARDING PAYMENTS TO
TRUST BENEFICIARY WHEN THE COMPANY IS INSOLVENT
3.1 INSOLVENCY. The Custodian shall cease payment of benefits to
Participants, their beneficiaries and the ESOP if the Company is Insolvent.
The Company shall be considered "Insolvent," for purposes of this Agreement if
(a) the Company is unable to pay its debts as they become due, or (b) the
Company is subject to a pending proceeding as a debtor under the United States
Bankruptcy Code.
3.2 DETERMINATION OF INSOLVENCY; DISCONTINUANCE OF BENEFIT
PAYMENTS. At all times during the continuance of this Custodial Arrangement,
as provided herein, the principal and income of the Custodial Arrangement shall
be subject to claims of general creditors of the Company under federal and
state law as set forth below.
(a) The Board of Directors and the Chief Executive
Officer of the Company shall have the duty to inform the Custodian in writing
of the Company's Insolvency. If a person claiming to be a creditor of the
Company alleges in writing to the Custodian that the Company has become
Insolvent, the Trustee shall determine whether the Company is Insolvent and,
pending such determination, the Custodian shall discontinue payment of benefits
to Participants and their beneficiaries and the ESOP.
(b) Unless the Custodian has actual knowledge of the
Company's Insolvency, or has received notice from the Company, the Trustee or a
person claiming to be a creditor alleging that the
7
<PAGE> 12
Company is Insolvent, the Custodian shall have no duty to inquire whether the
Company is Insolvent.
(c) If at any time the Custodian has been notified by the
Company or the Trustee that the Company is Insolvent, the Custodian shall
discontinue payments to Participants, their beneficiaries and the ESOP and
shall hold the assets of the Custodial Arrangement for the benefit of the
Company's general creditors. Nothing in this Agreement shall in any way
diminish any rights of Participants or their beneficiaries to pursue their
rights as general creditors of the Company with respect to benefits due under
the Plan or otherwise.
3.3 RESUMPTION OF BENEFIT PAYMENTS.
(a) The Custodian shall resume the payment of benefits to
Participants, their beneficiaries and the ESOP in accordance with Section 2 of
this Agreement only after the Custodian has been notified by the Trustee that
the Company is not Insolvent (or is no longer Insolvent).
(b) Provided that there are sufficient assets in the
Custodial Arrangement, if the Custodian discontinues the payment of benefits
from the Custodial Arrangement pursuant to Section 3.2 hereof, and subsequently
resumes such payments, the first payment following such discontinuance shall
include the aggregate amount of all payments due to Participants and their
beneficiaries under the terms of the Plan for the period of such
discontinuance, less the aggregate amount of any payments made to Participants,
their
8
<PAGE> 13
beneficiaries and the ESOP by the Company in lieu of the payments provided for
hereunder during any such period of discontinuance.
9
<PAGE> 14
SECTION 4
PAYMENTS TO COMPANY
Except as provided in Section 3 hereof, the Company shall have no
right or power to direct the Custodian to return to the Company or to divert to
others any of the Custodial Arrangement assets before all payments of benefits
have been made to Participants and their beneficiaries to the terms of the
Plan.
10
<PAGE> 15
SECTION 5
ACCOUNTING BY THE CUSTODIAN
5.1 VALUATION OF CUSTODIAL ARRANGEMENT. The Custodian shall
determine the net fair market value of the Custodial Arrangement as of each
December 31 and such other date as determined by the Trustee (the "Valuation
Date").
5.2 VALUATION OF PARTICIPANT ACCOUNTS. The Company shall maintain
a record of the amount credited to each Participant in the Initial Excess
Custodial Account and Incentive Excess Custodial Account. Each Participant's
interest in the Initial Excess Custodial Account and Incentive Excess Custodial
Account shall be adjusted as of each Valuation Date to reflect the
Participant's proportionate share of the total net fair market value of the
Initial Excess Custodial Account and Incentive Excess Custodial Account,
respectively.
5.3 PERIODIC REPORTS. The Custodian shall render to the Trustee,
the Company and the Supplemental Stock Plan Committee an account and report
within ninety (90) days after each Valuation Date showing all transactions
affecting the administration of the Plan and the Custodial Arrangement,
including, but not necessarily limited to, such information concerning the Plan
and the Custodial Arrangement and the administration thereof by the Custodian
as shall be requested in writing by the Trustee or the Company.
5.4 SPECIAL REPORTS. The Custodian shall render such further
reports from time to time as may be reasonably requested by the Company or the
Trustee, and shall submit its final report and
11
<PAGE> 16
account to the Custodian, the Company and the Trustee within 90 days after it
ceases to be Custodian hereunder, whether by resignation or other cause.
12
<PAGE> 17
SECTION 6
RESPONSIBILITY OF THE CUSTODIAN
6.1 CUSTODIAL POWERS. The Custodian shall have, without
exclusion, all powers conferred on custodians by applicable law, unless
expressly provided otherwise herein; PROVIDED, HOWEVER, that notwithstanding
any powers granted to the Custodian pursuant to Custodial Arrangement Agreement
or applicable law, the Custodian shall not have any power that could give this
Custodial Agreement the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Code.
6.2 LIMITATION ON RESPONSIBILITY. The responsibilities and
obligations of the Custodian shall be strictly limited to those set forth in
this Custodial Agreement. The Custodian shall have no authority or duty to
determine or enforce payment of any contribution under the Plan or to determine
the existence, nature or extent of any individual's rights in the Custodial
Arrangement or under the Plan or question any determination made by the Company
or the Trustee regarding the same. Nor shall the Custodian be responsible in
any way for the manner in which the Company or the Trustee carries out its
responsibilities under the this Agreement or under the Plan. Unless the
Custodian knowingly participates in, or knowingly undertakes to conceal, an act
or omission of the Company or the Trustees knowing such act or omission to be a
breach of the fiduciary responsibility of the Company or the Trustees with
13
<PAGE> 18
respect to the Plan, the Custodian shall be fully protected in relying on
directions received from the Company or the Trustees. The Custodian shall give
the Company and the Trustees notice of the prosecution or defense of any
litigation involving the Plan. To the extent permitted by law, the Company
agrees to indemnify the Custodian and hold it harmless from and against any
claim arising out of the administration of the Plan unless arising from the
negligence or willful misconduct of the Custodian, its officers, employees or
agents.
14
<PAGE> 19
SECTION 7
COMPENSATION AND EXPENSES OF THE CUSTODIAN
The Custodian shall be entitled to receive compensation for its
services hereunder as may be agreed upon from time to time by the Company, ALPA
and the Custodian, PROVIDED, HOWEVER, that no employee of the Company or ALPA
shall receive any compensation from the Trust for his services hereunder. The
Custodian (whether corporate or individual Custodian be acting) shall be
entitled to receive reimbursement for reasonable expenses, fees, costs and
other charges incurred by it or payable by it on account of the administration
of the Plan. Such compensation and reimbursement, including reasonable counsel
fees, shall be paid by the Company.
15
<PAGE> 20
SECTION 8
RESIGNATION AND REMOVAL OF THE CUSTODIAN
8.1 RESIGNATION. The Custodian may resign by giving thirty (30)
days' written notice of intention to do so to the Company, the Trustees and
ALPA or such shorter notice as ALPA may approve.
8.2 REMOVAL. ALPA may remove the Custodian or any successor
Custodian hereunder by giving such Custodian and the Company thirty (30) days'
written notice of removal, or such shorter notice as may be agreed to by the
Custodian.
8.3 APPOINTMENT. ALPA shall have the power and authority to
appoint one or more individual or corporate Custodians, or both, as additional
or successor Custodians, subject to the consent of the Company, which consent
shall not be unreasonably withheld. Upon resignation or removal of the
Custodian and appointment of a successor Custodian, all assets shall
subsequently be transferred to the successor Custodian. The transfer shall be
completed within 30 days after receipt of notice of resignation, removal or
transfer, unless ALPA extends the time limit.
8.4 SURVIVING CUSTODIANS. When any Custodian hereunder shall
cease to be a Custodian, the remaining Custodians then serving hereunder, or
the successor Custodian appointed hereunder, as the case may be, shall
thereupon be and become vested with full title and right to possession of all
assets and records of the Plan and the Custodial Arrangement in the possession
or control of such prior Custodian shall forthwith account for and deliver the
same to such remaining or successor Custodian.
16
<PAGE> 21
SECTION 9
AMENDMENT AND TERMINATION
9.1 AMENDMENT. This Agreement may be amended by a written
instrument executed by the Custodian, ALPA and the Company.
9.2 TERMINATION. The Custodial Agreement shall not terminate
until the date on which Participants and their beneficiaries are no longer
entitled to benefits pursuant to the terms of the Plan. Upon termination of
the Custodial Arrangement any assets remaining in the Custodial Arrangement
shall be returned to the Company after payment of all benefits under the Plan.
17
<PAGE> 22
SECTION 10
MISCELLANEOUS
10.1 SEVERABILITY. Any provision of this Agreement prohibited by
law shall be ineffective to the extent of any such prohibition, without
invalidating the remaining provisions hereof.
10.2 NON-ALIENATION OF BENEFITS. Benefits payable to Plan
participants and their beneficiaries under this Agreement may not be
anticipated, assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy, execution or other
legal or equitable process.
10.3 GOVERNING LAW. This Agreement shall be governed under the
laws of the State of Missouri.
10.4 DEFINED TERMS. Capitalized terms used herein shall have the
meaning ascribed to such terms in the Plan, unless the context clearly
indicates a different meaning.
10.5 NOTICES. All notices and other communications hereunder to
the following entities shall be in writing and shall be delivered or mailed,
first class postage prepaid, to those entities at the following addresses (or
at such other address for a party as shall be specified by like notice):
If to Trustees, to:
Trustees
TWA Air Line Pilots Supplemental Stock Plan Trust
Suite 200
3221 McKelvey Road
Bridgeton, MO 63044
18
<PAGE> 23
If to Company, to:
Trans World Airlines, Inc.
One City Center
515 N. Sixth Street
St. Louis, MO 63101
If to ALPA, to:
Air Line Pilots Association, International
Attn: Director, Retirement and Insurance
535 Herndon Parkway
Herndon, VA 22070
If to Custodian, to:
American Stock Transfer & Trust Company
40 Wall Street
New York, NY 10005
No such notice or communication shall be binding until received by the
recipient. Such notices or communications shall be binding as of the date
delivered or the third calendar day following the date placed with the mail
service.
10.6 EFFECTIVE DATE. The effective date of this Agreement shall be
August 23, 1995.
10.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which, without production of the others,
shall be deemed to be an original.
19
<PAGE> 24
IN WITNESS WHEREOF, each of the parties hereto has caused these
presents to be executed, all as of the day and year first above written.
TRANS WORLD AIRLINES, INC.
By _________________________
Its ___________________
AIR LINE PILOTS ASSOCIATION
WITNESSED: INTERNATIONAL
_________________________ By __________________________
WILLIAM F. COMPTON J. RANDOLPH BABBITT
Chairman, TWA MEC Its President
TRUSTEES, TWA AIR LINE PILOTS
SUPPLEMENTAL STOCK PLAN
By____________________________
A Trustee
CUSTODIAN
By __________________________
Its ____________________
20
<PAGE> 1
EXHIBIT 10.37
<PAGE> 2
EXTENSION, REFINANCING AND CONSENT AGREEMENT
This EXTENSION, REFINANCING AND CONSENT AGREEMENT (the "Agreement") is
being entered into as of this 14th day of June, 1995 between TRANS WORLD
AIRLINES, INC., a Delaware corporation ("TWA"), Karabu Corp., a Delaware
corporation ("Karabu"), Pichin Corp., a Delaware corporation ("Pichin"), and
Mr. Carl C. Icahn and the "Icahn Entities" (as hereinafter defined).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, TWA and Karabu have heretofore entered into that certain Loan
Agreement dated as of January 5, 1993, as amended, (the "Receivables
Agreement") and a related Security Agreement dated as of January 5, 1993 (the
"Receivables Security Agreement") pursuant to which TWA pledged certain of its
receivables (the "Receivables") to secure its obligations under the Receivables
Agreement; and
WHEREAS, TWA and Karabu have heretofore entered into that certain Note
Agreement dated as of January 5, 1993, as amended, (the "Asset Agreement"), and
TWA and State Street Bank & Trust Company of Connecticut, National Association
(in its individual capacity, "State Street"), as Security Trustee, have entered
into a related Security Agreement -- Trust Deed dated as of January 5, 1993
(the "Asset Security Agreement") pursuant to which TWA pledged certain aircraft
and spare parts (the "Flight Equipment"; the "Receivables" and the "Flight
Equipment," collectively the "Collateral"); and
WHEREAS, TWA and Karabu have heretofore amended and supplemented the
Receivables Agreement, the Receivables Security Agreement, the Asset Agreement
and the Asset Security Agreement (such documents as so amended and
supplemented, collectively, the "Loan Agreements") pursuant to that certain
Omnibus Amendment and Supplement to Agreements dated as of March 28, 1994 (the
"Omnibus Amendment"); and
WHEREAS, the aggregate principal amounts of the loans outstanding and
unpaid under the Loan Agreements (the "Karabu Loans") as of the date of this
Agreement is $190 million and there is accrued unpaid interest as of January 8,
1995 in the amount of $7,064,933.00; and
WHEREAS, TWA, Karabu, Pichin and the Icahn Entities desire to enter
into this Agreement (i) to refinance the Karabu Loans by amending and
supplementing the Loan Agreements to provide for the extension of the maturity
of the Karabu Loans, (ii) to reflect certain other agreements between TWA,
Karabu, Pichin and the Icahn Entities and (iii) to provide for the consent,
upon fulfillment of certain conditions, by the Icahn Entities to, among other
things, TWA's exchange (the "PBGC Debt and Equity Exchange") with the
<PAGE> 3
Pension Benefit Guaranty Corporation ("PBGC") of the Old PBGC Notes (as
hereinafter defined) for $244,344,987 principal amount of New PBGC Notes (as
hereinafter defined) and $77,817,513 principal amount of Equity Notes (as
hereinafter defined) redeemable, subject to certain conditions, for 2,658,470
shares, more or less, of TWA's common stock ("Common Stock") in 1995 all
substantially as provided in TWA's "Proxy Statement/Prospectus" (as hereinafter
defined).
NOW, THEREFORE, for and in consideration of the mutual covenants
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, TWA, Karabu, Pichin and the
Icahn Entities hereby agree as follows:
Section 1. DEFINED TERMS. As used in this Agreement, the following
terms shall have the meanings specified below:
"AGREEMENT," "THIS AGREEMENT," "HEREIN" and words of similar import
shall mean this Extension and Consent Agreement.
"ASSET AGREEMENT" shall have the meaning given that term in the
recitals to this Agreement.
"ASSET SECURITY AGREEMENT" shall have the meaning given that term in
the recitals to this Agreement.
"BANKRUPTCY COURT" shall mean the United States Bankruptcy Court in
which TWA commences a Chapter 11 case and files the Prepackaged Plan.
"COLLATERAL" shall have the meaning given that term in the recitals
to this Agreement.
"COMMON STOCK" shall have the meaning given that term in the recitals
to this Agreement.
"EQUITY NOTES" shall mean the three non-recourse promissory notes due
2007 in $77,817,513 aggregate principal amount held or to be held by the
Settlement Trust on behalf of the PBGC and redeemable, subject to certain
conditions, for approximately 2,658,470 shares, more or less, of Common Stock
in 1995.
"EXISTING DOCUMENTATION" shall mean the Asset Agreement, the
Receivables Agreement, the Asset Security Agreement, the Receivables Security
Agreement, the Omnibus Amendment and the Settlement Agreement.
"ICAHN ENTITIES" shall mean Mr. Carl C. Icahn and those entities,
including without limitation Karabu and Pichin, affiliated with Mr. Carl C.
Icahn. "Affiliated with" means more than fifty percent (50%) owned, directly
or indirectly by Mr. Carl
-2-
<PAGE> 4
Icahn or another entity more than fifty percent (50%) owned by Mr. Carl Icahn.
"KARABU" shall mean Karabu Corp., a Delaware corporation.
"KARABU LOANS" shall have the meaning given that term in the recitals
to this Agreement.
"NEW PBGC NOTES" shall mean the three non-recourse promissory notes
due 2007 in $244,344,987 original aggregate principal amount held or to be held
by the Settlement Trust on behalf of the PBGC.
"NON-STANDARD TERMINATION" shall have the meaning ascribed to such
term in the Settlement Agreement.
"OLD PBGC NOTES" shall mean the three non-recourse promissory notes
due 2007 in $322,162,500 aggregate principal amount held by the Settlement
Trust on behalf of the PBGC.
"OMNIBUS AMENDMENT" shall have the meaning given that term in the
recitals to this Agreement.
"PBGC" shall have the meaning given that term in the recitals to this
Agreement.
"PBGC DEBT AND EQUITY EXCHANGE" shall have the meaning given that term
in the recitals to this Agreement.
"PENSION PLANS" shall mean the defined benefit pension plans
identified as the Pilots' Plan, the Employees' Plan and the IFFA Plan in the
Settlement Agreement.
"PICHIN" shall mean Pichin Corp., a Delaware corporation.
"PREPACKAGED PLAN" shall mean TWA's proposed prepackaged plan of
reorganization pursuant to Chapter 11 of the United States Bankruptcy Code,
which plan is attached as Appendix B to the Proxy Statement/Prospectus.
"PROXY STATEMENT/PROSPECTUS" shall mean the Proxy
Statement/Prospectus, Exchange Offer, Offering of Common Stock, Employee
Preferred Stock and TWA Equity Rights, Solicitation of Consents and
Solicitation of Acceptances of Prepackaged Plan of Reorganization included as a
part of the Registration Statement, as the same may be amended from time to
time.
"RECEIVABLES AGREEMENT" shall have the meaning given that term in the
recitals to this Agreement.
"RECEIVABLES SECURITY AGREEMENT" shall have the meaning given that
term in the recitals to this Agreement.
-3-
<PAGE> 5
"REGISTRATION STATEMENT" shall mean TWA's Registration Statement on
Form S-4 (Registration No. 33-89764), as amended by Amendment No. 4 dated May
12, 1995 as the same may be amended from time to time as permitted by this
Agreement.
"SETTLEMENT AGREEMENT" shall mean that certain Settlement Agreement
dated as of January 5, 1993 between TWA, the Official Unsecured Creditors'
Committee of Trans World Airlines, Inc., the International Association of
Machinists and Aerospace Workers, the Independent Federation of Flight
Attendants, the Air Line Pilots Association, International, the Transport
Workers Union of America, Carl C. Icahn, certain affiliates of Mr. Icahn and
the PBGC.
"SETTLEMENT TRUST" shall mean the trust established pursuant to the
terms of that certain Settlement Trust Agreement between TWA, as grantor, and
American National Bank and Trust Company of Chicago, as trustee, dated as of
January 5, 1993, as amended or supplemented from time to time.
"STATE STREET" shall have the meaning given that term in the recitals
to this Agreement.
"TERMINATION EVENT" shall mean the occurrence of both of the
following: (i) one or more of the following events shall occur: (A) the
Prepackaged Plan shall not become effective on or before September 30, 1995;
(B) a competing plan of reorganization is filed by a third party with the
consent of TWA or filed pursuant to an order of the Bankruptcy Court, which
competing plan shall, without Karabu's consent, propose to deprive Karabu of
any of the Collateral or any material right under the Existing Documentation,
as modified by this Agreement; (C) the Bankruptcy Court shall not have
confirmed the Prepackaged Plan by August 31, 1995; or (D) the Bankruptcy Court
shall enter an order approving debtor-in-possession financing secured by a
superior or pari passu lien on any of the Collateral without the consent of
Karabu otherwise than in compliance with that certain side letter of even date
herewith between TWA and Karabu authorizing up to $100,000,000 of senior
financing secured by the Collateral under certain conditions and (ii) a
determination is made by Karabu in good faith that, as a result of the
happening of any of the matters in clause (i), Karabu's interests will be
materially adversely affected and Karabu shall have notified TWA in writing
that, as a consequence, a Termination Event has occurred; PROVIDED, HOWEVER, a
Termination Event shall be deemed to have occurred without reference to the
foregoing if any amounts credited to the Karabu Loans or the New PBGC Notes or
the funds retained by Karabu from the sale of Tickets pursuant to the Ticket
Program which result in such credits are avoided or recovered as preferential
transfers in any bankruptcy proceeding filed by or against TWA or the
Bankruptcy Court enters an order prohibiting or limiting Karabu's right to
either retain TWA Ticket Proceeds (as hereinafter defined) as prepayments of
the
-4-
<PAGE> 6
Karabu Loans or pay over TWA Ticket Proceeds to the Settlement Trust or the
PBGC as prepayments of the New PBGC Notes.
"TICKETS" and "TICKET PROGRAMS" shall have the meanings given those
terms in the Karabu Ticket Program Agreement attached hereto as EXHIBIT A.
"TRAVELLERS LITIGATION" shall mean the adversary proceeding against
Travellers International A.G. and its parent company, Windsor, Inc., currently
pending in the United States Bankruptcy Court for the District of Delaware by
TWA seeking to recover a cash undertaking of $13,693,101.
"TWA" shall mean Trans World Airlines, Inc., a Delaware corporation.
Section 2. EXTENSION. The maturity of the Karabu Loans shall be
extended to January 8, 2001. Interest shall continue to be paid as provided in
the Asset Agreement and the Receivables Agreement, as amended. The accrued and
unpaid interest as of April 8, 1995 in the amount of $12,302,105.00 shall be
paid by TWA to Karabu concurrently with the execution and delivery of this
Agreement plus interest on all overdue amounts from (and including) the date
due to (but not including) the date of actual payment at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days consisting of twelve thirty day months) equal to the Prime Rate, fixed as
of April 8, 1995 plus two percent (2%) per annum.
Section 3. CONSENT TO PBGC DEBT AND EQUITY EXCHANGE. Karabu and the
other Icahn Entities consent to the PBGC Debt and Equity Exchange. Such
consent to the PBGC Debt and Equity Exchange shall be effective upon
consummation of TWA's restructuring substantially on terms reflected or to be
reflected in TWA's Registration Statement.
Section 4. MAINTENANCE OF AIRCRAFT. TWA shall cause the airframes and
engines which constitute a portion of the Collateral to be maintained in
accordance the existing provisions of the Asset Security Agreement; PROVIDED,
HOWEVER, that, so long as no Event of Default (as defined in the Asset Security
Agreement), has occurred and is continuing, TWA shall have the right to
postpone scheduled airframe or engine heavy maintenance of each aircraft which
is part of the Collateral not more than on three separate occasions ending
prior to 90th day preceding January 8, 2001, no such extension period exceeding
30 days.
Section 5. TERMINATION OF PENSION PLANS. TWA acknowledges that Pichin
has the right to terminate the Pension Plans on or after January 1, 1995 in a
Non-Standard Termination by reason of the failure of certain Icahn Entities to
receive prior to May 1, 1993 favorable rulings, or equivalent agreements, from
the Internal
-5-
<PAGE> 7
Revenue Service as more fully described in Section 10 of the Settlement
Agreement (the "Termination Right"). Pichin agrees that its Termination Right
will not be exercised to cause a termination of the Pension Plans to become
effective prior to December 29, 1995. Pichin's agreement not to exercise its
right of termination prior to December 29, 1995 shall terminate upon the
occurrence of a Termination Event.
Section 6. TICKET PROGRAM. TWA agrees to provide to Karabu or one of
the other Icahn Entities a TWA ticket purchase program upon the terms set forth
in the Karabu Ticket Program Agreement attached hereto as EXHIBIT A. The
Purchase Price for the purchase by Karabu of Tickets from TWA under the Ticket
Programs (the "TWA Ticket Proceeds") shall be applied as is set forth in
Section 10 of the Ticket Program Agreement except that the option or right of
Karabu to apply or credit such TWA Ticket Proceeds to or against the New PBGC
Notes shall expire and terminate at any time when (i) the New PBGC Notes are
paid in full or (ii) the collateral securing the New PBGC Notes held by the
Settlement Trustee is foreclosed upon and sold or (iii) the collateral securing
the New PBGC Notes held by the Settlement Trustee consisting of TWA's
international route authority is abandoned or foreclosed on or sold and the
collateral consisting of TWA's leasehold interest in its Kansas City, MO
maintenance base ("KC Maintenance Base"), is abandoned, expires or is sold by
TWA and TWA neither continues to operate the KC Maintenance Base nor to have
its airframe or engine overhauls performed at the KC Maintenance Base.
TWA agrees that in the event the Karabu Ticket Program Agreement (or
the right to apply the proceeds thereof as therein provided) is rejected by TWA
(either voluntarily or in accordance with any court order) without Karabu's
consent (i) in any bankruptcy proceeding prior to the effective date of the
Prepackaged Plan commenced by or against TWA, the consent of Pichin and the
other Icahn Entities to the PBGC Debt and Equity Exchange set forth in Section
3 shall thereupon be cancelled and be of no further force or effect, or (ii) in
any bankruptcy proceeding prior to January 8, 2001 commenced by or against TWA,
the Extension of the maturity of the Karabu Loans set forth in Section 2 shall
thereupon be cancelled and be of no further force or effect and the Karabu
Loans shall immediately become due and payable.
Section 7. OTHER AMENDMENTS.
(a) The Existing Documentation shall be revised, as
necessary, to make the amendments set forth in Exhibit B and such other
amendments as may be necessary to accommodate
(i) TWA's proposed restructuring as more fully described in the
Proxy Statement/Prospectus, including without limitation those
modifications necessary for TWA to issue new securities and to
permit the filing and confirmation
-6-
<PAGE> 8
of the Prepackaged Plan; PROVIDED, HOWEVER, no such amendment
shall, without Karabu's consent, deprive Karabu of any of the
Collateral or any material right under the Existing Documentation,
as modified by this Agreement and any such amendment so depriving
Karabu without its consent shall be ineffective as to Karabu, and
(ii) the agreements contained herein.
(b) Subject to the amendments to the Existing Documentation
set forth in Exhibit B hereto, the amendments and supplements to the
Receivables Agreement, the Receivables Security Agreement, the Asset Agreement
and the Asset Security Agreement set forth in Section 1.1 of the Omnibus
Amendment shall be extended and continue in full force and effect through the
date the Karabu Loans are paid in full.
(c) Except as herein provided, all other terms and conditions
of the Existing Documentation shall continue in full force and effect.
Section 8. TWA UNDERTAKINGS.
TWA agrees that:
(a) (i) the Old PBGC Notes will be paid in an amount of interest
and principal equal to $3,355,441 on or before June 30, 1995
but only upon the condition that TWA shall have the right to have
such payment credited against its obligations on the New PBGC
Notes, such payment to be applied against accrued interest and
principal in order of maturity, (ii) the New PBGC Notes will be
paid on October 15, 1995 in an amount at least equal to $3,639,798,
such payment to be applied against accrued interest and principal
in order of maturity (and the failure to make such payment shall
constitute an Event of Default under the Loan Agreement) and (iii)
the New PBGC Notes will be prepaid in an amount in excess of the
scheduled amortization of such Notes to the extent necessary to
insure that the amortization of the New PBGC Notes is with respect
to any calendar year an amount at least equal to the amount which
would have been the scheduled amortization (exclusive of any right
of TWA under the Settlement Agreement to defer such scheduled
amortization) of the Old PBGC Notes during the same calendar year
(the "Prepayment Amount"), any such Prepayment Amount to be paid in
the following order on the dates indicated, provided, however, the
aggregate of the following payments shall not exceed the Prepayment
Amount (A) FIRST, 15 days prior to such date or dates during such
calendar year (on or after June 30) as TWA shall be advised in
writing by Karabu (such notice to be
-7-
<PAGE> 9
received by TWA at least twenty (20) business days in advance
of any required payment by TWA) that Karabu is required to
make a minimum funding payment to the Pension Plans (and on
such 15th day prior to such date or dates TWA shall make a
prepayment in the amount of the minimum funding payment
required to be made by Karabu as shall be specified by Karabu
in its notice to TWA), (B) SECOND, 15 days prior to such date
or dates during the succeeding calendar year (prior to June
30) as TWA shall be advised in writing by Karabu (such notice
to be received by TWA at least twenty (20) business days in
advance of any required payment by TWA) that Karabu is
required to make a minimum funding payment to the Pension
Plans (and on such 15th day prior to such date or dates TWA
shall make a prepayment in the amount of the minimum funding
payment required to be made by Karabu as shall be specified by
Karabu in its notice to TWA) and (C) THIRD, the balance, if
any, of the Prepayment Amount on June 30 of the succeeding
calendar year. The parties agree that TWA's undertaking in
this clause (a) shall be (x) non-recourse to TWA to the same
extent as the principal and interest of the New PBGC Notes are
non-recourse to TWA and (y) in lieu of the special covenant
set forth in clause (a) of Section 6.3 of the Settlement
Agreement, which clause shall be of no further force or
effect; PROVIDED, HOWEVER, notwithstanding the nonrecourse
status of such undertaking, said undertaking shall be
specifically enforceable by Karabu against TWA, if and so long
as no event of default shall have occurred and then be
continuing under the New PBGC Notes;
(b) in the event all or substantially all the routes and other
property presently held as security for the Old PBGC Notes are
sold by TWA outside of an insolvency proceeding, the proceeds
of such sale will be applied against the aggregate outstanding
balance of the New PBGC Notes for contribution to the Pension
Plans up to an amount equal to the remainder of $322,162,500
less the sum of (i) the then market value of the aggregate of
the Common Stock held in the Settlement Trust and held in the
Pension Plans plus, in each case, any proceeds previously
derived from the disposition of Common Stock held therein,
plus (ii) all principal payments theretofore made on the New
PBGC Notes; and
(c) any net recovery by TWA, after payment of reasonable legal
fees and other out-of-pocket costs, in respect of the
Travellers Litigation shall, if Karabu shall so direct TWA in
writing, be applied promptly (in any event within two (2)
business days) either to the prepayment of past due or
deferred interest, if any, on, and then to the principal of
(in inverse order of maturity), the
-8-
<PAGE> 10
Karabu Loans or the New PBGC Notes, as so directed by Karabu;
PROVIDED, HOWEVER, if TWA is not so directed in writing by
Karabu within fifteen (15) business days after receipt of
notice from TWA of TWA's receipt of any such net recovery, TWA
shall apply such net recovery promptly (in any event within
two (2) business days) as follows: (i) first to prepayment of
past due or deferred interest, if any, on, and then to the
principal of (in inverse order of maturity), the Karabu Loans
if then outstanding, (ii) second to prepayment of past due
interest, if any, on, and then to the principal of (in inverse
order of maturity), the New PBGC Notes if then outstanding and
(iii) third if neither the Karabu Loans nor the New PBGC Notes
are then outstanding, to the Settlement Trust for the benefit
of the Pension Plans or the PBGC after a non-standard
termination of such Pension Plans. TWA shall promptly notify
Karabu in writing of the receipt of any such net recovery.
Section 9. AMENDMENTS TO REGISTRATION STATEMENT. No amendment to
the Registration Statement shall, without the consent of Karabu, deprive Karabu
of any of the Collateral or any material right under this Agreement, the Karabu
Ticket Program Agreement or the Existing Documentation, as modified by this
Agreement, and any such amendment so depriving Karabu without its consent shall
be ineffective as to Karabu.
Section 10. CHOICE OF LAW. THE PARTIES AGREE THAT THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK.
Section 11. BENEFIT/ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that no party may assign this
Agreement without the prior written consent of the other party.
Section 12. MISCELLANEOUS.
The waiver by either party of a breach or violation of any term or
provision of this Agreement shall not operate as, or be construed to be, a
waiver of any subsequent breach of the same provision by any party or of the
breach of any other term or provision of this Agreement.
Each of the parties has agreed to the use of the particular language
of the provisions of this Agreement including all attached exhibits and
schedules and any questions of doubtful interpretation shall not be resolved by
any rule or interpretation against the draftsman but rather in accordance with
the fair meaning thereof, having due regard to the benefits and rights intended
to be
-9-
<PAGE> 11
conferred upon the parties hereto and the limitations and restrictions upon
such rights and benefits intended to be provided.
Any notice, demand or communication required, permitted, or desired to
be given hereunder shall be in writing and shall be deemed effectively given
when personally delivered, sent by facsimile transmission (receipt confirmed by
phone) or mailed by prepaid certified mail, return receipt requested, addressed
as follows:
TWA:
Trans World Airlines, Inc.
One City Centre
515 N. Sixth Street
St. Louis, Missouri 63101
Attention: Senior Vice President and General
Counsel
FAX: (314) 589-3267
With a copy to:
Smith, Gambrell & Russell
Suite 3100 Promenade II
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309-3592
Attention: Howard E. Turner
FAX: (404) 815-3509
Icahn Entities:
c/o Icahn & Co.
One Wall Street Court
New York, New York 10005
Attention: Richard T. Buonato
FAX: (212) 635-5571
With a copy to:
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street, 20th Floor
New York, New York 10036
Attention: Marc Weitzen
FAX: 212-626-0799
Karabu:
Karabu Corp.
c/o Icahn & Co.
One Wall Street Court
New York, New York 10005
Attention: Richard T. Buonato
FAX: (212) 635-5571
-10-
<PAGE> 12
With a copy to:
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street, 20th Floor
New York, New York 10036
Attention: Marc Weitzen
FAX: 212-626-0799
Pichin:
Pichin Corp.
c/o Icahn & Co.
One Wall Street Court
New York, New York 10005
Attention: Richard T. Buonato
FAX: (212) 635-5571
With a copy to:
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street, 20th Floor
New York, New York 10036
Attention: Marc Weitzen
FAX: 212-626-0799
or to such other address, and to the attention of such other person or officer
as any party may designate, with copies thereof to the respective counsel
thereof as notified by such party.
This Agreement supersedes all prior understandings and agreements,
whether written or oral, and constitutes the entire agreement of the parties
respecting the extension, refinancing and consent herein set forth and no party
shall be entitled to benefits other than those specified herein. As between or
among the parties, no oral statements or prior written material not
specifically included herein shall be of any force and effect as it relates to
the extension, refinancing and consent herein set forth; the parties
specifically acknowledge that in entering into and executing this Agreement,
the parties rely solely upon the representations and agreements contained in
this Agreement and no others as they relate to the extension, refinancing and
consent herein set forth. No terms, conditions, warranties, or
representations, other than those contained herein and no amendments or
modifications hereto, shall be binding unless made in writing and signed by the
party to be charged.
This Agreement may be executed in multiple originals or counterparts,
each and all of which shall be deemed an original and all of which together
shall constitute but one and the same instrument.
-11-
<PAGE> 13
13. EFFECTIVENESS. This Agreement, the Karabu Ticket Program
Agreement and the amendments to the existing documents effected by this
Agreement shall not be effective unless and until the consent thereto of the
PBGC shall have been obtained by TWA and Karabu.
IN WITNESS WHEREOF, each of the parties have caused this Agreement to
be executed on its behalf by its duly authorized officers, as of the date
hereinabove first written.
TRANS WORLD AIRLINES, INC.
By:
-----------------------------
Title:
------------------------
KARABU CORP.
By:
----------------------------
Title:
-------------------------
PICHIN CORP.
By:
----------------------------
Title:
-------------------------
-------------------------------
CARL C. ICAHN
ICAHN ENTITIES, as shown on the Exhibit
of Icahn Entities attached to
the Settlement Agreement
By:
----------------------------
An Authorized Officer or
Signatory of each respective
Icahn Entity
-12-
<PAGE> 14
EXHIBIT A
KARABU TICKET PROGRAM AGREEMENT
-13-
<PAGE> 15
EXHIBIT A
DOMESTIC CONSOLIDATOR PROGRAM
DOMESTIC CONSOLIDATOR FARES
1. Domestic Consolidator Fares are Bulk Fare Rates which are 40% of
the Published Fares for the lowest priced domestic system wide advance purchase
round trip excursion fare in effect on the dates specified in paragraph 2 and,
on a sell-up basis, the second lowest priced domestic system-wide advance
purchase round-trip excursion fares in effect on the dates specified in
paragraph 2 ("Structural Fares") established by TWA from time-to-time for air
transportation in Domestic Consolidator Markets. The sell-up feature available
for Domestic Consolidator Fares refers to the availability of higher price
levels which have added seat availability. For example, the 7 day advance
purchase fare is presently the sell-up fare from the 21-day advance purchase
fare.
Structural Fares currently have the following features:
- System wide advance purchase fare types that are effective
for travel for at least three months;
- Minimum and Maximum stay requirements;
- Non-refundability in the event the fare is not used on the
flight on which space was reserved;
- Penalty charges for change in flight reservations and
dates;
- Black-out periods during which travel is restricted or
conditioned by ticket purchase requirements;
- Seat inventory capacity limitations;
- Ticketing time limits within which tickets must be
purchased within a fixed period at or after specific
flight reservations are made.
1
<PAGE> 16
These features are not set out for the purpose of limiting the scope
or definition of Structural Fares but rather to better identify the qualities
which functionally characterize the lowest Published Fares and which over the
term of this Agreement would provide a basis for determining the lowest
Published Fares from which the Domestic Consolidator Fare levels are to be
determined. At the present time, for example, TWA's lowest domestic system-wide
advance purchase excursion fare is the 21-day advance purchase fare bearing an
E21N fare code basis. The second lowest advance purchase excursion fare is the
7-day advance purchase fare bearing an E7N fare code basis. In the event that
the fare designator codes are changed for these fares or that the fare
structure is changed so that either or both the 7-day and the 21-day advance
purchase condition is lengthened or shortened, the Domestic Consolidator Fares
will be determined on the basis of the new fares that are the functional
equivalent of the 7-day and the 21-day advance purchase fares without regard to
the new fare code or advance purchase period. For the purposes of this
Agreement, the E21N and the E7N fares refer to the lowest domestic system-wide
advance purchase excursion fare and the second lowest domestic system-wide
advance purchase excursion fare respectively without regard to the actual
advance purchase requirement of any later fares which bear different fare codes
but which are the functional equivalent of these two fares. For the purposes
of this Agreement, all references to the E21N fare and the E7N fare include the
functional equivalents of one or both such fares in the event that one or both
such fares have been eliminated.
2. Domestic Consolidator Fares will be in effect for periods of six
months effective as of February 15 and October 15 (the "effective fare date").
Ticket sales on and after the effective fare date will be at a 60% discount
from the applicable Structural Fare. TWA will notify Karabu of the new
Domestic Consolidator Fares on or before the effective fare date.
3. For such period of time that Las Vegas is designated as an origin
city or a destination city from another origin city under the Domestic
Consolidator Fare Program, the Domestic Consolidator Fare for travel between
Las Vegas and its related destination cities or such other origin cities and
Las Vegas (in each case in both directions) will be adjusted as of the
effective fare date. However, the Domestic Consolidator Fare for those city
pair markets shall be adjusted at other dates in order to match fares in those
city pair markets which are lower than the most recently offered Domestic
Consolidator Fare ("Las Vegas matched fare"). In such an instance, the reduced
Domestic Consolidator Fare in the particular Las Vegas city-pair market will be
at a 60% discount from the Las Vegas matched fare and will only be in effect
for such period of time as such Las Vegas matched fare is in effect for sale,
provided however that such fare matching will not apply to Las Vegas matched
fares offered for sale for three days or less.
2
<PAGE> 17
4. The advance purchase, round-trip and minimum/maximum stay period
requirements of the Structural Fares are not applicable to the Domestic
Consolidator Fares and one-way Tickets to and from the origin and destination
cities may be purchased.
5. The Domestic Consolidator Fare may be booked only in identified
seat inventory classes. A seat inventory class is a mechanism for categorizing
various fare types in order to control/limit the number of tickets sold at any
particular fare level on any particular flight. At the present time, TWA has
the following seat inventory classes shown in descending order:
F
C
Y
B
Q
K
V
T
S
For such period of time as the lowest Structural Fare which serves as
the base for the Domestic Consolidator Fare is the E21N fare, this fare may
only be booked in the "S" and "T" seat inventory classes. In the event that
either or both of the "S" and/or "T" seat inventory classes have been
eliminated, the E21N fare may be booked in the functional equivalent of the "S"
and/or "T" seat inventory classes.
In the event that the "S" and "T" seat inventory classes are closed
for sale for whatever reason, the sell-up fare for the Domestic Consolidator
Fare, the E7N fare may be booked in the "V" and/or "K" seat inventory class. In
the event that either or both of the "V" and/or "K" seat inventory classes are
eliminated, the E7N fare may be booked in the functional equivalent of the "V"
and/or "K" seat inventory classes . If within three days of the departure date
of a specific flight, the "V" and "K" seat inventory classes are fully booked,
the E7N fare may be booked in the "Q" seat inventory class or its functional
equivalent if the "Q" seat inventory class has been eliminated.
In the event that the number of seat inventory classes for discounted
Published Fares (the B, Q, K, V, T and S seat inventory classes) increases:
- by one such class, the additional seat inventory class will
be made available for the E21N fare;
3
<PAGE> 18
- by more than one such class, then one-half of the additional
classes (or if an odd number, the whole number which is rounded-up from
one-half) will be made available for the E21N fare and the balance of the
additional classes will be made available for the E7N fare.
In the event that the number of seat inventory classes for discounted
Published Fares decrease by one or more, then the "Q" seat inventory class or
its functional equivalent if it has been eliminated would become available for
the E7N fare. The two lowest order of seat inventory classes are available for
the E21N fare, while the other seat inventory classes other than "Y" or "B" are
available for the E7N fare.
In the event that the number of seat inventory classes for discounted
Published Fares decrease to three seat inventory classes or less, then all
remaining seat inventory classes would be divided so that one-half of the
inventory classes (or if an odd number, the whole number which is rounded-up
from one-half) would be allocated to the E21N and the balance would be
allocated to the E7N fares.
In the event that all of the discounted seat inventory classes are
eliminated, then the "Y" seat inventory class will become available for the
E21N.
TWA does not guarantee that with respect to any particular flight for
which reservations are sought that at all times there will always be
availability in "S", "T", "V", "K" and "Q" seat inventory classes.
Tickets issued at the Domestic Consolidator Fare which are improperly
issued and booked in any seat inventory class other than "S", "T", "V", "K" or
"Q" or their functional equivalent in the event that any or all of such seat
inventory classes are eliminated, will be priced at the full Published Fare.
6. For reservations made for travel during the following periods and
for such other similar such periods as may be established from time-to-time
during the term of the Agreement, Karabu must provide is the Passenger Name
Record the Ticket number of a ticket issued in connection with a reservation
made to the following destinations during the following periods if, but only
if, TWA applies this condition to all E21N or E7N fares offered for sale during
these periods.
To Florida: 12-15 APR95, 21/22NOV95, 20-26DEC95,
15-18FEB96, 03-06APR96, 26/27NOV96,
19-26DEC96.
From Florida: 21-24APR95, 26/27NOV95, 31DEC95 - 03JAN96,
4
<PAGE> 19
23-5FEB96, 12-14APR96, 02DEC96.
Non-Florida: 21-22NOV95 , 26-27NOV95, 20-26DEC95,
01-03JAN96, 26-27NOV96, 01-02DEC96,
19-26DEC96.
7. For reservations made more than 7 days before the date of flight
departure, Tickets must be issued within 24-hours of the date on which the
reservation was made. For reservations made within 7 days of flight departure,
Tickets must be issued at the time that the reservations are made provided that
such a ticketing condition is applied to all other Consolidators (Domestic)
offering tickets for sale in Domestic Consolidator Markets. No stopovers are
permitted on Domestic Consolidator Fare Tickets provided that this condition is
also applicable to tickets sold by other Consolidators (Domestic) offering
tickets for sale in Domestic Consolidator Markets.
8. Tickets issued at the Domestic Consolidator Fare are nonrefundable
and nonreissuable and the value of such tickets may not be applied in full or
in part against the purchase of any other Ticket or ticket. All Tickets issued
at the Domestic Consolidator Fare must indicate "bulk fare", non-endorsable and
non-refundable on the face of the Ticket. Tickets which fail to indicate this
information on the face of the Ticket will be valued at the full Published
Fare.
DOMESTIC CONSOLIDATOR MARKETS
1. The Domestic Consolidator Markets will consist exclusively of
transportation from 12 United States origin cities listed on the attachment
hereto to destination cities listed on the attachment hereto. The attachment
will be amended from time to time to reflect changes in origin/destination
cities in accordance with this paragraph. The initial 12 origin cities will
remain in place during the Fifteen Month Period. Three months prior to each
End Date (as hereinafter defined), TWA will provide to Karabu a list of 12
alternate United States origin cities. Prior to each End Date, Karabu shall
have the right to select 12 origin cities for the period ending on the next End
Date from the 12 then current origin cities, the 12 alternate cities plus three
additional alternate U.S. origin cities selected by Karabu, provided however
that at no time may the 12 origin cities selected by Karabu include two origin
cities each of which serve as a hub (as hereinafter defined) for any single
major U.S. scheduled air carrier. The effective date on which Karabu must
discontinue the sale and ticketing of Tickets from or to any origin/
destination city market whether because the origin city will not be included on
the list of 12 origin cities for the next succeeding Year or from any
origin\destination city pair because the market share in such market has
exceeded permissible market share levels as set forth below, will, except
5
<PAGE> 20
as otherwise provided in the next sentence, be as of the day following the next
succeeding End Date. TWA may, on three months notice to Karabu, remove an
origin city as a point from which Karabu may operate at any time that TWA
establishes a Hub at that origin city. In such an event, Karabu may select an
alternate origin city so long as the inclusion of that origin city does not
result in there being two origin cities which serve as a hub for any single
major U.S. scheduled air carrier. In the event that a city pair which had
previously been excluded from eligibility because it exceed the applicable
market share criteria falls below the applicable market share criteria, it
shall be included as an eligible city pair effective on the day following the
next End Date if the origin city of the city pair is included in the 12 origin
cities effective as of the day following the next End Date. "End Date" means
the last day of the fifteenth month following the Commencement Date and the
last day of each subsequent twelve month period. "Hub" means a city in which
TWA initiates non-stop service to six (6) new cities (other than service to its
other hubs including St. Louis and JFK) with a minimum average of three (3)
non-stop flights per day to each such city.
2. Destination cities from the 12 origin points must satisfy the
following criteria:
- the origin/destination city market must be one in which TWA
has less than a 5% market share except for the origin
city/New York market which has a 10% market share limit;
- during the initial fifteen months of the Ticket Program,
market share data will be based on the Year end 2nd
Quarter 1994 market share data prepared by the U.S.
Department of Transportation;
- during each subsequent Year of the Ticket Program, market
share data will be based on the Year end 3rd Quarter
market share data prepared by the U.S. Department of
Transportation;
- in the event that the U.S. Department of Transportation
discontinues the publication of such market share data, the
market share data will be determined from mutually acceptable
industry recognized sources or in the event that there is no
mutual agreement on such sources, then the then existing
markets will remain in place;
- in the event any origin city/destination market exceeds the
applicable 5% or 10% market share and/or either city becomes
a Hub, it will cease being eligible as a Domestic Consolidator
Market as of the day following the next succeeding
End Date;
6
<PAGE> 21
- the origin/destination city markets must be ones in
which TWA in fact files Published Fares;
- San Juan and Honolulu are treated as domestic points
for the purposes of this Agreement.
3. Domestic Consolidator Fares may not under any circumstances be sold:
- for transportation where the origin city or the destination
point is St. Louis;
- for Trans World Express flights;
- for any code-share and/or block space flights;
- on nonstop flights in any otherwise eligible market in
which TWA operates non-stop service.
NONDISCRIMINATION
Capacity controls applicable to Domestic Consolidator Markets will at
all times be consistent with general system controls and models. TWA will not
impose any such controls which are designed to specifically impact Karabu's
operations in Domestic Consolidator Markets or the Domestic Consolidator Fares
established hereunder. Published Fares will not be re-filed in different
classes for the sole purpose of isolating and controlling the program
described in this Exhibit and the Karabu Ticket Program Agreement. TWA will
not initiate unpublished fares for the sole purpose of impacting such programs
or the Domestic Consolidator Fares. TWA will not take any other action for the
purpose of adversely impacting the Ticket Programs described in the Karabu
Ticket Program Agreement.
7
<PAGE> 22
Exhibit B
---------
AMENDMENTS TO BE MADE TO THE EXISTING DOCUMENTATION
The following amendments shall be made to the documents indicated:
I. Loan Agreement dated as of January 5, 1993, as amended:
A. Section 1.01 shall be amended by revising the definition of
"Cash Collateral" so that it shall hereafter read as follows:
"'CASH COLLATERAL' shall mean the cash or cash equivalents
deposited or maintained in the Cash Collateral Account
pursuant to Section 2.05(a) and/or Section 6.09, the cash or
cash equivalents deposited or maintained in the Escrow Account
pursuant to Section 10.01 or 10.04, and any earnings thereon."
B. Section 1.01 shall be amended by inserting after the
definition of "Collateral" a new definition of "Commencement Date" reading as
follows:
"Commencement Date" shall mean the later of (i) the date of
execution by both the Lender and the Borrower of the Extension
Agreement or (ii) the earlier of the date on which the
Pre-Packaged Bankruptcy Plan as defined in the Extension
Agreement is declared effective or September 30, 1995."
C. Section 1.01 shall be amended by inserting after the
definition of "ERISA" new definitions of "Escrow Account" and "Extension
Agreement" reading as follows:
"'ESCROW ACCOUNT' shall mean the escrow account established by
Borrower and Lender at National Westminster Bank USA (or any
other bank approved in writing by Borrower and Lender),
entitled "Karabu Corp. Cash Collateral Escrow Account F/B/O
Trans World Airlines, Inc." pursuant to an escrow agreement
among such bank, Lender and Borrower (the "Escrow Agreement")
substantially in the form of Exhibit C to the Extension
Agreement into which escrow account cash or cash equivalents
shall be deposited by Borrower, if required, pursuant to
Section 10.01 and 10.04 hereof, or any replacement therefor.
-14-
<PAGE> 23
'EXTENSION AGREEMENT' shall mean the Extension, Refinancing
and Consent Agreement dated June 14, 1995 by and among
Borrower, Lender and the Icahn Entities, as the same may from
time to time be modified or amended."
D. Section 1.01 shall be amended by inserting after the
definition of "Interim Loan" a new definition of "Karabu Loans" reading as
follows:
"'KARABU LOANS' shall mean collectively the Loans and the
Term Loan."
E. Section 1.01 shall be amended by inserting after the
definition of "Maturity Date" a new definition of "Minimum Borrowing Base"
reading as follows:
"'MINIMUM BORROWING BASE' shall mean the lesser of (A)
$30,000,000 or (B) the outstanding principal amount of the
Karabu Loans."
F. Section 1.01 shall be amended by revising the definition of
"Miscellaneous Contracts" by inserting at the end thereof a new proviso reading
as follows:
"provided, however, that Miscellaneous Contracts shall not
include any Receivables representing amounts or payments due
from credit card or bank card companies, companies which act
as processing centers or clearing houses for credit card
issuers, or financial institutions or other third parties
resulting from sales charged to American Express, MasterCard,
Visa, Diner's Club, Discover Card, or any other charge or
credit card."
G. Section 1.01 shall be amended by inserting after the
definition of "Monies" a new definition of "New Borrowing Base" reading as
follows:
"'NEW BORROWING BASE' shall mean at any time the aggregate sum
of (i) 75% of the face amount of the UATP Eligible
Receivables, (ii) 60% of the face amount of the Getaway
Personal Credit Card Eligible Receivables, (iii) 65% of the
face amount of the Air Freight Eligible Receivables, (iv) 40%
of the face amount of the Miscellaneous Contract Eligible
Receivables and (v) the amount of Cash Collateral on deposit
in the Escrow Account."
-15-
<PAGE> 24
H. Section 1.01 shall be amended by inserting after the
definition of "New Borrowing Base" a new definition of "New Borrowing Base
Deficiency" reading as follows:
"'NEW BORROWING BASE DEFICIENCY' shall mean on any Business
Day the amount by which the New Borrowing Base shall be less
than the greater of (i) the remainder of $42,000,000 minus the
sum of (x) twenty-five percent (25%) of any reduction of the
principal balance of the Karabu Loans after the Commencement
Date and (y) one hundred percent (100%) of any reduction in
the principal balance of the Karabu Loans resulting from
withdrawals made by the Lender pursuant to Section 10.04
hereof and (ii) the Minimum Borrowing Base."
I. Section 1.01 shall be amended by inserting after the
definition of "Settlement Order" a new definition of "Significant Default"
reading as follows:
"'SIGNIFICANT DEFAULT' shall mean any default referred to in
clause (b), (h), (i) of Section 8.01 hereof, or any other
material default, which in any such case, upon the giving of
notice and lapse of time, would become an Event of Default."
J. Section 7.05 shall be amended by inserting at the end
thereof a new sentence reading as follows:
"Notwithstanding the foregoing restrictions of this Section,
the Borrower may (i) declare and pay dividends when due on
Borrower's 12% Preferred Stock (to be issued to the holders of
its 8% Senior Secured Notes Due 2000) or redeem or repurchase
such stock when required by its terms, (ii) declare and pay
dividends or make any redemption or repurchase mandatorily
required by the terms of any redeemable preferred stock of
Borrower hereafter issued for cash or in connection with any
merger or consolidation of Borrower, or (iii) retire any of
its shares of any class in exchange for or out of the proceeds
of the substantially concurrent sale or exchange of, other of
its shares of any class."
K. Section 8.01 shall be amended:
(i) to provide that the commencement of a voluntary case or
other proceeding seeking reorganization under Chapter 11 of
-16-
<PAGE> 25
the bankruptcy laws shall not be deemed to include the filing by TWA
of a petition for relief under Chapter 11 accompanied by the necessary
consents to the Plan of Reorganization attached as Appendix B to the
Registration Statement No. 33-89764 on Form S-4 of TWA filed with the
Securities and Exchange Commission, as amended by Amendment No. 4
declared effective on May 12, 1995.
(ii) to add at the end of clauses (m) and (n) the following
proviso:
"; PROVIDED, HOWEVER, the commencement of a case under
Chapter 11 of the Bankruptcy Code by or against Borrower
shall not constitute an Event of Default unless, in such
case, (A) the Ticket Program (as defined in the
Extension Agreement), or the right to apply the proceeds
thereof as therein provided, is rejected by Borrower
(either voluntarily or in accordance with any court
order) or (B) any plan is confirmed in such case without
Lender's consent which deprives Lender of any of the
Collateral or any material right under this Agreement,
the Ticket Program or the Extension Agreement."
(iii) to add a new clause "(r)" reading as follows:
"(r) (x) the Borrower shall fail to deposit cash or
cash equivalents into the Escrow Account pursuant to
either Section 10.01 or 10.04 hereof by 5:00 P.M. New
York City time on the fifth Business Day following the
day that a Borrowing Base Certificate is delivered to
Lender pursuant to Section 6.06(a) or 6.06(b) which
shows that such a deposit is required pursuant to either
Section 10.01 or 10.04 hereof or (y) notwithstanding
clause (d) of this Section 8.01, the Borrower fails to
deliver a Borrowing Base Certificate by 5:00 P.M. New
York City time on the fifth Business Day following the
day such Borrowing Base Certificate is due to be
delivered pursuant to either Section 6.06(a) or 6.06(b)
hereof."
L. A new Article X shall be added to the Loan Agreement
immediately following Article IX reading as follows:
-17-
<PAGE> 26
"ARTICLE X. NEW BORROWING BASE AND ESCROW ACCOUNT.
Section 10.01. Certain Actions by Borrower. If at
any time there shall exist a New Borrowing Base Deficiency,
Borrower shall deposit into the Escrow Account cash or cash
equivalents in an amount equal to the New Borrowing Base
Deficiency.
Section 10.02. Withdrawals From the Escrow Account.
At any time after the Commencement Date and from time to time,
when there is no New Borrowing Base Deficiency and no
Significant Default or Event of Default has occurred and is
continuing, Borrowing shall have the right to withdraw funds
on deposit in the Escrow Account in accordance with the
procedures set forth in the Escrow Agreement between Lender,
Borrower and the bank at which the Escrow Account is then
being maintained, which procedures shall be substantially
similar to those set forth in the form of Escrow Agreement
attached as Exhibit C to the Extension Agreement, provided,
however, that no withdrawal shall be made to the extent that
after giving effect thereto there would exist a New Borrowing
Base Deficiency.
Section 10.03. Investment of Funds in the Escrow
Account. The funds from time to time on deposit in the Escrow
Account may be invested in accordance with the procedures set
forth in the Escrow Agreement, which procedures shall be
substantially similar to those set forth in the form of Escrow
Agreement attached as Exhibit C to the Extension Agreement.
Section 10.04. Payments From the Escrow Account to
Lender. If at any time after the Commencement Date the New
Borrowing Base is less than the lesser of the Minimum (as
hereinafter defined) or the Loan Balance (as hereinafter
defined) (such lesser amount being referred to as the "Loan
Payment Minimum"), then, whether or not a New Borrowing Base
Deficiency exists, Borrower shall deposit into the Escrow
Account an amount of cash or cash equivalents equal to the
difference between the Loan Payment Minimum and the New
Borrowing Base. Whether or not Borrower makes the
-18-
<PAGE> 27
deposit required to be made pursuant to this Section, Lender
shall have the right to withdraw from the Escrow Account, to
the extent of any funds available therein, an amount equal to
the amount so deposited or the amount which should have been
deposited for its own account, which withdrawal shall
constitute a prepayment of the principal of Karabu Loans
(which shall be apportioned between the Loans and the Term
Loan pro rata in accordance with their respective outstanding
principal balances). Withdrawals by Lender pursuant to this
Section shall be made in accordance with the procedures set
forth in the Escrow Agreement, which procedures shall be
substantially in the form of the Escrow Agreement attached as
Exhibit C to the Extension Agreement. No portion of any
amount withdrawn by Lender pursuant to this Section shall to
be subject to return by Lender to Borrower. "Minimum" shall
mean "$30,000,000 less the aggregate of the amounts withdrawn
by Lender from the Escrow Account pursuant to this Section.
"Loan Balance" shall mean the then outstanding principal
balance of the Karabu Loans.
Section 10.05. Borrowing Base Certificates.
Notwithstanding the provisions of the Omnibus Amendment and
Supplement To Agreements between Borrower and Lender dated as
of March 28, 1994 (the "Amendment") or any other provision of
this Agreement, commencing with, and not before, the first of
the following to occur after the Commencement Date: (i) the
tenth Business Day of a month or (ii) the next succeeding
Tuesday (or if such Tuesday is not a Business Day, the first
Business Day following such Tuesday), Borrower shall commence
and thereafter continue to deliver Borrowing Base Certificates
to Lender in compliance with Sections 6.06(a) and 6.06(b) of
this Agreement. The reference to "Borrowing Base Deficiency"
contained in Section 6.06(b) of the Loan Agreement shall mean
and include both a Borrowing Base Deficiency and a New
Borrowing Base Deficiency.
Section 10.06. Compliance With Other Provisions of
this Agreement. Notwithstanding any other provision of this
Agreement or any
-19-
<PAGE> 28
other agreement between Lender and Borrower, Borrower shall
not at any time prior to January 8, 2001 be required to (i)
comply with the provisions of Sections 2.05(a) or 3.02(c) of
this Agreement or (ii) cure a Borrowing Base Deficiency. The
failure to cure a Borrowing Base Deficiency shall not
constitute a default or an Event of Default under of this
Agreement or the Term Loan."
II. Security Agreement-Trust Deed dated January 5, 1993, as amended
("Security Deed").
A. Section 4.4(c) is amended to insert a new sentence at
the end thereof reading as follows:
"In giving any consent, Lender may not impose any requirement
upon Borrower for the payment of any fee, require any
modification to be made to the Karabu Ticket Program Agreement
dated as of June 14, 1995, or require any other financial
consideration except payment of reasonable out-of-pocket
expenses (including reasonable legal fees and disbursements)
of the Security Trustee and of Lender, if any, incurred in
connection with any substitution pursuant to this Section."
B. Section 7.1 shall be amended to provide that (i) the
commencement of a voluntary case or other proceeding seeking
reorganization under Chapter 11 of the bankruptcy laws shall
not be deemed to include the filing by TWA of the Prepackaged
Bankruptcy Plan as defined in the Extension Agreement
accompanied by the necessary consents to such Plan and (ii)
the commencement of a case under Chapter 11 of the Bankruptcy
Code by or against Borrower shall not constitute an Event of
Default unless, in such case, (A) the Ticket Program (as
defined in the Extension Agreement), or the right to apply the
proceeds thereof as therein provided, is rejected by Borrower
(either voluntarily or in accordance with any court order) or
(B) any plan is confirmed in such case without Lender's
consent which deprives Lender of any of the Collateral or any
material right under this Agreement, the Ticket Program or the
Extension Agreement.
-20-
<PAGE> 29
Exhibit C
Form of Escrow Agreement
June ___, 1995
National Westminster Bank USA
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Mr. Arthur E. Beyer
Re: Karabu Corp.,
Cash Collateral Escrow Account
F/B/O Trans World Airlines, Inc.
Account Number ________________
Gentlemen:
Trans World Airlines, Inc. ("TWA" or the "Borrower") and Karabu Corp.
(the "Lender") have entered into a Loan Agreement dated as of January 5, 1993,
as amended and supplemented to date (the "Loan Agreement"). All capitalized
terms used herein or any Exhibit hereto which are not specifically defined
herein or therein, are used herein and therein as defined in the Loan
Agreement.
We hereby authorize you, with regard to National Westminster Bank USA
account no. _______________, designated as the "Karabu Corp. Cash Collateral
Escrow Account, F/B/O Trans World Airlines, Inc." (the "Escrow Account"), as
follows:
1. (a) The Borrower may make deposits into the Escrow
Account from time to time in accordance with the terms of Article X of the Loan
Agreement.
(b) Prior to receipt from Lender of a notice of an Event
of Default in the form attached hereto as EXHIBIT 1 (a "Notice of Default"), on
written instructions from the Borrower, you shall cause the amounts held in the
Escrow Account to be invested and reinvested in such Approved Investments (as
defined below) as the Borrower may direct from time to time and you shall hold
such Approved Investments in the name of Lender or in the name of its nominee
and shall sell Approved Investments on written instructions from the Borrower.
"Approved Investments" shall mean:
<PAGE> 30
National Westminster Bank
Page 2
(i) a bill, note or other evidence of
indebtedness which is fully guaranteed as to the timely
payment of principal and interest by the Government of the
United States of America, payable in U.S. dollars;
(ii) a certificate of deposit payable in dollars
issued or guaranteed by a bank or trust company organized and
existing under the laws of the United States of America or any
state thereof and having a combined capital, surplus and
undistributed profits of at least five hundred million dollars
($500,000,000) on the day such certificate of deposit is
delivered to or acquired by the Lender; and
(iii) commercial paper payable in U.S. dollars:
(A) rated not lower than P-1 (or the then equivalent grade) by
Moody's Investors Services, Inc., or (B) rated not lower than
A-1 (or the then equivalent grade) by Standard & Poor's
Corporation;
and have a maturity:
(x) in the case of commercial paper, at the time of
issuance thereof not in excess of nine months from the date of
issuance thereof; and
(y) in every other case, not in excess of one year
from the date of acquisition thereof.
The Lender shall have no liability for losses incurred in connection
with the purchase or sale of Approved Investments as directed by the Borrower.
(c) All payments, including without limitation, all
interest or dividends paid on or in respect of any Approved Investment, all
payments on or in respect of any Approved Investment which are made at its
maturity and all proceeds of any sale or other disposition of any Approved
Investment, shall be deposited into the Escrow Account.
(d) Prior to receipt from the Lender of a Notice of
Default, at any time and from time to time, subject to the following
conditions, the Borrower may withdraw cash and/or securities from the Escrow
Account.
In the event that the Borrower wishes to make a
withdrawal from the Escrow Account, on any Business Day the Borrower may
deliver to you, and shall simultaneously deliver to
<PAGE> 31
National Westminster Bank
Page 3
the Lender by noon, New York City time, of such Business Day, a certificate in
the form attached hereto as EXHIBIT 3 (a "Withdrawal Certificate"); PROVIDED,
HOWEVER, to be effective to permit any such withdrawal, the Withdrawal
Certificate must be signed by one of the individuals whose name and specimen
signature is set forth on EXHIBIT 4 (or such other persons whose name and
specimen signature may be hereafter supplied to you from time to time by TWA).
In the event that you and the Borrower shall not have received from the Lender
an objection substantially in the form attached hereto as EXHIBIT 5 (an
"Objection") by 11:00 a.m., New York City time, on the next Business Day
following the delivery of such Withdrawal Certificate, you shall promptly
deliver to the Borrower the amount specified in its Withdrawal Certificate.
Borrower shall not deliver any Withdrawal Certificate unless it is then
entitled under the Loan Agreement to make a withdrawal.
(e) If, at any time after an Objection has been delivered
to you, no Significant Default or Event of Default is continuing and no New
Borrowing Base Deficiency Exists, upon Borrower's written request, Lender
agrees to so notify you and such Objection shall be deemed withdrawn.
(f) Lender may withdraw cash and/or securities from the
Escrow Account on any Business Day, by delivering to you, and shall
simultaneously deliver to the Borrower, by noon, New York City time on such
Business Day, a certificate in the form attached hereto as Exhibit 6 ("Lender
Withdrawal Certificate"); PROVIDED, HOWEVER, to be effective to permit any such
withdrawal, the Lender Withdrawal Certificate must be signed by one of the
individuals whose name and specimen signature is set forth on Exhibit 2 (or
such other persons whose name and specimen signature may be hereafter supplied
to you from time to time by Lender). Upon receipt of a Lender Withdrawal
Certificate, you shall promptly deliver to the Lender the amount specified
therein as the amount Lender is entitled to withdraw. The Lender shall not
deliver any Lender Withdrawal Certificate unless it is then entitled under
Section 10.04 of the Loan Agreement to make such a withdrawal.
2. On the last Business Day of each week, you shall deliver or
cause to be delivered to the Borrower and the Lender a statement showing the
balance outstanding in the Escrow Account, deposits and withdrawals made during
the week, a description of Approved Investments and an accounting of interest
and/or dividends earned. In addition, you shall deliver such statement to the
Borrower and the Lender when requested from time to time.
3. (a) Notice shall be telecopied to TWA at 515 N. Sixth
Street, One City Centre, St. Louis, Missouri 63101 Attn: General
<PAGE> 32
National Westminster Bank
Page 4
Counsel, telecopier number (314) 589-3267. Notice shall be telecopied to
Karabu at One Wall Street Court, New York, New York 10005, c/o Icahn & Co.
Attn: Richard T. Buonato, telecopier number (212) 635-5571. Notice shall be
telecopied to you at the above address, attention of Arthur E. Beyer,
telecopier number (516) 349-4670.
(b) Funds shall be deposited in the Escrow Account
pursuant to the following instructions and notice shall be given as set forth
in paragraph 3(a) as to the deposit of funds:
(x) if by wire transfer:
Fed/Wire Instructions
NatWest NJ ABA #0212003339
or the account of Escrow via Karabu Corp./TWA
A/C #______________
Attn: Augustine Pringle, TR Division
(201) 547-7524
(y) if other than wire transfer, checks and all
notices should be sent:
Mr. Arthur E. Beyer, V.P.
National Westminster Bank USA
100 Jericho Quadrangle
Jericho, New York 11753
telephone number (516) 349-2095
telecopier number (516) 349-4670
4. (a) To be effective, the Notice of Default must be signed
by one of the individuals whose name and specimen signature is set forth on
EXHIBIT 2 (or such other person whose name and specimen signatures may be
hereafter supplied to you from time to time by Lender). From and after the
delivery by the Lender of a Notice of Default, you shall make payments for the
Escrow Account to the Lender pursuant to the wire instructions set forth below
until you have received notice from the Lender that it has been paid in full or
the Notice of Default is deemed withdrawn as provided in clause (c) of this
paragraph 4.
Unless the information shall have been changed by written notice to
you by one of the individuals of the Lender whose name and specimen signature
is set forth on EXHIBIT 2 hereto, you shall make all payments for the benefit
of the Icahn Entity by wire transfer as follows:
<PAGE> 33
National Westminster Bank
Page 5
National Westminster Bank USA
ABA #021 000 322
For the account of Karabu Corp.
Account number 2182015654
Attention: Madelaine Garagano (212) 602-2248
(b) From and after the delivery by the Lender of a Notice
of Default (unless the Notice of Default is deemed withdrawn as provided in
clause (c) of this paragraph 4), you shall only accept written instructions
regarding the Escrow Account from the Lender and from no other person or
entity, including any representative of TWA. Unless notified in writing by the
Lender in accordance with this clause (b), you shall make disbursements from
the Escrow Account only as set forth above, and to no other person or entity.
Notwithstanding the foregoing, you shall continue to accept deposits into the
Escrow Account from any person or entity. The Lender agrees to advise you in
writing promptly upon request of the Borrower if any Event of Default in
respect of which any Notice of Default is given is no longer continuing.
(c) If, at any time after a Notice of Default has been
delivered to you, no Significant Default or Event of Default is continuing,
then upon Borrower's written request, Lender shall so notify you and such
Notice of Default shall be deemed withdrawn.
5. (a) The instructions in this letter shall be irrevocable
until you have received written notice to the contrary signed by the Lender and
the Borrower.
(b) Subject to paragraph 4(a), you may act in reliance
upon any writing or instrument or signature which you, in good faith, believe
to be genuine, may assume the validity and accuracy of any statement or
assertion contained in such a writing or instrument, and may assume that any
persons purporting to give any writing, notice, advice or instruction in
connection with the provisions hereof have been duly authorized to do so. You
shall not be liable in any manner for the sufficiency or correctness as to
form, manner and execution, or the validity of any instrument deposited in the
Escrow Account; or as to the identity, authority or right of any persons
executing same; and your duties hereunder shall be limited to the safekeeping
of such monies, instruments or other documents received by you, for the
disposition of the same in accordance with the written instruments received by
you.
(c) You undertake to perform only such duties as are
expressly set forth herein and no implied duties or obligations shall be read
into this Letter Agreement against you.
<PAGE> 34
National Westminster Bank
Page 6
(d) The parties hereby agree to indemnify you and hold
you harmless from any and all claims, liabilities, losses, actions, suits or
proceedings at law or in equity, or any other expenses, fees or charges of any
charter or nature which you may incur or with which you may be threatened by
reason of your acting under this Letter Agreement other than claims,
liabilities, losses, actions, suits, proceedings or expenses, charges or fees
arising out of breaches of your obligations hereunder, gross negligence or
wilful misconduct.
(e) If the parties shall be in disagreement about the
interpretation of this Letter Agreement, or about rights and obligations, or
the propriety of any action contemplated by you hereunder, you may, at your
sole discretion, files an action in interpleader to resolve the said
disagreement. You shall be indemnified by the parties, for all costs,
including reasonable attorneys' fees, in connection with the aforesaid
interpleader action, and shall be fully protected in suspending all or a part
of its activities under this Letter Agreement until a final judgment in the
interpleader action is received. The Borrower and the Lender shall share
equally the costs of any such action.
(f) If any payment shall be received by the Lender after
the Lender has been indefeasibly paid in full, such payment shall be received
and held in trust for and promptly paid over to TWA or immediately redeposited
in the Escrow Account.
(g) You may resign upon 60 days' written notice to the
parties in this Letter Agreement. Such notice shall be transmitted by
certified mail, return receipt requested and by telecopier pursuant to
paragraph 3 hereof. A successor hereunder shall be appointed by the Lender,
with the approval of TWA. In case at any time you shall resign and a successor
shall not have been designated and shall not have accepted such designation,
the Lender or the Borrower may apply to a court of competent court of
jurisdiction, for the appointment of a successor. Such court may thereupon,
after notice, if any, as it may deem proper and prescribe, appoint a successor.
If a successor is not appointed within the 60-day period, you also may petition
a court of competent jurisdiction to name a successor.
(h) Except as specifically provided otherwise, all
notices and communications hereunder shall be in writing and shall be deemed to
be duly given if sent by registered or certified mail, return receipt
requested, to the respective addresses set forth in paragraph 3 or by
telecopier at the respective telecopier numbers set forth in paragraph 3.
Notwithstanding the preceding sentence, any notice actually delivered to a
party, by hand delivery or
<PAGE> 35
National Westminster Bank
Page 7
otherwise, shall be deemed validly given for purposes of this Letter Agreement.
(i) The rights under this Letter Agreement shall insure
to the benefit of, and the obligations created hereby shall be binding upon,
the parties hereto, and their respective successors and assigns.
(j) This Letter Agreement shall be construed and enforced
according to the laws of the State of New York without regard to principles of
conflict of laws.
Please sign in the space provided below on two of the enclosed copies
of this letter to acknowledge receipt of this letter to and indicate agreement
with its terms, and return both copies to us at the above address.
Very truly yours,
KARABU CORP.
By:__________________________
Name:
Title:
Accepted and agreed to as
of June ________, 1995.
NATIONAL WESTMINSTER BANK USA
By:__________________________
Name:
Title:
TRANS WORLD AIRLINES, INC.
By:__________________________
Name:
Title:
<PAGE> 36
Exhibit 1 to Cash
Collateral Escrow Account Letter
--------------------------------
Form of Notice of Default
(Karabu Corp. Letterhead)
(Date)
Via Telecopier
- - --------------
National Westminster Bank USA
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Mr. Arthur E. Beyer
Re: Karabu Corp.,
Cash Collateral Escrow Account
F/B/O Trans World Airlines, Inc.
Account Number ________________
Gentlemen:
Reference is made to that certain Loan Agreement dated as of January
5, 1993, as amended and supplemented to date, between Trans World Airlines,
Inc., as Borrower and Karabu Corp. as Lender (the "Loan Agreement").
The undersigned hereby certifies that an Event of Default, as defined
in Section 8.01 of the Loan Agreement, has occurred and is continuing.
Very truly yours,
KARABU CORP.
By:__________________________
Name:
Title:
<PAGE> 37
Exhibit 2 to Cash
Collateral Escrow Account Letter
--------------------------------
AUTHORIZED PERSONNEL
The following Karabu Corp. ("Karabu") personnel are authorized to act
on Karabu's behalf with respect to instructions to National Westminster Bank
USA pursuant to the letter agreement between National Westminster Bank USA,
Karabu and Trans World Airlines, Inc. dated as of June __, 1995, as amended and
supplemented to date.
Names Specimen Signature
----- ------------------
Richard T. Buonato ____________________________
________________________ ____________________________
________________________ ____________________________
The foregoing list may be changed or supplemented by the delivery of a
written notice signed by Richard T. Buonato, specifying any such change(s), to
National Westminster Bank USA at the following address:
Mr. Arthur E. Beyer, V.P.
National Westminster Bank USA
100 Jericho Quadrangle
Jericho, New York 11753
Dated: June ___, 1995 KARABU CORP.
By:__________________________
Name:
Title:
<PAGE> 38
Exhibit 3 to Cash
Collateral Escrow Account Letter
--------------------------------
Form of Withdrawal Certificate
[TWA Letterhead]
[Date]
Via Telecopier
- - --------------
National Westminster Bank USA
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Mr. Arthur E. Beyer
Re: Karabu Corp.,
Cash Collateral Escrow Account
F/B/O Trans World Airlines, Inc.
Account Number ________________
Gentlemen:
Reference is made to that certain Letter Agreement dated as of June
___, 1995, among you, Trans World Airlines, Inc., as Borrower and Karabu Corp.
as Lender.
The undersigned hereby directs you to pay to it or to endorse for
transfer and deliver to it the following amount in cash or securities in
accordance with the terms of the Letter Agreement:
Amount held in Escrow Account $__________
MINUS
Amount required to be held in the Escrow Account
(as set forth on the New Borrowing Base
Certificate attached hereto as Annex 1) $__________
Amount available for withdrawal $__________
Amount which TWA proposes to withdraw
from the Escrow Account $__________
TWA hereby certifies that (i) it is entitled to withdraw the amount
specified above pursuant to the terms of the Loan Agreement, (ii) there has not
occurred any Significant Default or Event of Default (as defined in the Loan
Agreement), and (iii) the
<PAGE> 39
withdrawal of the amount specified above will not cause there to be a New
Borrowing Base Deficiency (as defined in the Loan Agreement).
Very truly yours,
TRANS WORLD AIRLINES, INC.
By:
-----------------------
Name:
Title:
<PAGE> 40
Annex 1
-------
TRANS WORLD AIRLINES, INC.
New Borrowing Base Certificate
------------------------------
__________________, the _________________ of Trans World Airlines,
Inc., a Delaware corporation (the "Corporation") hereby states that:
1. This Certificate is being delivered pursuant to the
requirements of Section 10.01 of the Loan Agreement dated as of January 5,
1993, as amended and supplemented to date, between the Corporation, as
Borrower, and Karabu Corp., a Delaware corporation, as Lender (the "Loan
Agreement").
2. Unless the context otherwise requires, the capitalized terms
used in this Certificate which are defined in the Loan Agreement have the
respective meanings set forth therein.
3. The New Borrowing Base is based on the aggregate sum of
Designated Receivables (calculated as set forth on the schedule of Selected
Accounts Receivable annexed as EXHIBIT 1) in the following categories as of the
date of this Certificate:
a. UATP Eligible Receivables:
$___________ times 75%:
$__________
b. Getaway Personal Credit Card
Eligible Receivables:
$___________ times 60%:
$__________
c. Air Freight Eligible Receivables:
$___________ times 65%:
$__________
d. Miscellaneous Contract Eligible
Receivables: $__________ times 40%:
$__________
4. Cash Collateral, if any: $__________
5. Principal Amount of the Karabu
Loans outstanding:
$__________
IN WITNESS WHEREOF, I have caused this Certificate to be signed as of
___________ ___, 19__.
-----------------------------
Name:
Title:
<PAGE> 41
Exhibit 4 to Cash
Collateral Escrow Account Letter
--------------------------------
AUTHORIZED PERSONNEL
--------------------
The following Trans World Airlines, Inc. ("TWA") personnel are
authorized to act on TWA's behalf with respect to instructions to National
Westminster Bank USA pursuant to the letter agreement between National
Westminster Bank USA, Karabu Corp. and TWA dated as of June __, 1995, as
amended and supplemented to date.
Names Specimen Signature
----- ------------------
Robert A. Peiser ____________________________
Dan J. Holmes ____________________________
Michael J. Palumbo ____________________________
Christine R. Deister ____________________________
The foregoing list may be changed or supplemented by the delivery of a
written notice signed by Robert A. Peiser, specifying any such change(s), to
National Westminster Bank USA at the following address:
Mr. Arthur E. Beyer, V.P.
National Westminster Bank USA
100 Jericho Quadrangle
Jericho, New York 11753
Dated: June ___, 1995 TRANS WORLD AIRLINES, INC.
By:
---------------------------
Name:
Title:
<PAGE> 42
Exhibit 5 to Cash
Collateral Escrow Account Letter
--------------------------------
Form of Objection
[Karabu Corp. Letterhead]
[Date]
Via Telecopier
- - --------------
National Westminster Bank USA
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Mr. Arthur E. Beyer
Re: Karabu Corp.,
Cash Collateral Escrow Account
F/B/O Trans World Airlines, Inc.
Account Number ________________
Gentlemen:
Reference is made to that certain Letter Agreement dated as of June
__, 1995, as amended and supplemented to date, among you, Trans World Airlines,
Inc., as Borrower, and Karabu Corp., as Lender (the "Letter Agreement").
The undersigned hereby certifies that [a Significant Default or Event
of Default has occurred and is continuing under the Loan Agreement]* or [a New
Borrowing Base Deficiency exists under the Loan Agreement]*.
The undersigned hereby directs you NOT to deliver to TWA the cash or
securities from the Escrow Account (as defined in the Letter Agreement) which
TWA has directed you to deliver to it pursuant to a Withdrawal Certificate
dated ______________ __, ____ and this shall be your good and sufficient
authority to not comply with said Withdrawal Certificate unless and until such
direction is deemed with withdrawn in accordance with paragraph 1(e) or
paragraph 4(c) of the Letter Agreement.
Very truly yours,
KARABU CORP.
By:
--------------------------
Name:
Title:
* Indicate whichever is applicable.
<PAGE> 43
Exhibit 6 to Cash
Collateral Escrow Account Letter
--------------------------------
Form of Lender Withdrawal Certificate
[Karabu Letterhead]
[Date]
Via Telecopier
- - --------------
National Westminster Bank USA
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Mr. Arthur E. Beyer
Re: Karabu Corp.,
Cash Collateral Escrow Account
F/B/O Trans World Airlines, Inc.
Account Number ________________
Gentlemen:
Reference is made to that certain Letter Agreement dated as of June
__, 1995, among you, Trans World Airlines, Inc., as Borrower, and Karabu Corp.,
as Lender.
The undersigned hereby directs you to pay to it or to endorse for
transfer and deliver to it the following amount in cash or securities in
accordance with the terms of the Letter Agreement:
Minimum $__________
Loan Balance $__________
Loan Payment Minimum (lesser of two entries above) $__________
New Borrowing Base $__________
Amount to be withdrawn by Lender
from the Escrow Account $__________
Lender hereby certifies that it is entitled to withdraw the amount
specified above pursuant to the terms of Section 10.04 of the Loan Agreement.
Very truly yours,
KARABU CORP.
By:
--------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.38
<PAGE> 2
No. 1 1,150,000 Shares
TRANS WORLD AIRLINES, INC.
STOCK PURCHASE WARRANT
TO PURCHASE SHARES OF COMMON STOCK, $.01 PAR VALUE
Void After August 22, 1996.
This is to certify that, for value received, Trans World Airlines,
Inc., not for itself but solely as disbursing agent (the "Disbursing Agent")
for and on behalf of those aircraft lessors and other parties to be named by GE
Capital Aviation Services, Inc. ("GECAS"), its successors and registered
assigns, pursuant to the Agreement (as hereinafter defined), is entitled upon
the due exercise hereof at any time during the period commencing on August 23,
1995 and terminating at 5:00 p.m., New York Time, on August 22, 1996, to
purchase One Million One Hundred Fifty Thousand (1,150,000) shares (subject to
adjustment as provided in Section 9 hereof) of the $.01 par value Common Stock
of Trans World Airlines, Inc. (the "Company" or "TWA") at a price per share as
specified in Section 2 of this Warrant and to exercise the other rights, powers
and privileges hereinafter provided, all on the terms and subject to the
conditions specified herein. This TWA Stock Purchase Warrant has been issued
pursuant to Section 6.1.2(i) of the Plan (as hereinafter defined). The
Disbursing Agent shall be entitled to have this TWA Stock Purchase Warrant
reissued in one or more warrants directly to the parties to be named by GECAS
as above provided and, in the event, GECAS does not direct that all the
warrants be issued under the Agreement, such warrants shall be cancelled upon
TWA's written direction to the Disbursing Agent.
1.
CERTAIN DEFINITIONS. Unless the context otherwise requires, the
following terms as used in this Warrant herein shall have the following
meanings:
(A) AFFILIATE. Of any person means a person which
directly or indirectly through one or more intermediaries
controls, is controlled by, or is under common control with such
person. The term "control" as used with respect to any person
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of
such person, whether through the ownership of voting securities,
by contract or otherwise.
(B) AGREEMENT. The Agreement dated as of December
16, 1994, as amended to date, between GECAS and TWA, and as the
same may be further amended from time to time.
<PAGE> 3
(C) AVERAGE MARKET VALUE. The average of the
Closing Prices for the security in question for the thirty
trading days immediately preceding the date of determination.
(D) CLOSING PRICE.
(a) If the primary market for the security
in question is the American Stock Exchange or other
National Securities Exchange, the NASDAQ National
Market System, or other market or quotation system in
which last sale transactions are reported on a
contemporaneous basis, the last reported sales price,
regular way, of such security on such exchange or in
such quotation system for such day, or, if there shall
not have been a sale on such exchange or reported
through such system on such trading day, the highest
closing or last bid quotations therefor on such
exchange or quotation system on such trading day, or;
(b) If the primary market for such
security is not such an exchange or quotation market in
which last sale transactions are contemporaneously
reported, the last bid quotation in the
over-the-counter market on such trading day as reported
by the National Association of Securities Dealers
through NASDAQ, its automated system for reporting
quotations, or its successor or such other generally
accepted source of publicly reported bid quotations as
the Company may reasonably designate.
(E) COMMON STOCK. The Company's $.01 par value
Common Stock issued on or after the effective date of the Plan,
any stock into which such stock shall have been changed or any
stock resulting from reclassification of such stock.
(F) COMPANY OR TWA. Trans World Airlines, Inc., a
Delaware corporation, and its successors and assigns.
(G) CONVERTIBLE SECURITIES. Evidences of
indebtedness, shares of stock (other than Common Stock) or other
securities which are directly or indirectly convertible into or
exchangeable for, with or without payment of additional
consideration, additional shares of Common Stock, either
immediately or upon the arrival of a specified date or the
happening of a specified event.
(H) DISBURSING AGENT. Trans World Airlines, Inc.,
solely in its capacity as Disbursing Agent under the Plan and
not in its individual capacity.
(I) EFFECTIVE DATE. August 23, 1995.
(J) EMPLOYEE PREFERRED STOCK. The shares of $.01
par value preferred stock of the Company as defined in Section
1.1.57 of the Plan.
<PAGE> 4
(K) EXERCISE PRICE. The price specified in Section
2 hereof, as the same shall be adjusted from time to time
pursuant to the provisions of this Warrant.
(L) FAIR MARKET VALUE.
(a) As to Other Securities regularly
traded in the organized securities markets, the Average
Market Value thereof; and,
(b) As to all Other Securities and other
property, the fair value thereof as shall be determined
in good faith by the Board of Directors of the Company
at the time of authorization of the transaction giving
rise to the right to receive such property.
(M) HOLDER OR WARRANT HOLDER. [GECAS] and its
successors and registered assigns of this Warrant.
(N) INITIAL HOLDER. GECAS and its successors.
(O) OTHER SECURITIES. Any stock and other
securities of the Company (other than Common Stock) or of any
other person which the Holder of this Warrant shall become
entitled to receive upon exercise of this Warrant.
(P) OUTSTANDING STOCK PURCHASE RIGHTS. The
options, warrants, equity rights, Convertible Securities and
other Stock Purchase Rights which are issuable under the Plan or
otherwise described in the Registration Statement which entitle
the holders thereof to purchase or receive shares of the Common
Stock of the Company, either with or without the payment of
consideration or additional consideration, all of which options,
warrants, convertible securities and stock purchase rights are
listed on Schedule A hereto.
(Q) PLAN. The Joint Plan of Reorganization of TWA
and TWA Gate Holdings, Inc. filed in TWA's Chapter 11 Case No.
95-43748-399 confirmed by the United States Bankruptcy Court for
the Eastern District of Missouri on August 4, 1995.
(R) REGISTRATION STATEMENT. Registration Statement
no. 33-89764 of the Company relating to the Plan filed on
October 11, 1994 with, and as declared effective on May 12, 1995
by, the Securities and Exchange Commission.
(S) SERIES A WARRANTS. The 10 year warrants to
purchase Common Stock, as defined in Section 1.1.140 of the Plan.
(T) SEVEN YEAR WARRANTS. The 7 year warrants to
purchase Common Stock, as defined in Section 1.1.180 of the Plan.
<PAGE> 5
(U) STOCK PURCHASE RIGHTS. Warrants, options,
equity rights or other rights to subscribe for, purchase or
otherwise acquire any shares of Common Stock or any Convertible
Securities.
(V) TRANSFER AGENT means American Stock Trust and
Transfer Company, 40 Wall Street, New York, New York 10005 or
such other transfer agent as the Company may, from time to time
designate.
(W) WARRANT AGENT. The Agent maintained by the
Company pursuant to Section 5 hereof for the presentment of this
Warrant for exercise, transfer, exchange or repurchase.
2.
EXERCISE PRICE. Subject to the adjustments provided for elsewhere in
this Warrant, the Exercise Price per share shall be $.01.
3.
EXERCISE. This Warrant may be exercised by the Holder, as to the whole
or any part of the shares of Common Stock covered hereby, in whole shares, by
surrender of this Warrant at the principal office of the Company's Warrant
Agent, with the form of election to subscribe attached hereto duly executed and
upon tender of payment to the Warrant Agent of the Exercise Price for shares so
purchased in cash or by certified check or bank draft drawn on New York or St.
Louis funds. Upon the date of such receipt by Warrant Agent (herein called the
"Exercise Date"), this Warrant shall be deemed to have been exercised and the
person exercising the same to have become a holder of record of shares of
Common Stock (or of the other securities or property to which he or it is
entitled upon such exercise) purchased hereunder for all purposes, and
certificates for such shares so purchased shall be delivered to the Holder or
its transferee within a reasonable time (not exceeding five (5) business days),
after this Warrant shall have been exercised as set forth hereinabove. If this
Warrant shall be exercised in respect of a part only of the shares of Common
Stock covered hereby the Holder shall be entitled to receive a similar warrant
of like tenor and date covering the number of shares in respect of which this
Warrant shall not have been exercised.
4.
TAXES. The Company will pay all documentary stamp taxes attributable to
the initial issuance of the shares of Common Stock upon exercise of this
Warrant. The Holder hereof shall be responsible for all other taxes which may
be payable in respect of the exercise or receipt of this Warrant and in respect
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the registered Holder of this Warrant, and the Company shall
not be required to issue or deliver any such certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
<PAGE> 6
5.
WARRANT AGENT. The Company shall at all times while any portion of this
Warrant remains outstanding and exercisable appoint, keep and maintain a
Warrant Agent, which may be the Company, and such Warrant Agent shall keep and
maintain at its principal office a register in which, subject to such
reasonable regulations as it and the Company may prescribe, the registration,
transfer and exchange of this Warrant shall be provided for. The Company shall
not at any time, except upon the dissolution, liquidation or winding up of the
Company, close such register so as to result in preventing or delaying the
exercise or transfer of this Warrant. If at any time, the Company shall change
such Warrant Agent, it shall promptly give notice by certified or registered
mail to the registered Holder hereof of the name of such new Warrant Agent and
of the place or places at which this Warrant may be presented for transfer,
exchange or exercise. The terms of the Agreement between the Company and the
Warrant Agent at any time in effect will be in conformity with the terms of
this Warrant.
6.
TRANSFER. Except as otherwise provided herein, this Warrant and all
rights hereunder are transferable by the Holder hereof in person or by duly
authorized attorney on the books of the Company upon surrender of this Warrant
at the offices of the Warrant Agent, together with the form of transfer
authorization attached hereto duly executed. Absent any such transfer, the
Company may deem and treat the registered Holder of this Warrant at any time as
the absolute owner hereof for all purposes and shall not be affected by any
notice to the contrary.
7.
EXCHANGE. This Warrant is exchangeable, upon the surrender hereof by
the Holder at the offices of the Warrant Agent, together with the form of
transfer authorization attached hereto duly executed, for new warrants, in such
denominations as Holder shall designate at the time of surrender for exchange;
of like tenor and date representing in the aggregate the right to subscribe for
and purchase the number of shares which may be subscribed for and purchased
hereunder, each of such new warrants to represent the right to subscribe for
and purchase not less than 500 shares of Common Stock (except to the extent
necessary to round out the balance of the number of shares purchasable
hereunder).
8.
COVENANTS OF ISSUER. The Company covenants and agrees that all shares
which may be issued upon the exercise of the rights represented by this Warrant
will, upon issuance, be fully paid and nonassessable. The Company further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock to provide for the
exercise in full of the rights represented by this Warrant. The Company will
provide to, or make available to, as the
<PAGE> 7
case may be, the Holder of this Warrant the same information, reports and
notices as it shall provide to, or make available to, the holders of its Common
Stock.
9.
ADJUSTMENTS TO NUMBER OF SHARES PURCHASABLE. The number of shares of
Common Stock purchasable pursuant to this Warrant shall be subject to
adjustment from time to time as follows:
(a) In case, at any time during the period in which this
Warrant is exercisable, the Company shall pursuant to the Plan and/or
the exercise of Outstanding Stock Purchase Rights, issue, other than
pursuant to this Warrant, the Series A Warrants and/or the Seven Year
Warrants, additional shares of Common Stock such that the aggregate
number of shares of Common Stock and Employee Preferred Stock
outstanding would (exclusive of shares of Common Stock issued pursuant
to this Warrant, the Series A Warrants and/or the Seven Year Warrants)
exceed 45,000,000 (other than as a result of a subdivision, combination
or stock dividend as provided for in Section 9(b) or a consolidation,
merger or sale of assets as provided for in Section 9(c)), then and
thereafter the number of shares of Common Stock which the Holder of this
Warrant shall be entitled to purchase (calculated immediately prior to
such issuance), shall be increased in direct proportion to the increase
in the aggregate number of shares of Common Stock and Employee Preferred
Stock of the Company outstanding in excess of 45,000,000 by reason of
such issuance.
(b) In case, at any time during the period in which this
Warrant is exercisable, the Company shall at any time change as a whole,
by subdivision or combination in any manner or by the making of a stock
dividend, the number of shares of Common Stock then outstanding into a
different number of shares, with or without par value, then and
thereafter the number of shares of Common Stock which the Holder of this
Warrant shall be entitled to purchase (calculated immediately prior to
such change), shall be increased or decreased, as the case may be, in
direct proportion to the increase or decrease in the number of shares of
Common Stock of the Company by reason of such change, and the Exercise
Price of the shares of such Common Stock after such change shall, in
case of any decrease in the number of shares of Common Stock, be
proportionately increased.
(c) In case of, at any time during the period in which this
Warrant is exercisable, any reclassification of the outstanding shares
of Common Stock (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a
subdivision, combination or stock dividend as provided for in Section
9(b)), or in case of, at any time during the period in which this
Warrant is exercisable, any consolidation of the Company with, or merger
of the Company into, another corporation, or in case of, at any time
during the period in which this Warrant is exercisable, any sale of
all, or substantially all, of the property, assets, business and good
will of the Company as an entirety, the Company, or such successor or
purchasing corporation, as the case may be, shall provide that the
Holder of this Warrant shall thereafter be entitled to purchase the kind
and amount of shares of stock and other securities and property
receivable upon such reclassification, consolidation, merger or sale
<PAGE> 8
by a holder of the number of shares of Common Stock which this Warrant
entitles the Holder hereof to purchase immediately prior to such
reclassification, change, consolidation, merger or sale. Any such
successor corporation, which thereafter shall be deemed to be the
Company for purposes of this Warrant, shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 9 above, provided that all
outstanding stock purchase rights relating to the common stock of any
entity which the Company is consolidated with or merged into which were
outstanding prior to the effective date of such merger or consolidation
shall become "Outstanding Stock Purchase Rights" for the purpose of
computations of this Section 9.
10.
HOLDER'S RIGHTS. This Warrant shall not entitle the Holder to any
rights of a stockholder of the Company, except that should the Company, during
the period in which this Warrant is exercisable, (i) declare a dividend upon
the Common Stock payable otherwise than in (A) cash out of earnings or earned
surplus (computed in accordance with generally accepted accounting principles)
or (B) Common Stock or securities convertible into Common Stock or ticket
vouchers for the purchase at a discount on air transportation on TWA, or (ii)
make any other distribution (not excepted by CLAUSE (i)) in respect of the
Common Stock, then, thereafter, the Warrant Holder, upon exercise of this
Warrant, shall receive the number of shares of Common Stock purchasable upon
such exercise and, in addition and without further payment, the cash, stock or
other securities and/or other property which the Warrant Holder would have
received by way of dividends (otherwise than in cash out of such earnings or
earned surplus or in Common Stock or securities convertible into Common Stock)
and/or any other distributions in respect of the Common Stock as if,
continuously since the date hereof, such Warrant Holder (a) had been the record
holder of the number of shares of Common Stock then being purchased, and (b)
had retained all such cash, stock and other securities (other than Common Stock
or securities convertible into Common Stock) and/or other property payable in
respect of such Common Stock or in respect of any stock or securities paid as
dividends and originating directly or indirectly from such Common Stock.
11.
NOTICES. If there shall be any adjustment as provided above in Section
9, or if securities or property other than shares of Common Stock of the
Company shall become purchasable in lieu of shares of such Common Stock upon
exercises of this Warrant, the Company shall forthwith cause written notice
thereof to be sent by registered mail, postage prepaid, to the registered
Holder of this Warrant at the address of such Holder shown on the books of the
Warrant Agent, which notice shall be accompanied by an explanation prepared by
independent public accountants of recognized national standing (which may be
the Company's independent public accountants) setting forth in reasonable
detail the basis for the Holder's becoming entitled to purchase such shares and
the number of shares which may be purchased and the Exercise Price thereof, or
the facts requiring any such adjustment and the Exercise Price and number of
shares purchasable after such adjustment, or the kind and amount of any such
securities or property so purchasable upon the exercise of this Warrant, as the
<PAGE> 9
case may be. At the request of Holder and upon surrender of this Warrant, the
Company shall reissue this Warrant in a form conforming to such adjustments.
12.
DISSOLUTION OR LIQUIDATION. In the event of any proposed dissolution or
total liquidation of the Company, other than in connection with a
consolidation, merger or sale of all, or substantially all, of its property,
assets, business and goodwill as an entirety, the Company shall forthwith cause
written notice hereof to be sent by registered mail, postage prepaid, to the
registered Holder of this Warrant at the address of such Holder shown on the
books of the Company. Such notice shall be given not later than 30 days prior
to any record date fixed for the purpose of determining shareholders entitled
to participate in any liquidating distribution.
13.
CASH IN LIEU OF FRACTIONAL SHARES. The Company shall not be required to
issue fractional shares upon the exercise of this Warrant. If, by reason of
any change made pursuant to Sections 9 or 10 hereof, the Holder of this Warrant
would be entitled, upon the exercise of any rights evidenced hereby, to receive
a fractional interest in a share, the Holder shall, upon such exercise, be
entitled to purchase the remaining fractional interest to which he would not be
entitled hereunder for an amount in cash equal to the Average Market Value (or
in the absence thereof, the Fair Market Value) of such fractional interest,
determined as of the Exercise Date.
14.
LOST, STOLEN, MUTILATED, OR DESTROYED WARRANTS. If this Warrant shall
become lost, stolen, mutilated, or destroyed, the Company shall, on such terms
as to indemnity or otherwise as it may in its discretion impose, issue a new
warrant of like denomination, tenor, and date as the warrant so lost, stolen,
mutilated, or destroyed. Any such new warrant shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated, or destroyed warrant shall be at any time enforceable by
anyone.
15.
APPLICABLE LAW. The validity, interpretation, and performance of this
Warrant shall be governed by the laws of the State of New York.
16.
SUCCESSORS AND ASSIGNS. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and assigns of
the Company and the Holder hereof and shall be enforceable by the Company and
any such Holder.
<PAGE> 10
17.
HEADINGS. Headings of the paragraphs in this Warrant are for
convenience and reference only and shall not, for any purpose, be deemed a part
of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
this 23rd day of August, 1995, by its duly authorized officer.
TRANS WORLD AIRLINES, INC.
By:
--------------------------
Vice President
ATTEST:
- - -------------------------
Secretary
(Corporate Seal)
<PAGE> 11
EXHIBIT A
[Subscription Form to Be Executed Upon Exercise of Warrant]
The undersigned, registered holder or assignee of such registered holder
of the within Warrant, hereby (1) subscribes for ________ Share Units which the
undersigned is entitled to purchase under the terms of the within Warrant, (2)
makes the full cash payment therefor called for by the within Warrant, and (3)
directs that the shares issuable upon exercise of said Warrant be issued as
follows:
__________________________________
(Name)
__________________________________
(Address)
Signature
-------------------------
Dated
-------------------
_________________________________________________________________
NOTICE: The signature on this subscription form must correspond with
the name as written upon the face of the within Warrant, or upon the assignment
form attached as Exhibit B to the Warrant, in every particular, without
alteration or enlargement, or any change whatsoever and must be guaranteed by a
bank, other than a savings bank or trust company, having an office or
correspondent in New York, New York or St. Louis, Missouri, or by a firm having
membership on a registered national securities exchange and an office in New
York, New York or St. Louis, Missouri.
<PAGE> 12
EXHIBIT B
[Assignment]
(To be executed by the registered holder to effect a transfer of the within
Warrant)
FOR VALUE RECEIVED _____________________ hereby sell, assign, and
transfer unto ______________, of _______________, the right to purchase
________ Shares evidenced by the within Warrant, and do hereby irrevocably
constitute and appoint ______________________________ to transfer such right on
the books of the Company, with full power of substitution.
Dated: 19
-------------------, ---
__________________________________
Signature
_________________________________________________________________
NOTICE: The signature on this assignment must correspond with the name
as written upon the face of the within Warrant, in every particular, without
alteration or enlargement, or any change whatsoever and must be guaranteed by a
bank, other than a savings bank or trust company, having an office or
correspondent in New York, New York, or St. Louis, Missouri or by a firm having
membership on a registered national securities exchange and an office in New
York, New York or St. Louis, Missouri.
<PAGE> 13
<TABLE>
Schedule A
<CAPTION>
Common Stock Issued or Issuable to holders of:
<S> <C>
Old Common Stock:
(Non-employees) 235,807
(Employees) 335,334
Old Preferred Stock 1,280,000
PBGC 4,166,667
Old 10% Notes 2,300,000
CIT 208,344
Common Stock to Non-Contract Employees 1,026,694
Employee Preferred Stock 6,425,118
Public Warrants 1,747,132
Equity Rights 13,235,709(1)
Contingent Series A Warrants 0(2)
GE Warrants 1,150,000
Conditional Consideration 7,755,726(3)
Options Issued under the 1994 Key Employee Stock Incentive Plan:
Options have been granted for the purchase of an aggregate number of shares
of Common Stock equaling 3 1/3% of the Post-Restructuring Common Stock; as of
the Effective Date, this number was not yet determinable.
Employee Equity Ownership Program:
This Program is designed to enable TWA's employees to increase incrementally
their level of ownership of the combined total of the outstanding shares of
the Company's Common Stock and Employee Preferred Stock to between 30% and
40% over a seven-year period. As of the Effective Date, the number of shares
of Common Stock issuable under the Program was not yet determinable.
- - -----------------------------
1 without rounding for fractional shares otherwise issuable
2 these warrants were only issuable upon the fulfillment of certain
conditions which did not occur; therefore, these warrants were not and will not
be issued.
3 represents the maximum number of shares of Common Stock potentially
issuable to holders of old 8% and 10% Notes in the First and Second
Supplemental Distribution. The actual number of shares of Common Stock issued
will vary and be substantially below this amount.
</TABLE>
<PAGE> 1
EXHIBIT 10.39
<PAGE> 2
STAND-BY PURCHASE AGREEMENT
---------------------------
This Agreement dated as of August 8, 1995 is made by and between Trans
World Airlines, Inc., a Delaware corporation (the "Company") and M.D. Sass
Re/Enterprise Partners L.P., a Delaware limited partnership ("Sass
Partnership") and M.D. Sass Re/Enterprise International Ltd., a British Virgin
Island Company ("International"; Sass Partnership and International being
hereinafter referred to collectively as the "Purchasers");
WITNESSETH:
WHEREAS, the Company is a Chapter 11 bankruptcy debtor under the
United States Bankruptcy Code (the "Bankruptcy Code");
WHEREAS, pursuant to the Company's plan of reorganization confirmed by
the United States Bankruptcy Court for the Eastern District of Missouri on
August 4, 1995 (the "Plan"), the Company will issue 600,000 Ticket Vouchers (as
defined in Section 1.1.159 of the Plan), the form of which Ticket Vouchers is
attached as Exhibit "A" hereto, having an aggregate face amount of $30,000,000;
WHEREAS, the Plan contemplates the possibility of a stand-by purchase
arrangement for the purchase of Ticket Vouchers;
WHEREAS, the Company and Purchasers are willing to enter into this
Agreement to provide for such a stand-by purchase arrangement;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained and other good and valuable considerations, the receipt and
sufficiency thereof which are hereby acknowledged, the Company and the
Purchasers, agree as follows:
1. STAND-BY COMMITMENT TO PURCHASE TICKET VOUCHERS. On the basis
of the covenants, representations and warranties herein contained, but subject
to the terms and conditions herein set forth, the Purchasers agree as follows:
a. Each of the Purchasers will on the Effective
Date (as defined in the Plan) issue its unconditional
contractual undertaking (the "Standby Commitment") to
purchase, without setoff or reduction of any kind,
all Ticket Vouchers tendered to and accepted by
American Stock Transfer and Trust Company as agent
(the "Agent") during the period commencing on the
Effective Date and ending on October 15, 1995 (but in
no event earlier than the close of business on the
date 45 consecutive days after the Effective Date)
(the "Expiration Date"), such purchase to be at a
price of $26.00 per $50.00 face amount of the Ticket
Vouchers so tendered (the "Standby Purchase Price").
Ticket Vouchers so purchased by the Purchasers after
being validated by the Agent shall be conclusively
<PAGE> 3
deemed, as between the Purchasers and the Company, to
be Ticket Vouchers for all purposes of this Agreement.
b. The Standby Commitment provides that payment
of the Standby Purchase Price will be made to the
Agent within three days after the Expiration Date
(the "Settlement Date") in immediately available
funds. The form of the Standby Commitment will be
substantially as set forth as EXHIBIT "B" hereto.
c. On the Settlement Date, the Purchasers will
notify the Company of the aggregate face amount of
Ticket Vouchers tendered and purchased by the
Purchasers pursuant to Section 1.a. above (the
"Purchased Ticket Vouchers").
2. AGREEMENT OF THE COMPANY TO REDEEM TICKET VOUCHERS.
a. The Company unconditionally agrees to redeem,
at a price of $33.00 per $50.00 face amount (the
"Redemption Price"), without setoff or reduction of
any kind, the Purchased Ticket Vouchers from the
Purchasers in accordance with the following schedule
(the "Scheduled Redemption"):
(1) on the Settlement Date, the Company
will redeem at the Redemption Price, 1/9th of
the Purchased Ticket Vouchers (the "October
Redemption");
(2) on the fifteenth day of each of
March and April 1996, the Company will redeem
at the Redemption Price 1/3 of the Purchased
Ticket Vouchers remaining after the October
Redemption;
(3) on the fifteenth day of each of May
and June 1996, the Company will redeem at the
Redemption Price 1/6th of Purchased Ticket
Vouchers remaining after the October
Redemption (subject to the credit set forth
below).
Payment of the aggregate Redemption Price for a
Scheduled Redemption shall be made on or before the
date stated above (each a "Redemption Date") in
immediately available funds in accordance with wire
transfer instructions from the Purchasers upon tender
to the Company of the Purchased Ticket Vouchers to be
redeemed in a manner sufficient to convey good title
thereto free and clear of any lien or encumbrance
arising by, through or under the Purchasers, to the
Company. Any Scheduled Redemption payment or portion
thereof not so made upon proper tender by the
Purchasers of the Purchased Ticket Vouchers shall
include interest
2
<PAGE> 4
from and including the Redemption Date such
payment is due until paid at an overdue rate equal to
the then applicable Prime Commercial rate of Chase
Manhattan Bank N.A. plus 250 basis points (the
"Overdue Rate") and reasonable out-of-pocket
collection costs, including reasonable attorneys'
fees and disbursements, if any, incurred by the
Purchasers. Payments received will be applied first,
to pay reasonable out-of-pocket collection costs,
including reasonable attorneys' fees and
disbursements, if any, incurred by Purchasers, and
second, to pay overdue interest due under this
Agreement and third, to pay overdue Scheduled
Redemption amounts.
b. The Company may credit against its final
Scheduled Redemption an amount equal to (i) $7.00
times (ii) the number of Purchased Ticket Vouchers
redeemed on or about the October 15, 1995 Redemption
Date.
c. Provided that no Event of Default shall have
occurred and then be continuing under this Agreement,
the Company may, at its option, redeem any or all of
the Purchased Ticket Vouchers on any day after
October 31, 1995 in advance of any Scheduled
Redemption at the price set opposite the month below
in which such day occurs (a "Discounted Redemption")
as follows:
Month Discounted Redemption Price
November 1995 $30
December 1995 $30
January 1996 $31
February 1996 $32
March 1996 $33
April 1996 $33
May 1996 $33
June 1996 $33
The Company may exercise its option for Discounted Redemption
by giving five business days prior written notice to the
Purchasers of such exercise (i) stating the amount of Ticket
Vouchers being redeemed in advance of such Scheduled
Redemption and (ii) designating the date of such Discounted
Redemption. Upon tender to the Agent of the Purchased Ticket
Vouchers subject to the Discounted Redemption on the date
specified in the written notice for such Discounted
Redemption, the Company shall pay to the Purchasers the
required Discounted Redemption amount in the form of a wire
transfer of immediately available funds in accordance with
wire transfer instructions from the Purchasers. The
Discounted
3
<PAGE> 5
Redemption payments will be applied in inverse order of
Scheduled Redemptions. The option to redeem Ticket
Vouchers in advance does not extend to any Ticket Vouchers
scheduled for redemption during the calendar month in which
the Purchasers receive such notice from the Company. Any
notice of Discounted Redemption as to which the Company shall
have exercised its option may be withdrawn upon the giving of
a notice of revocation at least two (2) business days prior to
the date fixed for such Discounted Redemption.
d. The Purchasers agree not to sell the Purchased Ticket
Vouchers except to the Company pursuant to this Section 2 or
upon any Event of Default as hereafter defined.
3. COMPENSATION TO PURCHASERS FOR STANDBY COMMITMENT.
a. As compensation for the Purchasers' commitment in
Section 1, the Company will pay to the Purchasers a fee equal
to $.90 times the difference between (i) 600,000 and (ii) the
number of Purchased Ticket Vouchers (the "Commitment Fee").
As compensation for M.J. Whitman, Inc.'s intermediary role in
the Standby Commitment, the Company will pay to M.J. Whitman,
Inc. a fee equal to $1.02 times the number of Purchased
Ticket Vouchers (but not to exceed $400,000) (the "TWA Broker
Fee"). The Purchasers will pay a fee to M.J. Whitman, Inc. of
$39,000 (the "Purchasers Broker Fee").
b. The Commitment Fee, the TWA Broker Fee and the
Purchasers Broker Fee will be paid in immediately available
funds on the Settlement Date upon confirmation by the Agent of
full funding by the Purchasers of the Standby Purchase Price.
4 . PAYMENT OF TRANSACTION COSTS, FEES AND EXPENSES.
a. In the event the Stand-by Commitment is issued as
herein contemplated, the Company agrees to pay upon
presentation of an appropriate invoice(s) therefor (together
with such reasonable detail concerning the matters covered by
such invoice(s) as the Company may in good faith request) the
reasonable out-of-pocket expenses of (i) the Purchasers,
including reasonable attorneys' fees and disbursements, in
connection with the negotiation, preparation and execution of
this Agreement and the issuance of the Standby Commitment on
the Effective Date, not to exceed in the aggregate, $37,500,
(ii) the Agent in connection with its performance of the
transaction contemplated to be performed by it hereunder, and
(iii) M. J. Whitman, Inc. and its counsel, LeBoeuf, Lamb,
Greene & MacRae, in connection with the negotiation,
preparation and execution of this Agreement, as separately
agreed in writing between the Company and M. J. Whitman, Inc.,
a true and correct copy of which writing will be provided to
the Purchasers by the Company promptly after execution hereof.
4
<PAGE> 6
b. In the event that the Standby Commitment is not
issued by the Purchasers as herein contemplated, (i) by mutual
agreement in writing of the Company and the Purchasers or (ii)
as a result of the breach of this Agreement by either the
Company or the Purchasers, the Company and the Purchasers, in
the case of clause (i), or the breaching party in the case of
clause (ii), as the case may be, agree(s) to pay upon
presentation of an appropriate invoice therefor (together with
such reasonable detail concerning the matters covered by such
invoice(s) as the Company may in good faith request) the
reasonable fees and out-of-pocket expenses of M. J. Whitman,
Inc. and the reasonable fees and disbursements of LeBoeuf,
Lamb, Greene & MacRae in acting as counsel for M. J. Whitman,
Inc. in connection with negotiation and preparation of this
Agreement, which shall not exceed in the aggregate $37,500;
PROVIDED, HOWEVER, that in the event the Company is the
breaching party in the case of clause (ii), the Company agrees
to pay the reasonable out-of-pocket expenses of the
Purchasers, including reasonable attorneys' fees and
disbursements, in connection with the negotiation, preparation
and execution of this Agreement prior to the Company's breach,
not to exceed in the aggregate $37,500; PROVIDED FURTHER,
HOWEVER, that in the event the Purchasers are the breaching
parties in the case of clause (ii), the Purchasers agree to
pay the reasonable out-of-pocket expenses of the Company,
including reasonable attorneys' fees and disbursements, in
connection with the negotiation, preparation and execution of
this Agreement prior to the Purchasers' breach, not to exceed
in the aggregate $37,500.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. On the
Effective Date, the Purchasers will deliver to the Company a certificate signed
by their authorized representatives that represents and warrants to and agrees
that, as of the Effective Date:
a. Each of the Purchasers has been duly organized and,
in the case of Sass Partnership, is a validly existing
Delaware limited partnership and, in the case of
International, is a validly existing British Virgin Islands
company, in each case, duly organized and in good standing
under the laws of its respective jurisdiction of organization,
with power and authority to own its respective property and
conduct its respective business and to enter into and perform
this Agreement.
b. International is generally subject to suit and
neither it nor its property has any right of sovereign or
other immunity from suit, or in respect of matters of
jurisdiction or execution.
c. This Agreement has been duly authorized, executed and
delivered by the Purchasers and constitutes the valid, legal
and binding obligation of the Purchasers enforceable against
the Purchasers in accordance with its terms.
d. The Purchasers have a combined net worth and partners
capital, computed in accordance with generally accepted
accounting principles, of not less than
5
<PAGE> 7
$200,000,000 (Sass Partnership has a net worth (partners'
capital) of not less than $125,000,000 so computed and
International has a net worth of not less than $75,000,000 so
computed) and each of the Partners has sufficient unrestricted
liquid assets and the financial ability to fully perform its
obligations under the Stand-by Commitment and its respective
obligations hereunder. The financial statements of the
Purchasers furnished to the Company prior to execution and
delivery of this Agreement have been prepared in accordance
with generally accepted accounting principles consistently
applied and fairly present the pertinent results of operations
for the periods indicated and the financial position at the
end of such periods of the Purchasers, except as set forth in
the footnotes thereto.
e. No consent, approval, authorization or order of, or
filing with, any governmental agency or body of any court is
required for the consummation by the Purchasers of the
transactions contemplated by this Agreement in connection with
the performance by Purchasers of the Stand-by Commitment.
f. The execution, delivery and performance of this
Agreement and the Standby Commitment and the consummation of
the transactions herein and therein contemplated will not
result in a breach or violation by Purchasers of any of the
terms and provisions of, or constitute a default under, (i)
any statute, rule or regulation, or any order of any
governmental agency or body or any court having jurisdiction
over the Purchasers or any subsidiary of the Purchasers or any
of their properties or (ii) any agreement or instrument to
which the Purchasers or any subsidiary is a party or by which
the Purchasers or any subsidiary is bound or to which any of
the properties of the Purchasers or any subsidiary is subject,
or (iii) the certificate of incorporation or by-laws of the
Purchasers or any subsidiary of the Purchasers which currently
conducts business.
g. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Purchasers,
threatened against, and no order, decree or judgment of any
court agency or other governmental authority shall have been
rendered against, the Purchasers to restrain or prohibit the
performance by Purchasers of this Agreement or the
transactions contemplated by this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. On the
Effective Date, the Company will deliver to the Purchasers a certificate signed
by its President or General Counsel that represents and warrants that, as of
the Effective Date:
a. The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own
its properties and conduct its business as described in the
Prospectus (as hereafter defined).
6
<PAGE> 8
b. A registration statement (No. 33-89764), including a
prospectus, relating to (i) the Plan, (ii) securities to be
issued in connection with the Plan and (iii) the Ticket
Vouchers, has been filed by the Company with and declared
effective on May 12, 1995 by, the Securities and Exchange
Commission (the "Commission"). Such registration statement is
hereinafter referred to as the "Registration Statement," and
such prospectus, including all materials incorporated therein
by reference therein, as the "Prospectus."
c. The Registration Statement including the Prospectus,
taken as a whole, does not include any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein
not misleading in so far as relevant and material to the
financial condition of the Company, to the Ticket Vouchers or
the transactions contemplated hereby.
d. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid, legal and
binding obligation of the Company enforceable against the
Company in accordance with its terms.
e. The Ticket Vouchers have been duly authorized and
validly issued by the Company and the redemption of the Ticket
Vouchers by the Company in accordance with Section 2 of this
Agreement has been duly authorized by all necessary corporate
or judicial action.
f. The Ticket Vouchers conform to the description
thereof under the definition of "Ticket Voucher" contained in
Section 1.1.159 of the Plan.
g. As of the Effective Date, $30,000,000 face amount of
Ticket Vouchers were issued and outstanding.
h. No consent, approval, authorization or order of, or
filing with, any governmental agency or body of any court is
required for the consummation by the Company of the
transactions contemplated by this Agreement in connection with
the issuance and redemption by the Company of the Ticket
Vouchers, or resale of the Ticket Vouchers, except any such as
have been obtained and made.
i. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation by the
Company of any of the terms and provisions of, or constitute a
default under, (i) any statute, rule or regulation, or any
order of any governmental agency or body or any court having
jurisdiction over the Company or any subsidiary of the Company
or any of their properties or (ii) any agreement or instrument
to which the Company or any subsidiary is a party or by which
the Company or any subsidiary is bound or to which any of the
properties of the Company or any subsidiary is subject, or
(iii) the certificate of incorporation or
7
<PAGE> 9
by-laws of the Company or any subsidiary of the Company
which currently conducts business.
j. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Company,
threatened against, and no order, decree or judgment of any
court agency or other governmental authority shall have been
rendered against, the Company to restrain or prohibit this
Agreement or the transactions contemplated by this Agreement,
7 . COVENANTS OF THE COMPANY. The Company covenants and agrees
with the Purchasers that:
a. The Company will endeavor in good faith to advise the
Purchasers promptly of any proposed amendment or supplement to
the Plan prior to the Effective Date which affects the
Purchasers and if the Company effects any such amendment or
supplement without the Purchasers' consent which materially
adversely affects the Purchasers, Purchasers may by prompt
written notice to the Company terminate this Agreement and, in
such event, the Company shall reimburse the Purchasers for
their reasonable out-of-pocket expenses, including reasonable
attorneys' fees and disbursements, if any, incurred in
connection with such termination, together with payment of a
termination fee of $540,000. The Company will endeavor in
good faith to also advise the Purchasers of any judicial or
administrative order materially affecting the Plan or any of
the transactions contemplated by the Plan or this Agreement
and will use its best efforts to prevent the issuance of any
such order materially adversely affecting the rights of the
Purchasers.
b. The Company will furnish to the Purchasers copies of
the Confirmation Order, and all amendments and supplements
thereto, in each case as soon as available and in such
quantities as the Purchasers shall reasonably request.
c. The Ticket Vouchers will be in bearer form
substantially in the form attached hereto as EXHIBIT "A".
Records of the serial numbers applicable to specific holders
of Ticket Vouchers will be maintained by the Agent rather than
the Company and will be accessed by the Company only for
purposes of security and/or control when and to the extent the
Company in good faith believes there has been, or may have
been, improper use, reproduction or alteration of Ticket
Vouchers.
d. If required by any governmental agency of competent
jurisdiction in the United States, the Company will arrange
for the qualification of the purchase and resale of the Ticket
Vouchers under the laws of such jurisdictions as the
Purchasers may reasonably designate and will continue such
qualification in effect so long as reasonably requested by the
Purchasers.
8
<PAGE> 10
e. The Company will promptly file any forms 10K, 10Q or
8K required to be filed with the Commission under applicable
law and furnish to the Purchasers copies thereof promptly upon
the filing thereof.
f. The Company will honor Ticket Vouchers in accordance
with their terms whether tendered directly to the Company or
indirectly through a travel agent, interline agreement or
otherwise.
g. In any subsequent bankruptcy, reorganization or
similar proceeding, the Company will (i) continue to honor the
Ticket Vouchers in accordance with their terms and (ii) treat
the Ticket Vouchers as "tickets" and holders of the Ticket
Vouchers as "passengers/ticket holders."
h. As part of the Company's transmittal letter to
persons entitled to receive Ticket Vouchers under the Plan,
the Company will include a notice of the Standby Commitment in
a form reasonably satisfactory to the Purchasers and will
furnish to the Purchasers such copies thereof as the
Purchasers may reasonably request.
i. The Company will take such further actions and
execute and deliver to the Purchasers such further documents
and instruments as may be necessary to fully and completely
consummate the transactions and agreements contemplated by
this Agreement.
j. The Company agrees not to enter into any agreements
for the sale or disposition of all or substantially all of the
Company's assets (in one or more transactions), or a merger,
consolidation or other business combination involving all or
substantially all of the Company's assets unless the Company
provides the Purchasers with the express, written agreement by
the purchaser(s) or other successor(s) to assume the Company's
obligations and covenants hereunder and, after giving effect
to any such sale, disposition, merger, consolidation or other
business combination, the company or other successor(s) shall
meet the requirements of Section 6 hereof.
k. In the event the Company shall fail, for any calendar
month after the Expiration Date until all of the Ticket
Vouchers are redeemed in full, to maintain an average balance
of unrestricted domestic cash of not less than $70 million,
the Company shall be obligated to repurchase from the
Purchasers all Purchased Ticket Vouchers then held by the
Purchasers at the applicable Discounted Redemption price as
set forth in Section 2.c. hereof, such mandatory repurchase to
be effected within 5 business days after receipt of written
demand therefor from the Purchasers. Unrestricted domestic
cash computed for this purpose with respect to any calendar
month after December 31, 1995 shall exclude 50% of the cash
proceeds to the Company, if any, derived from any of the
following subsequent
9
<PAGE> 11
to the Effective Date: (i) an equity rights offering, (ii)
any working capital loan facility in addition to the Company's
currently existing and fully drawn asset and receivables based
loans from Karabu Corp., (iii) any change in the applicable
formulae (as distinct from day to day changes in holdback
levels in accordance with current procedures) which results in
any reduction in credit card processing holdback levels and
(iv) any sale of capital assets outside the ordinary course of
business. Conversely, any decrease in unrestricted domestic
cash, resulting from any change in the applicable formulae (as
distinct from day to day changes in holdback levels in
accordance with current procedures) governing credit card
processing holdback levels, shall be excluded.
In addition, the Company will maintain for the period of four
calendar months ended October 31, 1995 and on a cumulative
monthly basis thereafter, tested as of the last day of each
month through December 1995, earnings before interest and
taxes plus depreciation and amortization ("EBITDA") of not
less than 50% of the following amounts:
<TABLE>
<CAPTION>
Cumulative
PERIOD EBITDA EBITDA
------ ------ ------
<S> <C> <C>
July 1 - October 31, 1995 $227,600,000 $227,600,000
November 1995 $ 28,900,000 $256,500,000
December 1995 $ 30,100,000 $286,600,000
</TABLE>
;PROVIDED, HOWEVER, the Company shall not be required to
maintain such EBITDA levels with respect to any calendar month
during which the Company maintains an average balance of
unrestricted domestic cash of not less than $120 million.
Upon request by the Purchaser, the Company's chief financial
officer will execute and deliver to the Purchaser a
certificate certifying that the conditions of this subsection
are satisfied.
l. The Company will not purchase, publicly offer to
purchase, or otherwise enter into any legally binding
agreement to acquire prior to the Expiration Date any of the
Ticket Vouchers other than in accordance with (i) this
Agreement and (ii) the terms of the Ticket Vouchers. Should
the Company, subsequent to the Expiration Date and prior to
the redemption of all Ticket Vouchers purchased by the
Purchasers pursuant to the Standby Commitment, optionally
purchase from any person other than the Purchasers or in
accordance with the terms of the Ticket Vouchers, without the
prior written consent of the Purchasers, any of the Ticket
Vouchers then, in that event, the mandatory redemption dates
specified in clauses a.(2) and (3) of Section 2 hereof will be
accelerated seriatim so that the mandatory redemption next
scheduled will be rescheduled to the date upon which such
optional purchase occurs and each succeeding scheduled
redemption to the 15th day of each successive month
thereafter. For example, if the Company optionally
10
<PAGE> 12
repurchases Ticket Vouchers from any person other than the
Purchasers during the month of November, the Scheduled
Redemption for March, 1996 would be changed to the date in
November of the optional repurchase, and the balance of the
April, May and June, 1996 Scheduled Redemption Dates would be
accelerated to the 15th day of December, 1995, January, 1996
and February, 1996, respectively. In such event, the credit
referred to in Section 2.b. shall be applicable to the final
rescheduled Scheduled Redemption. In the event of the
acceleration of such Scheduled Redemption Dates, the price at
which such Ticket Vouchers shall be redeemed is the Discounted
Redemption Price specified in Section 2.6.
m. Prior to entering into any standby purchase agreement
for the standby purchase by any third party of any Ticket
Vouchers to be distributed by the Company subsequent to the
Settlement Date before the redemption of all Ticket Vouchers
purchased by the Purchasers pursuant to the Standby
Commitment, the Company will provide not less than 72 hours
prior written notice to the Purchasers at the address
specified in Section 16 to permit Purchasers to make a written
offer to the Company to act as standby purchaser with respect
to the Ticket Vouchers to be distributed subsequent to the
Settlement Date before the redemption of all Ticket Vouchers
purchased by the Purchasers pursuant to the Standby
Commitment. Should the Company not accept any offer made by
the Purchasers or should the Purchasers not make any offer
within said 72 hour period, the Company shall be free to make
whatever arrangements it may desire with third parties with
respect to any such standby commitment.
8. COVENANTS OF THE PURCHASERS. The Purchasers covenant and
agree with the Company that:
a. The Purchasers will take such further actions and
execute and deliver to the Company such further documents and
instruments as may be necessary to fully and completely
consummate the transactions and agreements contemplated by
this Agreement.
b. The Purchasers agree not to enter into any agreements
for the sale or disposition of all or substantially all of the
Purchasers' assets (in one or more transactions), or a merger,
consolidation or other business combination involving all or
substantially all of the Purchasers' assets unless the
Purchasers provide the Company with the express, written
agreement by the Purchasers or other successor(s) to assume
the Purchasers' obligations and covenants hereunder and, after
giving effect to any such sale, disposition, merger,
consolidation or other business combination, the Purchasers or
other successor(s) shall meet the requirements of Section 5
hereof.
11
<PAGE> 13
c. Purchasers agree that any legal action or proceeding
against Purchasers relating to or arising out of or under this
Agreement may be brought in any court of competent
jurisdiction in the State of New York or of the United States
of America for the Southern District of New York, and
Purchasers accept with regard to any such action or proceeding
for themselves and in respect to their property, generally and
unconditionally, the jurisdiction of the aforesaid courts.
Purchasers further irrevocably consent to the service of
process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by
registered or certified U.S. mail, postage prepaid, to the
Purchasers at their addresses provided in Section 16 hereof,
such service to become effective upon receipt or five (5) days
after such mailing, whichever shall first occur. Nothing
herein contained shall affect the right of the Company to
serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against
Purchasers in the British Virgin Islands or in any other
jurisdiction in which Purchasers may be subject to suit. To
the fullest extent permitted by applicable law, Purchasers
hereby waive, and agree not to assert, by way of motion,
defense, counterclaim or otherwise, in any such suit, action
or proceeding any claim that (i) Purchasers are not personally
subject to the jurisdiction of any of the above-named courts
by reason of any immunity or otherwise (ii) their respective
properties are exempt or immune from setoff, execution or
attachment, either prior to judgment or in aid of execution or
(iii) any suit, action or proceeding so brought is in an
inconvenient forum or that the venue of the suit, action or
proceeding is improper or that the subject matter hereof may
not be enforced in or by such courts. Purchasers further
agree that, after final judgment by any such court, they will,
to the fullest extent permitted by applicable law, waive the
benefit of any defense that would hinder or delay the levy,
execution or collection of any amount to which the Company is
entitled hereunder or pursuant to a final judgment of any
court having jurisdiction. The Purchasers hereby irrevocably
designate M.D. Sass Associates, Inc., in the case of Sass
Partnership and M.D. Sass Management, Inc., in case of
International, in each case having an office on the date
hereof at 1185 Avenue of the Americas, New York, New York
10036, as the designee, appointee and agent of the Purchasers
to receive service of process in such jurisdiction in any
legal action or proceeding with respect to this Agreement and
such service shall be deemed complete five (5) days after
delivery thereof to said agent, if written notice of such
service shall be given to Purchasers either by such agent or
by the Company, by mailing the same by registered or certified
mail to Purchasers at the addresses set forth in Section 16 or
otherwise as notice is permitted to be given under such
paragraph.
If, for the purpose of obtaining a judgment in any court with
respect to any obligation of Purchasers under this Agreement
it becomes necessary to convert into any other currency any
amount in Dollars due under this Agreement, then that
conversion shall be made at the buying spot rate of exchange
that would be
12
<PAGE> 14
utilized by the Company to purchase freely transferable
Dollars at the close of business on the day before the day on
which the judgment is rendered.
9. DEFAULT BY THE COMPANY. Each of the following shall
constitute an "Event of Default" by the Company under this Agreement.
a. failure of the Company to pay any Scheduled
Redemption amount or Discounted Redemption amount or interest,
when and as due and payable in accordance with the terms of
this Agreement, which default continues for 5 days after the
date due;
b. failure of the Company to pay any amount (other than
a Scheduled Redemption amount, Discounted Redemption amount or
interest) when and as due and payable in accordance with the
terms of this Agreement, which default continues for 10 days
after notice thereof by the Purchasers to the Company;
c. failure by the Company to observe and perform any of
its covenants under this Agreement, and, if curable, any such
failure continues for 30 days after notice thereof by the
Purchasers to the Company;
d. any representation or warranty of the Company set
forth in Section 6 hereof shall have been untrue or misleading
in any material respect as of the date made and, such untrue
and misleading representation or warranty shall be material as
of the date asserted as an Event of Default hereunder;
e. the Company defaults in any material way under the
terms of any of its material indebtedness for money borrowed
or material aircraft purchase contracts or material aircraft
leases and such default results in the acceleration of such
indebtedness for money borrowed, aircraft purchase contracts
or aircraft leases;
f. The Company ceases to provide commercial air
transportation at a level (based on available seat miles) at
least 70% of the level of available seat miles provided in
1994, in each case computed on a cumulative basis from July 1,
1995 compared to the cumulative average seat miles provided
for the corresponding period in 1994.
g. the Company refuses to honor 5% or more of the
outstanding Ticket Vouchers in accordance with their terms;
h. any final judgment in excess of $25 million is
entered against the Company in any judicial or administrative
proceeding, which judgment is not stayed within 30 days
following the entry thereof;
13
<PAGE> 15
i. the Company (i) commences a voluntary case or other
proceeding under any state or federal bankruptcy, insolvency
or receivership law, (ii) seeks or acquiesces to the
appointment of a trustee, receiver, liquidator or custodian or
any substantial part of its property, (iii) makes a general
assignment for the benefit of its creditors or (iv) takes any
corporate action authorizing the foregoing; or
j. an involuntary case or other proceeding under any
state or federal bankruptcy, insolvency or receivership law is
commenced against the Company and such involuntary case
remains undismissed and unstayed for 60 days.
10 . DEFAULT BY THE PURCHASERS. Each of the following shall
constitute an "Event of Default" by the Purchasers under this Agreement:
a. failure of the Purchasers to perform its obligations
under the Standby Commitment when and as due and payable in
accordance with the terms thereof and of this Agreement, which
default continues for 5 days after performance is due;
b. prior to performance in full of the Standby
Commitment, failure by the Purchasers to observe and perform
any of their other covenants under this Agreement and, if
curable, any such failure continues for 30 days after notice
by the Company;
c. prior to performance in full of the Standby
Commitment, any representation or warranty of the Purchasers
set forth in Section 6 hereof shall have been untrue or
misleading in any material respect as of the date made and,
such untrue and misleading representation or warranty shall be
material as of the date asserted as an Event of Default
hereunder;
d. prior to performance in full of the Standby
Commitment, any final judgment in excess of $25 million is
entered against the Purchasers in any judicial or
administrative proceeding, which judgment is not stayed within
30 days following the entry thereof;
e. prior to performance in full of the Standby
Commitment, the Purchasers (i) commence a voluntary case or
other proceeding under any state or federal bankruptcy,
insolvency or receivership law, (ii) seek or acquiesce to the
appointment of a trustee, receiver, liquidator or custodian or
any substantial part of its property, (iii) make a general
assignment for the benefit of their creditors or (iv) take any
corporate action authorizing the foregoing; or
f. prior to performance in full of the Standby
Commitment, an involuntary case or other proceeding under any
state or federal bankruptcy, insolvency or
14
<PAGE> 16
receivership law is commenced against either of the Purchasers
and remains undismissed and unstayed for 60 days.
11. REMEDIES UPON DEFAULT BY THE COMPANY. Upon the occurrence of
any Event of Default by the Company, the Purchasers may, but shall not be
required to, exercise one or more of the following remedies:
a. declare all or any portion of the aggregate amount of
all Scheduled Redemptions (undiscounted) immediately due and
payable, without any presentment, demand, protest or other
notice of any kind to the Company, all of which are hereby
expressly waived. All such accelerated Scheduled Redemption
amounts shall thereafter accrue interest at the Overdue Rate
until paid.
b. sell, assign or otherwise dispose of any or all
unredeemed Ticket Vouchers in one or more public or private
transactions in a commercially reasonable manner upon 5
business days prior written notice to the Company, which is
hereby deemed by the Company to be reasonable notice. The
Company shall, to the extent not otherwise provided by law,
remain liable for any deficiency resulting from such sales.
c. use any or all of the Ticket Vouchers for the
Purchasers' own account without prejudice to the Purchasers'
right to recover all unpaid amounts under this Agreement,
provided that, the Ticket Vouchers used by the Purchasers
shall be credited against any amounts owned to the Purchasers
under this Agreement in an amount equal to the face value
thereof.
d. any other legal or equitable remedy available to the
Purchasers by law or by agreement.
The remedies set forth in this Agreement are cumulative and not exclusive. The
exercise of any remedy shall not preclude the exercise of any other remedy by
the Purchasers.
12. REMEDIES UPON DEFAULT BY THE PURCHASERS. Upon the occurrence
of any Event of Default by the Purchasers, the Company may, but shall not be
required to, exercise one or more of the following remedies:
a. by notice in writing to Purchasers, immediately
terminate all of the Company's obligations under this
Agreement;
b. any other legal or equitable remedy available
to the Purchasers by law or by agreement.
The remedies set forth in this Agreement are cumulative and not exclusive. The
exercise of any remedy shall not preclude the exercise of any other remedy by
the Company.
15
<PAGE> 17
13. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS TO ISSUE
STAND-BY COMMITMENT. (A) The obligations of the Purchasers hereunder to issue
the Stand-by Commitment shall be subject to the accuracy of the representations
and warranties of the Company herein, at and as of the date hereof and the
Effective Date, the performance of the Company of its obligations hereunder and
the following conditions precedent:
a. The Company shall have delivered the certificate
described in Section 6 of this Agreement.
b. The Plan shall have been confirmed by an order which
is final and binding and not subject to appeal, rehearing or
stay and there shall be no pending or threatened actions to
revoke such order or to materially modify the Plan.
c. All of the conditions to the Effective Date of the
Plan have been satisfied or waived by the necessary parties
and the Plan is declared effective on or before August 30,
1995.
d. There shall not have occurred, in the reasonable
judgment of the Purchasers, any material adverse change in the
assets, liabilities or business of the Company since the date
of this Agreement.
e. Prior to the commencement of the mailing and
publication of the notice of Standby Commitment for the Ticket
Vouchers, the Purchasers shall have received the opinion of
Smith, Gambrell & Russell, counsel for the Company, dated as
of the Effective Date, substantially in the form attached
hereto as EXHIBIT "B".
f. Prior to the commencement of the mailing and
publication of the notice of the Standby commitment for the
Ticket Vouchers, the Purchasers shall have received an
opinion, dated as of the Effective Date, in form satisfactory
to the Purchasers, of Richard P, Magurno, Esq., General
Counsel of the Company, to the effect that the execution,
delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any agreement or
instrument known to such counsel to which the Company or any
subsidiary of the Company is a party or by which the Company
or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject.
g. No litigation shall have been brought or commenced
against the Purchasers prior to the Effective Date challenging
the propriety or legality of the transactions contemplated
hereby which is not dismissed or withdrawn prior to the
Effective Date.
(B) In the event:
16
<PAGE> 18
(i) any representation or warranty of the Company set
forth in Section 6 shall have been untrue or
misleading in any material respect as of the date
made, or
(ii) the Company shall not have maintained an average
balance of unrestricted domestic cash of at least $70
million for the 30 day period prior to the close of
business on the Expiration Date,
the Company shall be obligated to repurchase from the Purchasers all Ticket
Vouchers purchased by the Purchasers pursuant to the Standby Commitment at the
Standby Purchase Price, such repurchase to be made simultaneously with the
purchases by the Purchasers of Ticket Vouchers tendered to the Agent pursuant
to the Standby Commitment. Nothing in this section contained or otherwise in
this Agreement shall be deemed to modify or alter the unconditional nature of
the Standby Commitment. Unrestricted domestic cash shall, for the purposes of
the computations required by this subsection (B), exclude 50% of the cash
proceeds to the Company, if any, derived from any of the following subsequent
to the Effective Date: (i) an equity rights offering, (ii) any working capital
loan facility in addition to the Company's currently existing and fully drawn
asset and receivables based loans from Karabu Corp., (iii) any change in the
applicable formulae (as distinct from day to day changes in holdback levels in
accordance with current procedures) which results in any reduction in credit
card processing holdback levels and (iv) any sale of capital assets outside the
ordinary course of business. Conversely, any decrease in unrestricted domestic
cash, resulting from any change in the applicable formulae (as distinct from
day to day changes in holdback levels in accordance with current procedures)
governing credit card processing holdback levels, shall be excluded.
(C) The Company agrees upon written request by the Purchasers to
make available for inspection by the Purchasers such books and records of the
Company which are necessary to verify that the conditions of this Section have
been met.
14. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations
of the Company hereunder shall be subject to the accuracy of the
representations and warranties of the Purchasers herein, at and as of the date
hereof and the Expiration Date, the performance by the Purchasers of their
obligations hereunder and the following conditions precedent:
a. The Purchasers shall have delivered the certificate
described in Sections 5 of this Agreement.
b. The Plan shall have been confirmed by an order which
is final and binding and not subject to appeal, rehearing or
stay and there shall be no pending or threatened actions to
revoke such order or to materially modify the Plan.
c. All of the conditions to the Effective Date of the
Plan have been satisfied or waived by the necessary parties
and the Plan shall have been declared effective on or before
August 31, 1995.
17
<PAGE> 19
d. Prior to the commencement of the mailing and
publication of the notice of Standby Commitment for the Ticket
Vouchers, the Company shall have received the opinion of
counsel for the Purchasers, dated as of the Effective Date, as
to the matters referred in to clauses a., b., c., e., and f.
of Section 5 hereof, in form and substance reasonably
satisfactory to the Company.
e. No litigation shall have been brought or commenced
against the Company prior to the Effective Date challenging
the propriety or legality of the transactions contemplated
hereby which is not dismissed or withdrawn prior to the
Effective Date.
15. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The
agreements, representations and warranties of the Company and of the Purchasers
set forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results
thereof, made by or on behalf of the Purchasers or the Company or any of their
respective representatives, officers or directors or any controlling person
through and including the final Redemption Date, and will survive the
redemption of the Ticket vouchers hereunder by the Company.
16. NOTICES. All notices, demands, instructions and other
communications required or permitted hereunder will be in writing and shall be
personally delivered or sent by registered, certified or express mail, postage
prepaid, return receipt requested, or by telefacsimile (which shall immediately
be followed by the original of such communication) and shall be deemed to he
given when received by the intended recipient or, in the case of telefacsimile,
on the date transmitted to the intended recipient thereof. Unless otherwise
specified in writing in accordance with this Section, such notices, demands
instructions and communications shall be made to the following:
To Purchasers: M.D. Sass Re/Enterprise Partners L.P.
1185 Avenue of the Americas
New York, New York 10036
Attention: General Counsel
Telephone: (212) 843-8975
Telefacsimile: (212) 768-8078
To the Company: One City Centre
515 North Sixth Street
St. Louis, Mo. 63101
Attention: General Counsel
Telephone: (314) 589-3264
Telefacsimile: (314) 589-3267
18
<PAGE> 20
17. SUCCESSOR. This Agreement will inure to the benefit of and be
binding upon the parties hereto, their respective successors and assigns.
Except as expressly stated herein, the Purchasers may not assign their
obligations under this Agreement or the Standby Commitment but may, without
restriction, assign their rights hereunder to any affiliated entity and,
following the Settlement Date, to any three or fewer third parties or
affiliated parties. Except as expressly stated herein, the Company may not
assign its obligations under this Agreement without the consent of the
Purchasers.
18. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties hereto and supersedes any and all
prior agreements, arrangements and understandings relating to the matters
provided for herein.
19. INDEMNIFICATION. The Company will indemnify and hold harmless
the Purchasers, M.J. Whitman, Inc., and their respective officers, directors,
employees and agents (each an "indemnified party") against any claims of,
liabilities to or actions by third persons or entities (collectively,
"Claims"), joint and several, to which such indemnified party may become
subject, insofar as such Claims result from or are based upon any untrue
statement of any material fact contained in the Registration Statement, the
Prospectus, the Plan, or any amendment or supplement to any thereof, or any
related preliminary prospectus, or result from or are based upon the omission
or alleged omission to state in any thereof a material fact required to be
stated therein or necessary to make the statements therein not misleading or
otherwise result from or are based upon any act or omission of the Company, and
will reimburse each indemnified party for any reasonable legal or other
out-of-pocket expenses reasonably incurred by such indemnified party in
connection with investigating or defending such Claims as such expenses are
incurred; PROVIDED, HOWEVER, that the Company will not be liable in any such
case for Claims or expenses resulting from or based upon the breach of this
Agreement or the Standby Commitment by the Purchasers or the negligence, bad
faith acts or omissions or the willful misconduct of any indemnified party.
Each indemnified party shall cooperate fully with the Company in the defense of
any Claim and endeavor in good faith to keep the Company's costs and any Claim
to a minimum consistent with the retention by such parties of the benefits
intended to be conferred upon such indemnified party hereby. Each indemnified
party shall promptly notify the Company of the making of any Claim for which it
believes it is entitled to any indemnity hereunder.
20. APPLICABLE LAW. The Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
without regard to principles of conflict of laws.
19
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their authorized officers as of the date first
above written.
TRANS WORLD AIRLINES, INC.
By:
------------------------------------
Title:
------------------------------
M.D. SASS RE/ENTERPRISE PARTNERS, L.P.
BY: M.D. SASS ASSOCIATES, INC.,
Managing General Partner
By:
-----------------------------
Title:
---------------------------
M.D. SASS RE/ENTERPRISE
INTERNATIONAL, LTD.
BY: M.D. SASS MANAGEMENT, INC.,
Investment Manager
By:
------------------------------
Title:
--------------------------
Acknowledged and accepted:
M.J. Whitman, Inc.
By:
------------------------------
Title:
------------------------
20
<PAGE> 22
[FORM OF TWA TICKET VOUCHER - FRONT]
TRANS WORLD AIRLINES, INC. [TWA Logo]
TWA Ticket Voucher
AMOUNT: $_______________________
(Not to exceed $50.00)
Issued __________, 1995 Expires _____________, 2000
This TWA Ticket Voucher will be accepted by TWA from any person in lieu
of cash for a discount of up to 50% of the cost of TWA airline tickets for
transportation on TWA flights, subject to the Terms and Conditions on the
reverse side hereof, at any Published Fare (including discounted tickets or
fares), provided such tickets are purchased in the U. S. for travel (i)
originating within the U.S. to any destination on TWA's system or (ii) to and
from such other locations on TWA's routes as applicable law does not prohibit.
"Published Fare" means any fare TWA offers to the general public directly or
through others, including consolidators, and also includes specially negotiated
corporate rates, bulk fares or any other fares offered by TWA whether or not
made available directly or indirectly to the general public.
This TWA Ticket Voucher is freely transferable and may be used by the
holder or sold for cash to the travel agent community or any other willing
purchaser. In order to effect a valid transfer of this TWA Ticket Voucher, the
holder must print the name of the transferee and sign below on the appropriate
lines, and the transferee must sign below.
Initial Transfer Subsequent Transfer
---------------- -------------------
I certify that this TWA Ticket Voucher I certify that this TWA Ticket Voucher
is hereby transferred to: is hereby transferred to:
___________________________________ ___________________________________
Name/Relationship Name/Relationship
___________________________________ ___________________________________
Voucher Holder Signature Voucher Holder Signature
___________________________________ ___________________________________
Transferee Signature Transferee Signature
FOR TICKETING AGENT USE ONLY
----------------------------
TV USED $____________ TICKET _____________________________
FORM SERIAL #
TV RESIDUAL $____________ MCO _________________________________
FORM SERIAL #
TRAVEL AGENT ARC CODE #/COMPANY OUTLET #_______________________________________
TRAVEL AGENT NAME/# ___________________________________________________________
<PAGE> 23
[FORM OF TICKET VOUCHER - BACK]
TWA TICKET VOUCHER
TERMS AND CONDITIONS
1. TWA Ticket Vouchers may be used to pay up to 50% of the "Published Fare" of
a TWA airline ticket, including any upgrade costs but excluding all taxes,
airport charges, departure and arrival fees, and similar government
impositions. Subject to such 50% fare limitation, TWA agrees to treat TWA
Ticket Vouchers as equivalent to tickets which have been issued to the
public, and to provide to the holders of TWA Ticket Vouchers, at all times
and under all conditions, the rights afforded to TWA airline ticket holders
including the right to all standard denied boarding compensation and/or
alternative transportation arranged by TWA which is provided to other TWA
ticket holders and without discrimination against the holders of TWA Ticket
Vouchers. TWA Ticket Vouchers will not be redeemable in cash, either by
direct payment or indirectly, through refund of the portion of tickets paid
for with such TWA Ticket Vouchers. Tickets purchased with TWA Ticket
Vouchers will not be exchangeable for tickets on other airlines.
2. To the extent that the amount of a particular TWA Ticket Voucher exceeds the
allowable 50% of the price of the ticket(s) purchased, any excess may be
applied to subsequent purchases. To evidence the unused amount of any TWA
Ticket Voucher, TWA will either (a) issue a transferrable "miscellaneous
charge order" voucher that will be honored as a TWA Ticket Voucher solely
for future purchases on or before the expiration date of the TWA Ticket
Voucher, or, if the TWA Ticket Voucher was issued to a TWA employee, (b)
account for the unused amount by bookkeeping entries.
3. Passengers must comply with all tariff terms and conditions applicable to
the fare of the ticket purchased in part with TWA Ticket Vouchers. These
include, but are not limited to, advance purchase requirements, refund and
reissue restrictions, seat limitations, capacity control requirements and
ticket validity periods.
4. TWA Ticket Vouchers are freely transferable and may be applied by
individuals, travel agencies, ticket brokers, consolidators or any other
person who may from time to time seek to use them to purchase tickets from
TWA.
5. TWA Ticket Vouchers may not be used to purchase transportation on carriers
other than TWA, nor may they be applied to freight or any other charge (such
as, for example, excess baggage, ground handling, tours, in-flight
amenities, or Ambassador's Club dues).
6. Any misuse of TWA Ticket Vouchers in violation of these Terms and Conditions
shall result in the voiding of such misused TWA Ticket Vouchers and shall
also result in the voiding of all other TWA Ticket Vouchers issued to or
held by said person or entity. "Misuse" means any reproduction or
alteration of this TWA Ticket Voucher.
7. TWA is not obligated to replace this or any other TWA Ticket Voucher that is
lost, stolen or destroyed.
8. Individuals redeeming TWA Ticket Vouchers may be required to show
identification. Passengers may be required to show identification at any
time during travel.
9. TWA Ticket Vouchers may not be redeemed retroactively for any previously
issued ticket or in connection with the exchange of any wholly or partially
unused ticket.
10.TWA Ticket Vouchers will be replaced in connection with a refund of a
ticket purchased with TWA Ticket Vouchers only if the ticket is wholly
unused and fully refundable.
TICKETING INSTRUCTIONS
<TABLE>
<S> <C>
1. This TWA Ticket Voucher, when presented to TWA 2. Calculate the discount amount of the ticket by
or its Authorized Travel Agent, entitles the adding the total dollar amount of the TWA Ticket Voucher(s)
holder to a discount as specified in the Terms submitted, up to a maximum discount amount which is
and Conditions toward the purchase of a ticket 50% of the Published Fare (as defined on the front of
for travel on TWA. THIS TWA TICKET VOUCHER the TWA Ticket Voucher) of the ticket being purchased.
MUST BE SURRENDERED WHEN THE TICKET IS PURCHASED.
3. Subtract PFCs and other fees from the new ticket purchase
2. TWA Ticket Voucher value as specified may be price. Calculate the discounted fare. Enter this amount
applied to the purchase of a ticket, subject to in the "fare" box on the ticket.
the TWA Ticket Voucher Terms and Conditions.
Excess TWA Ticket Voucher Value may be applied 4. Calculate the taxes, PFCs and other fees and enter these
to subsequent purchases as listed in Terms and amounts in the "tax" boxes.
Conditions section 3.
5. Add the "fare" and "tax" boxes to arrive at the total
3. TWA TICKETING INSTRUCTIONS: purchase price of the ticket. Enter this amount in the
"total" box on the ticket.
Reference No. ______________________________.
6. Enter the applicable commission rate in the "commission"
4. Travel Agent Ticketing Instructions - Report as box on the ticket and the sum of the taxes, PFCs and other
_________________________________. fees in the tax box on the ticket.
Automated Ticketing - Travel Agent ticketing All tickets issued must show the ticket designator "____"
personnel should use the Profile _________, followed by the total dollar value of the discount (i.e., the
based on the CRS WORLDSPAN, to see the correct ticket designator for a $50 dollar discount will be ____50.
ticketing instructions. Enter the ticket designator in the "ticket designator" box
on the ticket.
TRAVEL AGENT MANUAL TICKETING - Travel Agent ticketing
personnel should select the ticketing/issuing airline ARC REPORTING PROCEDURE
validation plate then follow the ticketing instructions
below. 1. Treat as a Type A - Discount Certificate.
CALCULATE TICKET AMOUNTS. 2. No REN is required.
1. Calculate the new purchase price of the ticket by 3. Enter the discount certificate number (including the carrier
subtracting the discount amount from the total code) on the ticket in the Endorsements/Restrictions area.
purchase price of the ticket.
4. Place discount certificate on top of the Auditor's Coupon for
a cash sale or on top of the charge form for a credit sale.
5. Refer to Industry Agents' Handbook Section 6.0 for details.
</TABLE>
<PAGE> 24
August ___, 1995
M.D. Sass Re/Enterprise Partners L.P.
M.D. Sass Re/Enterprise International Ltd.
1185 Avenue of the Americas
New York, New York 10036
Gentlemen:
I am general counsel for Trans World Airlines, Inc., a Delaware
corporation ("TWA" or the "Company") and have so acted in connection with the
negotiation, execution and delivery by TWA of a Stand-By Purchase Agreement
dated as of August 8, 1995 between you and TWA (the "Purchase Agreement").
Capitalized terms used herein not otherwise defined shall have the meanings
ascribed to such terms in the Purchase Agreement and/or that certain Joint Plan
of Reorganization of TWA and the Company as modified and confirmed by order
(the "Confirmation Order") of the United Bankruptcy Court for the Eastern
District of Missouri (the "Bankruptcy Court") on August 4, 1995 (the "Plan of
Reorganization").
I have examined copies of the Purchase Agreement, the Ticket Vouchers,
Plan of Reorganization, Confirmation Order and Registration Statement No.
33-84944 of TWA on Form S-4 as filed with Securities and Exchange Commission on
October 11, 1994, as amended through Post-Effective Amendment No. 6 dated May
12, 1995 (the "Registration Statement"), and such other instruments, documents
and agreements and matters of law as I have deemed necessary in the
circumstances. In such review, I have assumed the genuineness of all
signatures not affixed by officers of TWA in our presence, the authenticity of
all documents submitted to me as originals, the conformity to originals of all
documents submitted to me as copies and the authenticity of such documents so
submitted.
As to factual matters on which this opinion is based, I have relied
without independent investigation upon the representations and warranties
contained in the Purchase Agreement and upon statements and certificates of
public officials and of TWA. For purposes hereof, "factual matters" shall not
be deemed to include, except in the case of certificates of public officials,
matters which directly or in practical effect constitute the legal conclusions
in question.
<PAGE> 25
M.D. Sass Re/Enterprise Partners L.P.
M.D. Sass Re/Enterprise International Ltd.
August 23, 1995
Page 2
Based upon the foregoing and subject to the qualifications and
limitations hereinafter set forth, I am of the opinion that the execution,
delivery and performance by the Company of the Purchase Agreement, and the
consummation by the Company of the transactions therein contemplated, will not
result in a breach or violation of any of the terms and provisions of or
constitute a default under, any agreement or instrument known to me to which
the Company or any subsidiary of the Company is a party or by which the Company
or any such subsidiary is bound or to which any of the properties of the
Company or any such subsidiary is subject.
I am duly admitted and qualified to practice in the State of New York
and do not hold myself out as an expert on, or as admitted to practice law in,
any other state. I am opining herein only as to the effect on the subject
transactions of the laws of the State of New York, the business corporation
laws of the State of Delaware and the federal laws of the United States of
America. Except as noted above, I am not opining as to the effect on any of
the matters covered herein of the laws of any other jurisdiction.
I undertake no responsibility to advise you of any change in the laws
after the date hereof that would alter the scope or substance of the opinions
expressed herein. This opinion is intended for your exclusive use and may not
be relied upon by any person or entity other than the addressees hereof. By
receipt and acceptance of or reliance on this opinion, you consent to the
limitations on the scope of our inquiry and the opinions stated herein.
Very truly yours,
Richard P. Magurno
<PAGE> 26
EXHIBIT C
[LETTERHEAD OF SMITH, GAMBRELL & RUSSELL]
[Effective Date]
M.D. Sass Re-Enterprise Partners L.P.
M.D. Sass Re-Enterprise International L.P.
1185 Avenue of the Americas
New York, New York 10036
Gentlemen:
We are counsel for Trans World Airlines, Inc., a Delaware corporation
("TWA" or the "Company") and have so acted in connection with the negotiation,
execution and delivery by TWA of a Stand-By Purchase Agreement dated as of
August __, 1995 between you and TWA (the "Purchase Agreement"). Capitalized
terms used herein not otherwise defined shall have the meanings ascribed to
such terms in the Purchase Agreement and/or that certain Joint Plan of
Reorganization of TWA and the Company as modified and confirmed by order (the
"Confirmation Order") of the United Bankruptcy Court for the Eastern District
of Missouri (the "Bankruptcy Court") on August 4, 1995 (the "Plan of
Reorganization").
In connection with our representation of TWA, we have examined copies
of the Purchase Agreement, the Ticket Vouchers, Plan of Reorganization,
Confirmation Order and Registration Statement No. 33-84944 of TWA on Form S-4
as filed with Securities and Exchange Commission on October 11, 1994, as
amended through Post-Effective Amendment No. 6 dated May 12, 1995 (the
"Registration Statement"), and such other instruments, documents and agreements
and matters of law as we have deemed necessary in the circumstances. In such
review, we have assumed the genuineness of all signatures not affixed by
officers of TWA in our presence, the authenticity of all documents submitted to
us as originals, the conformity to originals of all documents submitted to us
as copies and the authenticity of such documents so submitted.
As to factual matters on which this opinion is based, we have relied
without independent investigation upon the representations and warranties
contained in the Purchase Agreement and upon statements and certificates of
public officials and of TWA. For purposes hereof, "factual matters" shall not
be deemed to include, except in the case of certificates of public officials,
matters which directly or in practical effect constitute the legal conclusions
in question.
Based upon the foregoing and subject to the qualifications and
limitations hereinafter set forth, we are of the opinion that:
<PAGE> 27
________________
______________, 1995
Page 2
1. TWA is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has
the corporate power and authority to own its properties and carry on
its business substantially as described in the Registration Statement.
2. The Confirmation Order confirming the Reorganization
Plan is final and binding and not subject to appeal, rehearing or
stay.
3. The Purchase Agreement has been duly authorized,
executed and delivered by the Company and is binding on the Company in
accordance with its terms.
4. The Ticket Vouchers have been duly authorized and
validly issued by the Company and the redemption of the Ticket
Vouchers by the Company on each Redemption Date in accordance with
Section 2 of the Purchase Agreement has been duly authorized by all
necessary corporate or judicial action.
5. The Ticket Vouchers conform in all material respects
to the description thereof under the definition of "Ticket Voucher"
contained in Section 1.1.159 of the Plan of Reorganization.
6. No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is required
for the consummation of the transactions contemplated by the Purchase
Agreement in connection with the issuance or redemption of the Ticket
Vouchers by the Company or resale of the Ticket Vouchers by the
Purchaser, except such as have been obtained and made.
7. The execution, delivery and performance of the
Purchase Agreement and the consummation of the transactions therein
contemplated will not result in a breach or violation by TWA of any of
the terms and provisions of, or constitute a default under, (i) any
statute, rule or regulation, or, to the extent known to us, any order
of any governmental agency or body or any court having jurisdiction
over the Company or any subsidiary of the Company or any of their
properties or (ii) to the extent known to us, any agreement or
instrument to which the Company or any subsidiary is a party or by
which the Company or any subsidiary is bound or to which any of the
properties of the Company or any subsidiary is subject, or (iii) the
certificate of incorporation or by-laws of the Company or any
subsidiary of the Company which currently conducts business.
<PAGE> 28
_______________
______________, 1995
Page 3
The opinions expressed herein are subject to the following assumptions
and qualifications:
(i) no opinion is expressed herein as to the validity of any waiver,
express or implied, of any statutory or constitutional right;
(ii) the opinions expressed herein hereof include and are subject to: (a)
the effect of bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the rights and remedies of creditors; (b)
the effect of general principles of equity, whether applied by a court
of law or equity; (c) the effect and possible unenforceability of
contractual provisions for choice of governing law; (d) the possible
unenforceability of waivers or advance consents that have the effect
of waiving statutes of limitation or, as to the jurisdiction of
courts, the venue of actions, or, in certain cases, notice; (e) the
possible unenforceability of provisions providing that waivers or
consents by a party may not be given effect unless in writing or in
compliance with particular requirements or that a person's course of
dealing, course of performance, or the like or failure or delay in
taking actions may not constitute a waiver of related rights or
provisions or that one or more waivers may not under certain
circumstances constitute a waiver of other matters of the same kind;
(f) the effect of course of dealing, course of performance, or
the like, that would modify the terms of an agreement or the
respective rights or obligations of the parties under an agreement;
(g) the possible unenforceability of provisions that enumerate
remedies are not exclusive or that a party has the right to pursue
multiple remedies without regard to other remedies elected or that all
remedies are cumulative; (h) the possible unenforceability of
provisions permitting modifications of an agreement only in writing;
(i) the possible unenforceability of provisions that the provisions of
an agreement are severable; (j) the effect of laws requiring
mitigation of damages; (k) the possible unenforceability of provisions
permitting the exercise, under certain circumstances, of rights
without notice or without providing reasonable opportunity to cure
failure to perform; and (l) the possible unenforceability of
provisions requiring indemnification for, or providing exculpation,
release or exemption from liability for, action or inaction, to the
extent such action or inaction involves negligence or willful
misconduct or to the extent otherwise contrary to public policy;
<PAGE> 29
_______________
______________, 1995
Page 4
(v) no opinion is expressed herein as to the effect of laws
relating to the legally permissible rates of interest or the
computation or disclosure thereof;
(vi) in rendering the opinions set forth herein, as to the
authority of TWA to execute or issue, and/or the
enforceability of, the Ticket Vouchers and Purchase Agreement,
we have relied on the Confirmation Order authorizing and
approving, inter alia, the issuance of the Ticket Vouchers,
and in connection therewith, authorizing TWA to consummate the
transactions contemplated by the Plan of Reorganization of
TWA.
We are attorneys duly admitted and qualified to practice in the State
of Georgia and do not hold ourselves out as experts on, or as admitted to
practice law in, any other state. We are opining herein only as to the effect
on the subject transactions of the laws of the State of Georgia, the contract
and commercial laws of the State of New York, the business corporation laws of
the State of Delaware and the federal laws of the United States of America.
Except as noted above, we are not opining as to the effect on any of the
matters covered herein of the laws of any other jurisdiction. As to such laws
of the State of New York and the business corporation laws of the State of
Delaware applicable to the opinions set forth herein, we have made such
investigation of such laws as we have deemed necessary to express such
opinions.
We undertake no responsibility to advise you of any change in the laws
after the date hereof that would alter the scope or substance of the opinions
expressed herein. This opinion is intended for your exclusive use and may not
be relied upon by any person or entity other than the addressees hereof. By
receipt and acceptance of or reliance on this opinion, you consent to the
limitations on the scope of our inquiry and the opinions stated herein.
Very truly yours,
SMITH, GAMBRELL & RUSSELL
By:
Howard E. Turner
HET:sls
<PAGE> 1
EXHIBIT 10.40
<PAGE> 2
VOUCHER PURCHASE AGREEMENT
--------------------------
This Voucher Purchase Agreement dated as of October 18, 1995 (the
"Agreement")is made by and between Trans World Airlines, Inc., a Delaware
corporation (the "Company") and M.D. Sass Re/Enterprise Partners, L.P., a
Delaware limited partnership ("Sass Partnership") and M.D. Sass Re/Enterprise
International, Ltd., a British Virgin Islands Company ("International"; Sass
Partnership and International being hereinafter referred to collectively as the
"Purchasers");
WITNESSETH:
WHEREAS, on June 30, 1995 the Company filed a petition under Chapter
11 of the United States Bankruptcy Code (the "Bankruptcy Code");
WHEREAS, pursuant to the Company's plan of reorganization confirmed by
the United States Bankruptcy Court for the Eastern District of Missouri on
August 4, 1995 (the "Plan"), the Company issued 600,000 Ticket Vouchers (as
defined in Section 1.1.159 of the Plan), the form of which Ticket Vouchers is
attached as Exhibit "A" hereto, having an aggregate face amount of $30,000,000;
WHEREAS, the Company's Plan became effective on August 23, 1995 (the
"Effective Date") and the Company emerged from protection under the Bankruptcy
Code on that date;
WHEREAS, the Company and the Purchasers entered into a Standby
Purchase Agreement dated as of August 8, 1995 (the "Standby Agreement")
pursuant to which the Purchasers agreed to purchase Ticket Vouchers at $26 per
$50 face amount of Ticket Vouchers tendered during the period from the
Effective Date and ending on October 15, 1995;
WHEREAS, as of October 19, 1995 the Purchasers will purchase all
Ticket Vouchers tendered in accordance with the Standby Agreement;
WHEREAS, the Company and Purchasers wish to enter into this Agreement
to provide for a further purchase arrangement with respect to Ticket Vouchers
not tendered and purchased under the StandBy Agreement;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained and other good and valuable considerations, the receipt and
sufficiency thereof which are hereby acknowledged, the Company and the
Purchasers, agree as follows:
1. COMMITMENT TO PURCHASE TICKET VOUCHERS. On the basis of the
covenants, representations and warranties herein contained, but subject to the
terms and conditions herein set forth, the Purchasers agree as follows:
a. Each of the Purchasers will on October 19, 1995 (the
"Commencement Date"), or as soon thereafter as the conditions
set forth in Section 13 hereof are accomplished, issue its
unconditional contractual undertaking (the "Purchase
<PAGE> 3
Commitment") to purchase, without setoff or reduction of any
kind, all Ticket Vouchers tendered to and accepted by American
Stock Transfer and Trust Company as agent (the "Agent") during
the period commencing on the Commencement Date and ending on
November 16, 1995 (the "Expiration Date"), such purchase to be
at a price of $32.00 per $50.00 face amount of the Ticket
Vouchers so tendered (the "Purchase Price"). Ticket Vouchers
so purchased by the Purchasers after being validated by the
Agent shall be conclusively deemed, as between the Purchasers
and the Company, to be Ticket Vouchers for all purposes of
this Agreement. Promptly following the Commencement Date, the
Company will enter into an agreement with the Agent for the
processing and holding of Ticket Vouchers tendered in
accordance with this Agreement, such agreement to be
reasonably satisfactory to Purchasers and provide that the
Company will pay the Agent's reasonable fees and expenses
thereunder.
b. The Purchase Commitment provides that payment of the
Purchase Price will be made to the Agent within three days
after the Expiration Date (the "Settlement Date") in
immediately available funds. The form of the Purchase
Commitment will be substantially as set forth as EXHIBIT "B"
hereto.
c. On the Settlement Date, the Purchasers will notify
the Company of the aggregate face amount of Ticket Vouchers
tendered and purchased by the Purchasers pursuant to Section
1.a. above (the "Purchased Ticket Vouchers").
2. REDEMPTION OF TICKET VOUCHERS.
-------------------------------
a. The Company unconditionally agrees to redeem, at a
price of $39.00 per $50.00 face amount (the "Scheduled
Redemption Price"), without setoff or reduction of any kind,
all unredeemed Purchased Ticket Vouchers from the Purchasers
in accordance with the following schedule (the "Scheduled
Redemption").
(1) On the Settlement Date, the Company will
redeem at the Scheduled Redemption Price, 1/9th of
the Purchased Ticket Vouchers; and
(2) On March 15, 1996, the Company will redeem
all remaining unredeemed Purchased Ticket Vouchers,
subject to the credit set forth below.
Payment of the aggregate Scheduled Redemption Price for a
Scheduled Redemption shall be made on or before the dates
stated above (each a "Scheduled Redemption Date") in
immediately available funds in accordance with wire transfer
instructions from the Purchasers upon tender to the Company of
the Purchased Ticket Vouchers to be redeemed in a manner
sufficient to convey good title thereto free and clear of any
lien or encumbrance arising by, through or under the
Purchasers, to the Company. Any Scheduled Redemption payment
or portion thereof shall, if not so made upon proper tender by
the Purchasers of the Purchased Ticket Vouchers, include
interest from and including the Scheduled
2
<PAGE> 4
Redemption Date until paid at an overdue rate equal to the
then applicable Prime Commercial rate of Chase Manhattan Bank
N.A. plus 250 basis points (the "Overdue Rate") and
reasonable out-of-pocket collection costs, including
reasonable attorneys' fees and disbursements, if any, incurred
by the Purchasers. Payments received will be applied first,
to pay reasonable out-of-pocket collection costs, including
reasonable attorneys' fees and disbursements, if any, incurred
by Purchasers, and second, to pay overdue interest due under
this Agreement and third, to pay overdue Scheduled Redemption
amounts.
b. The Company may credit against the final Scheduled
Redemption an amount equal to (i) $7.00 times (ii) the number
of Purchased Ticket Vouchers redeemed on or about the
Settlement Date.
c. Provided that no Event of Default shall have occurred
and then be continuing under this Agreement, the Company may,
at its option, redeem any or all of the Purchased Ticket
Vouchers on any day after the Expiration Date in advance of
any Scheduled Redemption at the price (the "Discounted
Redemption Price") set opposite the month below in which such
day occurs (a "Discounted Redemption") as follows:
Month Discounted Redemption Price
on or before January 15, 1996 $37
on or before February 15, 1996 $38
The Company may exercise its option for Discounted Redemption
by giving five business days prior written notice to the
Purchasers of such exercise (i) stating the amount of Ticket
Vouchers being redeemed in advance of such Scheduled
Redemption and (ii) designating the date of such Discounted
Redemption. Upon tender to the Agent of the Purchased Ticket
Vouchers subject to the Discounted Redemption on the date
specified in the written notice for such Discounted
Redemption, the Company shall pay to the Purchasers the
required Discounted Redemption amount in the form of a wire
transfer of immediately available funds in accordance with
wire transfer instructions from the Purchasers. The
Discounted Redemption payments will be applied in inverse
order of Scheduled Redemptions. Any notice of Discounted
Redemption as to which the Company shall have exercised its
option may be withdrawn upon the giving of a notice of
revocation at least two (2) business days prior to the date
fixed for such Discounted Redemption.
d. The Purchasers agree not to sell the Purchased Ticket
Vouchers except to the Company pursuant to this Section 2 or
upon any Event of Default as hereafter defined.
3
<PAGE> 5
3. COMPENSATION TO PURCHASERS FOR PURCHASE COMMITMENT.
---------------------------------------------------
a. As compensation for the Purchasers' commitment in
Section 1 and Purchasers' commitment under the Standby
Agreement, the Company will pay to the Purchasers a fee equal
to $.90 times the difference between (i) 600,000 and (ii) the
sum of the number of Purchased Ticket Vouchers hereunder plus
the number of Ticket Vouchers purchased by Purchasers under
the Standby Agreement (the "Commitment Fee"). As compensation
for M.J. Whitman, Inc.'s intermediary role in the Purchase
Commitment, the Company will pay to M.J. Whitman, Inc. a fee
as specified in a letter agreement of even date herewith
between M.J. Whitman, Inc. and the Company (the "TWA Broker
Fee").
b. The Commitment Fee and the TWA Broker Fee will be
paid in immediately available funds on the Settlement Date
upon confirmation by the Agent of full funding by the
Purchasers of the Purchase Price. The Purchasers will repay
to the Company on the Settlement Date any amount by which the
fee paid by the Company under Section 1a. of the Standby
Agreement exceeds the Commitment Fee as calculated under 3a.
above.
4. PAYMENT OF TRANSACTION COSTS, FEES AND EXPENSES.
------------------------------------------------
a. In the event the Purchase Commitment is issued as
herein contemplated, the Company agrees to pay upon
presentation of an appropriate invoice(s) therefor (together
with such reasonable detail concerning the matters covered by
such invoice(s) as the Company may in good faith request) the
reasonable out-of-pocket expenses of (i) the Purchasers,
including reasonable attorneys' fees and disbursements, in
connection with the negotiation, preparation and execution of
this Agreement and the issuance of the Purchase Commitment on
the Commencement Date, not to exceed in the aggregate, $45,000
(less all amounts paid by the Company for similar services
under the Standby Agreement), (ii) the Agent in connection
with its performance of the transaction contemplated to be
performed by it hereunder, and (iii) M. J. Whitman, Inc. and
its counsel, LeBoeuf, Lamb, Greene & MacRae, in connection
with the negotiation, preparation and execution of this
Agreement, as separately agreed in writing between the Company
and M. J. Whitman, Inc., a true and correct copy of which
writing will be provided to the Purchasers by the Company
promptly after execution hereof.
b. In the event that the Purchase Commitment is not
issued by the Purchasers as herein contemplated, (i) by mutual
agreement in writing of the Company and the Purchasers or (ii)
as a result of the breach of this Agreement by either the
Company or the Purchasers, the Company and the Purchasers, in
the case of clause (i), or the breaching party in the case of
clause (ii), as the case may be, agree(s) to pay upon
presentation of an appropriate invoice therefor (together with
such reasonable detail concerning the matters covered by such
invoice(s) as the Company may in good faith request) the
reasonable fees and out-of-pocket
4
<PAGE> 6
expenses of M. J. Whitman, Inc. and the reasonable fees and
disbursements of LeBoeuf, Lamb, Greene & MacRae in acting as
counsel for M. J. Whitman, Inc. in connection with negotiation
and preparation of this Agreement, which shall not exceed in
the aggregate $37,500 (less all amounts paid by the Company
for similar fees and expenses under the Standby Agreement);
PROVIDED, HOWEVER, that in the event the Company is the
breaching party in the case of clause (ii), the Company agrees
to pay the reasonable out-of-pocket expenses of the
Purchasers, including reasonable attorneys' fees and
disbursements, in connection with the negotiation, preparation
and execution of this Agreement prior to the Company's breach,
not to exceed in the aggregate $45,000 (less all amounts paid
by the Company for for similar fees and expenses under the
Standby Agreement); PROVIDED FURTHER, HOWEVER, that in the
event the Purchasers are the breaching parties in the case of
clause (ii), the Purchasers agree to pay the reasonable
out-of-pocket expenses of the Company, including reasonable
attorneys' fees and disbursements, in connection with the
negotiation, preparation and execution of this Agreement prior
to the Purchasers' breach, not to exceed in the aggregate
$45,000 (less all amounts paid by Purchasers for similar fees
and expenses under the Standby Agreement).
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. On the
Commencement Date, the Purchasers will deliver to the Company a certificate
signed by their authorized representatives that represents and warrants to and
agrees that, as of the Commencement Date:
a. Each of the Purchasers has been duly organized and,
in the case of Sass Partnership, is a validly existing
Delaware limited partnership and, in the case of
International, is a validly existing British Virgin Islands
company, in each case, duly organized and in good standing
under the laws of its respective jurisdiction of organization,
with power and authority to own its respective property and
conduct its respective business and to enter into and perform
this Agreement.
b. International is generally subject to suit and
neither it nor its property has any right of sovereign or
other immunity from suit, or in respect of matters of
jurisdiction or execution.
c. This Agreement has been duly authorized, executed and
delivered by the Purchasers and constitutes the valid, legal
and binding obligation of the Purchasers enforceable against
the Purchasers in accordance with its terms.
d. The Purchasers have a combined net worth and partners
capital, computed in accordance with generally accepted
accounting principles, of not less than $200,000,000 (Sass
Partnership has a net worth (partners' capital) of not less
than $125,000,000 so computed and International has a net
worth of not less than $75,000,000 so computed) and each of
the Partners has sufficient unrestricted liquid assets and the
financial ability to fully perform its obligations under the
Purchase Commitment and its respective obligations hereunder.
The financial statements of the Purchasers furnished to the
Company prior to execution and
5
<PAGE> 7
delivery of this Agreement have been prepared in accordance
with generally accepted accounting principles consistently
applied and fairly present the pertinent results of operations
for the periods indicated and the financial position at the
end of such periods of the Purchasers, except as set forth in
the footnotes thereto.
e. No consent, approval, authorization or order of, or
filing with, any governmental agency or body of any court is
required for the consummation by the Purchasers of the
transactions contemplated by this Agreement in connection with
the performance by Purchasers of the Purchase Commitment.
f. The execution, delivery and performance of this
Agreement and the Purchase Commitment and the consummation of
the transactions herein and therein contemplated will not
result in a breach or violation by Purchasers of any of the
terms and provisions of, or constitute a default under, (i)
any statute, rule or regulation, or any order of any
governmental agency or body or any court having jurisdiction
over the Purchasers or any subsidiary of the Purchasers or any
of their properties or (ii) any agreement or instrument to
which the Purchasers or any subsidiary is a party or by which
the Purchasers or any subsidiary is bound or to which any of
the properties of the Purchasers or any subsidiary is subject,
or (iii) the certificate of incorporation or by-laws of the
Purchasers or any subsidiary of the Purchasers which currently
conducts business.
g. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Purchasers,
threatened against, and no order, decree or judgment of any
court agency or other governmental authority shall have been
rendered against, the Purchasers to restrain or prohibit the
performance by Purchasers of this Agreement or the
transactions contemplated by this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. On the
Commencement Date, the Company will deliver to the Purchasers a certificate
signed by its President or General Counsel that represents and warrants that,
as of the Commencement Date:
a. The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own
its properties and conduct its business as described in the
Prospectus (as hereafter defined).
b. A registration statement (No. 33-89764), including a
prospectus, relating to (i) the Plan, (ii) securities to be
issued in connection with the Plan and (iii) the Ticket
Vouchers, has been filed by the Company with and declared
effective on May 12, 1995 by, the Securities and Exchange
Commission (the "Commission"). Such registration statement is
hereinafter referred to as the "Registration Statement," and
such prospectus, including all materials incorporated therein
by reference therein, as the "Prospectus."
6
<PAGE> 8
c. The Registration Statement including the Prospectus,
taken as a whole, does not include any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein
not misleading in so far as relevant and material to the
financial condition of the Company, to the Ticket Vouchers or
the transactions contemplated hereby.
d. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid, legal and
binding obligation of the Company enforceable against the
Company in accordance with its terms.
e. The Ticket Vouchers have been duly authorized and
validly issued by the Company and the redemption of the Ticket
Vouchers by the Company in accordance with Section 2 of this
Agreement has been duly authorized by all necessary corporate
or judicial action.
f. The Ticket Vouchers conform to the description
thereof under the definition of "Ticket Voucher" contained in
Section 1.1.159 of the Plan.
g. As of August 23, 1995, $30,000,000 face amount of
Ticket Vouchers were issued and outstanding.
h. No consent, approval, authorization or order of, or
filing with, any governmental agency or body of any court is
required for the consummation by the Company of the
transactions contemplated by this Agreement in connection with
the issuance and redemption by the Company of the Ticket
Vouchers, or resale of the Ticket Vouchers, except any such as
have been obtained and made.
i. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation by the
Company of any of the terms and provisions of, or constitute a
default under, (i) any statute, rule or regulation, or any
order of any governmental agency or body or any court having
jurisdiction over the Company or any subsidiary of the Company
or any of their properties or (ii) any agreement or instrument
to which the Company or any subsidiary is a party or by which
the Company or any subsidiary is bound or to which any of the
properties of the Company or any subsidiary is subject, or
(iii) the certificate of incorporation or by-laws of the
Company or any subsidiary of the Company which currently
conducts business.
j. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Company,
threatened against, and no order, decree or judgment of any
court agency or other governmental authority shall have been
rendered against, the Company to restrain or prohibit this
Agreement or the transactions contemplated by this Agreement,
7
<PAGE> 9
7. COVENANTS OF THE COMPANY. The Company covenants and agrees
with the Purchasers that:
a. The Company will endeavor in good faith to advise the
Purchasers of any judicial or administrative order materially
affecting the Plan or any of the transactions contemplated by
the Plan or this Agreement and will use its best efforts to
prevent the issuance of any such order materially adversely
affecting the rights of the Purchasers.
b. The Ticket Vouchers will be in bearer form
substantially in the form attached hereto as EXHIBIT "A".
Records of the serial numbers applicable to specific holders
of Ticket Vouchers will be maintained by the Agent rather than
the Company and will be accessed by the Company only for
purposes of security and/or control when and to the extent the
Company in good faith believes there has been, or may have
been, improper use, reproduction or alteration of Ticket
Vouchers. The Agent will also utilize such serial numbers to
ensure that Ticket Vouchers purchased by the Purchasers under
the Standby Agreement are administered under the Standby
Agreement and the Purchased Ticket Vouchers purchased by the
Purchasers under this Agreement are administered under this
Agreement.
c. If required by any governmental agency of competent
jurisdiction in the United States, the Company will arrange
for the qualification of the purchase and resale of the Ticket
Vouchers under the laws of such jurisdictions as the
Purchasers may reasonably designate and will continue such
qualification in effect so long as reasonably requested by the
Purchasers.
d. The Company will promptly file any forms 10K, 10Q or
8K required to be filed with the Commission under applicable
law and furnish to the Purchasers copies thereof promptly upon
the filing thereof.
e. The Company will honor Ticket Vouchers in accordance
with their terms whether tendered directly to the Company or
indirectly through a travel agent, interline agreement or
otherwise.
f. In any subsequent bankruptcy, reorganization or
similar proceeding, the Company will (i) continue to honor the
Ticket Vouchers in accordance with their terms and (ii) treat
the Ticket Vouchers as "tickets" and holders of the Ticket
Vouchers as "passengers/ticket holders."
g. The Company will use commercially reasonable efforts
to notify the persons who were entitled to receive Ticket
Vouchers under the Plan of the existence of the Purchase
Commitment and will furnish to the Purchasers such copies
thereof as the Purchasers may reasonably request.
8
<PAGE> 10
h. The Company will take such further actions and
execute and deliver to the Purchasers such further documents
and instruments as may be necessary to fully and completely
consummate the transactions and agreements contemplated by
this Agreement.
i. The Company agrees not to enter into any agreements
for the sale or disposition of all or substantially all of the
Company's assets (in one or more transactions), or a merger,
consolidation or other business combination involving all or
substantially all of the Company's assets unless the Company
provides the Purchasers with the express, written agreement by
the purchaser(s) or other successor(s) to assume the Company's
obligations and covenants hereunder and, after giving effect
to any such sale, disposition, merger, consolidation or other
business combination, the company or other successor(s) shall
meet the requirements of Section 6 hereof.
j. In the event the Company shall fail, for any calendar
month after the Expiration Date until all of the Ticket
Vouchers are redeemed in full, to maintain an average balance
of unrestricted domestic cash of not less than $70 million,
the Company shall be obligated to repurchase from the
Purchasers all Purchased Ticket Vouchers then held by the
Purchasers at the applicable Discounted Redemption price as
set forth in Section 2.c. hereof, such mandatory repurchase to
be effected within 5 business days after receipt of written
demand therefor from the Purchasers. Unrestricted domestic
cash computed for this purpose with respect to any calendar
month after December 31, 1995 shall exclude 50% of the cash
proceeds to the Company, if any, derived from any of the
following subsequent to the Commencement Date: (i) an equity
rights offering, (ii) any working capital loan facility in
addition to the Company's currently existing and fully drawn
asset and receivables based loans from Karabu Corp., (iii) any
change in the applicable formulae (as distinct from day to day
changes in holdback levels in accordance with current
procedures) which results in any reduction in credit card
processing holdback levels and (iv) any sale of capital assets
outside the ordinary course of business. Conversely, any
decrease in unrestricted domestic cash, resulting from any
change in the applicable formulae (as distinct from day to day
changes in holdback levels in accordance with current
procedures) governing credit card processing holdback levels,
shall be excluded.
In addition, the Company will maintain for the period of four
calendar months ended October 31, 1995 and on a cumulative
monthly basis thereafter, tested as of the last day of each
month through December 1995, earnings before interest and
taxes plus depreciation and amortization ("EBITDA") of not
less than 50% of the following amounts:
9
<PAGE> 11
<TABLE>
<CAPTION>
Cumulative
PERIOD EBITDA EBITDA
------ ------ ------
<S> <C> <C>
July 1 - October 31, 1995 $227,600,000 $227,600,000
November 1995 $ 28,900,000 $256,500,000
December 1995 $ 30,100,000 $286,600,000
</TABLE>
; PROVIDED, HOWEVER, the Company shall not be required to
maintain such EBITDA levels with respect to any calendar month
during which the Company maintains an average balance of
unrestricted domestic cash of not less than $120 million.
Upon request by the Purchaser, the Company's chief financial
officer will execute and deliver to the Purchaser a
certificate certifying that the conditions of this subsection
are satisfied.
k. The Company will not purchase, publicly offer to
purchase, or otherwise enter into any legally binding
agreement to acquire prior to the Expiration Date any of the
600,000 Ticket Vouchers issued on August 23, 1995 other than
in accordance with (i) the Standby Agreement, (ii) this
Agreement and (iii) the terms of the Ticket Vouchers.
l. Prior to entering into any standby purchase agreement
for the standby purchase by any third party of any Ticket
Vouchers distributed by the Company subsequent to the
Settlement Date before the redemption of all Ticket Vouchers
purchased by the Purchasers pursuant to the Purchase
Commitment, the Company will provide not less than 72 hours
prior written notice to the Purchasers at the address
specified in Section 16 to permit Purchasers to make a written
offer to the Company to act as standby purchaser with respect
to the Ticket Vouchers to be distributed subsequent to the
Settlement Date before the redemption of all Ticket Vouchers
purchased by the Purchasers pursuant to the Purchase
Commitment. Should the Company not accept any offer made by
the Purchasers or should the Purchasers not make any offer
within said 72 hour period, the Company shall be free to make
whatever arrangements it may desire with third parties with
respect to any such standby purchase.
8. COVENANTS OF THE PURCHASERS. The Purchasers covenant and
agree with the Company that:
a. The Purchasers will take such further actions and
execute and deliver to the Company such further documents and
instruments as may be necessary to fully and completely
consummate the transactions and agreements contemplated by
this Agreement.
10
<PAGE> 12
b. The Purchasers agree not to enter into any agreements
for the sale or disposition of all or substantially all of the
Purchasers' assets (in one or more transactions), or a merger,
consolidation or other business combination involving all or
substantially all of the Purchasers' assets unless the
Purchasers provide the Company with the express, written
agreement by the Purchasers or other successor(s) to assume
the Purchasers' obligations and covenants hereunder and, after
giving effect to any such sale, disposition, merger,
consolidation or other business combination, the Purchasers or
other successor(s) shall meet the requirements of Section 5
hereof.
c. Purchasers agree that any legal action or proceeding
against Purchasers relating to or arising out of or under this
Agreement may be brought in any court of competent
jurisdiction in the State of New York or of the United States
of America for the Southern District of New York, and
Purchasers accept with regard to any such action or proceeding
for themselves and in respect to their property, generally and
unconditionally, the jurisdiction of the aforesaid courts.
Purchasers further irrevocably consent to the service of
process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by
registered or certified U.S. mail, postage prepaid, to the
Purchasers at their addresses provided in Section 16 hereof,
such service to become effective upon receipt or five (5) days
after such mailing, whichever shall first occur. Nothing
herein contained shall affect the right of the Company to
serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against
International in the British Virgin Islands or against
Purchasers in any other jurisdiction in which Purchasers may
be subject to suit. To the fullest extent permitted by
applicable law, Purchasers hereby waive, and agree not to
assert, by way of motion, defense, counterclaim or otherwise,
in any such suit, action or proceeding any claim that (i)
Purchasers are not personally subject to the jurisdiction of
any of the above-named courts by reason of any immunity or
otherwise (ii) their respective properties are exempt or
immune from setoff, execution or attachment, either prior to
judgment or in aid of execution or (iii) any suit, action or
proceeding so brought is in an inconvenient forum or that the
venue of the suit, action or proceeding is improper or that
the subject matter hereof may not be enforced in or by such
courts. Purchasers further agree that, after final judgment
by any such court, they will, to the fullest extent permitted
by applicable law, waive the benefit of any defense that would
hinder or delay the levy, execution or collection of any
amount to which the Company is entitled hereunder or pursuant
to a final judgment of any court having jurisdiction. The
Purchasers hereby irrevocably designate M.D. Sass Associates,
Inc., in the case of Sass Partnership and M.D. Sass
Management, Inc., in case of International, in each case
having an office on the date hereof at 1185 Avenue of the
Americas, New York, New York 10036, as the designee, appointee
and agent of the Purchasers to receive service of process in
such jurisdiction in any legal action or proceeding with
respect to this Agreement and such service shall be deemed
complete five (5)
11
<PAGE> 13
days after delivery thereof to said agent, if written notice
of such service shall be given to Purchasers either by such
agent or by the Company, by mailing the same by registered or
certified mail to Purchasers at the addresses set forth in
Section 16 or otherwise as notice is permitted to be given
under such paragraph.
If, for the purpose of obtaining a judgment in any court with respect
to any obligation of Purchasers under this Agreement it becomes
necessary to convert into any other currency any amount in Dollars due
under this Agreement, then that conversion shall be made at the buying
spot rate of exchange that would be utilized by the Company to
purchase freely transferable Dollars at the close of business on the
day before the day on which the judgment is rendered.
9. DEFAULT BY THE COMPANY. Each of the following shall
constitute an "Event of Default" by the Company under this Agreement.
a. failure of the Company to pay any Scheduled
Redemption amount or any Discounted Redemption amount or
interest, when and as due and payable in accordance with the
terms of this Agreement, which default continues for 5 days
after the date due;
b. failure of the Company to pay any amount (other than
any Scheduled Redemption amount, Discounted Redemption amount
or interest) when and as due and payable in accordance with
the terms of this Agreement, which default continues for 10
days after notice thereof by the Purchasers to the Company;
c. failure by the Company to observe and perform any of
its covenants under this Agreement, and, if curable, any such
failure continues for 30 days after notice thereof by the
Purchasers to the Company;
d. any representation or warranty of the Company set
forth in Section 6 hereof shall have been untrue or misleading
in any material respect as of the date made and, such untrue
and misleading representation or warranty shall be material as
of the date asserted as an Event of Default hereunder;
e. the Company defaults in any material way under the
terms of any of its material indebtedness for money borrowed
or material aircraft purchase contracts or material aircraft
leases and such default results in the acceleration of such
indebtedness for money borrowed, aircraft purchase contracts
or aircraft leases;
f. The Company ceases to provide commercial air
transportation at a level (based on available seat miles) at
least 70% of the level of available seat miles provided in
1994, in each case computed on a cumulative basis from July 1,
1995 compared to the cumulative average seat miles provided
for the corresponding period in 1994.
12
<PAGE> 14
g. the Company refuses to honor 5% or more of the
outstanding Ticket Vouchers in accordance with their terms;
h. any final judgment in excess of $25 million is
entered against the Company in any judicial or administrative
proceeding, which judgment is not stayed within 30 days
following the entry thereof;
i. the Company (i) commences a voluntary case or other
proceeding under any state or federal bankruptcy, insolvency
or receivership law, (ii) seeks or acquiesces to the
appointment of a trustee, receiver, liquidator or custodian or
any substantial part of its property, (iii) makes a general
assignment for the benefit of its creditors or (iv) takes any
corporate action authorizing the foregoing; or
j. an involuntary case or other proceeding under any
state or federal bankruptcy, insolvency or receivership law is
commenced against the Company and such involuntary case
remains undismissed and unstayed for 60 days.
10. DEFAULT BY THE PURCHASERS. Each of the following shall
constitute an "Event of Default" by the Purchasers under this Agreement:
a. failure of the Purchasers to perform its obligations
under the Purchase Commitment when and as due and payable in
accordance with the terms thereof and of this Agreement, which
default continues for 5 days after performance is due;
b. prior to performance in full of the Purchase
Commitment, failure by the Purchasers to observe and perform
any of their other covenants under this Agreement and, if
curable, any such failure continues for 30 days after notice
by the Company;
c. prior to performance in full of the Purchase
Commitment, any representation or warranty of the Purchasers
set forth in Section 6 hereof shall have been untrue or
misleading in any material respect as of the date made and,
such untrue and misleading representation or warranty shall be
material as of the date asserted as an Event of Default
hereunder;
d. prior to performance in full of the Purchase
Commitment, any final judgment in excess of $25 million is
entered against the Purchasers in any judicial or
administrative proceeding, which judgment is not stayed within
30 days following the entry thereof;
e. prior to performance in full of the Purchase
Commitment, the Purchasers (i) commence a voluntary case or
other proceeding under any state or federal bankruptcy,
insolvency or receivership law, (ii) seek or acquiesce to the
13
<PAGE> 15
appointment of a trustee, receiver, liquidator or custodian or
any substantial part of its property, (iii) make a general
assignment for the benefit of their creditors or (iv) take any
corporate action authorizing the foregoing; or
f. prior to performance in full of the Purchase
Commitment, an involuntary case or other proceeding under any
state or federal bankruptcy, insolvency or receivership law is
commenced against either of the Purchasers and remains
undismissed and unstayed for 60 days.
11. REMEDIES UPON DEFAULT BY THE COMPANY. Upon the occurrence of
any Event of Default by the Company, the Purchasers may, but shall not be
required to, exercise one or more of the following remedies:
a. declare all or any portion of the aggregate amount of
all Scheduled Redemptions (undiscounted) immediately due and
payable, without any presentment, demand, protest or other
notice of any kind to the Company, all of which are hereby
expressly waived. All such accelerated Scheduled Redemption
amounts shall thereafter accrue interest at the Overdue Rate
until paid.
b. sell, assign or otherwise dispose of any or all
unredeemed Ticket Vouchers in one or more public or private
transactions in a commercially reasonable manner upon 5
business days prior written notice to the Company, which is
hereby deemed by the Company to be reasonable notice. The
Company shall, to the extent not otherwise provided by law,
remain liable for any deficiency resulting from such sales.
c. use any or all of the Ticket Vouchers for the
Purchasers' own account without prejudice to the Purchasers'
right to recover all unpaid amounts under this Agreement,
provided that, the Ticket Vouchers used by the Purchasers
shall be credited against any amounts owned to the Purchasers
under this Agreement in an amount equal to the face value
thereof.
d. any other legal or equitable remedy available to the
Purchasers by law or by agreement.
The remedies set forth in this Agreement are cumulative and not exclusive. The
exercise of any remedy shall not preclude the exercise of any other remedy by
the Purchasers.
12. REMEDIES UPON DEFAULT BY THE PURCHASERS. Upon the occurrence
of any Event of Default by the Purchasers, the Company may, but shall not be
required to, exercise one or more of the following remedies:
a. by notice in writing to Purchasers, immediately
terminate all of the Company's obligations under this
Agreement;
14
<PAGE> 16
b. any other legal or equitable remedy available to the
Purchasers by law or by agreement.
The remedies set forth in this Agreement are cumulative and not exclusive. The
exercise of any remedy shall not preclude the exercise of any other remedy by
the Company.
13. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS TO ISSUE
PURCHASE COMMITMENT. (A) The obligations of the Purchasers hereunder to issue
the Purchase Commitment shall be subject to the accuracy of the representations
and warranties of the Company herein, at and as of the date hereof and the
Commencement Date, the performance of the Company of its obligations hereunder
and the following conditions precedent:
a. The Company shall have delivered the certificate
described in Section 6 of this Agreement.
b. There shall not have occurred, in the reasonable
judgment of the Purchasers, any material adverse change in the
assets, liabilities or business of the Company since the date
of this Agreement.
c. Prior to the commencement of the mailing and
publication of the notice of Purchase Commitment for the
Ticket Vouchers, the Purchasers shall have received the
opinion of Smith, Gambrell & Russell, counsel for the Company,
dated as of the Commencement Date, substantially in the form
attached hereto as EXHIBIT "B".
d. Prior to the commencement of the mailing and
publication of the notice of the Purchase Commitment for the
Ticket Vouchers, the Purchasers shall have received an
opinion, dated as of the Commencement Date, in form
satisfactory to the Purchasers, of Richard P, Magurno, Esq.,
General Counsel of the Company, to the effect that the
execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any agreement or
instrument known to such counsel to which the Company or any
subsidiary of the Company is a party or by which the Company
or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject.
e. No litigation shall have been brought or commenced
against the Purchasers prior to the Commencement Date
challenging the propriety or legality of the transactions
contemplated hereby which is not dismissed or withdrawn prior
to the Commencement Date.
(B) In the event:
15
<PAGE> 17
(i) any representation or warranty of the Company set
forth in Section 6 shall have been untrue or
misleading in any material respect as of the date
made, or
(ii) the Company shall not have maintained an average
balance of unrestricted domestic cash of at least $70
million for the 30 day period prior to the close of
business on the Expiration Date,
the Company shall be obligated to repurchase from the Purchasers all Ticket
Vouchers purchased by the Purchasers pursuant to the Purchase Commitment at the
Purchase Price, such repurchase to be made simultaneously with the purchases by
the Purchasers of Ticket Vouchers tendered to the Agent pursuant to the
Purchase Commitment. Nothing in this section contained or otherwise in this
Agreement shall be deemed to modify or alter the unconditional nature of the
Purchase Commitment. Unrestricted domestic cash shall, for the purposes of the
computations required by this subsection (B), exclude 50% of the cash proceeds
to the Company, if any, derived from any of the following subsequent to the
Commencement Date: (i) an equity rights offering, (ii) any working capital
loan facility in addition to the Company's currently existing and fully drawn
asset and receivables based loans from Karabu Corp., (iii) any change in the
applicable formulae (as distinct from day to day changes in holdback levels in
accordance with current procedures) which results in any reduction in credit
card processing holdback levels and (iv) any sale of capital assets outside the
ordinary course of business. Conversely, any decrease in unrestricted domestic
cash, resulting from any change in the applicable formulae (as distinct from
day to day changes in holdback levels in accordance with current procedures)
governing credit card processing holdback levels, shall be excluded.
(C) The Company agrees upon written request by the Purchasers to
make available for inspection by the Purchasers such books and records of the
Company which are necessary to verify that the conditions of this Section have
been met.
14. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations
of the Company hereunder shall be subject to the accuracy of the
representations and warranties of the Purchasers herein, at and as of the date
hereof and the Expiration Date, the performance by the Purchasers of their
obligations hereunder and the following conditions precedent:
a. The Purchasers shall have delivered the certificate
described in Sections 5 of this Agreement.
b. Prior to the commencement of the mailing and
publication of the notice of Purchase Commitment for the
Ticket Vouchers, the Company shall have received the opinion
of counsel for the Purchasers, dated as of the Commencement
Date, as to the matters referred in to clauses a., b., c., e.,
and f. of Section 5 hereof, in form and substance reasonably
satisfactory to the Company.
16
<PAGE> 18
c. No litigation shall have been brought or commenced
against the Company prior to the Commencement Date challenging
the propriety or legality of the transactions contemplated
hereby which is not dismissed or withdrawn prior to the
Commencement Date.
15. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The
agreements, representations and warranties of the Company and of the Purchasers
set forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results
thereof, made by or on behalf of the Purchasers or the Company or any of their
respective representatives, officers or directors or any controlling person
through and including the Scheduled Redemption Date, and will survive the
redemption of the Ticket vouchers hereunder by the Company.
16. NOTICES. All notices, demands, instructions and other
communications required or permitted hereunder will be in writing and shall be
personally delivered or sent by registered, certified or express mail, postage
prepaid, return receipt requested, or by telefacsimile (which shall immediately
be followed by the original of such communication) and shall be deemed to he
given when received by the intended recipient or, in the case of telefacsimile,
on the date transmitted to the intended recipient thereof. Unless otherwise
specified in writing in accordance with this Section, such notices, demands
instructions and communications shall be made to the following:
To Purchasers: M.D. Sass Re/Enterprise Partners, L.P.
1185 Avenue of the Americas
New York, New York 10036
Attention: General Counsel
Telephone: (212) 843-8975
Telefacsimile: (212) 768-8078
To the Company: Trans World Airlines, Inc.
One City Centre
515 North Sixth Street
St. Louis, Mo. 63101
Attention: General Counsel
Telephone: (314) 589-3264
Telefacsimile: (314) 589-3267
17. SUCCESSOR. This Agreement will inure to the benefit of and be
binding upon the parties hereto, their respective successors and assigns.
Except as expressly stated herein, the Purchasers may not assign their
obligations under this Agreement or the Purchase Commitment but may, without
restriction, assign their rights hereunder to any affiliated entity and,
following the Settlement Date, to any three or fewer third parties or
affiliated parties. Except as expressly stated herein, the Company may not
assign its obligations under this Agreement without the consent of the
Purchasers.
17
<PAGE> 19
18. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties hereto and supersedes any and all
prior agreements, arrangements and understandings relating to the matters
provided for herein. This Agreement does not amend or change the rights and
obligations of the parties under the Standby Agreement.
19. INDEMNIFICATION. The Company will indemnify and hold harmless
the Purchasers, M.J. Whitman, Inc., and their respective officers, directors,
employees and agents (each an "indemnified party") against any claims of,
liabilities to or actions by third persons or entities (collectively,
"Claims"), joint and several, to which such indemnified party may become
subject, insofar as such Claims result from or are based upon any untrue
statement of any material fact contained in the Registration Statement, the
Prospectus, the Plan, or any amendment or supplement to any thereof, or any
related preliminary prospectus, or result from or are based upon the omission
or alleged omission to state in any thereof a material fact required to be
stated therein or necessary to make the statements therein not misleading or
otherwise result from or are based upon any act or omission of the Company, and
will reimburse each indemnified party for any reasonable legal or other
out-of-pocket expenses reasonably incurred by such indemnified party in
connection with investigating or defending such Claims as such expenses are
incurred; PROVIDED, HOWEVER, that the Company will not be liable in any such
case for Claims or expenses resulting from or based upon the breach of this
Agreement or the Purchase Commitment by the Purchasers or the negligence, bad
faith acts or omissions or the willful misconduct of any indemnified party.
Each indemnified party shall cooperate fully with the Company in the defense of
any Claim and endeavor in good faith to keep the Company's costs and any Claim
to a minimum consistent with the retention by such parties of the benefits
intended to be conferred upon such indemnified party hereby. Each indemnified
party shall promptly notify the Company of the making of any Claim for which it
believes it is entitled to any indemnity hereunder.
20. APPLICABLE LAW. The Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
without regard to principles of conflict of laws.
18
<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their authorized officers as of the date first above
written.
TRANS WORLD AIRLINES, INC.
By:
----------------------------------
Title:
----------------------------
M.D. SASS RE/ENTERPRISE PARTNERS, L.P.
BY: M.D. SASS ASSOCIATES, INC.,
Managing General Partner
By:
----------------------------------
Title:
-------------------------------
M.D. SASS RE/ENTERPRISE
INTERNATIONAL, LTD.
BY: M.D. SASS MANAGEMENT, INC.,
Investment Manager
By:
----------------------------------
Title:
-------------------------------
19
<PAGE> 21
Exhibit B
October ___, 1995
M.D. Sass Re/Enterprise Partners, L.P.
M.D. Sass Re/Enterprise International, Ltd.
1185 Avenue of the Americas
New York, New York 10036
Gentlemen:
I am general counsel for Trans World Airlines, Inc., a Delaware
corporation ("TWA" or the "Company") and have so acted in connection with the
negotiation, execution and delivery by TWA of a Voucher Purchase Agreement
dated as of October 18, 1995 between you and TWA (the "Purchase Agreement").
Capitalized terms used herein not otherwise defined shall have the meanings
ascribed to such terms in the Purchase Agreement and/or that certain Joint Plan
of Reorganization of TWA and the Company as modified and confirmed by order
(the "Confirmation Order") of the United Bankruptcy Court for the Eastern
District of Missouri (the "Bankruptcy Court") on August 4, 1995 (the "Plan of
Reorganization").
I have examined copies of the Purchase Agreement, the Ticket Vouchers,
Plan of Reorganization, Confirmation Order and Registration Statement No.
33-84944 of TWA on Form S-4 as filed with Securities and Exchange Commission on
October 11, 1994, as amended through Post- Effective Amendment No. 6 dated May
12, 1995 (the "Registration Statement"), and such other instruments, documents
and agreements and matters of law as I have deemed necessary in the
circumstances. In such review, I have assumed the genuineness of all
signatures not affixed by officers of TWA in our presence, the authenticity of
all documents submitted to me as originals, the conformity to originals of all
documents submitted to me as copies and the authenticity of such documents so
submitted.
As to factual matters on which this opinion is based, I have relied
without independent investigation upon the representations and warranties
contained in the Purchase Agreement and upon statements and certificates of
public officials and of TWA. For purposes hereof, "factual matters" shall not
be deemed to include, except in the case of certificates of public officials,
matters which directly or in practical effect constitute the legal conclusions
in question.
Based upon the foregoing and subject to the qualifications and
limitations hereinafter set forth, I am of the opinion that the execution,
delivery and performance by the Company
<PAGE> 22
of the Purchase Agreement, and the consummation by the Company of the
transactions therein contemplated, will not result in a breach or violation of
any of the terms and provisions of or constitute a default under, any agreement
or instrument known to me to which the Company or any subsidiary of the Company
is a party or by which the Company or any such subsidiary is bound or to which
any of the properties of the Company or any such subsidiary is subject.
I am duly admitted and qualified to practice in the State of New York
and do not hold myself out as an expert on, or as admitted to practice law in,
any other state. I am opining herein only as to the effect on the subject
transactions of the laws of the State of New York, the business corporation
laws of the State of Delaware and the federal laws of the United States of
America. Except as noted above, I am not opining as to the effect on any of
the matters covered herein of the laws of any other jurisdiction.
I undertake no responsibility to advise you of any change in the laws
after the date hereof that would alter the scope or substance of the opinions
expressed herein. This opinion is intended for your exclusive use and may not
be relied upon by any person or entity other than the addressees hereof. By
receipt and acceptance of or reliance on this opinion, you consent to the
limitations on the scope of our inquiry and the opinions stated herein.
Very truly yours,
Richard P. Magurno
<PAGE> 23
Exhibit C
October ___, 1995
M.D. Sass Re/Enterprise Partners, L.P.
M.D. Sass Re/Enterprise International, Ltd.
1185 Avenue of the Americas
New York, New York 10036
Gentlemen:
We are counsel for Trans World Airlines, Inc., a Delaware corporation
("TWA" or the "Company") and have so acted in connection with the negotiation,
execution and delivery by TWA of a Voucher Purchase Agreement dated as of
October 18, 1995 between you and TWA (the "Purchase Agreement"). Capitalized
terms used herein not otherwise defined shall have the meanings ascribed to
such terms in the Purchase Agreement and/or that certain Joint Plan of
Reorganization of TWA and the Company as modified and confirmed by order (the
"Confirmation Order") of the United Bankruptcy Court for the Eastern District
of Missouri (the "Bankruptcy Court") on August 4, 1995 (the "Plan of
Reorganization").
In connection with our representation of TWA, we have examined copies of
the Purchase Agreement, the Ticket Vouchers, Plan of Reorganization,
Confirmation Order and Registration Statement No. 33-84944 of TWA on Form S-4
as filed with Securities and Exchange Commission on October 11, 1994, as
amended through Post-Effective Amendment No. 6 dated May 12, 1995 (the
"Registration Statement"), and such other instruments, documents and agreements
and matters of law as we have deemed necessary in the circumstances. In such
review, we have assumed the genuineness of all signatures not affixed by
officers of TWA in our presence, the authenticity of all documents submitted to
us as originals, the conformity to originals of all documents submitted to us
as copies and the authenticity of such documents so submitted.
As to factual matters on which this opinion is based, we have relied
without independent investigation upon the representations and warranties
contained in the Purchase Agreement and upon statements and certificates of
public officials and of TWA. For purposes hereof, "factual matters" shall not
be deemed to include, except in the case of certificates of public officials,
matters which directly or in practical effect constitute the legal conclusions
in question.
Based upon the foregoing and subject to the qualifications and limitations
hereinafter set forth, we are of the opinion that:
<PAGE> 24
October ____, 1995
Page 2
1. TWA is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has the
corporate power and authority to own its properties and carry on its
business substantially as described in the Prospectus.
2. The Confirmation Order confirming the Reorganization Plan is
final and binding and not subject to appeal, rehearing or stay.
3. The Purchase Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid, legal and binding
obligation of the Company enforceable against the Company in accordance
with its terms.
4. The Ticket Vouchers have been duly authorized and validly issued
by the Company and the redemption of the Ticket Vouchers by the Company in
accordance with Section 2 of the Purchase Agreement has been duly
authorized by all necessary corporate or judicial action.
5. The Ticket Vouchers conform in all material respects to the
description thereof under the definition of "Ticket Voucher" contained in
Section 1.1.159 of the Plan of Reorganization.
6. No consent, approval, authorization or order of, or filing with,
any governmental agency or body or any court is required for the
consummation of the transactions contemplated by the Purchase Agreement in
connection with the issuance or redemption of the Ticket Vouchers by the
Company or resale of the Ticket Vouchers, except such as have been
obtained and made.
7. The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions therein contemplated
will not result in a breach or violation by TWA of any of the terms and
provisions of, or constitute a default under, (i) any statute, rule or
regulation, or, to the extent known to us, any order of any governmental
agency or body or any court having jurisdiction over the Company or any
subsidiary of the Company or any of their properties or (ii) to the extent
known to us, any agreement or instrument to which the Company or any
subsidiary is a party or by which the Company or any subsidiary is bound
or to which any of the properties of the Company or any subsidiary is
subject, or (iii) the certificate of incorporation or by-laws of the
Company or any subsidiary of the Company which currently conducts
business.
<PAGE> 25
October ____, 1995
Page 3
The opinions expressed herein are subject to the following assumptions and
qualifications:
(i) no opinion is expressed herein as to the validity of any waiver,
express or implied, of any statutory or constitutional right;
(ii) the opinions expressed herein include and are subject to: (a)
the effect of bankruptcy, insolvency, reorganization, moratorium
and other similar laws affecting the rights and remedies of
creditors; (b) the effect of general principles of equity,
whether applied by a court of law or equity; (c) the effect and
possible unenforceability of contractual provisions for choice
of governing law; (d) the possible unenforceability of waivers
or advance consents that have the effect of waiving statutes of
limitation or, as to the jurisdiction of courts, the venue of
actions, or, in certain cases, notice; (e) the possible
unenforceability of provisions providing that waivers or
consents by a party may not be given effect unless in writing or
in compliance with particular requirements or that a person's
course of dealing, course of performance, or the like or failure
or delay in taking actions may not constitute a waiver of
related rights or provisions or that one or more waivers may not
under certain circumstances constitute a waiver of other matters
of the same kind; (f) the effect of course of dealing, course of
performance, or the like, that would modify the terms of an
agreement or the respective rights or obligations of the parties
under an agreement; (g) the possible unenforceability of
provisions that enumerate remedies are not exclusive or that a
party has the right to pursue multiple remedies without regard
to other remedies elected or that all remedies are cumulative;
(h) the possible unenforceability of provisions permitting
modifications of an agreement only in writing; (i) the possible
unenforceability of provisions that the provisions of an
agreement are severable; (j) the effect of laws requiring
mitigation of damages; (k) the possible unenforceability of
provisions permitting the exercise, under certain circumstances,
of rights without notice or without providing reasonable
opportunity to cure failure to perform; and (l) the possible
unenforceability of provisions requiring indemnification for, or
providing exculpation, release or exemption from liability for,
action or inaction, to the extent such action or inaction
involves negligence or willful misconduct or to the extent
otherwise contrary to public policy;
(iii) no opinion is expressed herein as to the effect of laws relating
to the legally permissible rates of interest or the computation
or disclosure thereof;
<PAGE> 26
October ____, 1995
Page 4
(iv) in rendering the opinions set forth herein, as to the authority
of TWA to execute or issue, and/or the enforceability of, the
Ticket Vouchers and Purchase Agreement, we have relied on the
Confirmation Order authorizing and approving, INTER ALIA, the
issuance of the Ticket Vouchers, and in connection therewith,
authorizing TWA to consummate the transactions contemplated by
the Plan of Reorganization of TWA.
We are attorneys duly admitted and qualified to practice in the State of
Georgia and do not hold ourselves out as experts on, or as admitted to practice
law in, any other state. We are opining herein only as to the effect on the
subject transactions of the laws of the State of Georgia, the contract and
commercial laws of the State of New York, the business corporation laws of the
State of Delaware and the federal laws of the United States of America. Except
as noted above, we are not opining as to the effect on any of the matters
covered herein of the laws of any other jurisdiction. As to such laws of the
State of New York and the business corporation laws of the State of Delaware
applicable to the opinions set forth herein, we have made such investigation of
such laws as we have deemed necessary to express such opinions.
We undertake no responsibility to advise you of any change in the laws
after the date hereof that would alter the scope or substance of the opinions
expressed herein. This opinion is intended for your exclusive use and may not
be relied upon by any person or entity other than the addressees hereof. By
receipt and acceptance of or reliance on this opinion, you consent to the
limitations on the scope of our inquiry and the opinions stated herein.
Very truly yours,
SMITH, GAMBRELL & RUSSELL
By:
Howard E. Turner
<PAGE> 1
EXHIBIT 10.41
<PAGE> 2
EQUITY RIGHTS PUT AGREEMENT
---------------------------
This Agreement dated as of September 15, 1995 is made by and between
Trans World Airlines, Inc., a Delaware corporation (the "Company") and Elliott
Associates, L.P., a Delaware limited partnership (the "Purchaser");
WITNESSETH:
WHEREAS, pursuant to the Company's plan of reorganization confirmed by
the United States Bankruptcy Court for the Eastern District of Missouri on
August 4, 1995 (the "Plan") which became effective on August 23, 1995 (the
"Effective Date"), the Company has issued approximately 13,150,000 Equity
Rights (as defined in Section 1.1.60 of the Plan), each consisting of the
nontransferable right to purchase for cash from the Company newly issued Common
Stock pursuant to a "Basic Subscription Privilege" and an "Oversubscription
Privilege" (as such terms are defined in Section 1.1.60 of the Plan);
WHEREAS, the Purchaser is the owner and holder of Equity Rights
("Purchaser's Equity Rights");
WHEREAS, the Common Stock to be issued to Purchaser upon exercise of
Purchaser's Equity Rights has been registered by the Company pursuant to
Registration Statement No. 33-89764, as amended, filed with the Securities and
Exchange Commission and declared effective on May 12, 1995 (the "Registration
Statement").
WHEREAS, the Company and Purchaser are willing to enter into this
Agreement to provide for the purchase of the number of shares of Common Stock
of the Company hereinafter set forth to the extent such shares may be acquired
pursuant to the Option (as defined below) to be effected by the full exercise
of the Basic Subscription Privilege, and an exercise of the Oversubscription
Privilege, of the Equity Rights held by Purchaser as set forth below; and
WHEREAS, all capitalized terms used herein which are not separately
defined, are used herein as defined in the Plan.
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Company and the Purchaser, agree as follows:
1. GRANT OF PUT OPTION. Purchaser hereby grants to the Company
the Option (the "Option") exercisable on or before October 5, 1995 (the 43rd
day following the Effective Date) to put to the Purchaser the exercise of
Purchaser's Basic Subscription Privileges and Oversubscription Privileges as
hereinafter provided. Upon the exercise by the Company of the Option, the
Purchaser shall, in accordance with the covenants, representations and
warranties herein contained, on or prior to 5:00 p.m. New York time on October
5, 1995, exercise the Basic Subscription Privilege and the Oversubscription
Privilege under Equity Rights held by the Purchaser to subscribe for, in the
aggregate, not fewer than 2,515,398 shares (the "Committed Shares") of Common
Stock of the Company by executing and delivering to American Stock
<PAGE> 3
Transfer and Trust Company as agent (the "Subscription Agent") properly
completed Subscription Forms, with any required signatures guaranteed, together
with payment in full of the Subscription Price for each of the Committed Shares
in accordance with the terms of the Equity Rights and the Plan. The Option may
be exercised by the Company by sending notice in writing to Purchaser by
facsimile transmission to the Purchaser's address, as initially stated in
Section 9, on or before 3:00 p.m. New York time on October 5, 1995. In no
event shall Purchaser be required to subscribe for more than 2,515,398 shares
of Common Stock in the aggregate pursuant to its own exercise of the Equity
Rights and the exercise by the Company of the Option.
2. PREMIUM TO PURCHASER FOR OPTION. As consideration for the
Option in Section 1, the Company will pay to the Purchaser an aggregate premium
equal to $658,326.82 (the "Premium").
The Premium will be paid in immediately available funds on the date of
the execution of this Agreement, if this Agreement is executed prior to 10:00
a.m. New York time on such date, and otherwise in immediately available funds
on the day following the execution of this Agreement, and will be placed in an
escrow account with Smith, Gambrell & Russell (in such capacity, the "Escrow
Agent") pursuant to an escrow agreement which will authorize the release of the
funds to Purchaser only upon receipt by the Escrow Agent and the Company of an
affidavit of a duly authorized officer or general partner of the Purchaser to
the effect that, Purchaser has executed or caused to be executed and delivered
or caused to be delivered to the Subscription Agent properly completed
Subscription Forms, with any required signatures guaranteed, together with
payment in full of the Subscription Price for each of the Committed Shares in
accordance with the terms hereof and of the Equity Rights and the Plan, and
confirmation from the carrying broker receipt and execution of instructions
from the Purchaser to exercise the Equity Rights in the amount specified in
such affidavit. Such escrow agreement shall provide that the Premium shall be
subject to a partial release at Purchaser's request, to the extent that the
Purchaser's Basic Subscription Privilege has been exercised prior to its
Oversubscription Privilege provided the Escrow Agent and the Company shall have
been furnished evidence as above required of such execution and delivery of
Subscription Forms and payment of the Subscription Price. Any partial release
of the Premium shall be in the same proportion as the number of shares
subscribed for by the Purchaser pursuant to the Equity Rights bears to the
total Committed Shares committed to by the Purchaser (the dollar amount derived
from such calculation shall be referred to as the "Computation"). Such escrow
agreement shall further provide that interest shall accrue on all escrowed
amounts. The Escrow Agent shall deposit the Premium in such interest bearing
account, as may be selected by the Escrow Agent, with Wachovia Bank of Georgia,
N.A. (the "Bank") on a basis allowing for withdrawal of the funds on one
business day's notice. The escrow agreement shall be in the form attached
hereto as Exhibit A and may contain such other terms as may be agreed to by the
parties hereto and the Escrow Agent. The Purchaser shall send a copy of all
documents sent to the Escrow Agent to the Company but such transmission shall
not be a condition to the release of Funds from escrow unless objection shall
be given by the Company as provided in the Escrow Agreement.
2
<PAGE> 4
3. TRANSACTION COSTS, FEES AND EXPENSES. Each party hereto
agrees to pay its own transaction costs, fees and expenses in connection with
the transactions contemplated hereby, including without limitation, the fees
and expenses of their respective counsel, except that the Company shall pay
Purchaser's actual reasonable legal fees and expenses in an amount not to
exceed $50,000.
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Purchaser
represents and warrants and agrees that:
a. Purchaser is a duly organized and validly existing
Delaware limited partnership which is in good standing under
the laws of its jurisdiction of organization, with partnership
power and authority to own its property and conduct its
business and to enter into and perform all of its obligations
under this Agreement.
b. Purchaser is the owner and holder of Equity Rights.
c. This Agreement has been duly authorized, executed and
delivered by the Purchaser and constitutes the valid, legal
and binding obligation of the Purchaser enforceable against
the Purchaser in accordance with its terms subject to the
effect of bankruptcy, insolvency, reorganization, moratorium,
in each case with respect to proceedings subsequent to the
date of this Agreement and other similar laws affecting the
rights and remedies of creditors generally and general
principles of equity.
d. The Purchaser has a net worth computed in accordance
with generally accepted accounting principles, of not less
than 90% of the amount set forth in the audited financial
statements heretofore furnished to the Company by Purchaser in
connection with this Agreement and has sufficient unrestricted
liquid assets and the financial ability to fully perform its
obligations under this Agreement. The financial statements of
the Purchaser furnished to the Company prior to execution and
delivery of this Agreement have been prepared in accordance
with generally accepted accounting principles consistently
applied and fairly present the pertinent results of operations
for the periods indicated and the financial position at the
end of such periods of the Purchaser, except as set forth in
the footnotes thereto.
e. No consent, approval, authorization or order of, or
filing with, any governmental agency or body of any court is
required for the consummation by the Purchaser of the
transactions contemplated by this Agreement.
f. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation by
Purchaser of any of the terms and provisions of, or constitute
a default under, (i) any statute, rule or regulation, or any
order of any governmental
3
<PAGE> 5
agency or body or any court having jurisdiction over the
Purchaser or any subsidiary of the Purchaser or any of their
properties or (ii) any agreement or instrument to which the
Purchaser or any subsidiary is a party or by which the
Purchaser or any subsidiary is bound or to which any of the
properties of the Purchaser or any subsidiary is subject, or
(iii) the certificate of limited partnership or partnership
agreement of the Purchaser or any subsidiary of the Purchaser
which currently conducts business.
g. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Purchaser,
threatened against, and no order, decree or judgment of any
court, agency or other governmental authority of competent
jurisdiction in the United States shall have been rendered
against, the Purchaser to restrain or prohibit the performance
by Purchaser of this Agreement or the transactions
contemplated by this Agreement.
h. The Purchaser's principal place of business is
located in the State of New York.
5. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants and agrees that:
a. The Company is a duly organized and validly existing
Delaware corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and
authority to own its property and conduct its business and to
enter into and perform all of its obligations under this
Agreement.
b. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid, legal and
binding obligation of the Company, enforceable against the
Company in accordance with its terms subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, in each
case with respect to proceedings subsequent to the date of
this Agreement and other similar laws affecting the rights and
remedies of creditors generally and general principles of
equity.
c. Except for the filing of an appropriately
supplemented prospectus describing, among other things, the
transactions contemplated by this Agreement, no consent,
approval, authorization or order of, or filing with, any
governmental agency or body or any court in any applicable
jurisdiction of the United States is required for the
consummation by the Company of the transactions contemplated
by this Agreement.
d. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation by the
Company of any of the terms and provisions of, or constitute
4
<PAGE> 6
a default under, (i) any statute, rule or regulation, or any
order of any governmental agency or body or any court having
jurisdiction over the Company or any subsidiary of the Company
or any of their properties or (ii) any agreement or instrument
to which the Company or any subsidiary is a party or by which
the Company or any subsidiary is bound or to which any of the
properties of the Company or any subsidiary is subject, or
(iii) the certificate of incorporation or by-laws of the
Company or any subsidiary of the Company which currently
conducts business.
e. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Company,
threatened against, and no order, decree or judgment of any
court, agency or other governmental authority of competent
authority in the United States shall have been rendered
against, the Company to restrain or prohibit the performance
by Company of this Agreement or the transactions contemplated
by this Agreement.
f. The Equity Rights issued to Purchaser for the
Committed Shares and the Committed Shares issued upon exercise
thereof have been duly authorized by the Company and such
Committed Shares, when issued and delivered by the Company in
accordance with the Plan and against payment therefor as
contemplated in the Plan and hereby, will be (i) validly
issued, fully paid and non-assessable and such Equity Rights
and Committed Shares have been registered pursuant to the
Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act") and (ii) free and clear of any
liens, claims and encumbrances arising by, through, or under
the Company and shall not be subject to any stop transfer
instructions imposed by the Company.
g. The Registration Statement with respect to the sale
of the Equity Rights and the underlying Common Stock (issuable
upon the exercise thereof) in each case by the Company to the
Purchaser is currently effective and no stop order pertaining
to it has been issued by the Securities and Exchange
Commission. The Registration Statement shall be effective at
the time of sale and delivery by the Company of the Committed
Shares and no stop order suspending the effectiveness of such
Registration Statement including any amendment or supplement
thereto shall have been issued. The Committed Shares have
been approved for issuance on the American Stock Exchange,
subject to official notice of issuance.
h. As of its effective date, the Registration Statement
did not, insofar as relevant to the Equity Rights or the
underlying Common Stock purchasable pursuant thereto, include
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements made therein not misleading, and, as of
such date, the Prospectus did not, insofar as material to the
investment decision of a reasonable purchaser of the Common
Stock, include any untrue statement of a material fact or omit
to state any material
5
<PAGE> 7
fact required to be stated therein or necessary to make the
statements therein not misleading.
6. PURCHASER'S COVENANTS. The Purchaser covenants and agrees
with the Company that:
a. No later than three business days following the
execution of this Agreement, the Purchaser shall cause to be
delivered to the Company an opinion of counsel for Purchaser
dated as of the date of this Agreement in form and substance
reasonably satisfactory to the Company as to the matters set
forth in Section 4a, c, e and f.
b. The Purchaser agrees to take such actions and execute
and deliver to the Company such documents and instruments as
may be necessary to fully consummate the transactions and
agreements of the Purchaser as contemplated by this Agreement.
c. During the period commencing with the execution of
this Agreement and terminating on the payment in full of the
exercise price as contemplated in Section 1 (the "Option
Term"), the Purchaser agrees not to enter into any agreement
for the sale or disposition of all or substantially all of the
Purchaser's assets (in one or more transactions), or a merger,
consolidation or other business combination involving all or
substantially all of the Purchaser's assets, unless the
Purchaser provide the Company with the express, written
agreement by the Purchaser or other successor(s) to assume the
Purchaser's obligations and covenants hereunder and, after
giving effect to any such sale, disposition, merger,
consolidation or other business combination, the Purchaser or
other successor(s) shall meet the requirements of Section 4
hereof.
7. THE COMPANY'S COVENANTS. The Company covenants and agrees
with the Purchaser that:
a. No later than three business days following the
execution of this Agreement, the Company shall cause to be
delivered to the Purchaser an opinion of counsel for the
Company dated as of the date of this Agreement in form and
substance reasonably satisfactory to Purchaser as to the
matters set forth in Section 5a, b, c, d and f , and as to the
first sentence of 5(g), such opinion of counsel shall state
that, to the best knowledge of such counsel, the Registration
Statement is currently in effect and no stop order suspending
the effectiveness has been instituted or is pending or
threatened by the Securities and Exchange Commission (the
"SEC").
b. The Company agrees to take such actions and execute
and deliver such documents and instruments as may be necessary
to fully consummate the
6
<PAGE> 8
transactions and agreements of the Company as contemplated by
this Agreement, including, without limitation, the filing with
the SEC in a timely manner in accordance with applicable law
of an appropriately supplemented prospectus as referred to in
Section 5c (the "Supplemental Prospectus").
c. Except as otherwise provided below and except for
distributions provided for in the Prospectus, the Plan and/or
pursuant to the terms of securities issued under the Plan,
during the Option Term and thereafter for the period ending
two weeks after the issuance and delivery to the Purchaser of
all of the Committed Shares (i) the Company shall not declare
any dividend or make any distribution on the Company's Common
Stock or Preferred Stock (other than dividends or
distributions payable in the Company's Common Stock or
Preferred Stock) and (ii) the Company shall not effect any
stock dividends, stock splits, or any other issuance of
capital stock (including options, warrants, rights to purchase
stock or securities convertible into stock) or issue any
Common Stock or any other options, warrants or rights thereto
("Derivative Securities") other than: (a) such Common Stock
or Derivative Securities provided for by the Prospectus, the
Plan and/or pursuant to the terms of securities issued under
the Plan, as the case may be; (b) such Common Stock or
Derivative Securities as may be issued pursuant to the terms
of the Company's Key Employee Stock Incentive Plan or to an
employee stock ownership or benefit plan in the ordinary
course of business. For purposes of this provision, the term
"employees" shall include those entities and persons defined
in Instruction A(1)(a) to Form S-8 under the Securities Act.
d. The Company will consult with the Purchaser with
respect to any press release, prospectus supplement, amendment
to the Registration Statement or other public statement or
filing that names or refers to the Purchaser. Any such
disclosure regarding the Purchaser shall be subject to the
Purchaser's consent (which shall not be unreasonably
withheld), except where such release, filing, statement or
announcement by the Company is believed by the responsible
officers of the Company, after consultation with the Company's
counsel, to be required, or that the failure to make such
disclosure would involve an unacceptable risk to the Company,
in each case, under applicable law or pursuant to any listing
agreement with or the rules or regulations of, any national
securities exchange on which the securities of the Company are
listed or traded.
e. Subject to the terms and conditions of this
Agreement, the Company shall deliver or cause to be delivered
to the Purchaser, the Premium (or applicable portion thereof),
together with any accrued interest thereon, (the Premium and
any accrued interest thereon, the "Funds") to be in same day
funds on the first business day following the date of notice
as provided in Section 2 by the Purchaser to the Escrow Agent
that it has performed its obligations under the Agreement
necessary for the Escrow Agent to release the Funds. The
Purchaser shall use its best reasonable efforts to give any
notice to the Escrow Agent to release Funds no later
7
<PAGE> 9
than 5:00 p.m. Atlanta, Georgia time on the business day
immediately preceding the business day on which such Funds are
to be released from escrow. Should the Purchaser terminate
this Agreement, in whole or in part, pursuant to Section 11,
Purchaser shall refund all Funds, and any interest accrued
thereon, theretofore received by it and shall not be entitled
to receive any further Funds whether held in escrow or
otherwise.
f. The Company shall instruct the Subscription Agent to
determine the amount of shares purchased and not purchased
pursuant to the Basic Subscription Privilege on October 6,
1995 and thereafter the Company shall, within one business day
after receiving all the foregoing information from the
Subscription Agent, in form sufficient to determine the shares
to be allocated pursuant to the Oversubscription Privilege,
and direct the Subscription Agent to effect the delivery of
the Committed Shares purchased pursuant to Purchaser's
Oversubscription Privilege within four business days
thereafter.
8. SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS. The agreements,
representations and warranties set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of the Company or any
of its representatives, officers or directors or any controlling person.
9. NOTICES. All notices, demands, instructions and other
communications required or permitted hereunder will be in writing and shall be
personally delivered or sent by registered, certified or express mail, postage
prepaid, return receipt requested, or by telefacsimile (which shall immediately
be followed by the original of such communication) and shall be deemed to be
given when received by the intended recipient or, in the case of telefacsimile,
on the date transmitted to the intended recipient thereof. Unless otherwise
specified in writing in accordance with this Section, such notices, demands
instructions and communications shall be made to the following:
To Purchaser: Elliott Associates, L.P.
712 Fifth Avenue
36th Floor
New York, New York 10019
Attention: Mr. Paul E. Singer
Telephone: (212) 974-6000
Telefacsimile: (212) 974-2092
8
<PAGE> 10
To the Company: Trans World Airlines, Inc.
One City Centre
515 North Sixth Street
St. Louis, Mo. 63101
Attention: General Counsel
Telephone: (314) 589-3264
Telefacsimile: (314) 589-3267
10. INDEMNIFICATION. (A) Each party shall indemnify, defend and
hold harmless the other, for any and all claims, losses, liabilities and
expenses (including reasonable attorneys' fees) arising out of the breach of
this Agreement in any material respect by such party; PROVIDED, HOWEVER, that
in no event shall this provision give rise to any obligation on the part of the
Company to indemnify the Purchaser for or in respect of any tax liabilities
related to or based on the payment to or receipt of the Premium.
(B) (a) GENERAL INDEMNITY. The Company agrees to indemnify
and hold harmless the Purchaser, and its respective partners, officers and
agents against any and all claims, damages, liabilities and expenses (including
but not limited to reasonable attorneys' fees and any out of pocket expenses
reasonably incurred, as incurred, in defending against any litigation,
commenced or threatened, and any amounts paid in settlement of any claim or
litigation in accordance with the terms hereof) asserted by persons other than
parties to this Agreement or any affiliate of any party to this Agreement (any
such litigation or claim collectively a "Claim"), to which Purchaser or its
respective partners, officers and agents shall become subject insofar as such
Claim results from any untrue statement, or alleged untrue statement, of a
material fact contained in the Registration Statement or any amendment thereof,
or the prospectus contained therein (the "Prospectus"), or in any supplement
thereto or amendment thereof, or any omission, or alleged omission, to state
therein a material fact required to be stated to make the statements therein
not misleading, PROVIDED, HOWEVER, the Company shall not be required to
indemnify the Purchaser for any Claim for any violation by the Purchaser of
Section 5 of the Securities Act arising out of the sales of Common Stock by
Purchaser after the date of this Agreement, including any violations arising
out of the failure of a registration statement ( other than the Registration
Statement with respect to the sale to the Purchaser) for such sales to be
effective, unless there shall be a final judicial determination that (x) the
Registration Statement or Prospectus contained an untrue statement of material
fact or an omission of a material face necessary to make the Registration
Statement or Prospectus not misleading and (y) which fact or omission (i) does
not relate to Purchaser's status, conduct or performance under or related to
this Agreement, and (ii) does not result from the description of the
transaction contemplated by this Agreement. The foregoing indemnification
pertains to such untrue statements or omissions relating to the Registration
Statement or any amendment thereof or the Prospectus or any supplement thereto
or amendment thereof at the time the Registration Statement was declared
effective or on any subsequent date until the expiration of the Option.
(b) A claim for indemnification shall be made by
Purchaser by delivery of a written notice to the Company requesting
indemnification and specifying the basis and facts, in
9
<PAGE> 11
reasonable detail, on which indemnification is sought and the amount of
asserted Claims and, containing (by attachment or otherwise) such other
information as such Purchaser shall have concerning such Claims.
(c) The obligations and liabilities of the Company
hereunder with respect to a claim for indemnification shall be subject to the
following terms and conditions.
(i) The Purchaser shall give the Company written
notice of a Claim promptly after receipt by the Purchaser of notice
thereof, and the Company may undertake the defense, compromise and
settlement thereof by legal counsel and representatives of its own
choosing reasonably acceptable to the Purchaser. The failure of the
Purchaser to notify the Company of a Claim shall not relieve the
Company of any liability that it may have with respect to such Claim
except to the extent the Company demonstrates that the defense of such
Claim is prejudiced by such failure or otherwise impairs the Company's
ability to participate in the contest of such Claim in any material
respect. The assumption of the defense, compromise and settlement of
any such Claim by the Company shall not be an acknowledgment of the
obligation of the Company to indemnify the Purchaser with respect to
any Claim or otherwise under the Agreement. Likewise, any payment
made by the Company pursuant to this indemnification provision shall
not be an acknowledgment of the obligation of the Company to indemnify
the Purchaser with respect to any Claim or otherwise under the
Agreement. If the Purchaser desires to participate in, but not
control, any such defense, compromise and settlement, it may do so at
its sole cost and expense. If, however, the Company fails or refuses
to undertake the defense of such Claim within seven (7) business days
after written notice of such Claim has been given to the Company by
the Purchaser, the Purchaser shall have the right to undertake the
defense of such Claim with counsel of its own choosing provided such
counsel is reasonably acceptable to the Company. After the Company's
notice to the Purchaser of the Company's election to assume the
defense of a Claim, the Company will not be liable to the Purchaser
under this Section 10(B)(a) for any legal or other expenses,
subsequently incurred by Purchaser in connection with the defense
thereof, unless (1) the Purchaser shall have employed separate counsel
in accordance with the immediately preceding sentence or (2) the
Company has authorized the employment of counsel for the Purchaser at
the expense of the Company.
(ii) No settlement or compromise of, or consent to
a judgement with respect to, a Claim shall be made without the prior
written consent of the Company, and the Company shall have no
liability with respect to any compromise or settlement of, or consent
to a judgement with respect to, a Claim effected without its consent.
(iii) In connection with the defense, compromise or
settlement of any Claim, the parties to this Agreement shall execute
such powers of attorney as may reasonably be necessary or appropriate
to permit participation of counsel selected by any party hereto and,
as may reasonably be related to any such claim or action, shall
provide access to the counsel, accountants and other representatives
of each party during normal
10
<PAGE> 12
business hours to all properties, personnel, books, tax records,
contracts, commitments and all other business records of such other
party relevant to the Claim and will furnish to such other party
copies of all such documents as may reasonably be requested
(certified, if requested).
(iv) Purchaser and the Company agrees to cooperate
in good faith in the defense of any Claim indemnifiable hereunder and
shall endeavor to keep any indemnity payable by the Company to a
minimum, consistent with a proper defense of the Claim.
11. TERMINATION. The Purchaser may terminate this Agreement (i)
upon the occurrence of a delisting of the Common Stock from the American Stock
Exchange at any time during the Option Term or a suspension of trading in the
Common Stock for (x) any four business days during the Option Term or (y) a
definite period of at least three business days or for an indefinite period
which suspension actually lasts for at least three business days, which, in
either case under clause (i)(y), shall exist or continue in whole or in part at
any time during the five business days prior to and including October 5, 1995,
(ii) if a general suspension shall occur in trading of securities on the New
York Stock Exchange, the American Stock Exchange and the NASDAQ National Market
for a period of three business days which shall exist or continue in whole or
in part during the five business days prior to and including October 5, 1995,
(iii) if there shall have occurred any general banking moratorium declared by
United States federal or by all or any substantial number of state banking
authorities, (iv) if a state of war shall have been declared or exist between
the United States and China, Germany, France, Japan, the United Kingdom or
Russia or (v) if on or prior to October 5, 1995, there shall have occurred, as
of any business day during the eight business days prior to and including
October 5, 1995, a decline in the Dow Jones Industrial Average by an amount in
excess of 20% as measured from the close of business on the date of this
Agreement to such business day.
12. NO LIMITATION ON EQUITY RIGHTS. Nothing in this Agreement,
including any failure by the Company to exercise the Option, shall be construed
as limiting any right Purchaser has to subscribe or oversubscribe for shares of
Common Stock pursuant to its Equity Rights, including, without limitation, the
right to purchase, if applicable, Common Stock in an amount in excess of the
Committed Shares.
13. CONDITIONS TO PURCHASER'S OBLIGATIONS. The Purchaser's
obligations to purchase the Committed Shares, shall be subject to the condition
that (i) the Company's representations and warranties set forth in Section 5a,
b, c, d, f, g, and h herein shall, as of the date made have been and on October
5, 1995 will be, true and correct in all material respects, (ii) that on or
prior to October 5, 1995 no order, decree or judgment of any court, agency or
other authority of competent authority in the United States shall have been
rendered against the Company to restrain or prohibit the performance by the
Company of this Agreement or the transactions contemplated thereby, (iii) on
October 5, 1995, the Registration Statement shall be currently effective and no
stop order pertaining to it shall have been issued by the Securities and
Exchange Commission, (iv) the Company shall have substantially performed its
covenants or other obligations set forth in this Agreement, and (v) the Company
shall not have altered the actual terms of the Equity
11
<PAGE> 13
Rights Offering or extended the time for exercise of such Equity Rights without
the consent of the Purchaser, which consent will not be unreasonably withheld;
PROVIDED, HOWEVER, that the entry by the Company into any put agreement or
stand by purchase agreement of any kind whatsoever with respect to the Equity
Rights or the Common Stock issuable pursuant thereto shall not be deemed to be
an alteration of the terms of the Equity Rights Offering in any manner
whatsoever. In the event of an agreement by the parties hereto (which
agreement may be evidenced by the absence of an objection by the Company to a
disbursement request by the Purchaser pursuant to the terms of the Escrow
Agreement based on this Section 13) or the entry of a final non-appealable
judgment by a court of competent jurisdiction that the Purchaser's performance
under this Agreement is excused pursuant to this Section 13, Purchaser shall be
entitled to receive the Funds (as defined in the Escrow Agreement).
14. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto, their respective successors and assigns.
Except as expressly stated herein, the Purchaser may not assign its obligations
under this Agreement or the Standby Commitment but may, without restriction,
assign its rights hereunder to any affiliated entity and, following the
settlement date, to any three or fewer third parties or affiliated parties.
Except as expressly stated herein, the Company may not assign its obligations
under this Agreement without the consent of the Purchaser.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties hereto and supersedes any and all
prior agreements, arrangements and understandings relating to the matters
provided for herein.
16. APPLICABLE LAW. The Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
without regard to principles of conflict of laws.
17. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of the parties hereto.
12
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their authorized officers as of the date first
above written.
COMPANY:
TRANS WORLD AIRLINES, INC.
By:
---------------------------------
Title:
---------------------------
PURCHASER:
ELLIOTT ASSOCIATES, L.P.
By:
---------------------------------
General Partner
By:
----------------------------
Title:
-------------------------
13
<PAGE> 15
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT, made and entered into this 15th day of
September, 1995, by and among Elliott Associates, L.P., a Delaware limited
partnership (hereinafter referred to as "Purchaser"), Trans World Airlines,
Inc., a Delaware corporation ("TWA") and Smith, Gambrell & Russell, a general
partnership (the "Escrow Agent");
W I T N E S S E T H, THAT:
- - - - - - - - - - ----
WHEREAS, Purchaser and TWA have entered into a certain
Agreement of even date herewith, a copy of which is attached hereto as EXHIBIT
A (the "Agreement"); and
WHEREAS, the Agreement provides for the deposit with the
Escrow Agent of $658,326.82, with all such amounts, together with any interest
earned thereon, to be held and applied by the Escrow Agent in accordance with
the terms of the Agreement; and
WHEREAS, the parties hereto desire to enter into a written
escrow agreement;
NOW, THEREFORE, in consideration of the agreements set forth
in the Agreement and the mutual covenants set forth herein, the parties hereto,
intending to be and being legally bound, do hereby agree as follows:
1. ESCROW. TWA has delivered to Escrow Agent $658,326.82 (the
"Premium"), the receipt whereof is hereby acknowledged by Escrow Agent, which
together with any interest earned thereon (collectively, the "Funds") shall be
held, administered and disbursed by Escrow Agent in accordance with the terms
and conditions of this Escrow Agreement and the Agreement. Escrow Agent shall
hold the Funds and shall deposit the Funds within one business day after the
date of this Agreement in an account with Wachovia Bank of Georgia, N.A. (the
"Bank") which shall be a standard passbook savings account or other interest
bearing account as Escrow Agent may direct, in its sole discretion, consistent
with the required availability of the Funds for payment under the Agreement.
Interest or other income, if any, earned on the Funds shall be deemed a part of
the Funds for purposes of this Agreement and shall be disbursed to Purchaser
from time to time in accordance with the terms and conditions of this Escrow
Agreement and the Agreement.
2. DISBURSEMENT OF FUNDS. The Funds shall be held and disbursed by
Escrow Agent as herein provided and subject to the terms of the Agreement. At
such time as Escrow Agent receives from the Purchaser the affidavit and other
evidence required by Section 2 of the Agreement as to the exercise of Equity
Rights pursuant to the Agreement, together with a computation of the Funds
required to be disbursed in consequence of such exercise and written
<PAGE> 16
notice stating the identity of the party to whom the Funds are to be disbursed
(which, in each such case, Escrow Agent believes to be genuine), Escrow Agent
shall disburse such Funds pursuant to such notice, PROVIDED, HOWEVER, that if
the Escrow Agent does not receive the affidavit from Purchaser required by the
Agreement by October 31, 1995, the Company will return the Premium to TWA. TWA
and Purchaser hereby agree to send to the other at the address specified in
Section 7 hereof, a duplicate of any written notice sent to Escrow Agent
requesting any disbursement of funds or requesting that any such disbursement
be withheld.
3. LIMITED LIABILITY. In performing any of its duties hereunder,
Escrow Agent shall not incur any liability to anyone for any damages, losses,
or expenses, except for any such arising solely as a result of the willful
misconduct or breach of trust by Escrow Agent hereunder, and, accordingly,
Escrow Agent shall not incur any such liability with respect to (i) any action
taken or omitted in good faith upon the basis of its own opinion, or upon
advice of separate legal counsel given, with respect to any questions relating
to the duties and responsibilities of Escrow Agent under this Agreement, or
(ii) any action taken or omitted in reliance on any instrument, including any
written notice or instruction provided for in this Agreement, not only as to
its due execution and the validity and effectiveness of its provisions but also
as to the truth and accuracy of any information contained therein, which Escrow
Agent shall in good faith believe to be genuine, to have been signed, or
presented by a person or persons having authority to sign or present such
instrument, and to conform with the provisions of this Escrow Agreement.
4. PURCHASER'S EXCUSED PERFORMANCE. Notwithstanding anything in this
Escrow Agreement to the contrary, in the event that prior to disbursement of
the Funds pursuant to Section 2 hereof, Purchaser shall give notice to Escrow
Agent, with a copy delivered to the Company as provided herein, that its
obligations to purchase have been excused pursuant to Paragraph 13 of the
Agreement and TWA shall not, within ten (10) days thereafter, give notice to
Escrow Agent that it disputes Purchaser's right to excused performance as
asserted, Escrow Agent shall disburse the Escrow Funds to Purchaser. If within
ten (10) of Escrow Agent's receipt of Purchaser's notice hereunder, TWA shall
give notice to the Escrow Agent, with a copy delivered to the Purchaser by the
Company as provided herein, that it disputes Purchaser's claimed right to
excused performance, Escrow Agent shall tender into the registry or custody of
a court of competent jurisdiction the Funds, together with such pleadings as it
may deem appropriate, and thereupon be discharged from all further duties and
liabilities under this Escrow Agent (other than with respect to any liabilities
for willful misconduct or breach of trust by Escrow Agent). Any such legal
action may be brought in such court as Escrow Agent shall determine to have
jurisdiction thereof. Any notice by Purchaser claiming a right to payment by
virtue of excused performance pursuant to this Paragraph 4 shall set forth with
particularity the specific basis (including the underlying facts) upon which
the performance is claimed to be excused.
5. INDEMNITY. TWA and Purchaser hereby agree to indemnify Escrow
Agent against, and hold Escrow Agent harmless from, any and all claims,
actions, demands, losses, damages, expenses (including, without limitation,
court costs, attorneys' fees, and accountant's fees), and liabilities that may
be imposed upon performance of its duties hereunder, including, without
2
<PAGE> 17
limitation, any litigation arising from this Escrow Agreement or involving the
subject matter hereof, but excluding any such claims, actions, demands, losses,
damages, expenses, and liabilities resulting solely from any willful misconduct
or breach of trust by Escrow Agent hereunder. In the event of any litigation
arising from this Escrow Agreement or involving the subject matter hereof, and
in the event TWA and Purchaser are opposing parties in such litigation, the
party prevailing in such litigation shall be reimbursed promptly upon demand by
the other such party for the reasonable out-of-pocket costs and expenses of
such litigation together with any amount which the prevailing party shall have
paid Escrow Agent with respect to such litigation and the subject matter
thereof pursuant to the indemnification agreement contained in this Paragraph
5.
6. COMPENSATION. In consideration of its services hereunder, Escrow
Agent shall be (i) paid an escrow fee of $l0.00, which amount shall be paid by
TWA at the time of disbursement of the Funds by Escrow Agent and (ii)
indemnified by the parties as provided in Paragraph 5 hereof.
7. NOTICES. Wherever any notice or other communication is required or
permitted hereunder, such notice shall be in writing and shall be delivered in
person or sent by U.S. registered or certified mail, return receipt requested,
postage prepaid, to the addresses set out below or at such other addresses as
are specified by written notice delivered in accordance herewith:
PURCHASER: Elliott Associates, L.P.
--------- 712 Fifth Avenue
36th Floor
New York, New York 10019
Attention: Mr. Paul E. Singer
Telephone: (212) 974-6000
Telefacsimile: (212) 974-2092
TWA: Trans World Airlines, Inc.
---- One City Centre
515 North Sixth Street
St. Louis, MO 63101
Attention: Richard P. Magurno, Esq.
Telephone: (314) 589-3264
Telefacsimile: (314) 589-3267
3
<PAGE> 18
ESCROW AGENT: Smith, Gambrell & Russell
------------ 1230 Peachtree Street, N.E.
Promenade II, Suite 3100
Atlanta, GA 30309-3592
Attention: Howard E. Turner
Telephone: (404) 815-3594
Telefacsimile: (404) 815-3509
8. BINDING EFFECT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors, and assigns,
provided neither TWA nor Purchaser shall be permitted to assign all or any part
of their respective right, title, and interest hereunder, except to the extent
said party is permitted to assign its right, title and interest whether in
whole or in part under the Agreement, and then only from and to the extent
permitted thereunder or pursuant to the written consent of the other party.
Any and all rights granted to any of the parties hereto may be exercised by
their agents or personal representatives.
9. MISCELLANEOUS. Time is of the essence of this Agreement.
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Agreement or the Plan. Each of the parties hereto acknowledge
that Escrow Agent acts as outside counsel for TWA and has so acted in
connection with, among other things, the negotiation, preparation and execution
of the Agreement and this Escrow Agreement. Such parties acknowledge and agree
that Escrow Agent shall be entitled to continue to so act with respect to all
existing and future matters on or with respect to which TWA may wish to consult
Smith, Gambrell & Russell.
10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all such
counterparts together shall constitute one and the same instrument.
4
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
Escrow Agreement as of the day and year first above written.
PURCHASER:
----------
ELLIOTT ASSOCIATES, L.P.
By:
---------------------------------------
General Partner
By:
-------------------------------------
Title:
-------------------------------
TRANS WORLD AIRLINES, INC.:
---------------------------
By:
----------------------------------------
Its:
----------------------------------------
ESCROW AGENT:
-------------
SMITH, GAMBRELL & RUSSELL
By:
----------------------------------------
a Partner
5
<PAGE> 1
EXHIBIT 10.42
<PAGE> 2
EQUITY RIGHTS PUT AGREEMENT
This Agreement dated as of September 15, 1995 is made by and between
Trans World Airlines, Inc., a Delaware corporation (the "Company") and Westgate
International, L.P., a Cayman Islands limited partnership (the "Purchaser");
WITNESSETH:
WHEREAS, pursuant to the Company's plan of reorganization confirmed by
the United States Bankruptcy Court for the Eastern District of Missouri on
August 4, 1995 (the "Plan") which became effective on August 23, 1995 (the
"Effective Date"), the Company has issued approximately 13,150,000 Equity
Rights (as defined in Section 1.1.60 of the Plan), each consisting of the
nontransferable right to purchase for cash from the Company newly issued Common
Stock pursuant to a "Basic Subscription Privilege" and an "Oversubscription
Privilege" (as such terms are defined in Section 1.1.60 of the Plan);
WHEREAS, the Purchaser is the owner and holder of Equity Rights
("Purchaser's Equity Rights");
WHEREAS, the Common Stock to be issued to Purchaser upon exercise of
Purchaser's Equity Rights has been registered by the Company pursuant to
Registration Statement No. 33-89764, as amended, filed with the Securities and
Exchange Commission and declared effective on May 12, 1995 (the "Registration
Statement").
WHEREAS, the Company and Purchaser are willing to enter into this
Agreement to provide for the purchase of the number of shares of Common Stock
of the Company hereinafter set forth to the extent such shares may be acquired
pursuant to the Option (as defined below) to be effected by the full exercise
of the Basic Subscription Privilege, and an exercise of the Oversubscription
Privilege, of the Equity Rights held by Purchaser as set forth below; and
WHEREAS, all capitalized terms used herein which are not separately
defined, are used herein as defined in the Plan.
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Company and the Purchaser, agree as follows:
1. GRANT OF PUT OPTION. Purchaser hereby grants to the Company the
Option (the "Option") exercisable on or before October 5, 1995 (the 43rd day
following the Effective Date) to put to the Purchaser the exercise of
Purchaser's Basic Subscription Privileges and Oversubscription Privileges as
hereinafter provided. Upon the exercise by the Company of the Option, the
Purchaser shall, in accordance with the covenants, representations and
warranties herein contained, on or prior to 5:00 p.m. New York time on October
5, 1995, exercise the Basic Subscription Privilege and the Oversubscription
Privilege under Equity Rights held by the Purchaser to subscribe for, in the
aggregate, not fewer than 772,388 shares (the "Committed Shares") of Common
Stock of the Company by executing and delivering to American Stock
<PAGE> 3
Transfer and Trust Company as agent (the "Subscription Agent") properly
completed Subscription Forms, with any required signatures guaranteed, together
with payment in full of the Subscription Price for each of the Committed Shares
in accordance with the terms of the Equity Rights and the Plan. The Option may
be exercised by the Company by sending notice in writing to Purchaser by
facsimile transmission to the Purchaser's address, as initially stated in
Section 9, on or before 3:00 p.m. New York time on October 5, 1995. In no
event shall Purchaser be required to subscribe for more than 772,388 shares of
Common Stock in the aggregate pursuant to its own exercise of the Equity Rights
and the exercise by the Company of the Option.
2. PREMIUM TO PURCHASER FOR OPTION. As consideration for the
Option in Section 1, the Company will pay to the Purchaser an aggregate premium
equal to $202,148.42 (the "Premium").
The Premium will be paid in immediately available funds on the date of
the execution of this Agreement, if this Agreement is executed prior to 10:00
a.m. New York time on such date, and otherwise in immediately available funds
on the day following the execution of this Agreement, and will be placed in an
escrow account with Smith, Gambrell & Russell (in such capacity, the "Escrow
Agent") pursuant to an escrow agreement which will authorize the release of the
funds to Purchaser only upon receipt by the Escrow Agent and the Company of an
affidavit of a duly authorized officer or general partner of the Purchaser to
the effect that, Purchaser has executed or caused to be executed and delivered
or caused to be delivered to the Subscription Agent properly completed
Subscription Forms, with any required signatures guaranteed, together with
payment in full of the Subscription Price for each of the Committed Shares in
accordance with the terms hereof and of the Equity Rights and the Plan, and
confirmation from the carrying broker receipt and execution of instructions
from the Purchaser to exercise the Equity Rights in the amount specified in
such affidavit. Such escrow agreement shall provide that the Premium shall be
subject to a partial release at Purchaser's request, to the extent that the
Purchaser's Basic Subscription Privilege has been exercised prior to its
Oversubscription Privilege provided the Escrow Agent and the Company shall have
been furnished evidence as above required of such execution and delivery of
Subscription Forms and payment of the Subscription Price. Any partial release
of the Premium shall be in the same proportion as the number of shares
subscribed for by the Purchaser pursuant to the Equity Rights bears to the
total Committed Shares committed to by the Purchaser (the dollar amount derived
from such calculation shall be referred to as the "Computation"). Such escrow
agreement shall further provide that interest shall accrue on all escrowed
amounts. The Escrow Agent shall deposit the Premium in such interest bearing
account, as may be selected by the Escrow Agent, with Wachovia Bank of Georgia,
N.A. (the "Bank") on a basis allowing for withdrawal of the funds on one
business day's notice. The escrow agreement shall be in the form attached
hereto as Exhibit A and may contain such other terms as may be agreed to by the
parties hereto and the Escrow Agent. The Purchaser shall send a copy of all
documents sent to the Escrow Agent to the Company but such transmission shall
not be a condition to the release of Funds from escrow unless objection shall
be given by the Company as provided in the Escrow Agreement.
2
<PAGE> 4
3. TRANSACTION COSTS, FEES AND EXPENSES. Each party hereto
agrees to pay its own transaction costs, fees and expenses in connection with
the transactions contemplated hereby, including without limitation, the fees
and expenses of their respective counsel.
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Purchaser
represents and warrants and agrees that:
a. Purchaser is a duly organized and validly existing
Cayman Islands limited partnership which is in good standing
under the laws of its jurisdiction of organization, with
partnership power and authority to own its property and
conduct its business and to enter into and perform all of its
obligations under this Agreement.
b. Purchaser is the owner and holder of Equity Rights.
c. This Agreement has been duly authorized, executed and
delivered by the Purchaser and constitutes the valid, legal
and binding obligation of the Purchaser enforceable against
the Purchaser in accordance with its terms subject to the
effect of bankruptcy, insolvency, reorganization, moratorium,
in each case with respect to proceedings subsequent to the
date of this Agreement and other similar laws affecting the
rights and remedies of creditors generally and general
principles of equity.
d. The Purchaser has a net worth computed in accordance
with generally accepted accounting principles, of not less
than 90% of the amount set forth in the audited financial
statements heretofore furnished to the Company by Purchaser in
connection with this Agreement and has sufficient unrestricted
liquid assets and the financial ability to fully perform its
obligations under this Agreement. The financial statements of
the Purchaser furnished to the Company prior to execution and
delivery of this Agreement have been prepared in accordance
with generally accepted accounting principles consistently
applied and fairly present the pertinent results of operations
for the periods indicated and the financial position at the
end of such periods of the Purchaser, except as set forth in
the footnotes thereto.
e. No consent, approval, authorization or order of, or
filing with, any governmental agency or body of any court is
required for the consummation by the Purchaser of the
transactions contemplated by this Agreement.
f. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation by
Purchaser of any of the terms and provisions of, or constitute
a default under, (i) any statute, rule or regulation, or any
order of any governmental agency or body or any court having
jurisdiction over the Purchaser or any subsidiary of the
Purchaser or any of their properties or (ii) any agreement or
3
<PAGE> 5
instrument to which the Purchaser or any subsidiary is a party
or by which the Purchaser or any subsidiary is bound or to
which any of the properties of the Purchaser or any subsidiary
is subject, or (iii) the certificate of limited partnership or
partnership agreement of the Purchaser or any subsidiary of
the Purchaser which currently conducts business.
g. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Purchaser,
threatened against, and no order, decree or judgment of any
court, agency or other governmental authority of competent
jurisdiction in the United States shall have been rendered
against, the Purchaser to restrain or prohibit the performance
by Purchaser of this Agreement or the transactions
contemplated by this Agreement.
h. Payment by the Company of the Premium to the Escrow
Agent or release of the Premium to the Purchaser from escrow
is not subject to any United States federal or state
withholding obligations. Purchaser agrees that any legal
action or proceeding against Purchaser relating to or arising
out of or under this Agreement may be brought in any court of
competent jurisdiction in the State of New York or of the
United States of America for the Southern District of New
York, and Purchaser accepts with regard to any such action or
proceeding for itself and in respect to its property,
generally and unconditionally, the jurisdiction of the
aforesaid courts. Purchaser further irrevocably consents to
the service of process out of any of the aforementioned courts
in any such action or proceeding by the mailing of copies
thereof by registered or certified U.S. mail, postage prepaid,
to the Purchaser at its address provided in Section 9 hereof,
such service to become effective upon receipt or five (5) days
after such mailing, whichever shall first occur. Nothing
herein contained shall affect the right of the Company to
serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against
Purchaser in the Cayman Islands or in any other jurisdiction
in which Purchaser may be subject to suit. To the fullest
extent permitted by applicable law, Purchaser hereby waives,
and agrees not to assert, by way of motion, defense,
counterclaim or otherwise, in any such suit, action or
proceeding any claim that (i) Purchaser is not personally
subject to the jurisdiction of any of the above-named courts
by reason of any immunity or otherwise (ii) its properties are
exempt or immune from setoff, execution or attachment, either
prior to judgment or in aid of execution or (iii) any suit,
action or proceeding so brought is in an inconvenient forum or
that the venue of the suit, action or proceeding is improper
or that the subject matter hereof may not be enforced in or by
such courts. Purchaser further agrees that, after final
judgment by any such court, they will, to the fullest extent
permitted by applicable law, waive the benefit of any defense
that would hinder or delay the levy, execution or collection
of any amount to which the Company is entitled hereunder or
pursuant to a final judgment of any court having jurisdiction.
The Purchaser hereby irrevocably designates Mr. Paul E. Singer
having an office on the date hereof at Stonington
4
<PAGE> 6
Management Corp., 712 Fifth Avenue, 36th Floor, New York, New
York 10019, as the designee, appointee and agent of the
Purchaser to receive service of process in such jurisdiction
in any legal action or proceeding with respect to this
Agreement and such service shall be deemed complete five (5)
days after delivery thereof to the office of said agent, if
written notice of such service shall be given to Purchaser
either by such agent or by the Company, by mailing the same by
registered or certified mail to Purchaser at the addresses set
forth in Section 9 or otherwise as notice is permitted to be
given under such paragraph.
If, for the purpose of obtaining a judgment in any court with
respect to any obligation of Purchaser under this Agreement it
becomes necessary to convert into any other currency any
amount in Dollars due under this Agreement, then that
conversion shall be made at the buying spot rate of exchange
that would be utilized by the Company to purchase freely
transferable Dollars at the close of business on the day
before the day on which the judgment is rendered.
5. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants and agrees that:
a. The Company is a duly organized and validly existing
Delaware corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and
authority to own its property and conduct its business and to
enter into and perform all of its obligations under this
Agreement.
b. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid, legal and
binding obligation of the Company, enforceable against the
Company in accordance with its terms subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, in each
case with respect to proceedings subsequent to the date of
this Agreement and other similar laws affecting the rights and
remedies of creditors generally and general principles of
equity.
c. Except for the filing of an appropriately
supplemented prospectus describing, among other things, the
transactions contemplated by this Agreement, no consent,
approval, authorization or order of, or filing with, any
governmental agency or body or any court in any applicable
jurisdiction of the United States is required for the
consummation by the Company of the transactions contemplated
by this Agreement.
d. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation by the
Company of any of the terms and provisions of, or constitute a
default under, (i) any statute, rule or regulation, or any
order of any governmental agency or body or any court having
jurisdiction over the Company
5
<PAGE> 7
or any subsidiary of the Company or any of their properties or
(ii) any agreement or instrument to which the Company or any
subsidiary is a party or by which the Company or any
subsidiary is bound or to which any of the properties of the
Company or any subsidiary is subject, or (iii) the certificate
of incorporation or by-laws of the Company or any subsidiary
of the Company which currently conducts business.
e. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Company,
threatened against, and no order, decree or judgment of any
court, agency or other governmental authority of competent
authority in the United States shall have been rendered
against, the Company to restrain or prohibit the performance
by Company of this Agreement or the transactions contemplated
by this Agreement.
f. The Equity Rights issued to Purchaser for the
Committed Shares and the Committed Shares issued upon exercise
thereof have been duly authorized by the Company and such
Committed Shares, when issued and delivered by the Company in
accordance with the Plan and against payment therefor as
contemplated in the Plan and hereby, will be (i) validly
issued, fully paid and non-assessable and such Equity Rights
and Committed Shares have been registered pursuant to the
Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act") and (ii) free and clear of any
liens, claims and encumbrances arising by, through, or under
the Company and shall not be subject to any stop transfer
instructions imposed by the Company.
g. The Registration Statement with respect to the sale
of the Equity Rights and the underlying Common Stock (issuable
upon the exercise thereof) in each case by the Company to the
Purchaser is currently effective and no stop order pertaining
to it has been issued by the Securities and Exchange
Commission. The Registration Statement shall be effective at
the time of sale and delivery by the Company of the Committed
Shares and no stop order suspending the effectiveness of such
Registration Statement including any amendment or supplement
thereto shall have been issued. The Committed Shares have
been approved for issuance on the American Stock Exchange,
subject to official notice of issuance.
h. As of its effective date, the Registration Statement
did not, insofar as relevant to the Equity Rights or the
underlying Common Stock purchasable pursuant thereto, include
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements made therein not misleading, and, as of
such date, the Prospectus did not, insofar as material to the
investment decision of a reasonable purchaser of the Common
Stock, include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
6
<PAGE> 8
6. PURCHASER'S COVENANTS. The Purchaser covenants and agrees
with the Company that:
a. No later than three business days following the
execution of this Agreement, the Purchaser shall cause to be
delivered to the Company an opinion of counsel for Purchaser
dated as of the date of this Agreement in form and substance
reasonably satisfactory to the Company as to the matters set
forth in Section 4a, c, e and f and the first sentence of
Section 4h with respect to federal withholding obligations in
the case of foreign entities.
b. The Purchaser agrees to take such actions and execute
and deliver to the Company such documents and instruments as
may be necessary to fully consummate the transactions and
agreements of the Purchaser as contemplated by this Agreement.
c. During the period commencing with the execution of
this Agreement and terminating on the payment in full of the
exercise price as contemplated in Section 1 (the "Option
Term"), the Purchaser agrees not to enter into any agreement
for the sale or disposition of all or substantially all of the
Purchaser's assets (in one or more transactions), or a merger,
consolidation or other business combination involving all or
substantially all of the Purchaser's assets, unless the
Purchaser provide the Company with the express, written
agreement by the Purchaser or other successor(s) to assume the
Purchaser's obligations and covenants hereunder and, after
giving effect to any such sale, disposition, merger,
consolidation or other business combination, the Purchaser or
other successor(s) shall meet the requirements of Section 4
hereof.
7. THE COMPANY'S COVENANTS. The Company covenants and agrees
with the Purchaser that:
a. No later than three business days following the
execution of this Agreement, the Company shall cause to be
delivered to the Purchaser an opinion of counsel for the
Company dated as of the date of this Agreement in form and
substance reasonably satisfactory to Purchaser as to the
matters set forth in Section 5a, b, c, d and f , and as to the
first sentence of 5(g), such opinion of counsel shall state
that, to the best knowledge of such counsel, the Registration
Statement is currently in effect and no stop order suspending
the effectiveness has been instituted or is pending or
threatened by the Securities and Exchange Commission (the
"SEC").
b. The Company agrees to take such actions and execute
and deliver such documents and instruments as may be necessary
to fully consummate the transactions and agreements of the
Company as contemplated by this Agreement, including, without
limitation, the filing with the SEC in a timely manner in
7
<PAGE> 9
accordance with applicable law of an appropriately
supplemented prospectus as referred to in Section 5c (the
"Supplemental Prospectus").
c. Except as otherwise provided below and except for
distributions provided for in the Prospectus, the Plan and/or
pursuant to the terms of securities issued under the Plan,
during the Option Term and thereafter for the period ending
two weeks after the issuance and delivery to the Purchaser of
all of the Committed Shares (i) the Company shall not declare
any dividend or make any distribution on the Company's Common
Stock or Preferred Stock (other than dividends or
distributions payable in the Company's Common Stock or
Preferred Stock) and (ii) the Company shall not effect any
stock dividends, stock splits, or any other issuance of
capital stock (including options, warrants, rights to purchase
stock or securities convertible into stock) or issue any
Common Stock or any other options, warrants or rights thereto
("Derivative Securities") other than: (a) such Common Stock
or Derivative Securities provided for by the Prospectus, the
Plan and/or pursuant to the terms of securities issued under
the Plan, as the case may be; (b) such Common Stock or
Derivative Securities as may be issued pursuant to the terms
of the Company's Key Employee Stock Incentive Plan or to an
employee stock ownership or benefit plan in the ordinary
course of business. For purposes of this provision, the term
"employees" shall include those entities and persons defined
in Instruction A(1)(a) to Form S-8 under the Securities Act.
d. The Company will consult with the Purchaser with
respect to any press release, prospectus supplement, amendment
to the Registration Statement or other public statement or
filing that names or refers to the Purchaser. Any such
disclosure regarding the Purchaser shall be subject to the
Purchaser's consent (which shall not be unreasonably
withheld), except where such release, filing, statement or
announcement by the Company is believed by the responsible
officers of the Company, after consultation with the Company's
counsel, to be required, or that the failure to make such
disclosure would involve an unacceptable risk to the Company,
in each case, under applicable law or pursuant to any listing
agreement with or the rules or regulations of, any national
securities exchange on which the securities of the Company are
listed or traded.
e. Subject to the terms and conditions of this
Agreement, the Company shall deliver or cause to be delivered
to the Purchaser, the Premium (or applicable portion thereof),
together with any accrued interest thereon, (the Premium and
any accrued interest thereon, the "Funds") to be in same day
funds on the first business day following the date of notice
as provided in Section 2 by the Purchaser to the Escrow Agent
that it has performed its obligations under the Agreement
necessary for the Escrow Agent to release the Funds. The
Purchaser shall use its best reasonable efforts to give any
notice to the Escrow Agent to release Funds no later than 5:00
p.m. Atlanta, Georgia time on the business day immediately
preceding the business day on which such Funds are to be
released from escrow. Should the
8
<PAGE> 10
Purchaser terminate this Agreement, in whole or in part,
pursuant to Section 11, Purchaser shall refund all Funds, and
any interest accrued thereon, theretofore received by it and
shall not be entitled to receive any further Funds whether
held in escrow or otherwise.
f. The Company shall instruct the Subscription Agent to
determine the amount of shares purchased and not purchased
pursuant to the Basic Subscription Privilege on October 6,
1995 and thereafter the Company shall, within one business day
after receiving all the foregoing information from the
Subscription Agent, in form sufficient to determine the shares
to be allocated pursuant to the Oversubscription Privilege,
and direct the Subscription Agent to effect the delivery of
the Committed Shares purchased pursuant to Purchaser's
Oversubscription Privilege within four business days
thereafter.
g. In reliance upon the truth and accuracy of the
representation of the Purchaser in Section 4h and upon
receipt of the opinion referred to in Section 6a, the Company
shall not, and will instruct the Escrow Agent not to, withhold
any part of the Funds pursuant to any United States federal or
state withholding obligations.
8. SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS. The agreements,
representations and warranties set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of the Company or any
of its representatives, officers or directors or any controlling person.
9. NOTICES. All notices, demands, instructions and other
communications required or permitted hereunder will be in writing and shall be
personally delivered or sent by registered, certified or express mail, postage
prepaid, return receipt requested, or by telefacsimile (which shall immediately
be followed by the original of such communication) and shall be deemed to be
given when received by the intended recipient or, in the case of telefacsimile,
on the date transmitted to the intended recipient thereof. Unless otherwise
specified in writing in accordance with this Section, such notices, demands
instructions and communications shall be made to the following:
To Purchaser: Westgate International, L.P.
c/o Stonington Management Corp.
712 Fifth Avenue
36th Floor
New York, New York 10019
Attention: Mr. Paul E. Singer
Telephone: (212) 974-6000
Telefacsimile: (212) 974-2092]
9
<PAGE> 11
To the Company: Trans World Airlines, Inc.
One City Centre
515 North Sixth Street
St. Louis, Mo. 63101
Attention: General Counsel
Telephone: (314) 589-3264
Telefacsimile: (314) 589-3267
10. INDEMNIFICATION. (A) Each party shall indemnify, defend and
hold harmless the other, for any and all claims, losses, liabilities and
expenses (including reasonable attorneys' fees) arising out of the breach of
this Agreement in any material respect by such party; PROVIDED, HOWEVER, that
in no event shall this provision give rise to any obligation on the part of the
Company to indemnify the Purchaser for or in respect of any tax liabilities
related to or based on the payment to or receipt of the Premium and further
provided that the foregoing proviso shall not be construed to excuse the
Company's performance under its covenant in Section 7g of this Agreement.
(B) (a) GENERAL INDEMNITY. The Company agrees to indemnify
and hold harmless the Purchaser, and its respective partners, officers and
agents against any and all claims, damages, liabilities and expenses (including
but not limited to reasonable attorneys' fees and any out of pocket expenses
reasonably incurred, as incurred, in defending against any litigation,
commenced or threatened, and any amounts paid in settlement of any claim or
litigation in accordance with the terms hereof) asserted by persons other than
parties to this Agreement or any affiliate of any party to this Agreement (any
such litigation or claim collectively a "Claim"), to which Purchaser or its
respective partners, officers and agents shall become subject insofar as such
Claim results from any untrue statement, or alleged untrue statement, of a
material fact contained in the Registration Statement or any amendment thereof,
or the prospectus contained therein (the "Prospectus"), or in any supplement
thereto or amendment thereof, or any omission, or alleged omission, to state
therein a material fact required to be stated to make the statements therein
not misleading, PROVIDED, HOWEVER, the Company shall not be required to
indemnify the Purchaser for any Claim for any violation by the Purchaser of
Section 5 of the Securities Act arising out of the sales of Common Stock by
Purchaser after the date of this Agreement, including any violations arising
out of the failure of a registration statement ( other than the Registration
Statement with respect to the sale to the Purchaser) for such sales to be
effective, unless there shall be a final judicial determination that (x) the
Registration Statement or Prospectus contained an untrue statement of material
fact or an omission of a material face necessary to make the Registration
Statement or Prospectus not misleading and (y) which fact or omission (i) does
not relate to Purchaser's status, conduct or performance under or related to
this Agreement, and (ii) does not result from the description of the
transaction contemplated by this Agreement. The foregoing indemnification
pertains to such untrue statements or omissions relating to the Registration
Statement or any amendment thereof or the Prospectus or any supplement thereto
or amendment thereof at the time the Registration Statement was declared
effective or on any subsequent date until the expiration of the Option.
10
<PAGE> 12
(b) A claim for indemnification shall be made by
Purchaser by delivery of a written notice to the Company requesting
indemnification and specifying the basis and facts, in reasonable detail, on
which indemnification is sought and the amount of asserted Claims and,
containing (by attachment or otherwise) such other information as such
Purchaser shall have concerning such Claims.
(c) The obligations and liabilities of the Company
hereunder with respect to a claim for indemnification shall be subject to the
following terms and conditions.
(i) The Purchaser shall give the Company written
notice of a Claim promptly after receipt by the Purchaser of notice
thereof, and the Company may undertake the defense, compromise and
settlement thereof by legal counsel and representatives of its own
choosing reasonably acceptable to the Purchaser. The failure of the
Purchaser to notify the Company of a Claim shall not relieve the
Company of any liability that it may have with respect to such Claim
except to the extent the Company demonstrates that the defense of such
Claim is prejudiced by such failure or otherwise impairs the Company's
ability to participate in the contest of such Claim in any material
respect. The assumption of the defense, compromise and settlement of
any such Claim by the Company shall not be an acknowledgment of the
obligation of the Company to indemnify the Purchaser with respect to
any Claim or otherwise under the Agreement. Likewise, any payment
made by the Company pursuant to this indemnification provision shall
not be an acknowledgment of the obligation of the Company to indemnify
the Purchaser with respect to any Claim or otherwise under the
Agreement. If the Purchaser desires to participate in, but not
control, any such defense, compromise and settlement, it may do so at
its sole cost and expense. If, however, the Company fails or refuses
to undertake the defense of such Claim within seven (7) business days
after written notice of such Claim has been given to the Company by
the Purchaser, the Purchaser shall have the right to undertake the
defense of such Claim with counsel of its own choosing provided such
counsel is reasonably acceptable to the Company. After the Company's
notice to the Purchaser of the Company's election to assume the
defense of a Claim, the Company will not be liable to the Purchaser
under this Section 10(B)(a) for any legal or other expenses,
subsequently incurred by Purchaser in connection with the defense
thereof, unless (1) the Purchaser shall have employed separate counsel
in accordance with the immediately preceding sentence or (2) the
Company has authorized the employment of counsel for the Purchaser at
the expense of the Company.
(ii) No settlement or compromise of, or consent to
a judgement with respect to, a Claim shall be made without the prior
written consent of the Company, and the Company shall have no
liability with respect to any compromise or settlement of, or consent
to a judgement with respect to, a Claim effected without its consent.
(iii) In connection with the defense, compromise or
settlement of any Claim, the parties to this Agreement shall execute
such powers of attorney as may reasonably be necessary or appropriate
to permit participation of counsel selected by any
11
<PAGE> 13
party hereto and, as may reasonably be related to any such claim or
action, shall provide access to the counsel, accountants and other
representatives of each party during normal business hours to all
properties, personnel, books, tax records, contracts, commitments and
all other business records of such other party relevant to the Claim
and will furnish to such other party copies of all such documents as
may reasonably be requested (certified, if requested).
(iv) Purchaser and the Company agrees to cooperate
in good faith in the defense of any Claim indemnifiable hereunder and
shall endeavor to keep any indemnity payable by the Company to a
minimum, consistent with a proper defense of the Claim.
11. TERMINATION. The Purchaser may terminate this Agreement (i)
upon the occurrence of a delisting of the Common Stock from the American Stock
Exchange at any time during the Option Term or a suspension of trading in the
Common Stock for (x) any four business days during the Option Term or (y) a
definite period of at least three business days or for an indefinite period
which suspension actually lasts for at least three business days, which, in
either case under clause (i)(y), shall exist or continue in whole or in part at
any time during the five business days prior to and including October 5, 1995,
(ii) if a general suspension shall occur in trading of securities on the New
York Stock Exchange, the American Stock Exchange and the NASDAQ National Market
for a period of three business days which shall exist or continue in whole or
in part during the five business days prior to and including October 5, 1995,
(iii) if there shall have occurred any general banking moratorium declared by
United States federal or by all or any substantial number of state banking
authorities, (iv) if a state of war shall have been declared or exist between
the United States and China, Germany, France, Japan, the United Kingdom or
Russia or (v) if on or prior to October 5, 1995, there shall have occurred, as
of any business day during the eight business days prior to and including
October 5, 1995, a decline in the Dow Jones Industrial Average by an amount in
excess of 20% as measured from the close of business on the date of this
Agreement to such business day.
12. NO LIMITATION ON EQUITY RIGHTS. Nothing in this Agreement,
including any failure by the Company to exercise the Option, shall be construed
as limiting any right Purchaser has to subscribe or oversubscribe for shares of
Common Stock pursuant to its Equity Rights, including, without limitation, the
right to purchase, if applicable, Common Stock in an amount in excess of the
Committed Shares.
13. CONDITIONS TO PURCHASER'S OBLIGATIONS. The Purchaser's
obligations to purchase the Committed Shares, shall be subject to the condition
that (i) the Company's representations and warranties set forth in Section 5a,
b, c, d, f, g, and h herein shall, as of the date made have been and on October
5, 1995 will be, true and correct in all material respects, (ii) that on or
prior to October 5, 1995 no order, decree or judgment of any court, agency or
other authority of competent authority in the United States shall have been
rendered against the Company to restrain or prohibit the performance by the
Company of this Agreement or the transactions contemplated thereby, (iii) on
October 5, 1995, the Registration Statement shall be currently effective and no
stop order pertaining to it shall have been issued by the Securities and
Exchange Commission,
12
<PAGE> 14
(iv) the Company shall have substantially performed its covenants or other
obligations set forth in this Agreement, and (v) the Company shall not have
altered the actual terms of the Equity Rights Offering or extended the time for
exercise of such Equity Rights without the consent of the Purchaser, which
consent will not be unreasonably withheld; PROVIDED, HOWEVER, that the entry by
the Company into any put agreement or stand by purchase agreement of any kind
whatsoever with respect to the Equity Rights or the Common Stock issuable
pursuant thereto shall not be deemed to be an alteration of the terms of the
Equity Rights Offering in any manner whatsoever. In the event of an agreement
by the parties hereto (which agreement may be evidenced by the absence of an
objection by the Company to a disbursement request by the Purchaser pursuant to
the terms of the Escrow Agreement based on this Section 13) or the entry of a
final non-appealable judgment by a court of competent jurisdiction that the
Purchaser's performance under this Agreement is excused pursuant to this
Section 13, Purchaser shall be entitled to receive the Funds (as defined in the
Escrow Agreement).
14. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto, their respective successors and assigns.
Except as expressly stated herein, the Purchaser may not assign its obligations
under this Agreement or the Standby Commitment but may, without restriction,
assign its rights hereunder to any affiliated entity and, following the
settlement date, to any three or fewer third parties or affiliated parties.
Except as expressly stated herein, the Company may not assign its obligations
under this Agreement without the consent of the Purchaser.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties hereto and supersedes any and all
prior agreements, arrangements and understandings relating to the matters
provided for herein.
16. APPLICABLE LAW. The Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
without regard to principles of conflict of laws.
17. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of the parties hereto.
13
<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their authorized officers as of the date first
above written.
COMPANY:
TRANS WORLD AIRLINES, INC.
By:
-----------------------------------
Title:
------------------------------
PURCHASER:
WESTGATE INTERNATIONAL, L.P.
By:
-----------------------------------
General Partner
By:
-------------------------------
Title:
----------------------------
14
<PAGE> 16
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, made and entered into this 15th day of
September, 1995, by and among Westgate International, L.P., a Cayman Islands
limited partnership (hereinafter referred to as "Purchaser"), Trans World
Airlines, Inc., a Delaware corporation ("TWA") and Smith, Gambrell & Russell, a
general partnership (the "Escrow Agent");
W I T N E S S E T H, THAT:
WHEREAS, Purchaser and TWA have entered into a certain Agreement of
even date herewith, a copy of which is attached hereto as EXHIBIT A (the
"Agreement"); and
WHEREAS, the Agreement provides for the deposit with the Escrow Agent
of $202,148.42, with all such amounts, together with any interest earned
thereon, to be held and applied by the Escrow Agent in accordance with the
terms of the Agreement; and
WHEREAS, the parties hereto desire to enter into a written escrow
agreement;
NOW, THEREFORE, in consideration of the agreements set forth in the
Agreement and the mutual covenants set forth herein, the parties hereto,
intending to be and being legally bound, do hereby agree as follows:
1. ESCROW. TWA has delivered to Escrow Agent $202,148.42 (the "Premium"),
the receipt whereof is hereby acknowledged by Escrow Agent, which together with
any interest earned thereon (collectively, the Funds ) shall be held,
administered and disbursed by Escrow Agent in accordance with the terms and
conditions of this Escrow Agreement and the Agreement. Escrow Agent shall hold
the Funds and shall deposit the Funds within one business day after the date of
this Agreement in an account with Wachovia Bank of Georgia, N.A. (the "Bank")
which shall be a standard passbook savings account or other interest bearing
account as Escrow Agent may direct, in its sole discretion, consistent with the
required availability of the Funds for payment under the Agreement. Interest
or other income, if any, earned on the Funds shall be deemed a part of the
Funds for purposes of this Agreement and shall be disbursed to Purchaser from
time to time in accordance with the terms and conditions of this Escrow
Agreement and the Agreement.
2. DISBURSEMENT OF FUNDS. The Funds shall be held and disbursed by Escrow
Agent as herein provided and subject to the terms of the Agreement. In
reliance on the representations of Purchaser in the Agreement and the opinion
of counsel to the Purchaser delivered pursuant to the Agreement, Escrow Agent
will disburse any Funds hereunder without withholding for any U.S. federal or
state tax obligation. At such time as Escrow Agent receives from the Purchaser
<PAGE> 17
the affidavit and other evidence required by Section 2 of the Agreement as to
the exercise of Equity Rights pursuant to the Agreement, together with a
computation of the Funds required to be disbursed in consequence of such
exercise and written notice stating the identity of the party to whom the Funds
are to be disbursed (which, in each such case, Escrow Agent believes to be
genuine), Escrow Agent shall disburse such Funds pursuant to such notice,
PROVIDED, HOWEVER, that if the Escrow Agent does not receive the affidavit from
Purchaser required by the Agreement by October 31, 1995, the Company will
return the Premium to TWA. TWA and Purchaser hereby agree to send to the other
at the address specified in Section 7 hereof, a duplicate of any written notice
sent to Escrow Agent requesting any disbursement of funds or requesting that
any such disbursement be withheld.
3. LIMITED LIABILITY. In performing any of its duties hereunder, Escrow
Agent shall not incur any liability to anyone for any damages, losses, or
expenses, except for any such arising solely as a result of the willful
misconduct or breach of trust by Escrow Agent hereunder, and, accordingly,
Escrow Agent shall not incur any such liability with respect to (i) any action
taken or omitted in good faith upon the basis of its own opinion, or upon
advice of separate legal counsel given, with respect to any questions relating
to the duties and responsibilities of Escrow Agent under this Agreement, or
(ii) any action taken or omitted in reliance on any instrument, including any
written notice or instruction provided for in this Agreement, not only as to
its due execution and the validity and effectiveness of its provisions but also
as to the truth and accuracy of any information contained therein, which Escrow
Agent shall in good faith believe to be genuine, to have been signed, or
presented by a person or persons having authority to sign or present such
instrument, and to conform with the provisions of this Escrow Agreement.
4. PURCHASER'S EXCUSED PERFORMANCE. Notwithstanding anything in this
Escrow Agreement to the contrary, in the event that prior to disbursement of
the Funds pursuant to Section 2 hereof, Purchaser shall give notice to Escrow
Agent, with a copy delivered to the Company as provided herein, that its
obligations to purchase have been excused pursuant to Paragraph 13 of the
Agreement and TWA shall not, within ten (10) days thereafter, give notice to
Escrow Agent that it disputes Purchaser's right to excused performance as
asserted, Escrow Agent shall disburse the Escrow Funds to Purchaser. If within
ten (10) of Escrow Agent's receipt of Purchaser's notice hereunder, TWA shall
give notice to the Escrow Agent, with a copy delivered to the Purchaser by the
Company as provided herein, that it disputes Purchaser's claimed right to
excused performance, Escrow Agent shall tender into the registry or custody of
a court of competent jurisdiction the Funds, together with such pleadings as it
may deem appropriate, and thereupon be discharged from all further duties and
liabilities under this Escrow Agent (other than with respect to any liabilities
for willful misconduct or breach of trust by Escrow Agent). Any such legal
action may be brought in such court as Escrow Agent shall determine to have
jurisdiction thereof. Any notice by Purchaser claiming a right to payment by
virtue of excused performance pursuant to this Paragraph 4 shall set forth with
particularity the specific basis (including the underlying facts) upon which
the performance is claimed to be excused.
2
<PAGE> 18
5. INDEMNITY. TWA and Purchaser hereby agree to indemnify Escrow Agent
against, and hold Escrow Agent harmless from, any and all claims, actions,
demands, losses, damages, expenses (including, without limitation, court costs,
attorneys' fees, and accountant's fees), and liabilities that may be imposed
upon performance of its duties hereunder, including, without limitation, any
litigation arising from this Escrow Agreement or involving the subject matter
hereof, but excluding any such claims, actions, demands, losses, damages,
expenses, and liabilities resulting solely from any willful misconduct or
breach of trust by Escrow Agent hereunder. In the event of any litigation
arising from this Escrow Agreement or involving the subject matter hereof, and
in the event TWA and Purchaser are opposing parties in such litigation, the
party prevailing in such litigation shall be reimbursed promptly upon demand by
the other such party for the reasonable out-of-pocket costs and expenses of
such litigation together with any amount which the prevailing party shall have
paid Escrow Agent with respect to such litigation and the subject matter
thereof pursuant to the indemnification agreement contained in this Paragraph
5.
6. COMPENSATION. In consideration of its services hereunder, Escrow Agent
shall be (i) paid an escrow fee of $l0.00, which amount shall be paid by TWA at
the time of disbursement of the Funds by Escrow Agent and (ii) indemnified by
the parties as provided in Paragraph 5 hereof.
7. NOTICES. Wherever any notice or other communication is required or
permitted hereunder, such notice shall be in writing and shall be delivered in
person or sent by U.S. registered or certified mail, return receipt requested,
postage prepaid, to the addresses set out below or at such other addresses as
are specified by written notice delivered in accordance herewith:
PURCHASER: Westgate International, L.P.
c/o Stonington Management Corp.
712 Fifth Avenue
36th Floor
New York, New York 10019
Attention: Mr. Paul E. Singer
Telephone: (212) 974-6000
Telefacsimile: (212) 974-2092
TWA: Trans World Airlines, Inc.
One City Centre
515 North Sixth Street
St. Louis, MO 63101
Attention: Richard P. Magurno, Esq.
Telephone: (314) 589-3264
Telefacsimile: (314) 589-3267
3
<PAGE> 19
ESCROW AGENT: Smith, Gambrell & Russell
1230 Peachtree Street, N.E.
Promenade II, Suite 3100
Atlanta, GA 30309-3592
Attention: Howard E. Turner
Telephone: (404) 815-3594
Telefacsimile: (404) 815-3509
8. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors, and assigns, provided
neither TWA nor Purchaser shall be permitted to assign all or any part of their
respective right, title, and interest hereunder, except to the extent said
party is permitted to assign its right, title and interest whether in whole or
in part under the Agreement, and then only from and to the extent permitted
thereunder or pursuant to the written consent of the other party. Any and all
rights granted to any of the parties hereto may be exercised by their agents or
personal representatives.
9. MISCELLANEOUS. Time is of the essence of this Agreement. Capitalized
terms not otherwise defined herein shall have the meaning ascribed to them in
the Agreement or the Plan. Each of the parties hereto acknowledge that Escrow
Agent acts as outside counsel for TWA and has so acted in connection with,
among other things, the negotiation, preparation and execution of the Agreement
and this Escrow Agreement. Such parties acknowledge and agree that Escrow
Agent shall be entitled to continue to so act with respect to all existing and
future matters on or with respect to which TWA may wish to consult Smith,
Gambrell & Russell.
10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all such
counterparts together shall constitute one and the same instrument.
4
<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have signed and sealed this Escrow
Agreement as of the day and year first above written.
PURCHASER:
WESTGATE INTERNATIONAL, L.P.
By:
----------------------------------------------
General Partner
By:
----------------------------------------------
Title:
-------------------------------------
TRANS WORLD AIRLINES, INC.:
By:
----------------------------------------------
Its:
---------------------------------------------
ESCROW AGENT:
SMITH, GAMBRELL & RUSSELL
By:
----------------------------------------------
a Partner
5
<PAGE> 1
EXHIBIT 10.43
<PAGE> 2
EQUITY RIGHTS PUT AGREEMENT
---------------------------
This Agreement dated as of September 15, 1995 is made by and between
Trans World Airlines, Inc., a Delaware corporation (the "Company") and United
Equities (Commodities) Company, a New York general partnership (the
"Purchaser");
WITNESSETH:
WHEREAS, pursuant to the Company's plan of reorganization confirmed by
the United States Bankruptcy Court for the Eastern District of Missouri on
August 4, 1995 (the "Plan") which became effective on August 23, 1995 (the
"Effective Date"), the Company has issued approximately 13,150,000 Equity
Rights (as defined in Section 1.1.60 of the Plan), each consisting of the
nontransferable right to purchase for cash from the Company newly issued Common
Stock pursuant to a "Basic Subscription Privilege" and an "Oversubscription
Privilege" (as such terms are defined in Section 1.1.60 of the Plan);
WHEREAS, the Purchaser is the owner and holder of Equity Rights
("Purchaser's Equity Rights");
WHEREAS, the Common Stock to be issued to Purchaser upon exercise of
Purchaser's Equity Rights has been registered by the Company pursuant to
Registration Statement No. 33-89764, as amended, filed with the Securities and
Exchange Commission and declared effective on May 12, 1995 (the "Registration
Statement").
WHEREAS, the Company and Purchaser are willing to enter into this
Agreement to provide for the purchase of the number of shares of Common Stock
of the Company hereinafter set forth to the extent such shares may be acquired
pursuant to the Option (as defined below) to be effected by the full exercise
of the Basic Subscription Privilege, and an exercise of the Oversubscription
Privilege, of the Equity Rights held by Purchaser as set forth below; and
WHEREAS, all capitalized terms used herein which are not separately
defined, are used herein as defined in the Plan.
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Company and the Purchaser, agree as follows:
1. GRANT OF PUT OPTION. Purchaser hereby grants to the Company
the Option (the "Option") exercisable on or before October 5, 1995 (the 43rd
day following the Effective Date) to put to the Purchaser the exercise of
Purchaser's Basic Subscription Privileges and Oversubscription Privileges as
hereinafter provided. Upon the exercise by the Company of the Option, the
Purchaser shall, in accordance with the covenants, representations and
warranties herein contained, on or prior to 5:00 p.m. New York time on October
5, 1995, exercise the Basic Subscription Privilege and the Oversubscription
Privilege under Equity Rights held by the Purchaser to subscribe for, in the
aggregate, not fewer than 3,287,785 shares (the "Committed Shares") of Common
Stock of the Company by executing and delivering to American Stock
<PAGE> 3
Transfer and Trust Company as agent (the "Subscription Agent") properly
completed Subscription Forms, with any required signatures guaranteed, together
with payment in full of the Subscription Price for each of the Committed Shares
in accordance with the terms of the Equity Rights and the Plan. The Option may
be exercised by the Company by sending notice in writing to Purchaser by
facsimile transmission to the Purchaser's address, as initially stated in
Section 9, on or before 3:00 p.m. New York time on October 5, 1995. In no
event shall Purchaser be required to subscribe for more than 3,287,785 shares
of Common Stock in the aggregate pursuant to its own exercise of the Equity
Rights and the exercise by the Company of the Option.
2. PREMIUM TO PURCHASER FOR OPTION. As consideration for the
Option in Section 1, the Company will pay to the Purchaser an aggregate premium
equal to $860,474.98 (the "Premium").
The Premium will be paid in immediately available funds on the date of
the execution of this Agreement, if this Agreement is executed prior to 10:00
a.m. New York time on such date, and otherwise in immediately available funds
on the day following the execution of this Agreement, and will be placed in an
escrow account with Smith, Gambrell & Russell (in such capacity, the "Escrow
Agent") pursuant to an escrow agreement which will authorize the release of the
funds to Purchaser only upon receipt by the Escrow Agent and the Company of an
affidavit of a duly authorized officer or general partner of the Purchaser to
the effect that, Purchaser has executed or caused to be executed and delivered
or caused to be delivered to the Subscription Agent properly completed
Subscription Forms, with any required signatures guaranteed, together with
payment in full of the Subscription Price for each of the Committed Shares in
accordance with the terms hereof and of the Equity Rights and the Plan, and
confirmation from the carrying broker receipt and execution of instructions
from the Purchaser to exercise the Equity Rights in the amount specified in
such affidavit. Such escrow agreement shall provide that the Premium shall be
subject to a partial release at Purchaser's request, to the extent that the
Purchaser's Basic Subscription Privilege has been exercised prior to its
Oversubscription Privilege provided the Escrow Agent and the Company shall have
been furnished evidence as above required of such execution and delivery of
Subscription Forms and payment of the Subscription Price. Any partial release
of the Premium shall be in the same proportion as the number of shares
subscribed for by the Purchaser pursuant to the Equity Rights bears to the
total Committed Shares committed to by the Purchaser (the dollar amount derived
from such calculation shall be referred to as the "Computation"). Such escrow
agreement shall further provide that interest shall accrue on all escrowed
amounts. The Escrow Agent shall deposit the Premium in such interest bearing
account, as may be selected by the Escrow Agent, with Wachovia Bank of Georgia,
N.A. (the "Bank") on a basis allowing for withdrawal of the funds on one
business day's notice. The escrow agreement shall be in the form attached
hereto as Exhibit A and may contain such other terms as may be agreed to by the
parties hereto and the Escrow Agent. The Purchaser shall send a copy of all
documents sent to the Escrow Agent to the Company but such transmission shall
not be a condition to the release of Funds from escrow unless objection shall
be given by the Company as provided in the Escrow Agreement.
2
<PAGE> 4
3. TRANSACTION COSTS, FEES AND EXPENSES. Each party hereto
agrees to pay its own transaction costs, fees and expenses in connection with
the transactions contemplated hereby, including without limitation, the fees
and expenses of their respective counsel, except that the Company shall pay
Purchaser's actual reasonable legal fees and expenses in an amount not to
exceed $20,000.
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Purchaser
represents and warrants and agrees that:
a. Purchaser is a duly organized and validly existing
New York general partnership which is in good standing under
the laws of its jurisdiction of organization, with partnership
power and authority to own its property and conduct its
business and to enter into and perform all of its obligations
under this Agreement.
b. Purchaser is the owner and holder of Equity Rights.
c. This Agreement has been duly authorized, executed and
delivered by the Purchaser and constitutes the valid, legal
and binding obligation of the Purchaser enforceable against
the Purchaser in accordance with its terms subject to the
effect of bankruptcy, insolvency, reorganization, moratorium,
in each case with respect to proceedings subsequent to the
date of this Agreement and other similar laws affecting the
rights and remedies of creditors generally and general
principles of equity.
d. The Purchaser has a net worth computed in accordance
with generally accepted accounting principles, of not less
than 90% of the amount set forth in the audited financial
statements heretofore furnished to the Company by Purchaser in
connection with this Agreement and has sufficient unrestricted
liquid assets and the financial ability to fully perform its
obligations under this Agreement. The financial statements of
the Purchaser furnished to the Company prior to execution and
delivery of this Agreement have been prepared in accordance
with generally accepted accounting principles consistently
applied and fairly present the pertinent results of operations
for the periods indicated and the financial position at the
end of such periods of the Purchaser, except as set forth in
the footnotes thereto.
e. No consent, approval, authorization or order of, or
filing with, any governmental agency or body of any court is
required for the consummation by the Purchaser of the
transactions contemplated by this Agreement.
f. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation by
Purchaser of any of the terms and provisions of, or constitute
a default under, (i) any statute, rule or regulation, or any
order of any governmental
3
<PAGE> 5
agency or body or any court having jurisdiction over the
Purchaser or any subsidiary of the Purchaser or any of their
properties or (ii) any agreement or instrument to which the
Purchaser or any subsidiary is a party or by which the
Purchaser or any subsidiary is bound or to which any of the
properties of the Purchaser or any subsidiary is subject, or
(iii) the certificate of limited partnership or partnership
agreement of the Purchaser or any subsidiary of the Purchaser
which currently conducts business.
g. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Purchaser,
threatened against, and no order, decree or judgment of any
court, agency or other governmental authority of competent
jurisdiction in the United States shall have been rendered
against, the Purchaser to restrain or prohibit the performance
by Purchaser of this Agreement or the transactions
contemplated by this Agreement.
h. The Purchaser's principal place of business is
located in the State of New York.
5. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants and agrees that:
a. The Company is a duly organized and validly existing
Delaware corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and
authority to own its property and conduct its business and to
enter into and perform all of its obligations under this
Agreement.
b. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid, legal and
binding obligation of the Company, enforceable against the
Company in accordance with its terms subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, in each
case with respect to proceedings subsequent to the date of
this Agreement and other similar laws affecting the rights and
remedies of creditors generally and general principles of
equity.
c. Except for the filing of an appropriately
supplemented prospectus describing, among other things, the
transactions contemplated by this Agreement, no consent,
approval, authorization or order of, or filing with, any
governmental agency or body or any court in any applicable
jurisdiction of the United States is required for the
consummation by the Company of the transactions contemplated
by this Agreement.
d. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation by the
Company of any of the terms and provisions of, or constitute
4
<PAGE> 6
a default under, (i) any statute, rule or regulation, or any
order of any governmental agency or body or any court having
jurisdiction over the Company or any subsidiary of the Company
or any of their properties or (ii) any agreement or instrument
to which the Company or any subsidiary is a party or by which
the Company or any subsidiary is bound or to which any of the
properties of the Company or any subsidiary is subject, or
(iii) the certificate of incorporation or by-laws of the
Company or any subsidiary of the Company which currently
conducts business.
e. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Company,
threatened against, and no order, decree or judgment of any
court, agency or other governmental authority of competent
authority in the United States shall have been rendered
against, the Company to restrain or prohibit the performance
by Company of this Agreement or the transactions contemplated
by this Agreement.
f. The Equity Rights issued to Purchaser for the
Committed Shares and the Committed Shares issued upon exercise
thereof have been duly authorized by the Company and such
Committed Shares, when issued and delivered by the Company in
accordance with the Plan and against payment therefor as
contemplated in the Plan and hereby, will be (i) validly
issued, fully paid and non-assessable and such Equity Rights
and Committed Shares have been registered pursuant to the
Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act") and (ii) free and clear of any
liens, claims and encumbrances arising by, through, or under
the Company and shall not be subject to any stop transfer
instructions imposed by the Company.
g. The Registration Statement with respect to the sale
of the Equity Rights and the underlying Common Stock (issuable
upon the exercise thereof) in each case by the Company to the
Purchaser is currently effective and no stop order pertaining
to it has been issued by the Securities and Exchange
Commission. The Registration Statement shall be effective at
the time of sale and delivery by the Company of the Committed
Shares and no stop order suspending the effectiveness of such
Registration Statement including any amendment or supplement
thereto shall have been issued. The Committed Shares have
been approved for issuance on the American Stock Exchange,
subject to official notice of issuance.
h. As of its effective date, the Registration Statement
did not, insofar as relevant to the Equity Rights or the
underlying Common Stock purchasable pursuant thereto, include
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements made therein not misleading, and, as of
such date, the Prospectus did not, insofar as material to the
investment decision of a reasonable purchaser of the Common
Stock, include any untrue statement of a material fact or omit
to state any material
5
<PAGE> 7
fact required to be stated therein or necessary to make the
statements therein not misleading.
6. PURCHASER'S COVENANTS. The Purchaser covenants and agrees
with the Company that:
a. No later than three business days following the
execution of this Agreement, the Purchaser shall cause to be
delivered to the Company an opinion of counsel for Purchaser
dated as of the date of this Agreement in form and substance
reasonably satisfactory to the Company as to the matters set
forth in Section 4a, c, e and f.
b. The Purchaser agrees to take such actions and execute
and deliver to the Company such documents and instruments as
may be necessary to fully consummate the transactions and
agreements of the Purchaser as contemplated by this Agreement.
c. During the period commencing with the execution of
this Agreement and terminating on the payment in full of the
exercise price as contemplated in Section 1 (the "Option
Term"), the Purchaser agrees not to enter into any agreement
for the sale or disposition of all or substantially all of the
Purchaser's assets (in one or more transactions), or a merger,
consolidation or other business combination involving all or
substantially all of the Purchaser's assets, unless the
Purchaser provide the Company with the express, written
agreement by the Purchaser or other successor(s) to assume the
Purchaser's obligations and covenants hereunder and, after
giving effect to any such sale, disposition, merger,
consolidation or other business combination, the Purchaser or
other successor(s) shall meet the requirements of Section 4
hereof.
7. THE COMPANY'S COVENANTS. The Company covenants and agrees
with the Purchaser that:
a. No later than three business days following the
execution of this Agreement, the Company shall cause to be
delivered to the Purchaser an opinion of counsel for the
Company dated as of the date of this Agreement in form and
substance reasonably satisfactory to Purchaser as to the
matters set forth in Section 5a, b, c, d and f, and as to the
first sentence of 5(g), such opinion of counsel shall state
that, to the best knowledge of such counsel, the Registration
Statement is currently in effect and no stop order suspending
the effectiveness has been instituted or is pending or
threatened by the Securities and Exchange Commission (the
"SEC").
b. The Company agrees to take such actions and execute
and deliver such documents and instruments as may be necessary
to fully consummate the
6
<PAGE> 8
transactions and agreements of the Company as contemplated by
this Agreement, including, without limitation, the filing with
the SEC in a timely manner in accordance with applicable law
of an appropriately supplemented prospectus as referred to in
Section 5c (the "Supplemental Prospectus").
c. Except as otherwise provided below and except for
distributions provided for in the Prospectus, the Plan and/or
pursuant to the terms of securities issued under the Plan,
during the Option Term and thereafter for the period ending
two weeks after the issuance and delivery to the Purchaser of
all of the Committed Shares (i) the Company shall not declare
any dividend or make any distribution on the Company's Common
Stock or Preferred Stock (other than dividends or
distributions payable in the Company's Common Stock or
Preferred Stock) and (ii) the Company shall not effect any
stock dividends, stock splits, or any other issuance of
capital stock (including options, warrants, rights to purchase
stock or securities convertible into stock) or issue any
Common Stock or any other options, warrants or rights thereto
("Derivative Securities") other than: (a) such Common Stock
or Derivative Securities provided for by the Prospectus, the
Plan and/or pursuant to the terms of securities issued under
the Plan, as the case may be; (b) such Common Stock or
Derivative Securities as may be issued pursuant to the terms
of the Company's Key Employee Stock Incentive Plan or to an
employee stock ownership or benefit plan in the ordinary
course of business. For purposes of this provision, the term
"employees" shall include those entities and persons defined
in Instruction A(1)(a) to Form S-8 under the Securities Act.
d. The Company will consult with the Purchaser with
respect to any press release, prospectus supplement, amendment
to the Registration Statement or other public statement or
filing that names or refers to the Purchaser. Any such
disclosure regarding the Purchaser shall be subject to the
Purchaser's consent (which shall not be unreasonably
withheld), except where such release, filing, statement or
announcement by the Company is believed by the responsible
officers of the Company, after consultation with the Company's
counsel, to be required, or that the failure to make such
disclosure would involve an unacceptable risk to the Company,
in each case, under applicable law or pursuant to any listing
agreement with or the rules or regulations of, any national
securities exchange on which the securities of the Company are
listed or traded.
e. Subject to the terms and conditions of this
Agreement, the Company shall deliver or cause to be delivered
to the Purchaser, the Premium (or applicable portion thereof),
together with any accrued interest thereon, (the Premium and
any accrued interest thereon, the "Funds") to be in same day
funds on the first business day following the date of notice
as provided in Section 2 by the Purchaser to the Escrow Agent
that it has performed its obligations under the Agreement
necessary for the Escrow Agent to release the Funds. The
Purchaser shall use its best reasonable efforts to give any
notice to the Escrow Agent to release Funds no later
7
<PAGE> 9
than 5:00 p.m. Atlanta, Georgia time on the business day
immediately preceding the business day on which such Funds are
to be released from escrow. Should the Purchaser terminate
this Agreement, in whole or in part, pursuant to Section 11,
Purchaser shall refund all Funds, and any interest accrued
thereon, theretofore received by it and shall not be entitled
to receive any further Funds whether held in escrow or
otherwise.
f. The Company shall instruct the Subscription Agent to
determine the amount of shares purchased and not purchased
pursuant to the Basic Subscription Privilege on October 6,
1995 and thereafter the Company shall, within one business day
after receiving all the foregoing information from the
Subscription Agent, in form sufficient to determine the shares
to be allocated pursuant to the Oversubscription Privilege,
and direct the Subscription Agent to effect the delivery of
the Committed Shares purchased pursuant to Purchaser's
Oversubscription Privilege within four business days
thereafter.
8. SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS. The agreements,
representations and warranties set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of the Company or any
of its representatives, officers or directors or any controlling person.
9. NOTICES. All notices, demands, instructions and other
communications required or permitted hereunder will be in writing and shall be
personally delivered or sent by registered, certified or express mail, postage
prepaid, return receipt requested, or by telefacsimile (which shall immediately
be followed by the original of such communication) and shall be deemed to be
given when received by the intended recipient or, in the case of telefacsimile,
on the date transmitted to the intended recipient thereof. Unless otherwise
specified in writing in accordance with this Section, such notices, demands
instructions and communications shall be made to the following:
To Purchaser: United Equities (Commodities) Company
160 Broadway
New York, New York 10038
Attention: Mr. Phillippe Katz
Telephone: (212) 349-2875
Telefacsimile: (212) 227-3208
8
<PAGE> 10
To the Company: Trans World Airlines, Inc.
One City Centre
515 North Sixth Street
St. Louis, Mo. 63101
Attention: General Counsel
Telephone: (314) 589-3264
Telefacsimile: (314) 589-3267
10. INDEMNIFICATION. (A) Each party shall indemnify, defend and
hold harmless the other, for any and all claims, losses, liabilities and
expenses (including reasonable attorneys' fees) arising out of the breach of
this Agreement in any material respect by such party; PROVIDED, HOWEVER, that
in no event shall this provision give rise to any obligation on the part of the
Company to indemnify the Purchaser for or in respect of any tax liabilities
related to or based on the payment to or receipt of the Premium.
(B) (a) GENERAL INDEMNITY. The Company agrees to indemnify
and hold harmless the Purchaser, and its respective partners, officers and
agents against any and all claims, damages, liabilities and expenses (including
but not limited to reasonable attorneys' fees and any out of pocket expenses
reasonably incurred, as incurred, in defending against any litigation,
commenced or threatened, and any amounts paid in settlement of any claim or
litigation in accordance with the terms hereof) asserted by persons other than
parties to this Agreement or any affiliate of any party to this Agreement (any
such litigation or claim collectively a "Claim"), to which Purchaser or its
respective partners, officers and agents shall become subject insofar as such
Claim results from any untrue statement, or alleged untrue statement, of a
material fact contained in the Registration Statement or any amendment thereof,
or the prospectus contained therein (the "Prospectus"), or in any supplement
thereto or amendment thereof, or any omission, or alleged omission, to state
therein a material fact required to be stated to make the statements therein
not misleading, PROVIDED, HOWEVER, the Company shall not be required to
indemnify the Purchaser for any Claim for any violation by the Purchaser of
Section 5 of the Securities Act arising out of the sales of Common Stock by
Purchaser after the date of this Agreement, including any violations arising
out of the failure of a registration statement ( other than the Registration
Statement with respect to the sale to the Purchaser) for such sales to be
effective, unless there shall be a final judicial determination that (x) the
Registration Statement or Prospectus contained an untrue statement of material
fact or an omission of a material face necessary to make the Registration
Statement or Prospectus not misleading and (y) which fact or omission (i) does
not relate to Purchaser's status, conduct or performance under or related to
this Agreement, and (ii) does not result from the description of the
transaction contemplated by this Agreement. The foregoing indemnification
pertains to such untrue statements or omissions relating to the Registration
Statement or any amendment thereof or the Prospectus or any supplement thereto
or amendment thereof at the time the Registration Statement was declared
effective or on any subsequent date until the expiration of the Option.
(b) A claim for indemnification shall be made by
Purchaser by delivery of a written notice to the Company requesting
indemnification and specifying the basis and facts, in
9
<PAGE> 11
reasonable detail, on which indemnification is sought and the amount of
asserted Claims and, containing (by attachment or otherwise) such other
information as such Purchaser shall have concerning such Claims.
(c) The obligations and liabilities of the Company
hereunder with respect to a claim for indemnification shall be subject to the
following terms and conditions.
(i) The Purchaser shall give the Company written
notice of a Claim promptly after receipt by the Purchaser of notice
thereof, and the Company may undertake the defense, compromise and
settlement thereof by legal counsel and representatives of its own
choosing reasonably acceptable to the Purchaser. The failure of the
Purchaser to notify the Company of a Claim shall not relieve the
Company of any liability that it may have with respect to such Claim
except to the extent the Company demonstrates that the defense of such
Claim is prejudiced by such failure or otherwise impairs the Company's
ability to participate in the contest of such Claim in any material
respect. The assumption of the defense, compromise and settlement of
any such Claim by the Company shall not be an acknowledgment of the
obligation of the Company to indemnify the Purchaser with respect to
any Claim or otherwise under the Agreement. Likewise, any payment
made by the Company pursuant to this indemnification provision shall
not be an acknowledgment of the obligation of the Company to indemnify
the Purchaser with respect to any Claim or otherwise under the
Agreement. If the Purchaser desires to participate in, but not
control, any such defense, compromise and settlement, it may do so at
its sole cost and expense. If, however, the Company fails or refuses
to undertake the defense of such Claim within seven (7) business days
after written notice of such Claim has been given to the Company by
the Purchaser, the Purchaser shall have the right to undertake the
defense of such Claim with counsel of its own choosing provided such
counsel is reasonably acceptable to the Company. After the Company's
notice to the Purchaser of the Company's election to assume the
defense of a Claim, the Company will not be liable to the Purchaser
under this Section 10(B)(a) for any legal or other expenses,
subsequently incurred by Purchaser in connection with the defense
thereof, unless (1) the Purchaser shall have employed separate counsel
in accordance with the immediately preceding sentence or (2) the
Company has authorized the employment of counsel for the Purchaser at
the expense of the Company.
(ii) No settlement or compromise of, or consent to
a judgement with respect to, a Claim shall be made without the prior
written consent of the Company, and the Company shall have no
liability with respect to any compromise or settlement of, or consent
to a judgement with respect to, a Claim effected without its consent.
(iii) In connection with the defense, compromise or
settlement of any Claim, the parties to this Agreement shall execute
such powers of attorney as may reasonably be necessary or appropriate
to permit participation of counsel selected by any party hereto and,
as may reasonably be related to any such claim or action, shall
provide access to the counsel, accountants and other representatives
of each party during normal
10
<PAGE> 12
business hours to all properties, personnel, books, tax records,
contracts, commitments and all other business records of such other
party relevant to the Claim and will furnish to such other party
copies of all such documents as may reasonably be requested
(certified, if requested).
(iv) Purchaser and the Company agrees to cooperate
in good faith in the defense of any Claim indemnifiable hereunder and
shall endeavor to keep any indemnity payable by the Company to a
minimum, consistent with a proper defense of the Claim.
11. TERMINATION. The Purchaser may terminate this Agreement (i)
upon the occurrence of a delisting of the Common Stock from the American Stock
Exchange at any time during the Option Term or a suspension of trading in the
Common Stock for (x) any four business days during the Option Term or (y) a
definite period of at least three business days or for an indefinite period
which suspension actually lasts for at least three business days, which, in
either case under clause (i)(y), shall exist or continue in whole or in part at
any time during the five business days prior to and including October 5, 1995,
(ii) if a general suspension shall occur in trading of securities on the New
York Stock Exchange, the American Stock Exchange and the NASDAQ National Market
for a period of three business days which shall exist or continue in whole or
in part during the five business days prior to and including October 5, 1995,
(iii) if there shall have occurred any general banking moratorium declared by
United States federal or by all or any substantial number of state banking
authorities, (iv) if a state of war shall have been declared or exist between
the United States and China, Germany, France, Japan, the United Kingdom or
Russia or (v) if on or prior to October 5, 1995, there shall have occurred, as
of any business day during the eight business days prior to and including
October 5, 1995, a decline in the Dow Jones Industrial Average by an amount in
excess of 20% as measured from the close of business on the date of this
Agreement to such business day.
12. NO LIMITATION ON EQUITY RIGHTS. Nothing in this Agreement,
including any failure by the Company to exercise the Option, shall be construed
as limiting any right Purchaser has to subscribe or oversubscribe for shares of
Common Stock pursuant to its Equity Rights, including, without limitation, the
right to purchase, if applicable, Common Stock in an amount in excess of the
Committed Shares.
13. CONDITIONS TO PURCHASER'S OBLIGATIONS. The Purchaser's
obligations to purchase the Committed Shares, shall be subject to the condition
that (i) the Company's representations and warranties set forth in Section 5a,
b, c, d, f, g, and h herein shall, as of the date made have been and on October
5, 1995 will be, true and correct in all material respects, (ii) that on or
prior to October 5, 1995 no order, decree or judgment of any court, agency or
other authority of competent authority in the United States shall have been
rendered against the Company to restrain or prohibit the performance by the
Company of this Agreement or the transactions contemplated thereby, (iii) on
October 5, 1995, the Registration Statement shall be currently effective and no
stop order pertaining to it shall have been issued by the Securities and
Exchange Commission, (iv) the Company shall have substantially performed its
covenants or other obligations set forth in this Agreement, and (v) the Company
shall not have altered the actual terms of the Equity
11
<PAGE> 13
Rights Offering or extended the time for exercise of such Equity Rights without
the consent of the Purchaser, which consent will not be unreasonably withheld;
PROVIDED, HOWEVER, that the entry by the Company into any put agreement or
stand by purchase agreement of any kind whatsoever with respect to the Equity
Rights or the Common Stock issuable pursuant thereto shall not be deemed to be
an alteration of the terms of the Equity Rights Offering in any manner
whatsoever. In the event of an agreement by the parties hereto (which
agreement may be evidenced by the absence of an objection by the Company to a
disbursement request by the Purchaser pursuant to the terms of the Escrow
Agreement based on this Section 13) or the entry of a final non-appealable
judgment by a court of competent jurisdiction that the Purchaser's performance
under this Agreement is excused pursuant to this Section 13, Purchaser shall be
entitled to receive the Funds (as defined in the Escrow Agreement).
14. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto, their respective successors and assigns.
Except as expressly stated herein, the Purchaser may not assign its obligations
under this Agreement or the Standby Commitment but may, without restriction,
assign its rights hereunder to any affiliated entity and, following the
settlement date, to any three or fewer third parties or affiliated parties.
Except as expressly stated herein, the Company may not assign its obligations
under this Agreement without the consent of the Purchaser.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties hereto and supersedes any and all
prior agreements, arrangements and understandings relating to the matters
provided for herein.
16. APPLICABLE LAW. The Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
without regard to principles of conflict of laws.
17. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of the parties hereto.
12
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their authorized officers as of the date first
above written.
COMPANY:
TRANS WORLD AIRLINES, INC.
By:
---------------------------------
Title:
---------------------------
PURCHASER:
UNITED EQUITIES (COMMODITIES) COMPANY
By:
---------------------------------
General Partner
By:
------------------------------
Title:
---------------------------
13
<PAGE> 15
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT, made and entered into this 15th day of
September, 1995, by and among United Equities (Commodities) Company, a New York
general partnership (hereinafter referred to as "Purchaser"), Trans World
Airlines, Inc., a Delaware corporation ("TWA") and Smith, Gambrell & Russell, a
general partnership (the "Escrow Agent");
W I T N E S S E T H, THAT:
- - - - - - - - - - ----
WHEREAS, Purchaser and TWA have entered into a certain
Agreement of even date herewith, a copy of which is attached hereto as EXHIBIT
A (the "Agreement"); and
WHEREAS, the Agreement provides for the deposit with the
Escrow Agent of $860,474.98, with all such amounts, together with any interest
earned thereon, to be held and applied by the Escrow Agent in accordance with
the terms of the Agreement; and
WHEREAS, the parties hereto desire to enter into a written
escrow agreement;
NOW, THEREFORE, in consideration of the agreements set forth
in the Agreement and the mutual covenants set forth herein, the parties hereto,
intending to be and being legally bound, do hereby agree as follows:
1. ESCROW. TWA has delivered to Escrow Agent $860,474.98 (the
"Premium"), the receipt whereof is hereby acknowledged by Escrow Agent, which
together with any interest earned thereon (collectively, the "Funds") shall be
held, administered and disbursed by Escrow Agent in accordance with the terms
and conditions of this Escrow Agreement and the Agreement. Escrow Agent shall
hold the Funds and shall deposit the Funds within one business day after the
date of this Agreement in an account with Wachovia Bank of Georgia, N.A. (the
"Bank") which shall be a standard passbook savings account or other interest
bearing account as Escrow Agent may direct, in its sole discretion, consistent
with the required availability of the Funds for payment under the Agreement.
Interest or other income, if any, earned on the Funds shall be deemed a part of
the Funds for purposes of this Agreement and shall be disbursed to Purchaser
from time to time in accordance with the terms and conditions of this Escrow
Agreement and the Agreement.
2. DISBURSEMENT OF FUNDS. The Funds shall be held and disbursed by
Escrow Agent as herein provided and subject to the terms of the Agreement. At
such time as Escrow Agent receives from the Purchaser the affidavit and other
evidence required by Section 2 of the Agreement as to the exercise of Equity
Rights pursuant to the Agreement, together with a
<PAGE> 16
computation of the Funds required to be disbursed in consequence of such
exercise and written notice stating the identity of the party to whom the Funds
are to be disbursed (which, in each such case, Escrow Agent believes to be
genuine), Escrow Agent shall disburse such Funds pursuant to such notice,
PROVIDED, HOWEVER, that if the Escrow Agent does not receive the affidavit from
Purchaser required by the Agreement by October 31, 1995, the Company will
return the Premium to TWA. TWA and Purchaser hereby agree to send to the other
at the address specified in Section 7 hereof, a duplicate of any written notice
sent to Escrow Agent requesting any disbursement of funds or requesting that
any such disbursement be withheld.
3. LIMITED LIABILITY. In performing any of its duties hereunder,
Escrow Agent shall not incur any liability to anyone for any damages, losses,
or expenses, except for any such arising solely as a result of the willful
misconduct or breach of trust by Escrow Agent hereunder, and, accordingly,
Escrow Agent shall not incur any such liability with respect to (i) any action
taken or omitted in good faith upon the basis of its own opinion, or upon
advice of separate legal counsel given, with respect to any questions relating
to the duties and responsibilities of Escrow Agent under this Agreement, or
(ii) any action taken or omitted in reliance on any instrument, including any
written notice or instruction provided for in this Agreement, not only as to
its due execution and the validity and effectiveness of its provisions but also
as to the truth and accuracy of any information contained therein, which Escrow
Agent shall in good faith believe to be genuine, to have been signed, or
presented by a person or persons having authority to sign or present such
instrument, and to conform with the provisions of this Escrow Agreement.
4. PURCHASER'S EXCUSED PERFORMANCE. Notwithstanding anything in this
Escrow Agreement to the contrary, in the event that prior to disbursement of
the Funds pursuant to Section 2 hereof, Purchaser shall give notice to Escrow
Agent, with a copy delivered to the Company as provided herein, that its
obligations to purchase have been excused pursuant to Paragraph 13 of the
Agreement and TWA shall not, within ten (10) days thereafter, give notice to
Escrow Agent that it disputes Purchaser's right to excused performance as
asserted, Escrow Agent shall disburse the Escrow Funds to Purchaser. If within
ten (10) of Escrow Agent's receipt of Purchaser's notice hereunder, TWA shall
give notice to the Escrow Agent, with a copy delivered to the Purchaser by the
Company as provided herein, that it disputes Purchaser's claimed right to
excused performance, Escrow Agent shall tender into the registry or custody of
a court of competent jurisdiction the Funds, together with such pleadings as it
may deem appropriate, and thereupon be discharged from all further duties and
liabilities under this Escrow Agent (other than with respect to any liabilities
for willful misconduct or breach of trust by Escrow Agent). Any such legal
action may be brought in such court as Escrow Agent shall determine to have
jurisdiction thereof. Any notice by Purchaser claiming a right to payment by
virtue of excused performance pursuant to this Paragraph 4 shall set forth with
particularity the specific basis (including the underlying facts) upon which
the performance is claimed to be excused.
5. INDEMNITY. TWA and Purchaser hereby agree to indemnify Escrow
Agent against, and hold Escrow Agent harmless from, any and all claims,
actions, demands, losses, damages, expenses (including, without limitation,
court costs, attorneys' fees, and accountant's fees), and
2
<PAGE> 17
liabilities that may be imposed upon performance of its duties hereunder,
including, without limitation, any litigation arising from this Escrow
Agreement or involving the subject matter hereof, but excluding any such
claims, actions, demands, losses, damages, expenses, and liabilities resulting
solely from any willful misconduct or breach of trust by Escrow Agent
hereunder. In the event of any litigation arising from this Escrow Agreement or
involving the subject matter hereof, and in the event TWA and Purchaser are
opposing parties in such litigation, the party prevailing in such litigation
shall be reimbursed promptly upon demand by the other such party for the
reasonable out-of-pocket costs and expenses of such litigation together with
any amount which the prevailing party shall have paid Escrow Agent with respect
to such litigation and the subject matter thereof pursuant to the
indemnification agreement contained in this Paragraph 5.
6. COMPENSATION. In consideration of its services hereunder, Escrow
Agent shall be (i) paid an escrow fee of $10.00, which amount shall be paid by
TWA at the time of disbursement of the Funds by Escrow Agent and (ii)
indemnified by the parties as provided in Paragraph 5 hereof.
7. NOTICES. Wherever any notice or other communication is required or
permitted hereunder, such notice shall be in writing and shall be delivered in
person or sent by U.S. registered or certified mail, return receipt requested,
postage prepaid, to the addresses set out below or at such other addresses as
are specified by written notice delivered in accordance herewith:
PURCHASER: United Equities (Commodities) Company
--------- 160 Broadway
New York, New York 10038
Attention: Mr. Phillippe Katz
Telephone: (212) 349-2875
Telefacsimile: (212) 227-3208
TWA: Trans World Airlines, Inc.
--- One City Centre
515 North Sixth Street
St. Louis, MO 63101
Attention: Richard P. Magurno, Esq.
Telephone: (314) 589-3264
Telefacsimile: (314) 589-3267
3
<PAGE> 18
ESCROW AGENT: Smith, Gambrell & Russell
------------ 1230 Peachtree Street, N.E.
Promenade II, Suite 3100
Atlanta, GA 30309-3592
Attention: Howard E. Turner
Telephone: (404) 815-3594
Telefacsimile: (404) 815-3509
8. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors, and assigns,
provided neither TWA nor Purchaser shall be permitted to assign all or any part
of their respective right, title, and interest hereunder, except to the extent
said party is permitted to assign its right, title and interest whether in
whole or in part under the Agreement, and then only from and to the extent
permitted thereunder or pursuant to the written consent of the other party.
Any and all rights granted to any of the parties hereto may be exercised by
their agents or personal representatives.
9. MISCELLANEOUS. Time is of the essence of this Agreement.
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Agreement or the Plan. Each of the parties hereto acknowledge
that Escrow Agent acts as outside counsel for TWA and has so acted in
connection with, among other things, the negotiation, preparation and execution
of the Agreement and this Escrow Agreement. Such parties acknowledge and agree
that Escrow Agent shall be entitled to continue to so act with respect to all
existing and future matters on or with respect to which TWA may wish to consult
Smith, Gambrell & Russell.
10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all such
counterparts together shall constitute one and the same instrument.
4
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
Escrow Agreement as of the day and year first above written.
PURCHASER:
---------
UNITED EQUITIES (COMMODITIES) COMPANY
By:
--------------------------------------
General Partner
By:
------------------------------------
Title:
-------------------------------
TRANS WORLD AIRLINES, INC.:
---------------------------
By:
-------------------------------------
Its:
-------------------------------------
ESCROW AGENT:
------------
SMITH, GAMBRELL & RUSSELL
By:
------------------------------------
a Partner
5
<PAGE> 1
EXHIBIT 10.44
<PAGE> 2
EQUITY RIGHTS PUT AGREEMENT
---------------------------
This Agreement dated as of September 15, 1995 is made by and between
Trans World Airlines, Inc., a Delaware corporation (the "Company") and Grace
Brothers, Ltd., a Illinois limited partnership (the "Purchaser");
WITNESSETH:
WHEREAS, pursuant to the Company's plan of reorganization confirmed by
the United States Bankruptcy Court for the Eastern District of Missouri on
August 4, 1995 (the "Plan") which became effective on August 23, 1995 (the
"Effective Date"), the Company has issued approximately 13,150,000 Equity
Rights (as defined in Section 1.1.60 of the Plan), each consisting of the
nontransferable right to purchase for cash from the Company newly issued Common
Stock pursuant to a "Basic Subscription Privilege" and an "Oversubscription
Privilege" (as such terms are defined in Section 1.1.60 of the Plan);
WHEREAS, the Purchaser is the owner and holder of Equity Rights
("Purchaser's Equity Rights");
WHEREAS, the Common Stock to be issued to Purchaser upon exercise of
Purchaser's Equity Rights has been registered by the Company pursuant to
Registration Statement No. 33-89764, as amended, filed with the Securities and
Exchange Commission and declared effective on May 12, 1995 (the "Registration
Statement").
WHEREAS, the Company and Purchaser are willing to enter into this
Agreement to provide for the purchase of the number of shares of Common Stock
of the Company hereinafter set forth to the extent such shares may be acquired
pursuant to the Option (as defined below) to be effected by the full exercise
of the Basic Subscription Privilege, and an exercise of the Oversubscription
Privilege, of the Equity Rights held by Purchaser as set forth below; and
WHEREAS, all capitalized terms used herein which are not separately
defined, are used herein as defined in the Plan.
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Company and the Purchaser, agree as follows:
1. GRANT OF PUT OPTION. Purchaser hereby grants to the Company
the Option (the "Option") exercisable on or before October 5, 1995 (the 43rd
day following the Effective Date) to put to the Purchaser the exercise of
Purchaser's Basic Subscription Privileges and Oversubscription Privileges as
hereinafter provided. Upon the exercise by the Company of the Option, the
Purchaser shall, in accordance with the covenants, representations and
warranties herein contained, on or prior to 5:00 p.m. New York time on October
5, 1995, exercise the Basic Subscription Privilege and the Oversubscription
Privilege under Equity Rights held by the Purchaser to subscribe for, in the
aggregate, not fewer than 1,972,671 shares (the "Committed Shares") of Common
Stock of the Company by executing and delivering to American Stock
<PAGE> 3
Transfer and Trust Company as agent (the "Subscription Agent") properly
completed Subscription Forms, with any required signatures guaranteed, together
with payment in full of the Subscription Price for each of the Committed Shares
in accordance with the terms of the Equity Rights and the Plan. The Option may
be exercised by the Company by sending notice in writing to Purchaser by
facsimile transmission to the Purchaser's address, as initially stated in
Section 9, on or before 3:00 p.m. New York time on October 5, 1995. In no
event shall Purchaser be required to subscribe for more than 1,972,671 shares
of Common Stock in the aggregate pursuant to its own exercise of the Equity
Rights and the exercise by the Company of the Option.
2. PREMIUM TO PURCHASER FOR OPTION. As consideration for the
Option in Section 1, the Company will pay to the Purchaser an aggregate premium
equal to $516,284.99 (the "Premium").
The Premium will be paid in immediately available funds on the date of
the execution of this Agreement, if this Agreement is executed prior to 10:00
a.m. New York time on such date, and otherwise in immediately available funds
on the day following the execution of this Agreement, and will be placed in an
escrow account with Smith, Gambrell & Russell (in such capacity, the "Escrow
Agent") pursuant to an escrow agreement which will authorize the release of the
funds to Purchaser only upon receipt by the Escrow Agent and the Company of an
affidavit of a duly authorized officer or general partner of the Purchaser to
the effect that, Purchaser has executed or caused to be executed and delivered
or caused to be delivered to the Subscription Agent properly completed
Subscription Forms, with any required signatures guaranteed, together with
payment in full of the Subscription Price for each of the Committed Shares in
accordance with the terms hereof and of the Equity Rights and the Plan, and
confirmation from the carrying broker receipt and execution of instructions
from the Purchaser to exercise the Equity Rights in the amount specified in
such affidavit. Such escrow agreement shall provide that the Premium shall be
subject to a partial release at Purchaser's request, to the extent that the
Purchaser's Basic Subscription Privilege has been exercised prior to its
Oversubscription Privilege provided the Escrow Agent and the Company shall have
been furnished evidence as above required of such execution and delivery of
Subscription Forms and payment of the Subscription Price. Any partial release
of the Premium shall be in the same proportion as the number of shares
subscribed for by the Purchaser pursuant to the Equity Rights bears to the
total Committed Shares committed to by the Purchaser (the dollar amount derived
from such calculation shall be referred to as the "Computation"). Such escrow
agreement shall further provide that interest shall accrue on all escrowed
amounts. The Escrow Agent shall deposit the Premium in such interest bearing
account, as may be selected by the Escrow Agent, with Wachovia Bank of Georgia,
N.A. (the "Bank") on a basis allowing for withdrawal of the funds on one
business day's notice. The escrow agreement shall be in the form attached
hereto as Exhibit A and may contain such other terms as may be agreed to by the
parties hereto and the Escrow Agent. The Purchaser shall send a copy of all
documents sent to the Escrow Agent to the Company but such transmission shall
not be a condition to the release of Funds from escrow unless objection shall
be given by the Company as provided in the Escrow Agreement.
2
<PAGE> 4
3. TRANSACTION COSTS, FEES AND EXPENSES. Each party hereto
agrees to pay its own transaction costs, fees and expenses in connection with
the transactions contemplated hereby, including without limitation, the fees
and expenses of their respective counsel, except that the Company shall pay
Purchaser's actual reasonable legal fees and expenses in an amount not to
exceed $10,000.
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Purchaser
represents and warrants and agrees that:
a. Purchaser is a duly organized and validly existing
Illinois limited partnership which is in good standing under
the laws of its jurisdiction of organization, with partnership
power and authority to own its property and conduct its
business and to enter into and perform all of its obligations
under this Agreement.
b. Purchaser is the owner and holder of Equity Rights.
c. This Agreement has been duly authorized, executed and
delivered by the Purchaser and constitutes the valid, legal
and binding obligation of the Purchaser enforceable against
the Purchaser in accordance with its terms subject to the
effect of bankruptcy, insolvency, reorganization, moratorium,
in each case with respect to proceedings subsequent to the
date of this Agreement and other similar laws affecting the
rights and remedies of creditors generally and general
principles of equity.
d. The Purchaser has a net worth computed in accordance
with generally accepted accounting principles, of not less
than 90% of the amount set forth in the audited financial
statements heretofore furnished to the Company by Purchaser in
connection with this Agreement and has sufficient unrestricted
liquid assets and the financial ability to fully perform its
obligations under this Agreement. The financial statements of
the Purchaser furnished to the Company prior to execution and
delivery of this Agreement have been prepared in accordance
with generally accepted accounting principles consistently
applied and fairly present the pertinent results of operations
for the periods indicated and the financial position at the
end of such periods of the Purchaser, except as set forth in
the footnotes thereto.
e. No consent, approval, authorization or order of, or
filing with, any governmental agency or body of any court is
required for the consummation by the Purchaser of the
transactions contemplated by this Agreement.
f. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation by
Purchaser of any of the terms and provisions of, or constitute
a default under, (i) any statute, rule or regulation, or any
order of any governmental
3
<PAGE> 5
agency or body or any court having jurisdiction over the
Purchaser or any subsidiary of the Purchaser or any of their
properties or (ii) any agreement or instrument to which the
Purchaser or any subsidiary is a party or by which the
Purchaser or any subsidiary is bound or to which any of the
properties of the Purchaser or any subsidiary is subject, or
(iii) the certificate of limited partnership or partnership
agreement of the Purchaser or any subsidiary of the Purchaser
which currently conducts business.
g. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Purchaser,
threatened against, and no order, decree or judgment of any
court, agency or other governmental authority of competent
jurisdiction in the United States shall have been rendered
against, the Purchaser to restrain or prohibit the performance
by Purchaser of this Agreement or the transactions
contemplated by this Agreement.
h. The Purchaser's principal place of business is
located in the State of New York.
5. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants and agrees that:
a. The Company is a duly organized and validly existing
Delaware corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and
authority to own its property and conduct its business and to
enter into and perform all of its obligations under this
Agreement.
b. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid, legal and
binding obligation of the Company, enforceable against the
Company in accordance with its terms subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, in each
case with respect to proceedings subsequent to the date of
this Agreement and other similar laws affecting the rights and
remedies of creditors generally and general principles of
equity.
c. Except for the filing of an appropriately
supplemented prospectus describing, among other things, the
transactions contemplated by this Agreement, no consent,
approval, authorization or order of, or filing with, any
governmental agency or body or any court in any applicable
jurisdiction of the United States is required for the
consummation by the Company of the transactions contemplated
by this Agreement.
d. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation by the
Company of any of the terms and provisions of, or constitute
4
<PAGE> 6
a default under, (i) any statute, rule or regulation, or any
order of any governmental agency or body or any court having
jurisdiction over the Company or any subsidiary of the Company
or any of their properties or (ii) any agreement or instrument
to which the Company or any subsidiary is a party or by which
the Company or any subsidiary is bound or to which any of the
properties of the Company or any subsidiary is subject, or
(iii) the certificate of incorporation or by-laws of the
Company or any subsidiary of the Company which currently
conducts business.
e. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Company,
threatened against, and no order, decree or judgment of any
court, agency or other governmental authority of competent
authority in the United States shall have been rendered
against, the Company to restrain or prohibit the performance
by Company of this Agreement or the transactions contemplated
by this Agreement.
f. The Equity Rights issued to Purchaser for the
Committed Shares and the Committed Shares issued upon exercise
thereof have been duly authorized by the Company and such
Committed Shares, when issued and delivered by the Company in
accordance with the Plan and against payment therefor as
contemplated in the Plan and hereby, will be (i) validly
issued, fully paid and non-assessable and such Equity Rights
and Committed Shares have been registered pursuant to the
Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act") and (ii) free and clear of any
liens, claims and encumbrances arising by, through, or under
the Company and shall not be subject to any stop transfer
instructions imposed by the Company.
g. The Registration Statement with respect to the sale
of the Equity Rights and the underlying Common Stock (issuable
upon the exercise thereof) in each case by the Company to the
Purchaser is currently effective and no stop order pertaining
to it has been issued by the Securities and Exchange
Commission. The Registration Statement shall be effective at
the time of sale and delivery by the Company of the Committed
Shares and no stop order suspending the effectiveness of such
Registration Statement including any amendment or supplement
thereto shall have been issued. The Committed Shares have
been approved for issuance on the American Stock Exchange,
subject to official notice of issuance.
h. As of its effective date, the Registration Statement
did not, insofar as relevant to the Equity Rights or the
underlying Common Stock purchasable pursuant thereto, include
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements made therein not misleading, and, as of
such date, the Prospectus did not, insofar as material to the
investment decision of a reasonable purchaser of the Common
Stock, include any untrue statement of a material fact or omit
to state any material
5
<PAGE> 7
fact required to be stated therein or necessary to make the
statements therein not misleading.
6. PURCHASER'S COVENANTS. The Purchaser covenants and agrees
with the Company that:
a. No later than three business days following the
execution of this Agreement, the Purchaser shall cause to be
delivered to the Company an opinion of counsel for Purchaser
dated as of the date of this Agreement in form and substance
reasonably satisfactory to the Company as to the matters set
forth in Section 4a, c, e and f.
b. The Purchaser agrees to take such actions and execute
and deliver to the Company such documents and instruments as
may be necessary to fully consummate the transactions and
agreements of the Purchaser as contemplated by this Agreement.
c. During the period commencing with the execution of
this Agreement and terminating on the payment in full of the
exercise price as contemplated in Section 1 (the "Option
Term"), the Purchaser agrees not to enter into any agreement
for the sale or disposition of all or substantially all of the
Purchaser's assets (in one or more transactions), or a merger,
consolidation or other business combination involving all or
substantially all of the Purchaser's assets, unless the
Purchaser provide the Company with the express, written
agreement by the Purchaser or other successor(s) to assume the
Purchaser's obligations and covenants hereunder and, after
giving effect to any such sale, disposition, merger,
consolidation or other business combination, the Purchaser or
other successor(s) shall meet the requirements of Section 4
hereof.
7. THE COMPANY'S COVENANTS. The Company covenants and agrees
with the Purchaser that:
a. No later than three business days following the
execution of this Agreement, the Company shall cause to be
delivered to the Purchaser an opinion of counsel for the
Company dated as of the date of this Agreement in form and
substance reasonably satisfactory to Purchaser as to the
matters set forth in Section 5a, b, c, d and f , and as to the
first sentence of 5(g), such opinion of counsel shall state
that, to the best knowledge of such counsel, the Registration
Statement is currently in effect and no stop order suspending
the effectiveness has been instituted or is pending or
threatened by the Securities and Exchange Commission (the
"SEC").
b. The Company agrees to take such actions and execute
and deliver such documents and instruments as may be necessary
to fully consummate the
6
<PAGE> 8
transactions and agreements of the Company as contemplated by
this Agreement, including, without limitation, the filing with
the SEC in a timely manner in accordance with applicable law
of an appropriately supplemented prospectus as referred to in
Section 5c (the "Supplemental Prospectus").
c. Except as otherwise provided below and except for
distributions provided for in the Prospectus, the Plan and/or
pursuant to the terms of securities issued under the Plan,
during the Option Term and thereafter for the period ending
two weeks after the issuance and delivery to the Purchaser of
all of the Committed Shares (i) the Company shall not declare
any dividend or make any distribution on the Company's Common
Stock or Preferred Stock (other than dividends or
distributions payable in the Company's Common Stock or
Preferred Stock) and (ii) the Company shall not effect any
stock dividends, stock splits, or any other issuance of
capital stock (including options, warrants, rights to purchase
stock or securities convertible into stock) or issue any
Common Stock or any other options, warrants or rights thereto
("Derivative Securities") other than: (a) such Common Stock
or Derivative Securities provided for by the Prospectus, the
Plan and/or pursuant to the terms of securities issued under
the Plan, as the case may be; (b) such Common Stock or
Derivative Securities as may be issued pursuant to the terms
of the Company's Key Employee Stock Incentive Plan or to an
employee stock ownership or benefit plan in the ordinary
course of business. For purposes of this provision, the term
"employees" shall include those entities and persons defined
in Instruction A(1)(a) to Form S-8 under the Securities Act.
d. The Company will consult with the Purchaser with
respect to any press release, prospectus supplement, amendment
to the Registration Statement or other public statement or
filing that names or refers to the Purchaser. Any such
disclosure regarding the Purchaser shall be subject to the
Purchaser's consent (which shall not be unreasonably
withheld), except where such release, filing, statement or
announcement by the Company is believed by the responsible
officers of the Company, after consultation with the Company's
counsel, to be required, or that the failure to make such
disclosure would involve an unacceptable risk to the Company,
in each case, under applicable law or pursuant to any listing
agreement with or the rules or regulations of, any national
securities exchange on which the securities of the Company are
listed or traded.
e. Subject to the terms and conditions of this
Agreement, the Company shall deliver or cause to be delivered
to the Purchaser, the Premium (or applicable portion thereof),
together with any accrued interest thereon, (the Premium and
any accrued interest thereon, the "Funds") to be in same day
funds on the first business day following the date of notice
as provided in Section 2 by the Purchaser to the Escrow Agent
that it has performed its obligations under the Agreement
necessary for the Escrow Agent to release the Funds. The
Purchaser shall use its best reasonable efforts to give any
notice to the Escrow Agent to release Funds no later
7
<PAGE> 9
than 5:00 p.m. Atlanta, Georgia time on the business day
immediately preceding the business day on which such Funds are
to be released from escrow. Should the Purchaser terminate
this Agreement, in whole or in part, pursuant to Section 11,
Purchaser shall refund all Funds, and any interest accrued
thereon, theretofore received by it and shall not be entitled
to receive any further Funds whether held in escrow or
otherwise.
f. The Company shall instruct the Subscription Agent to
determine the amount of shares purchased and not purchased
pursuant to the Basic Subscription Privilege on October 6,
1995 and thereafter the Company shall, within one business day
after receiving all the foregoing information from the
Subscription Agent, in form sufficient to determine the shares
to be allocated pursuant to the Oversubscription Privilege,
and direct the Subscription Agent to effect the delivery of
the Committed Shares purchased pursuant to Purchaser's
Oversubscription Privilege within four business days
thereafter.
8. SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS. The agreements,
representations and warranties set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of the Company or any
of its representatives, officers or directors or any controlling person.
9. NOTICES. All notices, demands, instructions and other
communications required or permitted hereunder will be in writing and shall be
personally delivered or sent by registered, certified or express mail, postage
prepaid, return receipt requested, or by telefacsimile (which shall immediately
be followed by the original of such communication) and shall be deemed to be
given when received by the intended recipient or, in the case of telefacsimile,
on the date transmitted to the intended recipient thereof. Unless otherwise
specified in writing in accordance with this Section, such notices, demands
instructions and communications shall be made to the following:
To Purchaser: Grace Brothers, Ltd.
1000 West Diversey Parkway
Suite 233
Chicago, Illinois 60614
Attention: Mr. Bradford T. Whitmore
Telephone: (312) 868-0700
Telefacsimile: (312) 868-0509
8
<PAGE> 10
To the Company: Trans World Airlines, Inc.
One City Centre
515 North Sixth Street
St. Louis, Mo. 63101
Attention: General Counsel
Telephone: (314) 589-3264
Telefacsimile: (314) 589-3267
10. INDEMNIFICATION. (A) Each party shall indemnify, defend and
hold harmless the other, for any and all claims, losses, liabilities and
expenses (including reasonable attorneys' fees) arising out of the breach of
this Agreement in any material respect by such party; PROVIDED, HOWEVER, that
in no event shall this provision give rise to any obligation on the part of the
Company to indemnify the Purchaser for or in respect of any tax liabilities
related to or based on the payment to or receipt of the Premium.
(B) (a) GENERAL INDEMNITY. The Company agrees to indemnify
and hold harmless the Purchaser, and its respective partners, officers and
agents against any and all claims, damages, liabilities and expenses (including
but not limited to reasonable attorneys' fees and any out of pocket expenses
reasonably incurred, as incurred, in defending against any litigation,
commenced or threatened, and any amounts paid in settlement of any claim or
litigation in accordance with the terms hereof) asserted by persons other than
parties to this Agreement or any affiliate of any party to this Agreement (any
such litigation or claim collectively a "Claim"), to which Purchaser or its
respective partners, officers and agents shall become subject insofar as such
Claim results from any untrue statement, or alleged untrue statement, of a
material fact contained in the Registration Statement or any amendment thereof,
or the prospectus contained therein (the "Prospectus"), or in any supplement
thereto or amendment thereof, or any omission, or alleged omission, to state
therein a material fact required to be stated to make the statements therein
not misleading, PROVIDED, HOWEVER, the Company shall not be required to
indemnify the Purchaser for any Claim for any violation by the Purchaser of
Section 5 of the Securities Act arising out of the sales of Common Stock by
Purchaser after the date of this Agreement, including any violations arising
out of the failure of a registration statement ( other than the Registration
Statement with respect to the sale to the Purchaser) for such sales to be
effective, unless there shall be a final judicial determination that (x) the
Registration Statement or Prospectus contained an untrue statement of material
fact or an omission of a material face necessary to make the Registration
Statement or Prospectus not misleading and (y) which fact or omission (i) does
not relate to Purchaser's status, conduct or performance under or related to
this Agreement, and (ii) does not result from the description of the
transaction contemplated by this Agreement. The foregoing indemnification
pertains to such untrue statements or omissions relating to the Registration
Statement or any amendment thereof or the Prospectus or any supplement thereto
or amendment thereof at the time the Registration Statement was declared
effective or on any subsequent date until the expiration of the Option.
(b) A claim for indemnification shall be made by
Purchaser by delivery of a written notice to the Company requesting
indemnification and specifying the basis and facts, in
9
<PAGE> 11
reasonable detail, on which indemnification is sought and the amount of
asserted Claims and, containing (by attachment or otherwise) such other
information as such Purchaser shall have concerning such Claims.
(c) The obligations and liabilities of the Company
hereunder with respect to a claim for indemnification shall be subject to the
following terms and conditions.
(i) The Purchaser shall give the Company written
notice of a Claim promptly after receipt by the Purchaser of notice
thereof, and the Company may undertake the defense, compromise and
settlement thereof by legal counsel and representatives of its own
choosing reasonably acceptable to the Purchaser. The failure of the
Purchaser to notify the Company of a Claim shall not relieve the
Company of any liability that it may have with respect to such Claim
except to the extent the Company demonstrates that the defense of such
Claim is prejudiced by such failure or otherwise impairs the Company's
ability to participate in the contest of such Claim in any material
respect. The assumption of the defense, compromise and settlement of
any such Claim by the Company shall not be an acknowledgment of the
obligation of the Company to indemnify the Purchaser with respect to
any Claim or otherwise under the Agreement. Likewise, any payment
made by the Company pursuant to this indemnification provision shall
not be an acknowledgment of the obligation of the Company to indemnify
the Purchaser with respect to any Claim or otherwise under the
Agreement. If the Purchaser desires to participate in, but not
control, any such defense, compromise and settlement, it may do so at
its sole cost and expense. If, however, the Company fails or refuses
to undertake the defense of such Claim within seven (7) business days
after written notice of such Claim has been given to the Company by
the Purchaser, the Purchaser shall have the right to undertake the
defense of such Claim with counsel of its own choosing provided such
counsel is reasonably acceptable to the Company. After the Company's
notice to the Purchaser of the Company's election to assume the
defense of a Claim, the Company will not be liable to the Purchaser
under this Section 10(B)(a) for any legal or other expenses,
subsequently incurred by Purchaser in connection with the defense
thereof, unless (1) the Purchaser shall have employed separate counsel
in accordance with the immediately preceding sentence or (2) the
Company has authorized the employment of counsel for the Purchaser at
the expense of the Company.
(ii) No settlement or compromise of, or consent to
a judgement with respect to, a Claim shall be made without the prior
written consent of the Company, and the Company shall have no
liability with respect to any compromise or settlement of, or consent
to a judgement with respect to, a Claim effected without its consent.
(iii) In connection with the defense, compromise or
settlement of any Claim, the parties to this Agreement shall execute
such powers of attorney as may reasonably be necessary or appropriate
to permit participation of counsel selected by any party hereto and,
as may reasonably be related to any such claim or action, shall
provide access to the counsel, accountants and other representatives
of each party during normal
10
<PAGE> 12
business hours to all properties, personnel, books, tax records,
contracts, commitments and all other business records of such other
party relevant to the Claim and will furnish to such other party
copies of all such documents as may reasonably be requested
(certified, if requested).
(iv) Purchaser and the Company agrees to cooperate
in good faith in the defense of any Claim indemnifiable hereunder and
shall endeavor to keep any indemnity payable by the Company to a
minimum, consistent with a proper defense of the Claim.
11. TERMINATION. The Purchaser may terminate this Agreement (i)
upon the occurrence of a delisting of the Common Stock from the American Stock
Exchange at any time during the Option Term or a suspension of trading in the
Common Stock for (x) any four business days during the Option Term or (y) a
definite period of at least three business days or for an indefinite period
which suspension actually lasts for at least three business days, which, in
either case under clause (i)(y), shall exist or continue in whole or in part at
any time during the five business days prior to and including October 5, 1995,
(ii) if a general suspension shall occur in trading of securities on the New
York Stock Exchange, the American Stock Exchange and the NASDAQ National Market
for a period of three business days which shall exist or continue in whole or
in part during the five business days prior to and including October 5, 1995,
(iii) if there shall have occurred any general banking moratorium declared by
United States federal or by all or any substantial number of state banking
authorities, (iv) if a state of war shall have been declared or exist between
the United States and China, Germany, France, Japan, the United Kingdom or
Russia or (v) if on or prior to October 5, 1995, there shall have occurred, as
of any business day during the eight business days prior to and including
October 5, 1995, a decline in the Dow Jones Industrial Average by an amount in
excess of 20% as measured from the close of business on the date of this
Agreement to such business day.
12. NO LIMITATION ON EQUITY RIGHTS. Nothing in this Agreement,
including any failure by the Company to exercise the Option, shall be construed
as limiting any right Purchaser has to subscribe or oversubscribe for shares of
Common Stock pursuant to its Equity Rights, including, without limitation, the
right to purchase, if applicable, Common Stock in an amount in excess of the
Committed Shares.
13. CONDITIONS TO PURCHASER'S OBLIGATIONS. The Purchaser's
obligations to purchase the Committed Shares, shall be subject to the condition
that (i) the Company's representations and warranties set forth in Section 5a,
b, c, d, f, g, and h herein shall, as of the date made have been and on October
5, 1995 will be, true and correct in all material respects, (ii) that on or
prior to October 5, 1995 no order, decree or judgment of any court, agency or
other authority of competent authority in the United States shall have been
rendered against the Company to restrain or prohibit the performance by the
Company of this Agreement or the transactions contemplated thereby, (iii) on
October 5, 1995, the Registration Statement shall be currently effective and no
stop order pertaining to it shall have been issued by the Securities and
Exchange Commission, (iv) the Company shall have substantially performed its
covenants or other obligations set forth in this Agreement, and (v) the Company
shall not have altered the actual terms of the Equity
11
<PAGE> 13
Rights Offering or extended the time for exercise of such Equity Rights without
the consent of the Purchaser, which consent will not be unreasonably withheld;
PROVIDED, HOWEVER, that the entry by the Company into any put agreement or
stand by purchase agreement of any kind whatsoever with respect to the Equity
Rights or the Common Stock issuable pursuant thereto shall not be deemed to be
an alteration of the terms of the Equity Rights Offering in any manner
whatsoever. In the event of an agreement by the parties hereto (which
agreement may be evidenced by the absence of an objection by the Company to a
disbursement request by the Purchaser pursuant to the terms of the Escrow
Agreement based on this Section 13) or the entry of a final non-appealable
judgment by a court of competent jurisdiction that the Purchaser's performance
under this Agreement is excused pursuant to this Section 13, Purchaser shall be
entitled to receive the Funds (as defined in the Escrow Agreement).
14. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto, their respective successors and assigns.
Except as expressly stated herein, the Purchaser may not assign its obligations
under this Agreement or the Standby Commitment but may, without restriction,
assign its rights hereunder to any affiliated entity and, following the
settlement date, to any three or fewer third parties or affiliated parties.
Except as expressly stated herein, the Company may not assign its obligations
under this Agreement without the consent of the Purchaser.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties hereto and supersedes any and all
prior agreements, arrangements and understandings relating to the matters
provided for herein.
16. APPLICABLE LAW. The Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
without regard to principles of conflict of laws.
17. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of the parties hereto.
12
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their authorized officers as of the date first
above written.
COMPANY:
TRANS WORLD AIRLINES, INC.
By:
----------------------------------------
Title:
-----------------------------------
PURCHASER:
GRACE BROTHERS, LTD.
By:
---------------------------------------
General Partner
By:
----------------------------------
Title:
-------------------------------
13
<PAGE> 15
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT, made and entered into this 15th day of
September, 1995, by and among Grace Brothers, Ltd., a Illinois limited
partnership (hereinafter referred to as "Purchaser"), Trans World Airlines,
Inc., a Delaware corporation ("TWA") and Smith, Gambrell & Russell, a general
partnership (the "Escrow Agent");
W I T N E S S E T H, THAT:
- - - - - - - - - - ----
WHEREAS, Purchaser and TWA have entered into a certain
Agreement of even date herewith, a copy of which is attached hereto as EXHIBIT
A (the "Agreement"); and
WHEREAS, the Agreement provides for the deposit with the
Escrow Agent of $516,284.99, with all such amounts, together with any interest
earned thereon, to be held and applied by the Escrow Agent in accordance with
the terms of the Agreement; and
WHEREAS, the parties hereto desire to enter into a written
escrow agreement;
NOW, THEREFORE, in consideration of the agreements set forth
in the Agreement and the mutual covenants set forth herein, the parties hereto,
intending to be and being legally bound, do hereby agree as follows:
1. ESCROW. TWA has delivered to Escrow Agent $516,284.99 (the
"Premium"), the receipt whereof is hereby acknowledged by Escrow Agent, which
together with any interest earned thereon (collectively, the "Funds") shall be
held, administered and disbursed by Escrow Agent in accordance with the terms
and conditions of this Escrow Agreement and the Agreement. Escrow Agent shall
hold the Funds and shall deposit the Funds within one business day after the
date of this Agreement in an account with Wachovia Bank of Georgia, N.A. (the
"Bank") which shall be a standard passbook savings account or other interest
bearing account as Escrow Agent may direct, in its sole discretion, consistent
with the required availability of the Funds for payment under the Agreement.
Interest or other income, if any, earned on the Funds shall be deemed a part of
the Funds for purposes of this Agreement and shall be disbursed to Purchaser
from time to time in accordance with the terms and conditions of this Escrow
Agreement and the Agreement.
2. DISBURSEMENT OF FUNDS. The Funds shall be held and disbursed by
Escrow Agent as herein provided and subject to the terms of the Agreement. At
such time as Escrow Agent receives from the Purchaser the affidavit and other
evidence required by Section 2 of the Agreement as to the exercise of Equity
Rights pursuant to the Agreement, together with a computation of the Funds
required to be disbursed in consequence of such exercise and written
<PAGE> 16
notice stating the identity of the party to whom the Funds are to be disbursed
(which, in each such case, Escrow Agent believes to be genuine), Escrow Agent
shall disburse such Funds pursuant to such notice, PROVIDED, HOWEVER, that if
the Escrow Agent does not receive the affidavit from Purchaser required by the
Agreement by October 31, 1995, the Company will return the Premium to TWA. TWA
and Purchaser hereby agree to send to the other at the address specified in
Section 7 hereof, a duplicate of any written notice sent to Escrow Agent
requesting any disbursement of funds or requesting that any such disbursement
be withheld.
3. LIMITED LIABILITY. In performing any of its duties hereunder,
Escrow Agent shall not incur any liability to anyone for any damages, losses,
or expenses, except for any such arising solely as a result of the willful
misconduct or breach of trust by Escrow Agent hereunder, and, accordingly,
Escrow Agent shall not incur any such liability with respect to (i) any action
taken or omitted in good faith upon the basis of its own opinion, or upon
advice of separate legal counsel given, with respect to any questions relating
to the duties and responsibilities of Escrow Agent under this Agreement, or
(ii) any action taken or omitted in reliance on any instrument, including any
written notice or instruction provided for in this Agreement, not only as to
its due execution and the validity and effectiveness of its provisions but also
as to the truth and accuracy of any information contained therein, which Escrow
Agent shall in good faith believe to be genuine, to have been signed, or
presented by a person or persons having authority to sign or present such
instrument, and to conform with the provisions of this Escrow Agreement.
4. PURCHASER'S EXCUSED PERFORMANCE. Notwithstanding anything in this
Escrow Agreement to the contrary, in the event that prior to disbursement of
the Funds pursuant to Section 2 hereof, Purchaser shall give notice to Escrow
Agent, with a copy delivered to the Company as provided herein, that its
obligations to purchase have been excused pursuant to Paragraph 13 of the
Agreement and TWA shall not, within ten (10) days thereafter, give notice to
Escrow Agent that it disputes Purchaser's right to excused performance as
asserted, Escrow Agent shall disburse the Escrow Funds to Purchaser. If within
ten (10) of Escrow Agent's receipt of Purchaser's notice hereunder, TWA shall
give notice to the Escrow Agent, with a copy delivered to the Purchaser by the
Company as provided herein, that it disputes Purchaser's claimed right to
excused performance, Escrow Agent shall tender into the registry or custody of
a court of competent jurisdiction the Funds, together with such pleadings as it
may deem appropriate, and thereupon be discharged from all further duties and
liabilities under this Escrow Agent (other than with respect to any liabilities
for willful misconduct or breach of trust by Escrow Agent). Any such legal
action may be brought in such court as Escrow Agent shall determine to have
jurisdiction thereof. Any notice by Purchaser claiming a right to payment by
virtue of excused performance pursuant to this Paragraph 4 shall set forth with
particularity the specific basis (including the underlying facts) upon which
the performance is claimed to be excused.
5. INDEMNITY. TWA and Purchaser hereby agree to indemnify Escrow
Agent against, and hold Escrow Agent harmless from, any and all claims,
actions, demands, losses, damages, expenses (including, without limitation,
court costs, attorneys' fees, and accountant's fees), and liabilities that may
be imposed upon performance of its duties hereunder, including, without
2
<PAGE> 17
limitation, any litigation arising from this Escrow Agreement or involving the
subject matter hereof, but excluding any such claims, actions, demands, losses,
damages, expenses, and liabilities resulting solely from any willful misconduct
or breach of trust by Escrow Agent hereunder. In the event of any litigation
arising from this Escrow Agreement or involving the subject matter hereof, and
in the event TWA and Purchaser are opposing parties in such litigation, the
party prevailing in such litigation shall be reimbursed promptly upon demand by
the other such party for the reasonable out-of-pocket costs and expenses of
such litigation together with any amount which the prevailing party shall have
paid Escrow Agent with respect to such litigation and the subject matter
thereof pursuant to the indemnification agreement contained in this Paragraph
5.
6. COMPENSATION. In consideration of its services hereunder, Escrow
Agent shall be (i) paid an escrow fee of $l0.00, which amount shall be paid by
TWA at the time of disbursement of the Funds by Escrow Agent and (ii)
indemnified by the parties as provided in Paragraph 5 hereof.
7. NOTICES. Wherever any notice or other communication is required or
permitted hereunder, such notice shall be in writing and shall be delivered in
person or sent by U.S. registered or certified mail, return receipt requested,
postage prepaid, to the addresses set out below or at such other addresses as
are specified by written notice delivered in accordance herewith:
PURCHASER: Grace Brothers, Ltd.
--------- 1000 West Diversey Parkway
Suite 233
Chicago, Illinois 60614
Attention: Mr. Bradford T.Whitmore
Telephone: (312) 868-0700
Telefacsilile: (312) 868-0509
TWA: Trans World Airlines, Inc.
--- One City Centre
515 North Sixth Street
St. Louis, MO 63101
Attention: Richard P. Magurno, Esq.
Telephone: (314) 589-3264
Telefacsimile: (314) 589-3267
3
<PAGE> 18
ESCROW AGENT: Smith, Gambrell & Russell
------------- 1230 Peachtree Street, N.E.
Promenade II, Suite 3100
Atlanta, GA 30309-3592
Attention: Howard E. Turner
Telephone: (404) 815-3594
Telefacsimile: (404) 815-3509
8. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors, and assigns,
provided neither TWA nor Purchaser shall be permitted to assign all or any part
of their respective right, title, and interest hereunder, except to the extent
said party is permitted to assign its right, title and interest whether in
whole or in part under the Agreement, and then only from and to the extent
permitted thereunder or pursuant to the written consent of the other party.
Any and all rights granted to any of the parties hereto may be exercised by
their agents or personal representatives.
9. MISCELLANEOUS. Time is of the essence of this Agreement.
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Agreement or the Plan. Each of the parties hereto acknowledge
that Escrow Agent acts as outside counsel for TWA and has so acted in
connection with, among other things, the negotiation, preparation and execution
of the Agreement and this Escrow Agreement. Such parties acknowledge and agree
that Escrow Agent shall be entitled to continue to so act with respect to all
existing and future matters on or with respect to which TWA may wish to consult
Smith, Gambrell & Russell.
10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all such
counterparts together shall constitute one and the same instrument.
4
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
Escrow Agreement as of the day and year first above written.
PURCHASER:
---------
GRACE BROTHERS, LTD.
By:
-------------------------------------
General Partner
By:
-------------------------------
Title:
----------------------------
TRANS WORLD AIRLINES, INC.:
--------------------------
By:
-------------------------------------
Its:
-----------------------------------
ESCROW AGENT:
------------
SMITH, GAMBRELL & RUSSELL
By:
-------------------------------------
a Partner
5
<PAGE> 1
EXHIBIT 10.45
<PAGE> 2
EQUITY RIGHTS PUT AGREEMENT
---------------------------
This Agreement dated as of September 15, 1995 is made by and between
Trans World Airlines, Inc., a Delaware corporation (the "Company") and First
Capital Alliance, L.P., a Illinois limited partnership (the "Purchaser");
WITNESSETH:
WHEREAS, pursuant to the Company's plan of reorganization confirmed by
the United States Bankruptcy Court for the Eastern District of Missouri on
August 4, 1995 (the "Plan") which became effective on August 23, 1995 (the
"Effective Date"), the Company has issued approximately 13,150,000 Equity
Rights (as defined in Section 1.1.60 of the Plan), each consisting of the
nontransferable right to purchase for cash from the Company newly issued Common
Stock pursuant to a "Basic Subscription Privilege" and an "Oversubscription
Privilege" (as such terms are defined in Section 1.1.60 of the Plan);
WHEREAS, the Purchaser is the owner and holder of Equity Rights
("Purchaser's Equity Rights");
WHEREAS, the Common Stock to be issued to Purchaser upon exercise of
Purchaser's Equity Rights has been registered by the Company pursuant to
Registration Statement No. 33-89764, as amended, filed with the Securities and
Exchange Commission and declared effective on May 12, 1995 (the "Registration
Statement").
WHEREAS, the Company and Purchaser are willing to enter into this
Agreement to provide for the purchase of the number of shares of Common Stock
of the Company hereinafter set forth to the extent such shares may be acquired
pursuant to the Option (as defined below) to be effected by the full exercise
of the Basic Subscription Privilege, and an exercise of the Oversubscription
Privilege, of the Equity Rights held by Purchaser as set forth below; and
WHEREAS, all capitalized terms used herein which are not separately
defined, are used herein as defined in the Plan.
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Company and the Purchaser, agree as follows:
1. GRANT OF PUT OPTION. Purchaser hereby grants to the Company
the Option (the "Option") exercisable on or before October 5, 1995 (the 43rd
day following the Effective Date) to put to the Purchaser the exercise of
Purchaser's Basic Subscription Privileges and Oversubscription Privileges as
hereinafter provided. Upon the exercise by the Company of the Option, the
Purchaser shall, in accordance with the covenants, representations and
warranties herein contained, on or prior to 5:00 p.m. New York time on October
5, 1995, exercise the Basic Subscription Privilege and the Oversubscription
Privilege under Equity Rights held by the Purchaser to subscribe for, in the
aggregate, not fewer than 1,315,114 shares (the "Committed Shares") of Common
Stock of the Company by executing and delivering to American Stock
<PAGE> 3
Transfer and Trust Company as agent (the "Subscription Agent") properly
completed Subscription Forms, with any required signatures guaranteed, together
with payment in full of the Subscription Price for each of the Committed Shares
in accordance with the terms of the Equity Rights and the Plan. The Option may
be exercised by the Company by sending notice in writing to Purchaser by
facsimile transmission to the Purchaser's address, as initially stated in
Section 9, on or before 3:00 p.m. New York time on October 5, 1995. In no
event shall Purchaser be required to subscribe for more than 1,315,114 shares
of Common Stock in the aggregate pursuant to its own exercise of the Equity
Rights and the exercise by the Company of the Option.
2. PREMIUM TO PURCHASER FOR OPTION. As consideration for the
Option in Section 1, the Company will pay to the Purchaser an aggregate premium
equal to $344,189.99 (the "Premium").
The Premium will be paid in immediately available funds on the date of
the execution of this Agreement, if this Agreement is executed prior to 10:00
a.m. New York time on such date, and otherwise in immediately available funds
on the day following the execution of this Agreement, and will be placed in an
escrow account with Smith, Gambrell & Russell (in such capacity, the "Escrow
Agent") pursuant to an escrow agreement which will authorize the release of the
funds to Purchaser only upon receipt by the Escrow Agent and the Company of an
affidavit of a duly authorized officer or general partner of the Purchaser to
the effect that, Purchaser has executed or caused to be executed and delivered
or caused to be delivered to the Subscription Agent properly completed
Subscription Forms, with any required signatures guaranteed, together with
payment in full of the Subscription Price for each of the Committed Shares in
accordance with the terms hereof and of the Equity Rights and the Plan, and
confirmation from the carrying broker receipt and execution of instructions
from the Purchaser to exercise the Equity Rights in the amount specified in
such affidavit. Such escrow agreement shall provide that the Premium shall be
subject to a partial release at Purchaser's request, to the extent that the
Purchaser's Basic Subscription Privilege has been exercised prior to its
Oversubscription Privilege provided the Escrow Agent and the Company shall have
been furnished evidence as above required of such execution and delivery of
Subscription Forms and payment of the Subscription Price. Any partial release
of the Premium shall be in the same proportion as the number of shares
subscribed for by the Purchaser pursuant to the Equity Rights bears to the
total Committed Shares committed to by the Purchaser (the dollar amount derived
from such calculation shall be referred to as the "Computation"). Such escrow
agreement shall further provide that interest shall accrue on all escrowed
amounts. The Escrow Agent shall deposit the Premium in such interest bearing
account, as may be selected by the Escrow Agent, with Wachovia Bank of Georgia,
N.A. (the "Bank") on a basis allowing for withdrawal of the funds on one
business day's notice. The escrow agreement shall be in the form attached
hereto as Exhibit A and may contain such other terms as may be agreed to by the
parties hereto and the Escrow Agent. The Purchaser shall send a copy of all
documents sent to the Escrow Agent to the Company but such transmission shall
not be a condition to the release of Funds from escrow unless objection shall
be given by the Company as provided in the Escrow Agreement.
2
<PAGE> 4
3. TRANSACTION COSTS, FEES AND EXPENSES. Each party hereto
agrees to pay its own transaction costs, fees and expenses in connection with
the transactions contemplated hereby, including without limitation, the fees
and expenses of their respective counsel, except that the Company shall pay
Purchaser's actual reasonable legal fees and expenses in an amount not to
exceed $10,000.
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Purchaser
represents and warrants and agrees that:
a. Purchaser is a duly organized and validly existing
Illinois limited partnership which is in good standing under
the laws of its jurisdiction of organization, with partnership
power and authority to own its property and conduct its
business and to enter into and perform all of its obligations
under this Agreement.
b. Purchaser is the owner and holder of Equity Rights.
c. This Agreement has been duly authorized, executed and
delivered by the Purchaser and constitutes the valid, legal
and binding obligation of the Purchaser enforceable against
the Purchaser in accordance with its terms subject to the
effect of bankruptcy, insolvency, reorganization, moratorium,
in each case with respect to proceedings subsequent to the
date of this Agreement and other similar laws affecting the
rights and remedies of creditors generally and general
principles of equity.
d. The Purchaser has a net worth and sufficient
unrestricted liquid assets and the financial ability to fully
perform its obligations under this Agreement. The Purchaser
shall furnish a certification signed by an authorized officer
of First Options of Chicago, Inc. ("First Options") certifying
that Purchaser has, and that Purchaser will, at all times
prior to consummation of its obligations to purchase the
Committed Shares, maintain sufficient funds on deposit with
First Options to fund its purchase of the Committed Shares.
e. No consent, approval, authorization or order of, or
filing with, any governmental agency or body of any court is
required for the consummation by the Purchaser of the
transactions contemplated by this Agreement.
f. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation by
Purchaser of any of the terms and provisions of, or constitute
a default under, (i) any statute, rule or regulation, or any
order of any governmental agency or body or any court having
jurisdiction over the Purchaser or any subsidiary of the
Purchaser or any of their properties or (ii) any agreement or
instrument to which the Purchaser or any subsidiary is a party
or by which the
3
<PAGE> 5
Purchaser or any subsidiary is bound or to which any of the
properties of the Purchaser or any subsidiary is subject, or
(iii) the certificate of limited partnership or partnership
agreement of the Purchaser or any subsidiary of the Purchaser
which currently conducts business.
g. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Purchaser,
threatened against, and no order, decree or judgment of any
court, agency or other governmental authority of competent
jurisdiction in the United States shall have been rendered
against, the Purchaser to restrain or prohibit the performance
by Purchaser of this Agreement or the transactions
contemplated by this Agreement.
h. The Purchaser's principal place of business is
located in the State of New York.
5. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants and agrees that:
a. The Company is a duly organized and validly existing
Delaware corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and
authority to own its property and conduct its business and to
enter into and perform all of its obligations under this
Agreement.
b. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid, legal and
binding obligation of the Company, enforceable against the
Company in accordance with its terms subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, in each
case with respect to proceedings subsequent to the date of
this Agreement and other similar laws affecting the rights and
remedies of creditors generally and general principles of
equity.
c. Except for the filing of an appropriately
supplemented prospectus describing, among other things, the
transactions contemplated by this Agreement, no consent,
approval, authorization or order of, or filing with, any
governmental agency or body or any court in any applicable
jurisdiction of the United States is required for the
consummation by the Company of the transactions contemplated
by this Agreement.
d. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation by the
Company of any of the terms and provisions of, or constitute a
default under, (i) any statute, rule or regulation, or any
order of any governmental agency or body or any court having
jurisdiction over the Company or any subsidiary of the Company
or any of their properties or (ii) any agreement
4
<PAGE> 6
or instrument to which the Company or any subsidiary is a
party or by which the Company or any subsidiary is bound or to
which any of the properties of the Company or any subsidiary
is subject, or (iii) the certificate of incorporation or
by-laws of the Company or any subsidiary of the Company which
currently conducts business.
e. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Company,
threatened against, and no order, decree or judgment of any
court, agency or other governmental authority of competent
authority in the United States shall have been rendered
against, the Company to restrain or prohibit the performance
by Company of this Agreement or the transactions contemplated
by this Agreement.
f. The Equity Rights issued to Purchaser for the
Committed Shares and the Committed Shares issued upon exercise
thereof have been duly authorized by the Company and such
Committed Shares, when issued and delivered by the Company in
accordance with the Plan and against payment therefor as
contemplated in the Plan and hereby, will be (i) validly
issued, fully paid and non-assessable and such Equity Rights
and Committed Shares have been registered pursuant to the
Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act") and (ii) free and clear of any
liens, claims and encumbrances arising by, through, or under
the Company and shall not be subject to any stop transfer
instructions imposed by the Company.
g. The Registration Statement with respect to the sale
of the Equity Rights and the underlying Common Stock (issuable
upon the exercise thereof) in each case by the Company to the
Purchaser is currently effective and no stop order pertaining
to it has been issued by the Securities and Exchange
Commission. The Registration Statement shall be effective at
the time of sale and delivery by the Company of the Committed
Shares and no stop order suspending the effectiveness of such
Registration Statement including any amendment or supplement
thereto shall have been issued. The Committed Shares have
been approved for issuance on the American Stock Exchange,
subject to official notice of issuance.
h. As of its effective date, the Registration Statement
did not, insofar as relevant to the Equity Rights or the
underlying Common Stock purchasable pursuant thereto, include
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements made therein not misleading, and, as of
such date, the Prospectus did not, insofar as material to the
investment decision of a reasonable purchaser of the Common
Stock, include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
5
<PAGE> 7
6. PURCHASER'S COVENANTS. The Purchaser covenants and agrees
with the Company that:
a. No later than three business days following the
execution of this Agreement, the Purchaser shall cause to be
delivered to the Company an opinion of counsel for Purchaser
dated as of the date of this Agreement in form and substance
reasonably satisfactory to the Company as to the matters set
forth in Section 4a, c, e and f.
b. The Purchaser agrees to take such actions and execute
and deliver to the Company such documents and instruments as
may be necessary to fully consummate the transactions and
agreements of the Purchaser as contemplated by this Agreement.
c. During the period commencing with the execution of
this Agreement and terminating on the payment in full of the
exercise price as contemplated in Section 1 (the "Option
Term"), the Purchaser agrees not to enter into any agreement
for the sale or disposition of all or substantially all of the
Purchaser's assets (in one or more transactions), or a merger,
consolidation or other business combination involving all or
substantially all of the Purchaser's assets, unless the
Purchaser provide the Company with the express, written
agreement by the Purchaser or other successor(s) to assume the
Purchaser's obligations and covenants hereunder and, after
giving effect to any such sale, disposition, merger,
consolidation or other business combination, the Purchaser or
other successor(s) shall meet the requirements of Section 4
hereof.
7. THE COMPANY'S COVENANTS. The Company covenants and agrees
with the Purchaser that:
a. No later than three business days following the
execution of this Agreement, the Company shall cause to be
delivered to the Purchaser an opinion of counsel for the
Company dated as of the date of this Agreement in form and
substance reasonably satisfactory to Purchaser as to the
matters set forth in Section 5a, b, c, d and f , and as to the
first sentence of 5(g), such opinion of counsel shall state
that, to the best knowledge of such counsel, the Registration
Statement is currently in effect and no stop order suspending
the effectiveness has been instituted or is pending or
threatened by the Securities and Exchange Commission (the
"SEC").
b. The Company agrees to take such actions and execute
and deliver such documents and instruments as may be necessary
to fully consummate the transactions and agreements of the
Company as contemplated by this Agreement, including, without
limitation, the filing with the SEC in a timely manner in
6
<PAGE> 8
accordance with applicable law of an appropriately
supplemented prospectus as referred to in Section 5c (the
"Supplemental Prospectus").
c. Except as otherwise provided below and except for
distributions provided for in the Prospectus, the Plan and/or
pursuant to the terms of securities issued under the Plan,
during the Option Term and thereafter for the period ending
two weeks after the issuance and delivery to the Purchaser of
all of the Committed Shares (i) the Company shall not declare
any dividend or make any distribution on the Company's Common
Stock or Preferred Stock (other than dividends or
distributions payable in the Company's Common Stock or
Preferred Stock) and (ii) the Company shall not effect any
stock dividends, stock splits, or any other issuance of
capital stock (including options, warrants, rights to purchase
stock or securities convertible into stock) or issue any
Common Stock or any other options, warrants or rights thereto
("Derivative Securities") other than: (a) such Common Stock
or Derivative Securities provided for by the Prospectus, the
Plan and/or pursuant to the terms of securities issued under
the Plan, as the case may be; (b) such Common Stock or
Derivative Securities as may be issued pursuant to the terms
of the Company's Key Employee Stock Incentive Plan or to an
employee stock ownership or benefit plan in the ordinary
course of business. For purposes of this provision, the term
"employees" shall include those entities and persons defined
in Instruction A(1)(a) to Form S-8 under the Securities Act.
d. The Company will consult with the Purchaser with
respect to any press release, prospectus supplement, amendment
to the Registration Statement or other public statement or
filing that names or refers to the Purchaser. Any such
disclosure regarding the Purchaser shall be subject to the
Purchaser's consent (which shall not be unreasonably
withheld), except where such release, filing, statement or
announcement by the Company is believed by the responsible
officers of the Company, after consultation with the Company's
counsel, to be required, or that the failure to make such
disclosure would involve an unacceptable risk to the Company,
in each case, under applicable law or pursuant to any listing
agreement with or the rules or regulations of, any national
securities exchange on which the securities of the Company are
listed or traded.
e. Subject to the terms and conditions of this
Agreement, the Company shall deliver or cause to be delivered
to the Purchaser, the Premium (or applicable portion thereof),
together with any accrued interest thereon, (the Premium and
any accrued interest thereon, the "Funds") to be in same day
funds on the first business day following the date of notice
as provided in Section 2 by the Purchaser to the Escrow Agent
that it has performed its obligations under the Agreement
necessary for the Escrow Agent to release the Funds. The
Purchaser shall use its best reasonable efforts to give any
notice to the Escrow Agent to release Funds no later than 5:00
p.m. Atlanta, Georgia time on the business day immediately
preceding the business day on which such Funds are to be
released from escrow. Should the
7
<PAGE> 9
Purchaser terminate this Agreement, in whole or in part,
pursuant to Section 11, Purchaser shall refund all Funds, and
any interest accrued thereon, theretofore received by it and
shall not be entitled to receive any further Funds whether
held in escrow or otherwise.
f. The Company shall instruct the Subscription Agent to
determine the amount of shares purchased and not purchased
pursuant to the Basic Subscription Privilege on October 6,
1995 and thereafter the Company shall, within one business day
after receiving all the foregoing information from the
Subscription Agent, in form sufficient to determine the shares
to be allocated pursuant to the Oversubscription Privilege,
and direct the Subscription Agent to effect the delivery of
the Committed Shares purchased pursuant to Purchaser's
Oversubscription Privilege within four business days
thereafter.
8. SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS. The agreements,
representations and warranties set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of the Company or any
of its representatives, officers or directors or any controlling person.
9. NOTICES. All notices, demands, instructions and other
communications required or permitted hereunder will be in writing and shall be
personally delivered or sent by registered, certified or express mail, postage
prepaid, return receipt requested, or by telefacsimile (which shall immediately
be followed by the original of such communication) and shall be deemed to be
given when received by the intended recipient or, in the case of telefacsimile,
on the date transmitted to the intended recipient thereof. Unless otherwise
specified in writing in accordance with this Section, such notices, demands
instructions and communications shall be made to the following:
To Purchaser: First Capital Alliance, L.P.
440 South LaSalle
Suite 1614
Chicago, Illinios 60605
Attention: Mr. Henry Chu
Telephone: (312) 362-2050
Telefacsimile: (312) 362-2022
To the Company: Trans World Airlines, Inc.
One City Centre
515 North Sixth Street
St. Louis, Mo. 63101
Attention: General Counsel
Telephone: (314) 589-3264
Telefacsimile: (314) 589-3267
8
<PAGE> 10
10. INDEMNIFICATION. (A) Each party shall indemnify, defend and
hold harmless the other, for any and all claims, losses, liabilities and
expenses (including reasonable attorneys' fees) arising out of the breach of
this Agreement in any material respect by such party; PROVIDED, HOWEVER, that
in no event shall this provision give rise to any obligation on the part of the
Company to indemnify the Purchaser for or in respect of any tax liabilities
related to or based on the payment to or receipt of the Premium.
(B) (a) GENERAL INDEMNITY. The Company agrees to indemnify
and hold harmless the Purchaser, and its respective partners, officers and
agents against any and all claims, damages, liabilities and expenses (including
but not limited to reasonable attorneys' fees and any out of pocket expenses
reasonably incurred, as incurred, in defending against any litigation,
commenced or threatened, and any amounts paid in settlement of any claim or
litigation in accordance with the terms hereof) asserted by persons other than
parties to this Agreement or any affiliate of any party to this Agreement (any
such litigation or claim collectively a "Claim"), to which Purchaser or its
respective partners, officers and agents shall become subject insofar as such
Claim results from any untrue statement, or alleged untrue statement, of a
material fact contained in the Registration Statement or any amendment thereof,
or the prospectus contained therein (the "Prospectus"), or in any supplement
thereto or amendment thereof, or any omission, or alleged omission, to state
therein a material fact required to be stated to make the statements therein
not misleading, PROVIDED, HOWEVER, the Company shall not be required to
indemnify the Purchaser for any Claim for any violation by the Purchaser of
Section 5 of the Securities Act arising out of the sales of Common Stock by
Purchaser after the date of this Agreement, including any violations arising
out of the failure of a registration statement ( other than the Registration
Statement with respect to the sale to the Purchaser) for such sales to be
effective, unless there shall be a final judicial determination that (x) the
Registration Statement or Prospectus contained an untrue statement of material
fact or an omission of a material face necessary to make the Registration
Statement or Prospectus not misleading and (y) which fact or omission (i) does
not relate to Purchaser's status, conduct or performance under or related to
this Agreement, and (ii) does not result from the description of the
transaction contemplated by this Agreement. The foregoing indemnification
pertains to such untrue statements or omissions relating to the Registration
Statement or any amendment thereof or the Prospectus or any supplement thereto
or amendment thereof at the time the Registration Statement was declared
effective or on any subsequent date until the expiration of the Option.
(b) A claim for indemnification shall be made by
Purchaser by delivery of a written notice to the Company requesting
indemnification and specifying the basis and facts, in reasonable detail, on
which indemnification is sought and the amount of asserted Claims and,
containing (by attachment or otherwise) such other information as such
Purchaser shall have concerning such Claims.
(c) The obligations and liabilities of the Company
hereunder with respect to a claim for indemnification shall be subject to the
following terms and conditions.
9
<PAGE> 11
(i) The Purchaser shall give the Company written
notice of a Claim promptly after receipt by the Purchaser of notice
thereof, and the Company may undertake the defense, compromise and
settlement thereof by legal counsel and representatives of its own
choosing reasonably acceptable to the Purchaser. The failure of the
Purchaser to notify the Company of a Claim shall not relieve the
Company of any liability that it may have with respect to such Claim
except to the extent the Company demonstrates that the defense of such
Claim is prejudiced by such failure or otherwise impairs the Company's
ability to participate in the contest of such Claim in any material
respect. The assumption of the defense, compromise and settlement of
any such Claim by the Company shall not be an acknowledgment of the
obligation of the Company to indemnify the Purchaser with respect to
any Claim or otherwise under the Agreement. Likewise, any payment
made by the Company pursuant to this indemnification provision shall
not be an acknowledgment of the obligation of the Company to indemnify
the Purchaser with respect to any Claim or otherwise under the
Agreement. If the Purchaser desires to participate in, but not
control, any such defense, compromise and settlement, it may do so at
its sole cost and expense. If, however, the Company fails or refuses
to undertake the defense of such Claim within seven (7) business days
after written notice of such Claim has been given to the Company by
the Purchaser, the Purchaser shall have the right to undertake the
defense of such Claim with counsel of its own choosing provided such
counsel is reasonably acceptable to the Company. After the Company's
notice to the Purchaser of the Company's election to assume the
defense of a Claim, the Company will not be liable to the Purchaser
under this Section 10(B)(a) for any legal or other expenses,
subsequently incurred by Purchaser in connection with the defense
thereof, unless (1) the Purchaser shall have employed separate counsel
in accordance with the immediately preceding sentence or (2) the
Company has authorized the employment of counsel for the Purchaser at
the expense of the Company.
(ii) No settlement or compromise of, or consent to
a judgement with respect to, a Claim shall be made without the prior
written consent of the Company, and the Company shall have no
liability with respect to any compromise or settlement of, or consent
to a judgement with respect to, a Claim effected without its consent.
(iii) In connection with the defense, compromise or
settlement of any Claim, the parties to this Agreement shall execute
such powers of attorney as may reasonably be necessary or appropriate
to permit participation of counsel selected by any party hereto and,
as may reasonably be related to any such claim or action, shall
provide access to the counsel, accountants and other representatives
of each party during normal business hours to all properties,
personnel, books, tax records, contracts, commitments and all other
business records of such other party relevant to the Claim and will
furnish to such other party copies of all such documents as may
reasonably be requested (certified, if requested).
10
<PAGE> 12
(iv) Purchaser and the Company agrees to cooperate
in good faith in the defense of any Claim indemnifiable hereunder and
shall endeavor to keep any indemnity payable by the Company to a
minimum, consistent with a proper defense of the Claim.
11. TERMINATION. The Purchaser may terminate this Agreement (i)
upon the occurrence of a delisting of the Common Stock from the American Stock
Exchange at any time during the Option Term or a suspension of trading in the
Common Stock for (x) any four business days during the Option Term or (y) a
definite period of at least three business days or for an indefinite period
which suspension actually lasts for at least three business days, which, in
either case under clause (i)(y), shall exist or continue in whole or in part at
any time during the five business days prior to and including October 5, 1995,
(ii) if a general suspension shall occur in trading of securities on the New
York Stock Exchange, the American Stock Exchange and the NASDAQ National Market
for a period of three business days which shall exist or continue in whole or
in part during the five business days prior to and including October 5, 1995,
(iii) if there shall have occurred any general banking moratorium declared by
United States federal or by all or any substantial number of state banking
authorities, (iv) if a state of war shall have been declared or exist between
the United States and China, Germany, France, Japan, the United Kingdom or
Russia or (v) if on or prior to October 5, 1995, there shall have occurred, as
of any business day during the eight business days prior to and including
October 5, 1995, a decline in the Dow Jones Industrial Average by an amount in
excess of 20% as measured from the close of business on the date of this
Agreement to such business day.
12. NO LIMITATION ON EQUITY RIGHTS. Nothing in this Agreement,
including any failure by the Company to exercise the Option, shall be construed
as limiting any right Purchaser has to subscribe or oversubscribe for shares of
Common Stock pursuant to its Equity Rights, including, without limitation, the
right to purchase, if applicable, Common Stock in an amount in excess of the
Committed Shares.
13. CONDITIONS TO PURCHASER'S OBLIGATIONS. The Purchaser's
obligations to purchase the Committed Shares, shall be subject to the condition
that (i) the Company's representations and warranties set forth in Section 5a,
b, c, d, f, g, and h herein shall, as of the date made have been and on October
5, 1995 will be, true and correct in all material respects, (ii) that on or
prior to October 5, 1995 no order, decree or judgment of any court, agency or
other authority of competent authority in the United States shall have been
rendered against the Company to restrain or prohibit the performance by the
Company of this Agreement or the transactions contemplated thereby, (iii) on
October 5, 1995, the Registration Statement shall be currently effective and no
stop order pertaining to it shall have been issued by the Securities and
Exchange Commission, (iv) the Company shall have substantially performed its
covenants or other obligations set forth in this Agreement, and (v) the Company
shall not have altered the actual terms of the Equity Rights Offering or
extended the time for exercise of such Equity Rights without the consent of the
Purchaser, which consent will not be unreasonably withheld; PROVIDED, HOWEVER,
that the entry by the Company into any put agreement or stand by purchase
agreement of any kind whatsoever with respect to the Equity Rights or the
Common Stock issuable pursuant thereto shall not be deemed to be an alteration
of the terms of the Equity Rights Offering in any manner whatsoever.
11
<PAGE> 13
In the event of an agreement by the parties hereto (which agreement may be
evidenced by the absence of an objection by the Company to a disbursement
request by the Purchaser pursuant to the terms of the Escrow Agreement based on
this Section 13) or the entry of a final non- appealable judgment by a court of
competent jurisdiction that the Purchaser's performance under this Agreement is
excused pursuant to this Section 13, Purchaser shall be entitled to receive the
Funds (as defined in the Escrow Agreement).
14. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto, their respective successors and assigns.
Except as expressly stated herein, the Purchaser may not assign its obligations
under this Agreement or the Standby Commitment but may, without restriction,
assign its rights hereunder to any affiliated entity and, following the
settlement date, to any three or fewer third parties or affiliated parties.
Except as expressly stated herein, the Company may not assign its obligations
under this Agreement without the consent of the Purchaser.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties hereto and supersedes any and all
prior agreements, arrangements and understandings relating to the matters
provided for herein.
16. APPLICABLE LAW. The Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
without regard to principles of conflict of laws.
17. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of the parties hereto.
12
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their authorized officers as of the date first
above written.
COMPANY:
TRANS WORLD AIRLINES, INC.
By:
---------------------------------
Title:
---------------------------
PURCHASER:
FIRST CAPITAL ALLIANCE, L.P.
By:
---------------------------------
General Partner
By:
------------------------------
Title:
---------------------------
13
<PAGE> 15
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT, made and entered into this 15th day of
September, 1995, by and among First Capital Alliance, L.P., an Illinois limited
partnership (hereinafter referred to as "Purchaser"), Trans World Airlines,
Inc., a Delaware corporation ("TWA") and Smith, Gambrell & Russell, a general
partnership (the "Escrow Agent");
W I T N E S S E T H, THAT:
- - - - - - - - - - ----
WHEREAS, Purchaser and TWA have entered into a certain Agreement of
even date herewith, a copy of which is attached hereto as EXHIBIT A (the
"Agreement"); and
WHEREAS, the Agreement provides for the deposit with the Escrow Agent
of $344,189.99, with all such amounts, together with any interest earned
thereon, to be held and applied by the Escrow Agent in accordance with the
terms of the Agreement; and
WHEREAS, the parties hereto desire to enter into a written escrow
agreement;
NOW, THEREFORE, in consideration of the agreements set forth in the
Agreement and the mutual covenants set forth herein, the parties hereto,
intending to be and being legally bound, do hereby agree as follows:
1. ESCROW. TWA has delivered to Escrow Agent $344,189.99 (the Premium ),
the receipt whereof is hereby acknowledged by Escrow Agent, which together with
any interest earned thereon (collectively, the Funds ) shall be held,
administered and disbursed by Escrow Agent in accordance with the terms and
conditions of this Escrow Agreement and the Agreement. Escrow Agent shall hold
the Funds and shall deposit the Funds within one business day after the date of
this Agreement in an account with Wachovia Bank of Georgia, N.A. (the Bank )
which shall be a standard passbook savings account or other interest bearing
account as Escrow Agent may direct, in its sole discretion, consistent with the
required availability of the Funds for payment under the Agreement. Interest
or other income, if any, earned on the Funds shall be deemed a part of the
Funds for purposes of this Agreement and shall be disbursed to Purchaser from
time to time in accordance with the terms and conditions of this Escrow
Agreement and the Agreement.
2. DISBURSEMENT OF FUNDS. The Funds shall be held and disbursed by Escrow
Agent as herein provided and subject to the terms of the Agreement. At such
time as Escrow Agent receives from the Purchaser the affidavit and other
evidence required by Section 2 of the Agreement as to the exercise of Equity
Rights pursuant to the Agreement, together with a computation of the Funds
required to be disbursed in consequence of such exercise and written
<PAGE> 16
notice stating the identity of the party to whom the Funds are to be disbursed
(which, in each such case, Escrow Agent believes to be genuine), Escrow Agent
shall disburse such Funds pursuant to such notice, PROVIDED, HOWEVER, that if
the Escrow Agent does not receive the affidavit from Purchaser required by the
Agreement by October 31, 1995, the Company will return the Premium to TWA. TWA
and Purchaser hereby agree to send to the other at the address specified in
Section 7 hereof, a duplicate of any written notice sent to Escrow Agent
requesting any disbursement of funds or requesting that any such disbursement
be withheld.
3. LIMITED LIABILITY. In performing any of its duties hereunder, Escrow
Agent shall not incur any liability to anyone for any damages, losses, or
expenses, except for any such arising solely as a result of the willful
misconduct or breach of trust by Escrow Agent hereunder, and, accordingly,
Escrow Agent shall not incur any such liability with respect to (i) any action
taken or omitted in good faith upon the basis of its own opinion, or upon
advice of separate legal counsel given, with respect to any questions relating
to the duties and responsibilities of Escrow Agent under this Agreement, or
(ii) any action taken or omitted in reliance on any instrument, including any
written notice or instruction provided for in this Agreement, not only as to
its due execution and the validity and effectiveness of its provisions but also
as to the truth and accuracy of any information contained therein, which Escrow
Agent shall in good faith believe to be genuine, to have been signed, or
presented by a person or persons having authority to sign or present such
instrument, and to conform with the provisions of this Escrow Agreement.
4. PURCHASER'S EXCUSED PERFORMANCE. Notwithstanding anything in this
Escrow Agreement to the contrary, in the event that prior to disbursement of
the Funds pursuant to Section 2 hereof, Purchaser shall give notice to Escrow
Agent, with a copy delivered to the Company as provided herein, that its
obligations to purchase have been excused pursuant to Paragraph 13 of the
Agreement and TWA shall not, within ten (10) days thereafter, give notice to
Escrow Agent that it disputes Purchaser's right to excused performance as
asserted, Escrow Agent shall disburse the Escrow Funds to Purchaser. If within
ten (10) of Escrow Agent's receipt of Purchaser's notice hereunder, TWA shall
give notice to the Escrow Agent, with a copy delivered to the Purchaser by the
Company as provided herein, that it disputes Purchaser's claimed right to
excused performance, Escrow Agent shall tender into the registry or custody of
a court of competent jurisdiction the Funds, together with such pleadings as it
may deem appropriate, and thereupon be discharged from all further duties and
liabilities under this Escrow Agent (other than with respect to any liabilities
for willful misconduct or breach of trust by Escrow Agent). Any such legal
action may be brought in such court as Escrow Agent shall determine to have
jurisdiction thereof. Any notice by Purchaser claiming a right to payment by
virtue of excused performance pursuant to this Paragraph 4 shall set forth with
particularity the specific basis (including the underlying facts) upon which
the performance is claimed to be excused.
5. INDEMNITY. TWA and Purchaser hereby agree to indemnify Escrow Agent
against, and hold Escrow Agent harmless from, any and all claims, actions,
demands, losses, damages, expenses (including, without limitation, court costs,
attorneys' fees, and accountant's fees), and liabilities that may be imposed
upon performance of its duties hereunder, including, without
2
<PAGE> 17
limitation, any litigation arising from this Escrow Agreement or involving the
subject matter hereof, but excluding any such claims, actions, demands, losses,
damages, expenses, and liabilities resulting solely from any willful misconduct
or breach of trust by Escrow Agent hereunder. In the event of any litigation
arising from this Escrow Agreement or involving the subject matter hereof, and
in the event TWA and Purchaser are opposing parties in such litigation, the
party prevailing in such litigation shall be reimbursed promptly upon demand by
the other such party for the reasonable out-of-pocket costs and expenses of
such litigation together with any amount which the prevailing party shall have
paid Escrow Agent with respect to such litigation and the subject matter
thereof pursuant to the indemnification agreement contained in this Paragraph
5.
6. COMPENSATION. In consideration of its services hereunder, Escrow Agent
shall be (i) paid an escrow fee of $l0.00, which amount shall be paid by TWA at
the time of disbursement of the Funds by Escrow Agent and (ii) indemnified by
the parties as provided in Paragraph 5 hereof.
7. NOTICES. Wherever any notice or other communication is required or
permitted hereunder, such notice shall be in writing and shall be delivered in
person or sent by U.S. registered or certified mail, return receipt requested,
postage prepaid, to the addresses set out below or at such other addresses as
are specified by written notice delivered in accordance herewith:
PURCHASER: First Capital Alliance, L.P.
440 South LaSalle
Suite 1614
Chicago, Illinois 60605
Attention: Mr. Henry Chu
Telephone: (312) 362-2050
Telefacsilile: (312) 362-2022
TWA: Trans World Airlines, Inc.
One City Centre
515 North Sixth Street
St. Louis, MO 63101
Attention: Richard P. Magurno, Esq.
Telephone: (314) 589-3264
Telefacsimile: (314) 589-3267
3
<PAGE> 18
ESCROW AGENT: Smith, Gambrell & Russell
1230 Peachtree Street, N.E.
Promenade II, Suite 3100
Atlanta, GA 30309-3592
Attention: Howard E. Turner
Telephone: (404) 815-3594
Telefacsimile: (404) 815-3509
8. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors, and assigns, provided
neither TWA nor Purchaser shall be permitted to assign all or any part of their
respective right, title, and interest hereunder, except to the extent said
party is permitted to assign its right, title and interest whether in whole or
in part under the Agreement, and then only from and to the extent permitted
thereunder or pursuant to the written consent of the other party. Any and all
rights granted to any of the parties hereto may be exercised by their agents or
personal representatives.
9. MISCELLANEOUS. Time is of the essence of this Agreement. Capitalized
terms not otherwise defined herein shall have the meaning ascribed to them in
the Agreement or the Plan. Each of the parties hereto acknowledge that Escrow
Agent acts as outside counsel for TWA and has so acted in connection with,
among other things, the negotiation, preparation and execution of the Agreement
and this Escrow Agreement. Such parties acknowledge and agree that Escrow
Agent shall be entitled to continue to so act with respect to all existing and
future matters on or with respect to which TWA may wish to consult Smith,
Gambrell & Russell.
10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all such
counterparts together shall constitute one and the same instrument.
4
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have signed and sealed this Escrow
Agreement as of the day and year first above written.
PURCHASER:
----------
FIRST CAPITAL ALLIANCE, L.P.
By:
------------------------------------
General Partner
By:
-------------------------------
Title:
-------------------------
TRANS WORLD AIRLINES, INC.:
---------------------------
By:
-------------------------------------
Its:
-------------------------------------
ESCROW AGENT:
------------
SMITH, GAMBRELL & RUSSELL
By:
-------------------------------------
a Partner
5
<PAGE> 1
EXHIBIT 10.46
<PAGE> 2
EQUITY RIGHTS PUT AGREEMENT
---------------------------
This Agreement dated as of September 15, 1995 is made by and between
Trans World Airlines, Inc., a Delaware corporation (the "Company") and Romulus
Holdings Corp., a Delaware corporation (the "Purchaser");
WITNESSETH:
WHEREAS, pursuant to the Company's plan of reorganization confirmed by
the United States Bankruptcy Court for the Eastern District of Missouri on
August 4, 1995 (the "Plan") which became effective on August 23, 1995 (the
"Effective Date"), the Company has issued approximately 13,150,000 Equity
Rights (as defined in Section 1.1.60 of the Plan), each consisting of the
nontransferable right to purchase for cash from the Company newly issued Common
Stock pursuant to a "Basic Subscription Privilege" and an "Oversubscription
Privilege" (as such terms are defined in Section 1.1.60 of the Plan);
WHEREAS, the Purchaser is the owner and holder of Equity Rights
("Purchaser's Equity Rights");
WHEREAS, the Common Stock to be issued to Purchaser upon exercise of
Purchaser's Equity Rights has been registered by the Company pursuant to
Registration Statement No. 33-89764, as amended, filed with the Securities and
Exchange Commission and declared effective on May 12, 1995 (the "Registration
Statement").
WHEREAS, the Company and Purchaser are willing to enter into this
Agreement to provide for the purchase of the number of shares of Common Stock
of the Company hereinafter set forth to the extent such shares may be acquired
pursuant to the Option (as defined below) to be effected by the full exercise
of the Basic Subscription Privilege, and an exercise of the Oversubscription
Privilege, of the Equity Rights held by Purchaser as set forth below; and
WHEREAS, all capitalized terms used herein which are not separately
defined, are used herein as defined in the Plan.
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Company and the Purchaser, agree as follows:
1. GRANT OF PUT OPTION. Purchaser hereby grants to the Company
the Option (the "Option") exercisable on or before October 5, 1995 (the 43rd
day following the Effective Date) to put to the Purchaser the exercise of
Purchaser's Basic Subscription Privileges and Oversubscription Privileges as
hereinafter provided. Upon the exercise by the Company of the Option, the
Purchaser shall, in accordance with the covenants, representations and
warranties herein contained, on or prior to 5:00 p.m. New York time on October
5, 1995, exercise the Basic Subscription Privilege and the Oversubscription
Privilege under Equity Rights held by the Purchaser to subscribe for, in the
aggregate, not fewer than 3,287,785 shares (the "Committed Shares") of Common
Stock of the Company by executing and delivering to American Stock
<PAGE> 3
Transfer and Trust Company as agent (the "Subscription Agent") properly
completed Subscription Forms, with any required signatures guaranteed, together
with payment in full of the Subscription Price for each of the Committed Shares
in accordance with the terms of the Equity Rights and the Plan. The Option may
be exercised by the Company by sending notice in writing to Purchaser by
facsimile transmission to the Purchaser's address, as initially stated in
Section 9, on or before 3:00 p.m. New York time on October 5, 1995. In no
event shall Purchaser be required to subscribe for more than 3,287,785 shares
of Common Stock in the aggregate pursuant to its own exercise of the Equity
Rights and the exercise by the Company of the Option.
2. PREMIUM TO PURCHASER FOR OPTION. As consideration for the
Option in Section 1, the Company will pay to the Purchaser an aggregate premium
equal to $860,474.98 (the "Premium").
The Premium will be paid in immediately available funds on the date of
the execution of this Agreement, if this Agreement is executed prior to 10:00
a.m. New York time on such date, and otherwise in immediately available funds
on the day following the execution of this Agreement, and will be placed in an
escrow account with Smith, Gambrell & Russell (in such capacity, the "Escrow
Agent") pursuant to an escrow agreement which will authorize the release of the
funds to Purchaser only upon receipt by the Escrow Agent and the Company of an
affidavit of a duly authorized officer or general partner of the Purchaser to
the effect that, Purchaser has executed or caused to be executed and delivered
or caused to be delivered to the Subscription Agent properly completed
Subscription Forms, with any required signatures guaranteed, together with
payment in full of the Subscription Price for each of the Committed Shares in
accordance with the terms hereof and of the Equity Rights and the Plan, and
confirmation from the carrying broker receipt and execution of instructions
from the Purchaser to exercise the Equity Rights in the amount specified in
such affidavit. Such escrow agreement shall provide that the Premium shall be
subject to a partial release at Purchaser's request, to the extent that the
Purchaser's Basic Subscription Privilege has been exercised prior to its
Oversubscription Privilege provided the Escrow Agent and the Company shall have
been furnished evidence as above required of such execution and delivery of
Subscription Forms and payment of the Subscription Price. Any partial release
of the Premium shall be in the same proportion as the number of shares
subscribed for by the Purchaser pursuant to the Equity Rights bears to the
total Committed Shares committed to by the Purchaser (the dollar amount derived
from such calculation shall be referred to as the "Computation"). Such escrow
agreement shall further provide that interest shall accrue on all escrowed
amounts. The Escrow Agent shall deposit the Premium in such interest bearing
account, as may be selected by the Escrow Agent, with Wachovia Bank of Georgia,
N.A. (the "Bank") on a basis allowing for withdrawal of the funds on one
business day's notice. The escrow agreement shall be in the form attached
hereto as Exhibit A and may contain such other terms as may be agreed to by the
parties hereto and the Escrow Agent. The Purchaser shall send a copy of all
documents sent to the Escrow Agent to the Company but such transmission shall
not be a condition to the release of Funds from escrow unless objection shall
be given by the Company as provided in the Escrow Agreement.
2
<PAGE> 4
3. TRANSACTION COSTS, FEES AND EXPENSES. Each party hereto
agrees to pay its own transaction costs, fees and expenses in connection with
the transactions contemplated hereby, including without limitation, the fees
and expenses of their respective counsel, except that the Company shall pay
Purchaser's actual reasonable legal fees and expenses in an amount not to
exceed $10,000.
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Purchaser
represents and warrants and agrees that:
a. Purchaser is a duly organized and validly existing
Delaware corporation which is in good standing under the laws
of its jurisdiction of organization, with corporate power and
authority to own its property and conduct its business and to
enter into and perform all of its obligations under this
Agreement.
b. Purchaser is the owner and holder of Equity Rights.
c. This Agreement has been duly authorized, executed and
delivered by the Purchaser and constitutes the valid, legal
and binding obligation of the Purchaser enforceable against
the Purchaser in accordance with its terms subject to the
effect of bankruptcy, insolvency, reorganization, moratorium,
in each case with respect to proceedings subsequent to the
date of this Agreement and other similar laws affecting the
rights and remedies of creditors generally and general
principles of equity.
d. The Purchaser has a net worth computed in accordance
with generally accepted accounting principles, of not less
than 90% of the amount set forth in the audited financial
statements heretofore furnished to the Company by Purchaser in
connection with this Agreement and has sufficient unrestricted
liquid assets and the financial ability to fully perform its
obligations under this Agreement. The financial statements of
the Purchaser furnished to the Company prior to execution and
delivery of this Agreement have been prepared in accordance
with generally accepted accounting principles consistently
applied and fairly present the pertinent results of operations
for the periods indicated and the financial position at the
end of such periods of the Purchaser, except as set forth in
the footnotes thereto.
e. No consent, approval, authorization or order of, or
filing with, any governmental agency or body of any court is
required for the consummation by the Purchaser of the
transactions contemplated by this Agreement.
f. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation by
Purchaser of any of the terms and provisions of, or constitute
a default under, (i) any statute, rule or regulation, or any
order of any governmental agency or body or any court having
jurisdiction over the Purchaser or any
3
<PAGE> 5
subsidiary of the Purchaser or any of their properties or (ii) any
agreement or instrument to which the Purchaser or any subsidiary is a
party or by which the Purchaser or any subsidiary is bound or to which
any of the properties of the Purchaser or any subsidiary is subject,
or (iii) the certificate of limited partnership or partnership
agreement of the Purchaser or any subsidiary of the Purchaser which
currently conducts business.
g. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Purchaser,
threatened against, and no order, decree or judgment of any
court, agency or other governmental authority of competent
jurisdiction in the United States shall have been rendered
against, the Purchaser to restrain or prohibit the performance
by Purchaser of this Agreement or the transactions
contemplated by this Agreement.
h. The Purchaser's principal place of business is
located in the State of New York.
5. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants and agrees that:
a. The Company is a duly organized and validly existing
Delaware corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and
authority to own its property and conduct its business and to
enter into and perform all of its obligations under this
Agreement.
b. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid, legal and
binding obligation of the Company, enforceable against the
Company in accordance with its terms subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, in each
case with respect to proceedings subsequent to the date of
this Agreement and other similar laws affecting the rights and
remedies of creditors generally and general principles of
equity.
c. Except for the filing of an appropriately
supplemented prospectus describing, among other things, the
transactions contemplated by this Agreement, no consent,
approval, authorization or order of, or filing with, any
governmental agency or body or any court in any applicable
jurisdiction of the United States is required for the
consummation by the Company of the transactions contemplated
by this Agreement.
d. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation by the
Company of any of the terms and provisions of, or constitute a
default under, (i) any statute, rule or regulation, or any
order of any
4
<PAGE> 6
governmental agency or body or any court having jurisdiction
over the Company or any subsidiary of the Company or any of
their properties or (ii) any agreement or instrument to which
the Company or any subsidiary is a party or by which the
Company or any subsidiary is bound or to which any of the
properties of the Company or any subsidiary is subject, or
(iii) the certificate of incorporation or by-laws of the
Company or any subsidiary of the Company which currently
conducts business.
e. No suit, action, claim or governmental proceeding has
been instituted or, to the knowledge of the Company,
threatened against, and no order, decree or judgment of any
court, agency or other governmental authority of competent
authority in the United States shall have been rendered
against, the Company to restrain or prohibit the performance
by Company of this Agreement or the transactions contemplated
by this Agreement.
f. The Equity Rights issued to Purchaser for the
Committed Shares and the Committed Shares issued upon exercise
thereof have been duly authorized by the Company and such
Committed Shares, when issued and delivered by the Company in
accordance with the Plan and against payment therefor as
contemplated in the Plan and hereby, will be (i) validly
issued, fully paid and non-assessable and such Equity Rights
and Committed Shares have been registered pursuant to the
Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act") and (ii) free and clear of any
liens, claims and encumbrances arising by, through, or under
the Company and shall not be subject to any stop transfer
instructions imposed by the Company.
g. The Registration Statement with respect to the sale
of the Equity Rights and the underlying Common Stock (issuable
upon the exercise thereof) in each case by the Company to the
Purchaser is currently effective and no stop order pertaining
to it has been issued by the Securities and Exchange
Commission. The Registration Statement shall be effective at
the time of sale and delivery by the Company of the Committed
Shares and no stop order suspending the effectiveness of such
Registration Statement including any amendment or supplement
thereto shall have been issued. The Committed Shares have
been approved for issuance on the American Stock Exchange,
subject to official notice of issuance.
h. As of its effective date, the Registration Statement
did not, insofar as relevant to the Equity Rights or the
underlying Common Stock purchasable pursuant thereto, include
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements made therein not misleading, and, as of
such date, the Prospectus did not, insofar as material to the
investment decision of a reasonable purchaser of the Common
Stock, include any untrue statement of a material fact or omit
to state any material
5
<PAGE> 7
fact required to be stated therein or necessary to make the
statements therein not misleading.
6. PURCHASER'S COVENANTS. The Purchaser covenants and agrees
with the Company that:
a. No later than three business days following the
execution of this Agreement, the Purchaser shall cause to be
delivered to the Company an opinion of counsel for Purchaser
dated as of the date of this Agreement in form and substance
reasonably satisfactory to the Company as to the matters set
forth in Section 4a, c, e and f.
b. The Purchaser agrees to take such actions and execute
and deliver to the Company such documents and instruments as
may be necessary to fully consummate the transactions and
agreements of the Purchaser as contemplated by this Agreement.
c. During the period commencing with the execution of
this Agreement and terminating on the payment in full of the
exercise price as contemplated in Section 1 (the "Option
Term"), the Purchaser agrees not to enter into any agreement
for the sale or disposition of all or substantially all of the
Purchaser's assets (in one or more transactions), or a merger,
consolidation or other business combination involving all or
substantially all of the Purchaser's assets, unless the
Purchaser provide the Company with the express, written
agreement by the Purchaser or other successor(s) to assume the
Purchaser's obligations and covenants hereunder and, after
giving effect to any such sale, disposition, merger,
consolidation or other business combination, the Purchaser or
other successor(s) shall meet the requirements of Section 4
hereof.
7. THE COMPANY'S COVENANTS. The Company covenants and agrees
with the Purchaser that:
a. No later than three business days following the
execution of this Agreement, the Company shall cause to be
delivered to the Purchaser an opinion of counsel for the
Company dated as of the date of this Agreement in form and
substance reasonably satisfactory to Purchaser as to the
matters set forth in Section 5a, b, c, d and f , and as to the
first sentence of 5(g), such opinion of counsel shall state
that, to the best knowledge of such counsel, the Registration
Statement is currently in effect and no stop order suspending
the effectiveness has been instituted or is pending or
threatened by the Securities and Exchange Commission (the
"SEC").
b. The Company agrees to take such actions and execute
and deliver such documents and instruments as may be necessary
to fully consummate the
6
<PAGE> 8
transactions and agreements of the Company as contemplated by
this Agreement, including, without limitation, the filing with
the SEC in a timely manner in accordance with applicable law
of an appropriately supplemented prospectus as referred to in
Section 5c (the "Supplemental Prospectus").
c. Except as otherwise provided below and except for
distributions provided for in the Prospectus, the Plan and/or
pursuant to the terms of securities issued under the Plan,
during the Option Term and thereafter for the period ending
two weeks after the issuance and delivery to the Purchaser of
all of the Committed Shares (i) the Company shall not declare
any dividend or make any distribution on the Company's Common
Stock or Preferred Stock (other than dividends or
distributions payable in the Company's Common Stock or
Preferred Stock) and (ii) the Company shall not effect any
stock dividends, stock splits, or any other issuance of
capital stock (including options, warrants, rights to purchase
stock or securities convertible into stock) or issue any
Common Stock or any other options, warrants or rights thereto
("Derivative Securities") other than: (a) such Common Stock
or Derivative Securities provided for by the Prospectus, the
Plan and/or pursuant to the terms of securities issued under
the Plan, as the case may be; (b) such Common Stock or
Derivative Securities as may be issued pursuant to the terms
of the Company's Key Employee Stock Incentive Plan or to an
employee stock ownership or benefit plan in the ordinary
course of business. For purposes of this provision, the term
"employees" shall include those entities and persons defined
in Instruction A(1)(a) to Form S-8 under the Securities Act.
d. The Company will consult with the Purchaser with
respect to any press release, prospectus supplement, amendment
to the Registration Statement or other public statement or
filing that names or refers to the Purchaser. Any such
disclosure regarding the Purchaser shall be subject to the
Purchaser's consent (which shall not be unreasonably
withheld), except where such release, filing, statement or
announcement by the Company is believed by the responsible
officers of the Company, after consultation with the Company's
counsel, to be required, or that the failure to make such
disclosure would involve an unacceptable risk to the Company,
in each case, under applicable law or pursuant to any listing
agreement with or the rules or regulations of, any national
securities exchange on which the securities of the Company are
listed or traded.
e. Subject to the terms and conditions of this
Agreement, the Company shall deliver or cause to be delivered
to the Purchaser, the Premium (or applicable portion thereof),
together with any accrued interest thereon, (the Premium and
any accrued interest thereon, the "Funds") to be in same day
funds on the first business day following the date of notice
as provided in Section 2 by the Purchaser to the Escrow Agent
that it has performed its obligations under the Agreement
necessary for the Escrow Agent to release the Funds. The
Purchaser shall use its best reasonable efforts to give any
notice to the Escrow Agent to release Funds no later
7
<PAGE> 9
than 5:00 p.m. Atlanta, Georgia time on the business day
immediately preceding the business day on which such Funds are
to be released from escrow. Should the Purchaser terminate
this Agreement, in whole or in part, pursuant to Section 11,
Purchaser shall refund all Funds, and any interest accrued
thereon, theretofore received by it and shall not be entitled
to receive any further Funds whether held in escrow or
otherwise.
f. The Company shall instruct the Subscription Agent to
determine the amount of shares purchased and not purchased
pursuant to the Basic Subscription Privilege on October 6,
1995 and thereafter the Company shall, within one business day
after receiving all the foregoing information from the
Subscription Agent, in form sufficient to determine the shares
to be allocated pursuant to the Oversubscription Privilege,
and direct the Subscription Agent to effect the delivery of
the Committed Shares purchased pursuant to Purchaser's
Oversubscription Privilege within four business days
thereafter.
8. SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS. The agreements,
representations and warranties set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of the Company or any
of its representatives, officers or directors or any controlling person.
9. NOTICES. All notices, demands, instructions and other
communications required or permitted hereunder will be in writing and shall be
personally delivered or sent by registered, certified or express mail, postage
prepaid, return receipt requested, or by telefacsimile (which shall immediately
be followed by the original of such communication) and shall be deemed to be
given when received by the intended recipient or, in the case of telefacsimile,
on the date transmitted to the intended recipient thereof. Unless otherwise
specified in writing in accordance with this Section, such notices, demands
instructions and communications shall be made to the following:
To Purchaser: Romulus Holdings Corp.
25 Coligni Avenue
New Rochelle, New York 10801
Attention: Gary Singer/Steven Singer
Telephone: (914) 235-8800
Telefacsimile: (914) 235-8849
8
<PAGE> 10
To the Company: Trans World Airlines, Inc.
One City Centre
515 North Sixth Street
St. Louis, Mo. 63101
Attention: General Counsel
Telephone: (314) 589-3264
Telefacsimile: (314) 589-3267
10. INDEMNIFICATION. (A) Each party shall indemnify, defend and
hold harmless the other, for any and all claims, losses, liabilities and
expenses (including reasonable attorneys' fees) arising out of the breach of
this Agreement in any material respect by such party; PROVIDED, HOWEVER, that
in no event shall this provision give rise to any obligation on the part of the
Company to indemnify the Purchaser for or in respect of any tax liabilities
related to or based on the payment to or receipt of the Premium.
(B) (a) GENERAL INDEMNITY. The Company agrees to indemnify
and hold harmless the Purchaser, and its respective partners, officers and
agents against any and all claims, damages, liabilities and expenses (including
but not limited to reasonable attorneys' fees and any out of pocket expenses
reasonably incurred, as incurred, in defending against any litigation,
commenced or threatened, and any amounts paid in settlement of any claim or
litigation in accordance with the terms hereof) asserted by persons other than
parties to this Agreement or any affiliate of any party to this Agreement (any
such litigation or claim collectively a "Claim"), to which Purchaser or its
respective partners, officers and agents shall become subject insofar as such
Claim results from any untrue statement, or alleged untrue statement, of a
material fact contained in the Registration Statement or any amendment thereof,
or the prospectus contained therein (the "Prospectus"), or in any supplement
thereto or amendment thereof, or any omission, or alleged omission, to state
therein a material fact required to be stated to make the statements therein
not misleading, PROVIDED, HOWEVER, the Company shall not be required to
indemnify the Purchaser for any Claim for any violation by the Purchaser of
Section 5 of the Securities Act arising out of the sales of Common Stock by
Purchaser after the date of this Agreement, including any violations arising
out of the failure of a registration statement ( other than the Registration
Statement with respect to the sale to the Purchaser) for such sales to be
effective, unless there shall be a final judicial determination that (x) the
Registration Statement or Prospectus contained an untrue statement of material
fact or an omission of a material face necessary to make the Registration
Statement or Prospectus not misleading and (y) which fact or omission (i) does
not relate to Purchaser's status, conduct or performance under or related to
this Agreement, and (ii) does not result from the description of the
transaction contemplated by this Agreement. The foregoing indemnification
pertains to such untrue statements or omissions relating to the Registration
Statement or any amendment thereof or the Prospectus or any supplement thereto
or amendment thereof at the time the Registration Statement was declared
effective or on any subsequent date until the expiration of the Option.
(b) A claim for indemnification shall be made by
Purchaser by delivery of a written notice to the Company requesting
indemnification and specifying the basis and facts, in
9
<PAGE> 11
reasonable detail, on which indemnification is sought and the amount of
asserted Claims and, containing (by attachment or otherwise) such other
information as such Purchaser shall have concerning such Claims.
(c) The obligations and liabilities of the Company
hereunder with respect to a claim for indemnification shall be subject to the
following terms and conditions.
(i) The Purchaser shall give the Company written
notice of a Claim promptly after receipt by the Purchaser of notice
thereof, and the Company may undertake the defense, compromise and
settlement thereof by legal counsel and representatives of its own
choosing reasonably acceptable to the Purchaser. The failure of the
Purchaser to notify the Company of a Claim shall not relieve the
Company of any liability that it may have with respect to such Claim
except to the extent the Company demonstrates that the defense of such
Claim is prejudiced by such failure or otherwise impairs the Company's
ability to participate in the contest of such Claim in any material
respect. The assumption of the defense, compromise and settlement of
any such Claim by the Company shall not be an acknowledgment of the
obligation of the Company to indemnify the Purchaser with respect to
any Claim or otherwise under the Agreement. Likewise, any payment
made by the Company pursuant to this indemnification provision shall
not be an acknowledgment of the obligation of the Company to indemnify
the Purchaser with respect to any Claim or otherwise under the
Agreement. If the Purchaser desires to participate in, but not
control, any such defense, compromise and settlement, it may do so at
its sole cost and expense. If, however, the Company fails or refuses
to undertake the defense of such Claim within seven (7) business days
after written notice of such Claim has been given to the Company by
the Purchaser, the Purchaser shall have the right to undertake the
defense of such Claim with counsel of its own choosing provided such
counsel is reasonably acceptable to the Company. After the Company's
notice to the Purchaser of the Company's election to assume the
defense of a Claim, the Company will not be liable to the Purchaser
under this Section 10(B)(a) for any legal or other expenses,
subsequently incurred by Purchaser in connection with the defense
thereof, unless (1) the Purchaser shall have employed separate counsel
in accordance with the immediately preceding sentence or (2) the
Company has authorized the employment of counsel for the Purchaser at
the expense of the Company.
(ii) No settlement or compromise of, or consent to
a judgement with respect to, a Claim shall be made without the prior
written consent of the Company, and the Company shall have no
liability with respect to any compromise or settlement of, or consent
to a judgement with respect to, a Claim effected without its consent.
(iii) In connection with the defense, compromise or
settlement of any Claim, the parties to this Agreement shall execute
such powers of attorney as may reasonably be necessary or appropriate
to permit participation of counsel selected by any party hereto and,
as may reasonably be related to any such claim or action, shall
provide access to the counsel, accountants and other representatives
of each party during normal
10
<PAGE> 12
business hours to all properties, personnel, books, tax records,
contracts, commitments and all other business records of such other
party relevant to the Claim and will furnish to such other party
copies of all such documents as may reasonably be requested
(certified, if requested).
(iv) Purchaser and the Company agrees to cooperate
in good faith in the defense of any Claim indemnifiable hereunder and
shall endeavor to keep any indemnity payable by the Company to a
minimum, consistent with a proper defense of the Claim.
11. TERMINATION. The Purchaser may terminate this Agreement (i)
upon the occurrence of a delisting of the Common Stock from the American Stock
Exchange at any time during the Option Term or a suspension of trading in the
Common Stock for (x) any four business days during the Option Term or (y) a
definite period of at least three business days or for an indefinite period
which suspension actually lasts for at least three business days, which, in
either case under clause (i)(y), shall exist or continue in whole or in part at
any time during the five business days prior to and including October 5, 1995,
(ii) if a general suspension shall occur in trading of securities on the New
York Stock Exchange, the American Stock Exchange and the NASDAQ National Market
for a period of three business days which shall exist or continue in whole or
in part during the five business days prior to and including October 5, 1995,
(iii) if there shall have occurred any general banking moratorium declared by
United States federal or by all or any substantial number of state banking
authorities, (iv) if a state of war shall have been declared or exist between
the United States and China, Germany, France, Japan, the United Kingdom or
Russia or (v) if on or prior to October 5, 1995, there shall have occurred, as
of any business day during the eight business days prior to and including
October 5, 1995, a decline in the Dow Jones Industrial Average by an amount in
excess of 20% as measured from the close of business on the date of this
Agreement to such business day.
12. NO LIMITATION ON EQUITY RIGHTS. Nothing in this Agreement,
including any failure by the Company to exercise the Option, shall be construed
as limiting any right Purchaser has to subscribe or oversubscribe for shares of
Common Stock pursuant to its Equity Rights, including, without limitation, the
right to purchase, if applicable, Common Stock in an amount in excess of the
Committed Shares.
13. CONDITIONS TO PURCHASER'S OBLIGATIONS. The Purchaser's
obligations to purchase the Committed Shares, shall be subject to the condition
that (i) the Company's representations and warranties set forth in Section 5a,
b, c, d, f, g, and h herein shall, as of the date made have been and on October
5, 1995 will be, true and correct in all material respects, (ii) that on or
prior to October 5, 1995 no order, decree or judgment of any court, agency or
other authority of competent authority in the United States shall have been
rendered against the Company to restrain or prohibit the performance by the
Company of this Agreement or the transactions contemplated thereby, (iii) on
October 5, 1995, the Registration Statement shall be currently effective and no
stop order pertaining to it shall have been issued by the Securities and
Exchange Commission, (iv) the Company shall have substantially performed its
covenants or other obligations set forth in this Agreement, and (v) the Company
shall not have altered the actual terms of the Equity
11
<PAGE> 13
Rights Offering or extended the time for exercise of such Equity Rights without
the consent of the Purchaser, which consent will not be unreasonably withheld;
PROVIDED, HOWEVER, that the entry by the Company into any put agreement or
stand by purchase agreement of any kind whatsoever with respect to the Equity
Rights or the Common Stock issuable pursuant thereto shall not be deemed to be
an alteration of the terms of the Equity Rights Offering in any manner
whatsoever. In the event of an agreement by the parties hereto (which
agreement may be evidenced by the absence of an objection by the Company to a
disbursement request by the Purchaser pursuant to the terms of the Escrow
Agreement based on this Section 13) or the entry of a final non-appealable
judgment by a court of competent jurisdiction that the Purchaser's performance
under this Agreement is excused pursuant to this Section 13, Purchaser shall be
entitled to receive the Funds (as defined in the Escrow Agreement).
14. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto, their respective successors and assigns.
Except as expressly stated herein, the Purchaser may not assign its obligations
under this Agreement or the Standby Commitment but may, without restriction,
assign its rights hereunder to any affiliated entity and, following the
settlement date, to any three or fewer third parties or affiliated parties.
Except as expressly stated herein, the Company may not assign its obligations
under this Agreement without the consent of the Purchaser.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties hereto and supersedes any and all
prior agreements, arrangements and understandings relating to the matters
provided for herein.
16. APPLICABLE LAW. The Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
without regard to principles of conflict of laws.
17. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of the parties hereto.
12
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their authorized officers as of the date first
above written.
COMPANY:
TRANS WORLD AIRLINES, INC.
By:_____________________________________
Title:________________________________
PURCHASER:
ROMULUS HOLDINGS CORP.
By:_____________________________________
Title:_______________________________
13
<PAGE> 15
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT, made and entered into this 15th day of September,
1995, by and among Romulus Holdings Corp., an Illinois corporation (hereinafter
referred to as "Purchaser"), Trans World Airlines, Inc., a Delaware corporation
("TWA") and Smith, Gambrell & Russell, a general partnership (the "Escrow
Agent");
W I T N E S S E T H, THAT:
- - - - - - - - - - ----
WHEREAS, Purchaser and TWA have entered into a certain Agreement of even
date herewith, a copy of which is attached hereto as EXHIBIT A (the
"Agreement"); and
WHEREAS, the Agreement provides for the deposit with the Escrow Agent of
$860,474.98, with all such amounts, together with any interest earned thereon,
to be held and applied by the Escrow Agent in accordance with the terms of the
Agreement; and
WHEREAS, the parties hereto desire to enter into a written escrow agreement;
NOW, THEREFORE, in consideration of the agreements set forth in the
Agreement and the mutual covenants set forth herein, the parties hereto,
intending to be and being legally bound, do hereby agree as follows:
1. ESCROW. TWA has delivered to Escrow Agent $860,474.98 (the "Premium"), the
receipt whereof is hereby acknowledged by Escrow Agent, which together with any
interest earned thereon (collectively, the "Funds") shall be held, administered
and disbursed by Escrow Agent in accordance with the terms and conditions of
this Escrow Agreement and the Agreement. Escrow Agent shall hold the Funds and
shall deposit the Funds within one business day after the date of this
Agreement in an account with Wachovia Bank of Georgia, N.A. (the "Bank") which
shall be a standard passbook savings account or other interest bearing account
as Escrow Agent may direct, in its sole discretion, consistent with the
required availability of the Funds for payment under the Agreement. Interest
or other income, if any, earned on the Funds shall be deemed a part of the
Funds for purposes of this Agreement and shall be disbursed to Purchaser from
time to time in accordance with the terms and conditions of this Escrow
Agreement and the Agreement.
2. DISBURSEMENT OF FUNDS. The Funds shall be held and disbursed by Escrow
Agent as herein provided and subject to the terms of the Agreement. At such
time as Escrow Agent receives from the Purchaser the affidavit and other
evidence required by Section 2 of the Agreement as to the exercise of Equity
Rights pursuant to the Agreement, together with a computation of the Funds
required to be disbursed in consequence of such exercise and written
<PAGE> 16
notice stating the identity of the party to whom the Funds are to be disbursed
(which, in each such case, Escrow Agent believes to be genuine), Escrow Agent
shall disburse such Funds pursuant to such notice, PROVIDED, HOWEVER, that if
the Escrow Agent does not receive the affidavit from Purchaser required by the
Agreement by October 31, 1995, the Company will return the Premium to TWA. TWA
and Purchaser hereby agree to send to the other at the address specified in
Section 7 hereof, a duplicate of any written notice sent to Escrow Agent
requesting any disbursement of funds or requesting that any such disbursement
be withheld.
3. LIMITED LIABILITY. In performing any of its duties hereunder, Escrow Agent
shall not incur any liability to anyone for any damages, losses, or expenses,
except for any such arising solely as a result of the willful misconduct or
breach of trust by Escrow Agent hereunder, and, accordingly, Escrow Agent shall
not incur any such liability with respect to (i) any action taken or omitted in
good faith upon the basis of its own opinion, or upon advice of separate legal
counsel given, with respect to any questions relating to the duties and
responsibilities of Escrow Agent under this Agreement, or (ii) any action taken
or omitted in reliance on any instrument, including any written notice or
instruction provided for in this Agreement, not only as to its due execution
and the validity and effectiveness of its provisions but also as to the truth
and accuracy of any information contained therein, which Escrow Agent shall in
good faith believe to be genuine, to have been signed, or presented by a person
or persons having authority to sign or present such instrument, and to conform
with the provisions of this Escrow Agreement.
4. PURCHASER'S EXCUSED PERFORMANCE. Notwithstanding anything in this Escrow
Agreement to the contrary, in the event that prior to disbursement of the Funds
pursuant to Section 2 hereof, Purchaser shall give notice to Escrow Agent, with
a copy delivered to the Company as provided herein, that its obligations to
purchase have been excused pursuant to Paragraph 13 of the Agreement and TWA
shall not, within ten (10) days thereafter, give notice to Escrow Agent that it
disputes Purchaser's right to excused performance as asserted, Escrow Agent
shall disburse the Escrow Funds to Purchaser. If within ten (10) of Escrow
Agent's receipt of Purchaser's notice hereunder, TWA shall give notice to the
Escrow Agent, with a copy delivered to the Purchaser by the Company as provided
herein, that it disputes Purchaser's claimed right to excused performance,
Escrow Agent shall tender into the registry or custody of a court of competent
jurisdiction the Funds, together with such pleadings as it may deem
appropriate, and thereupon be discharged from all further duties and
liabilities under this Escrow Agent (other than with respect to any liabilities
for willful misconduct or breach of trust by Escrow Agent). Any such legal
action may be brought in such court as Escrow Agent shall determine to have
jurisdiction thereof. Any notice by Purchaser claiming a right to payment by
virtue of excused performance pursuant to this Paragraph 4 shall set forth with
particularity the specific basis (including the underlying facts) upon which
the performance is claimed to be excused.
5. INDEMNITY. TWA and Purchaser hereby agree to indemnify Escrow Agent
against, and hold Escrow Agent harmless from, any and all claims, actions,
demands, losses, damages, expenses (including, without limitation, court costs,
attorneys' fees, and accountant's fees), and liabilities that may be imposed
upon performance of its duties hereunder, including, without
2
<PAGE> 17
limitation, any litigation arising from this Escrow Agreement or involving the
subject matter hereof, but excluding any such claims, actions, demands, losses,
damages, expenses, and liabilities resulting solely from any willful misconduct
or breach of trust by Escrow Agent hereunder. In the event of any litigation
arising from this Escrow Agreement or involving the subject matter hereof, and
in the event TWA and Purchaser are opposing parties in such litigation, the
party prevailing in such litigation shall be reimbursed promptly upon demand by
the other such party for the reasonable out-of-pocket costs and expenses of
such litigation together with any amount which the prevailing party shall have
paid Escrow Agent with respect to such litigation and the subject matter
thereof pursuant to the indemnification agreement contained in this Paragraph 5.
6. COMPENSATION. In consideration of its services hereunder, Escrow Agent
shall be (i) paid an escrow fee of $l0.00, which amount shall be paid by TWA at
the time of disbursement of the Funds by Escrow Agent and (ii) indemnified by
the parties as provided in Paragraph 5 hereof.
7. NOTICES. Wherever any notice or other communication is required or
permitted hereunder, such notice shall be in writing and shall be delivered in
person or sent by U.S. registered or certified mail, return receipt requested,
postage prepaid, to the addresses set out below or at such other addresses as
are specified by written notice delivered in accordance herewith:
PURCHASER: Romulus Holdings Corp.
---------- 25 Coligni Avenue
New Rochelle, New York 10801
Attention: Gary Singer/Steven Singer
Telephone: (914) 235-8800
Telefacsimile: (914) 235-8849
TWA: Trans World Airlines, Inc.
---- One City Centre
515 North Sixth Street
St. Louis, MO 63101
Attention: Richard P. Magurno, Esq.
Telephone: (314) 589-3264
Telefacsimile: (314) 589-3267
3
<PAGE> 18
ESCROW AGENT: Smith, Gambrell & Russell
------------- 1230 Peachtree Street, N.E.
Promenade II, Suite 3100
Atlanta, GA 30309-3592
Attention: Howard E. Turner
Telephone: (404) 815-3594
Telefacsimile: (404) 815-3509
8. BINDING EFFECT. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors, and assigns, provided
neither TWA nor Purchaser shall be permitted to assign all or any part of their
respective right, title, and interest hereunder, except to the extent said
party is permitted to assign its right, title and interest whether in whole or
in part under the Agreement, and then only from and to the extent permitted
thereunder or pursuant to the written consent of the other party. Any and all
rights granted to any of the parties hereto may be exercised by their agents or
personal representatives.
9. MISCELLANEOUS. Time is of the essence of this Agreement. Capitalized
terms not otherwise defined herein shall have the meaning ascribed to them in
the Agreement or the Plan. Each of the parties hereto acknowledge that Escrow
Agent acts as outside counsel for TWA and has so acted in connection with,
among other things, the negotiation, preparation and execution of the Agreement
and this Escrow Agreement. Such parties acknowledge and agree that Escrow
Agent shall be entitled to continue to so act with respect to all existing and
future matters on or with respect to which TWA may wish to consult Smith,
Gambrell & Russell.
10. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and all such counterparts together
shall constitute one and the same instrument.
4
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have signed and sealed this Escrow
Agreement as of the day and year first above written.
PURCHASER:
----------
ROMULUS HOLDINGS CORP.
By:_______________________________________
Title:_________________________________
TRANS WORLD AIRLINES, INC.:
---------------------------
By:_____________________________________
Its:_____________________________________
ESCROW AGENT:
-------------
SMITH, GAMBRELL & RUSSELL
By:_____________________________________
a Partner
5
<PAGE> 1
EXHIBIT 10.47
<PAGE> 2
August 22, 1995
Ms. Marilyn M. Hoppe
16426 S. 41st Street
Phoenix, AZ 85044
Dear Ms. Hoppe:
Further to recent discussions, we are pleased to offer you the position of Vice
President, Revenue Management subject to your election by TWA's Board of
Directors.
- - - Your annual salary will be $135,000.
- - - You will be paid a lump sum "signing bonus" of $20,000 less applicable
withholdings, within (30) days of your election by TWA's Board of Directors.
- - - You will be eligible to participate in the Key Employee Stock Incentive
Plan ("Plan"). The terms and conditions of your initial grant will be at a
level no less than 20,000 options.
- - - As an elected Corporate Officer, you and your eligible family members will
be entitled to card-type Class 1 "term" passes, generally permitting
positive space first class travel, without charge, on TWA routes worldwide.
- - - You and your eligible dependents will be covered by TWA's Company paid
comprehensive Medical and Dental Plan, on the same terms and conditions
applicable to other officers. As an Officer, you will also
be covered by TWA's Company-paid Travel Accident Insurance Program.
- - - You will be eligible for coverage under TWA's Group Term Life Insurance.
Under this plan, TWA provides Basic Life Insurance of $50,000 at no cost to
you. Assuming you are insurable at standard rates, you also have two
options for purchasing Additional Group Term Life Insurance in an amount
up to three times your annual salary, less the Basic $50,000. The monthly
cost of this Additional Life Insurance is currently $4.50 per $10,000.
- - - You will be eligible to participate in TWA's Voluntary Personal Accident
Insurance Plan. The maximum coverage is currently $150,000 at a cost of
$6.60 per month.
<PAGE> 3
Marilyn M. Hoppe
August 22, 1995
Page 2
- You will be covered for long-term disability protection pursuant
to plan provisions at standard rates and subject to standard
conditions.
- You will be eligible to participate in any and all applicable
officer related programs.
- You will devote the whole of your business time to the business and
affairs of, and to advance the best interest of, TWA.
- While your responsibilities will require that you divide
your work on TWA's system, your principle work place will
be at St. Louis. The company will provide you with assistance as
described in detail in the attached copy of the Company's 1995
Class "A" Relocation Policy for Management Employees.
Additionally, the Company will reimburse reasonable and actual
temporary lodging and transportation expenses for up to six (6)
months.
- You will be eligible for three weeks vacation.
- The term of your employment will begin on or about September
1, 1995, (the "Commencement Date"), and will be for an indefinite
period, subject to TWA's right of termination without cause, with
twelve (12) months' severance pay. Notwithstanding the foregoing,
TWA may terminate your employment for cause, as such term is
defined herein, at any time without advance notice, in which event
TWA will have no further obligations to you except for accrued or
unpaid salary earned by you, through and including the effective
date of such termination. "Cause" shall mean (1) the Executive is
convicted of a felony, or a misdeameanor involving moral
turpitude, or (2) the Board of Directors determines in good faith
that the Executive has (a) materially failed or refused to perform
competently her duties and responsibililties (after notice and
opportunity to cure if such material failure or refusal can be
cured), or (b) have breached her duty of loyalty to, or committed
any act of fraud, theft or dishonesty against the Company or any
of its affiliated Companies. In order to terminate your
employment, you agree that you must give TWA thirty (30) days
advance written notice. If you fail to do so, you forfeit all
unaccrued rights and benefits to which you might otherwise be
entitled under this or any related agreement and TWA will have no
further obligations to you except for unpaid salary earned by you
through and including the effective date of such termination.
<PAGE> 4
Marilyn M. Hoppe
August 22, 1995
Page 3
Regardless of the cause, you agree that, for a period of one year following
termination of your employment by TWA, you shall not 1) publicly disparage TWA
or ii) directly or indirectly solicit or offer employment or otherwise engage
the services of any individual who was a TWA management employee during the
last three months of your employment by TWA.
Please return the copy of this letter indicating your agreement by signing
below.
Sincerely,
/s/ C.J. Thibaudeau
C.J. Thibaudeau
I understand and accept the terms and conditions of this letter.
/s/ Marilyn M. Hoppe
- - ----------------------
Marilyn M. Hoppe
Attachment
cc: M. Coleman
J. Erickson
R. Magurno
<PAGE> 1
Trans World Airlines, Inc. and Subsidiaries
EXHIBIT 11.1
Computation of Earnings Per Share
(Amounts in Thousands, Except Per Share Amount)
<TABLE>
<CAPTION>
Reorganized
Company
------------
One Month
Ended
September 30, 1995
ADJUSTMENTS TO NET INCOME (LOSS)
<S> <C>
Net income (loss) $ (2,347)
Mandatorily Redeemable Preferred
Stock dividend requirements (1,163)
-----------
Net income (loss) applicable to common
stock and common stock equivalents for
primary computation $ (3,510)
-----------
ADJUSTMENTS TO OUTSTANDING SHARES
Average number of shares of common stock (1) 22,503
Primary Adjustments
Incremental shares associated with the
assumed exercise of options and
warrants (2) 0
-----------
Total average number of common and common
equivalent shares used for primary
calculation 22,503
-----------
Earnings per common share $ (0.16)
-----------
</TABLE>
(1) Includes 5,301 shares of Employee Preferred Stock which, except for a
liquidation preference of $.01 per share and the right to elect a
certain number of directors to the Board of Directors, is the
functional equivalent of common stock.
(2) The computations do not give effect to common shares or Employee
Preferred Stock issuable under stock options, warrants or common stock
or Employee Preferred Stock which may be issued in future periods,
based upon various factors, including the value of consideration issued
on the Effective Date of the Plan of Reorganization as measured at
dates in the future, as their inclusion would be anti-dilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 1-MO 8-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> SEP-01-1995 JAN-01-1995
<PERIOD-END> SEP-30-1995 AUG-31-1995
<CASH> 251,312 0
<SECURITIES> 0 0
<RECEIVABLES> 324,153 0
<ALLOWANCES> 15,809 0
<INVENTORY> 147,993 0
<CURRENT-ASSETS> 768,552 0
<PP&E> 608,374 0
<DEPRECIATION> 7,956 0
<TOTAL-ASSETS> 2,951,589 0
<CURRENT-LIABILITIES> 932,764 0
<BONDS> 0 0
<COMMON> 172 0
58,860 0
53 0
<OTHER-SE> 267,846 0
<TOTAL-LIABILITY-AND-EQUITY> 2,951,589 0
<SALES> 0 0
<TOTAL-REVENUES> 293,890 2,218,355
<CGS> 0 0
<TOTAL-COSTS> 284,582 2,203,713
<OTHER-EXPENSES> 11,623 352,951
<LOSS-PROVISION> 15,809 0
<INTEREST-EXPENSE> 11,283 123,247
<INCOME-PRETAX> (2,315) (338,309)
<INCOME-TAX> 32 (96)
<INCOME-CONTINUING> (2,347) (338,213)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 140,898
<CHANGES> 0 0
<NET-INCOME> (2,347) (197,315)
<EPS-PRIMARY> (.16) (10.44)
<EPS-DILUTED> (.16) (10.44)
<FN>
<F1>Presented above are the operating results for the reorgnized Company (one month
of September, 1995) and the predecessor Company (eight months ended August 31,
1995).
</FN>
</TABLE>