<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 31, 1996.
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TRANS WORLD AIRLINES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4512 43-1145889
(State of Incorporation) (Primary Standard (I.R.S. Employer
Industrial Identification No.)
Classification Code
Number)
</TABLE>
ONE CITY CENTRE, 515 N. SIXTH STREET
ST. LOUIS, MISSOURI 63101
(314) 589-3000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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Copy to:
<TABLE>
<S> <C>
JEFFREY H. ERICKSON HOWARD E. TURNER, ESQ.
PRESIDENT AND CHIEF EXECUTIVE OFFICER SMITH, GAMBRELL & RUSSELL
ONE CITY CENTRE, 515 N. SIXTH STREET 1230 PEACHTREE STREET, NE, SUITE 3100
ST. LOUIS, MISSOURI 63101 ATLANTA, GEORGIA 30309
(314) 589-3000 (404) 815-3500
</TABLE>
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. / /
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
8% Cumulative Convertible Exchangeable Pre-
ferred Stock, $.01 par value per share... 3,869,000 shares $50(1) $193,450,000(1) $66,707(1)
8% Convertible Subordinated Debentures due
2006..................................... $193,450,000 N/A N/A N/A(2)
principal amount
Common Stock, $.01 par value per share..... 9,544,823 shares N/A N/A N/A(3)
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Total...................................... N/A N/A N/A $66,707
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee based
upon the $50 initial sale price of the 8% Cumulative Convertible
Exchangeable Preferred Stock, $.01 par value per share (the "Preferred
Stock").
(2) No additional consideration will be received by the Registrant for the
issuance of the 8% Convertible Subordinated Debentures due 2006 (the
"Debentures") upon exchange of the Preferred Stock. Accordingly, no
additional registration fee is required in respect of the Debentures
pursuant to Rule 457(i) under the Securities Act.
(3) No additional consideration will be received by the Registrant for the
issuance of shares of the Company's Common Stock, $.01 par value per share
(the "Common Stock") upon the conversion of the Preferred Stock or the
Debentures. Accordingly, no additional registration fee is required in
respect of such shares of Common Stock pursuant to Rule 457(i) under the
Securities Act.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
- --------------------------------------------------------------------------------
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
PROSPECTUS
SUBJECT TO COMPLETION DATED MAY 31, 1996
TRANS WORLD AIRLINES, INC.
3,869,000 SHARES OF 8% CUMULATIVE CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
$193,450,000 PRINCIPAL AMOUNT OF 8%
CONVERTIBLE SUBORDINATED DEBENTURES DUE 2006
9,544,823 SHARES OF COMMON STOCK (PAR VALUE $.01 PER SHARE)
This Prospectus relates to the 3,869,000 shares of the 8% Cumulative
Convertible Exchangeable Preferred Stock, par value $.01 per share (the
"Preferred Stock"), of Trans World Airlines, Inc., a Delaware corporation ("TWA"
or the "Company"), the $193,450,000 aggregate principal amount of the Company's
8% Convertible Subordinated Debentures due 2006 (the "Debentures") issuable upon
exchange of the Preferred Stock and the 9,544,823 shares of the Company's Common
Stock, $.01 par value per share (the "Common Stock"), issuable upon conversion
of the Preferred Stock or the Debentures, subject to adjustment under certain
circumstances.
The Preferred Stock was initially issued and sold on March 22 and 29, 1996
(the "Original Offering"), in transactions exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
to persons reasonably believed by the Initial Purchasers (as defined herein) of
the Preferred Stock to be "qualified institutional buyers" (as defined by Rule
144A under the Securities Act ("Rule 144A")), or in transactions complying with
the provisions of Regulation S under the Securities Act ("Regulation S"). The
Preferred Stock, along with the Debentures issuable upon exchange of the
Preferred Stock and the Common Stock issuable upon conversion of the Preferred
Stock or the Debentures, may be offered and sold from time to time by the
holders named herein or by their transferees, pledgees, donees, or their
successors (collectively, the "Selling Holders") pursuant to this Prospectus.
The Registration Statement on Form S-3 of which this Prospectus is a part (the
"Registration Statement") has been filed with the Securities and Exchange
Commission (the "SEC" or the "Commission") pursuant to the Company's obligations
under a registration rights agreement dated as of March 22, 1996 (the
"Registration Rights Agreement") among the Company and the Initial Purchasers,
which was entered into in connection with the Original Offering.
Dividends on the Preferred Stock are cumulative from the date of original
issuance and payable quarterly in arrears commencing June 15, 1996 at an annual
rate of 8% (equivalent to $4.00 per share per annum). The Preferred Stock has a
liquidation preference of $50.00 per share, plus accrued and unpaid dividends.
Each share of the Preferred Stock (or, if issued, each $50.00 principal
amount of Debentures) may be converted at any time at the option of the holder,
unless previously redeemed or exchanged, into shares of Common Stock at a
conversion price of $20.269 per share or $50.00 principal amount (equivalent to
a conversion rate of approximately 2.467 shares of Common Stock for each share
of Preferred Stock or $50.00 principal amount of Debentures), subject to
adjustment in certain circumstances. The number of shares of Common Stock
issuable upon conversion of the Preferred Stock or the Debentures is subject to
possible adjustment under certain circumstances. Therefore, the number of shares
of Common Stock registered hereunder may increase or decrease. See "Description
of Preferred Stock -- Conversion Rights."
(Continued on next page)
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER MATTERS DISCUSSED UNDER THE
CAPTION "RISK FACTORS" ON PAGE 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
---------------------
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 3
(Continued from cover page)
The Preferred Stock may be exchanged, in whole but not in part, at the
option of the Company, for the Debentures on any dividend date beginning on
March 15, 1998 at the rate of $50.00 principal amount of Debentures for each
share of Preferred Stock outstanding at the time of exchange; provided, that all
accrued and unpaid dividends, whether or not earned or declared, on the
Preferred Stock to the date of exchange have been paid or set aside for payment
and certain other conditions are met. The Debentures, if issued, will bear
interest payable semiannually and will have the terms and conditions set forth
elsewhere in this Prospectus. See "Description of Preferred Stock -- Exchange
Provisions."
The Preferred Stock may not be redeemed prior to March 15, 1999. On or
after March 15, 1999, the Preferred Stock may be redeemed, in whole or in part,
at the option of the Company, at the redemption prices set forth elsewhere in
this Prospectus plus accrued and unpaid dividends thereon to the date fixed for
redemption. See "Description of Preferred Stock -- Optional Redemption by the
Company."
Upon the occurrence of a Change in Control (as defined herein), the
conversion price of the Preferred Stock will be reduced for a limited period of
time in the event that the Market Value (as defined herein) of the Common Stock
is less than the then prevailing conversion price, but in no event will the
conversion price be lower than $11.75, subject to certain adjustments as set
forth herein.
The Preferred Stock, the Debentures and the shares of Common Stock issuable
upon conversion of the Preferred Stock or Debentures may be sold by the Selling
Holders from time to time directly to purchasers or through agents, underwriters
or dealers. See "Plan of Distribution." If required, the names of any agents or
underwriters involved in the sale of the securities in respect of which this
Prospectus is being delivered, along with any applicable agent's commission,
dealer's purchase price or underwriter's discount, will be set forth in an
accompanying supplement to this Prospectus (the "Prospectus Supplement").
Furthermore, information concerning Selling Holders set forth herein may change
from time to time, and the changes will be set forth in such a Prospectus
Supplement.
The Selling Holders will receive all of the net proceeds from the sale of
the Preferred Stock, the Debentures and the shares of Common Stock issuable upon
conversion of the Preferred Stock or Debentures and will pay any and all
underwriting discounts and selling commissions applicable to the sale of such
securities. The Company is responsible for payment of all other expenses
incident to the registration of the securities registered hereunder.
The Selling Holders and any broker-dealers, agents or underwriters which
participate in the distribution of the securities offered hereby may be deemed
to be "underwriters" within the meaning of the Securities Act, and any
commission received by them or purchases by them of such securities at a price
less than the initial price to the public may be deemed to be underwriting
commission for discounts under the Securities Act.
The Company has also agreed to pay certain fees and expenses incident to
the registration of the Preferred Stock, the Debentures and the shares of Common
Stock issuable upon conversion of the Preferred Stock or Debentures pursuant to
the Registration Rights Agreement. It is estimated that the aggregate amount of
fees and expenses payable by the Company in connection with the registration of
the securities offered hereby will be approximately $267,000. The Company
intends to keep the Registration Statement effective for a period of three years
following the initial issuance of shares of Preferred Stock on March 22, 1996,
unless the three-year holding required by Rule 144 under the Securities Act
("Rule 144") is shortened, in which case the Registration Statement will be kept
effective for such shorter period.
The Company plans to make application to list the Preferred Stock with the
American Stock Exchange ("AMEX"). If issued, the Company will make application
for listing of the Debentures with AMEX. There has not previously been any
public market for the Preferred Stock or the Debentures, and there can be no
assurance that an active trading market will ever develop for the Preferred
Stock, or, if issued, the Debentures. The Common Stock is listed on AMEX under
the symbol "TWA." On May 30, 1996, the closing sale price on AMEX for one share
of Common Stock was $20 1/8.
2
<PAGE> 4
No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offer of
securities made by this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or by any underwriter, dealer or agent. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any securities other than
those to which it relates. Neither the delivery of this Prospectus nor any sale
of, or offer to sell, the securities offered hereby shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company since the date hereof or that the information herein is
correct as of any time subsequent to its date.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company with the Commission pursuant to the informational requirements of the
Exchange Act can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
NW, Washington, D.C. 20549, and at the following Regional Offices of the
Commission: Northeast Regional Office, 7 World Trade Center, Suite 1300, New
York City, New York 10048 and Midwest Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can also be obtained upon written request addressed to the Securities
and Exchange Commission, Public Reference Section, Room 1024, 450 Fifth Street,
NW, Washington, D.C. 20549 at prescribed rates. Such reports, proxy statements
and other information can also be inspected at the offices of the American Stock
Exchange, 86 Trinity Place, New York City, New York 10006-1881, on which the
Preferred Stock and the Common Stock of the Company is listed. In addition, the
Company has agreed, for so long as any of the securities offered hereby remain
outstanding, to make available to any prospective purchaser or beneficial holder
of such securities in connection with any sale thereof, the information required
by subsection (d) of Rule 144A under the Securities Act ("Rule 144A"), until
such time as the holders thereof have disposed of such securities pursuant to an
effective registration statement filed by the Company.
This Prospectus contains summaries believed to be accurate in all material
respects of certain terms of certain agreements; however, in each such case,
reference is made to the actual agreements (copies of which will be made
available upon request to the Company) for complete information with respect
thereto, and all such summaries are qualified in their entirety by this
reference.
This Prospectus forms a part of the Registration Statement, including all
amendments (including post-effective amendments) and exhibits thereto, which the
Company has filed under the Securities Act with respect to the securities
offered hereby. This Prospectus does not contain all the information otherwise
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is made to the Registration Statement and the exhibits
filed as part thereof. The Registration Statement may be inspected at the public
reference facilities maintained by the Commission at the addresses set forth in
the preceding paragraph. Statements contained herein concerning any document
filed as an exhibit are not necessarily complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement. Each such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus (i) the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 and
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996; (ii) the
description of the Common Stock contained in the Company's Form 8-A dated August
1, 1995 filed under the Exchange Act, including any amendment or reports filed
for the purpose of updating such description; (iii) the Company's Current Report
on Form 8-K filed on March 20, 1996; (iv) the
3
<PAGE> 5
Company's Current Report on Form 8-K filed on March 21, 1996; and (v) the
Company's Proxy Statement and Notice of Meeting relating to the Annual
Stockholders to be held on May 21, 1996, each of which has been filed with the
Commission pursuant to the requirements of the Exchange Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the securities offered hereby shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to furnish without charge to each person to
whom a copy of this Prospectus has been delivered, upon written or oral request
of such person, a copy of any and all documents incorporated herein by reference
(not including exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents). Requests should be directed to
the Corporate Secretary of Trans World Airlines, Inc., One City Centre, 515 N.
Sixth Street, St. Louis, Missouri 63101, telephone (314) 589-3000.
4
<PAGE> 6
PROSPECTUS SUMMARY
This summary does not purport to be complete and is qualified in its
entirety by reference to the detailed information and consolidated financial
statements appearing elsewhere in this Prospectus or incorporated by reference
herein. Terms not defined in this summary are defined elsewhere herein.
TWA is the seventh largest U.S. air carrier (based on 1995 revenue
passenger miles ("RPMs") and available seat miles ("ASMs")), whose primary
business is transporting passengers, cargo and mail. During 1995, the Company
carried more than 21.7 million passengers and flew approximately 25.1 billion
RPMs. As of December 31, 1995, TWA provided regularly scheduled jet service to
112 cities in the United States, Mexico, Europe, the Middle East and the
Caribbean and operated a fleet of 188 jet aircraft.
TWA's North American operations have a primarily domestic hub in St. Louis
at Lambert International Airport ("St. Louis") and a domestic-international hub
at New York's John F. Kennedy International Airport ("JFK"). TWA is the
predominant carrier at St. Louis, with approximately 350 scheduled daily
departures and an approximately 71% share of airline passenger enplanements in
St. Louis during 1995. Given its location in the center of the U.S., St. Louis
is well-suited to function as an omni-directional hub for both north-south and
east-west transcontinental traffic. Therefore, TWA believes it can offer more
frequencies and connecting opportunities to many travelers in its key Midwestern
markets than competing airlines.
TWA's international operations are concentrated at JFK, where TWA has a hub
system designed to provide domestic feed traffic for its transatlantic service.
JFK is the industry's largest international gateway from North America. The
Company focuses its international operations on business markets that it
believes can support non-stop service.
In March 1996, the Company issued and sold the Preferred Stock in the
Original Offering. After deducting discounts, commissions and estimated
expenses, the net proceeds of the Original Offering were approximately $186.2
million. The Company has used a portion of such proceeds to exercise its option
to redeem the Company's outstanding 12% Cumulative Preferred Stock, $.01 par
value per share (the "12% Preferred Stock"). On April 26, 1996 (the "Redemption
Date"), the Company made payment of an aggregate redemption amount of $84.9
million at the offices of American Stock Transfer & Trust Company ("AST"), the
stock transfer agent for the 12% Preferred Stock. Upon proper presentation and
surrender of certificates evidencing shares of 12% Preferred Stock, AST will pay
record holders of 12% Preferred Stock a redemption price per share equal to
$75.00, plus $2.8667 in accrued dividends to and including the Redemption Date.
Since the Redemption Date, the 12% Preferred Stock has been deemed to be no
longer outstanding, and holders of 12% Preferred Stock have no rights as
stockholders of the Company (except the right to receive from the Company any
monies payable upon redemption without interest thereon).
TWA is a Delaware corporation organized in 1978 and is the successor to the
business of its predecessor corporation, Transcontinental & Western Air, Inc.,
originally formed in 1934. The Company's principal executive offices are located
at One City Centre, 515 N. Sixth Street, St. Louis, Missouri 63101 and its
telephone number is (314) 589-3000.
5
<PAGE> 7
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following factors should be considered carefully in evaluating the Company and
its business before purchasing any of the securities offered hereby.
Certain statements made in this Prospectus relating to plans, conditions,
objectives, and economic performance go beyond historical information and may
provide an indication of future results. To that extent, they are
forward-looking statements within the meaning of Section 21E of the Exchange
Act, and each is subject to risks, uncertainties, and assumptions that could
cause actual results to differ from those in the forward-looking statement.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may very materially from
those anticipated, estimated or projected. Some of the uncertainties that might
adversely impact TWA's future results of operations include, but are not limited
to, the "Risk Factors" described below.
COMPANY RELATED CONSIDERATIONS
Substantial Indebtedness; Future Capital Requirements; Liquidity
During the period from 1992 through 1995, TWA underwent two separate
Chapter 11 reorganizations, the first in 1992-93 (the " '93 Reorganization") and
the second in 1995 (the " '95 Reorganization"). Pursuant to the '95
Reorganization, the Company improved its financial condition and operating
performance by, among other things, reducing labor and other operating and
financing costs, rescheduling debt payments, recapitalizing the Company's equity
securities and certain of its debt, revising the Company's route structure to
capitalize further on its strength in St. Louis, and developing enhanced
marketing systems. As a result of the '95 Reorganization, the Company eliminated
approximately $500 million in face amount (approximately $300 million book
value) of debt from its balance sheet. In addition, the maturity of the
Company's indebtedness with certain entities affiliated with Mr. Carl C. Icahn
was extended from January 8, 1995 to January 8, 2001, and the Company negotiated
an aggregate of approximately $91 million of aircraft lease and conditional sale
agreement deferrals for various periods of time, with a weighted average life of
approximately two years.
Notwithstanding the Company's '93 and '95 Reorganizations, the Company
remains highly leveraged and has and will continue to have significant debt
service obligations. See Note 7 to the Company's 1995 consolidated financial
statements incorporated by reference in this Prospectus (including the notes
thereto, the "1995 Consolidated Financial Statements"), and the Company's
condensed consolidated financial statements for the three months ended March 31,
1996 (including the notes thereto the "1996 Interim Consolidated Financial
Statements") incorporated by reference herein, together referred to herein as
the "Consolidated Financial Statements." As of March 31, 1996, the Company's
ratio of long-term debt and capital leases (including current maturities) to
shareholders' equity was 2.5 to 1. In addition, at December 31, 1995, TWA's
estimated minimum payment obligations under noncancellable operating leases
totaled approximately $227 million for 1996 and approximately $1,650 million for
periods thereafter.
The degree to which the Company is leveraged could have important
consequences to holders of the securities offered hereby, including the
following: (i) the Company's ability to obtain additional financing in the
future for working capital, capital expenditures, acquisitions, general
corporate purposes or other purposes may be impaired; (ii) a substantial portion
of the Company's cash flow from operations must be dedicated to the payment of
principal and interest on the Company's indebtedness, thereby reducing the funds
available to the Company for its operations and to pay dividends on its equity
securities; and (iii) such indebtedness contains restrictive and other
covenants, which, if not complied with, may result in an event of default which,
if not cured or waived, could have a material adverse effect on the Company. See
"-- Prior Operating Losses; Reorganizations" for a description of an alleged
default under a loan agreement of the Company which could result in a
cross-default under other indebtedness of the Company.
TWA's 1996 capital expenditures are currently anticipated to total
approximately $120 million, including approximately $75 million for flight
equipment related expenditures (e.g., progress payments for aircraft and
6
<PAGE> 8
the purchase of aircraft engines and parts). In February 1996, TWA executed
definitive agreements providing for the operating lease of up to 10 new Boeing
757 aircraft to be delivered in 1996 and 1997. Although individual aircraft
rentals escalate over the terms of the leases, annual aggregate rental
obligations are estimated to average approximately $51 million over the lease
terms after all 10 aircraft have been delivered. These aircraft have an initial
lease term of 10 years. The Company also entered into an agreement in February
1996, with The Boeing Company ("Boeing"), for the purchase of 10 new Boeing 757
aircraft with deliveries in February 1997 through May 1999. The Company also
acquired the right, subject to certain conditions, to purchase up to 20
additional Boeing 757 aircraft. The estimated purchase price for the firm order
aircraft and related spare parts and equipment is $550 million including an
estimate for the price escalation factor. The Company has secured financing
commitments from engine and airframe manufacturers for approximately $420
million of the estimated purchase price. For certain information regarding other
aircraft purchase agreements, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" incorporated herein by reference.
In addition, the Company is currently negotiating, but has not concluded, an
agreement to extend the leases on 28 DC-9-30 aircraft operated by the Company
and to increase the rent payable thereunder to finance the acquisition at an
aggregate cost of approximately $49 million of hush-kits for installation on
such aircraft to enable them to meet the Stage 3 noise requirements of the
Airport Noise and Capacity Act of 1990 (the "Noise Act"). The Noise Act
provides, with certain exceptions, that no person may operate large civilian
turbo-jet aircraft in the U.S. after December 31, 1999 that do not comply with
Stage 3 noise levels. Stage 3 is a designation of the Federal Aviation
Administration (the "FAA") for the quietest commercial aircraft. As of March 31,
1996, the Company had purchased eight hush-kits at a cost of $13.6 million with
internal funds.
TWA's consolidated cash and cash equivalents at March 31, 1996 was
approximately $374.7 million. The Company's cash balances were subsequently
reduced as a result of the April 26, 1996 payment of approximately $84.9 million
in connection with the redemption of the Company's outstanding 12% Preferred
Stock.
TWA has no unused credit lines and must satisfy all of its working capital
and capital expenditure requirements from cash provided by operating activities,
from external capital sources or from the sale of assets. Substantially all of
TWA's strategic assets, including its owned aircraft, ground equipment, slots
and overhaul facilities, have been pledged to secure 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 in many
cases would likely exceed the immediately realizable value of such assets. TWA
has relatively few non-strategic assets which it could monetize, substantially
all of such assets being subject to various liens and security interests which
would restrict and/or limit the ability of TWA to realize any significant
proceeds from the sale thereof. To the extent that the Company's access to
capital is constrained, the Company may not be able to make certain capital
expenditures or implement certain other aspects of its strategic plan, and the
Company may therefore be unable to achieve the full benefits expected therefrom.
The Company's estimates that it had, for federal income tax purposes, net
operating loss carryforwards ("NOLs"), amounting to approximately $167.0 million
at December 31, 1995, which expire in 2008 through 2010 if not utilized before
then to offset taxable income. Section 382 of the Internal Revenue Code of 1986,
as amended, and regulations issued thereunder (the "Code") imposes limitations
on the ability of corporations to use NOLs, if the corporation experiences a
more than 50% change in ownership during certain periods. As a result of such a
change in ownership caused by the '95 Reorganization, the Company's use of its
NOLs will, depending upon certain elections to be made by the Company, either be
substantially restricted (to approximately $12 million annually) or reduced (by
approximately $45 million) in future periods. Any future ownership change may
result in the imposition of a significantly lower annual limitation on the
Company's utilization of NOLs and extend the period over which any benefits are
realized therefrom. Moreover, if the Company elects to reduce its NOLs rather
than to apply the $12 million annual limitation described above and if another
ownership change were to occur during the two-year period following the '95
Reorganization, the annual limitation on the Company's use of its existing NOLs
would be reduced to zero. In addition, the
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NOLs are subject to examination by the Internal Revenue Service (the "IRS") and
are thus subject to adjustment or disallowance resulting from any such IRS
examination.
The Company's long-term viability as well as its ability to meet its
existing debt and lease obligations and future capital commitments, as well as
to make scheduled dividend payments to the holders of the Preferred Stock (or
interest payments to the holders of the Debentures, if issued), depend upon the
Company's financial and operating performance, which in turn are subject to,
among other things, prevailing economic conditions and to certain other
financial, business and other factors beyond the Company's control. Although the
Company's cash flow from its operations subsequent to the '95 Reorganization is
anticipated to be sufficient in the foreseeable future to meet the Company's
debt service and lease obligations and to pay dividends on the Preferred Stock
(or interest on the Debentures, if issued), there can be no assurance that the
Company's operating results will continue to be sufficient to do so.
Prior Operating Losses and Future Uncertainties Relating to Results of
Operations
As with other companies, TWA's long-term viability depends on its ability
to achieve and maintain profitable operations. The airline industry and the
Company have both experienced significant losses in recent periods. For example,
in 1995 the Company earned its first annual operating profit since 1989, with
operating losses in the years ended December 31, 1993 and 1994 totaling $284.0
million and $279.5 million, respectively (including special and nonrecurring
charges of $175.1 million in 1994). The Company also experienced significant net
losses during such periods (excluding extraordinary gains related to the '93
Reorganization). Although TWA achieved an operating profit of $25.1 million for
the combined twelve month period ended December 31, 1995 (including $58.0
million of non-cash expense relating to the distribution of stock to employees
as part of the '95 Reorganization), achieved a $25.1 million reduction in its
operating loss in the first quarter of 1996 ($54.2 million) as compared to the
prior year and has taken a number of actions intended to improve future
profitability, it experienced a net loss of $227.5 million in 1995 (including
net charges of $155.8 million related to the '95 Reorganization) and a net loss
of $37.1 million in the first quarter of 1996, and there can be no assurance
that the Company's future operations will be profitable. In addition, TWA has
historically experienced significant variations in annual operating revenues and
operating expenses and expects such variations to continue.
While numerous uncertainties concerning the level of revenues and expenses
always exist, the nature of such uncertainties is constantly changing, and the
Company is unable to predict the potential impact of any of such uncertainties
upon its results of operations. Among the uncertainties that might adversely
impact TWA's future results of operations are: (i) competitive pricing and
scheduling initiatives; (ii) competitive flights added by competing airlines;
(iii) increases in operating costs, including the cost of fuel; (iv) reduced
levels of air passenger traffic resulting from war, threat of war, international
terrorism or changes in the economy; (v) governmental limitations on the ability
of TWA to service certain airports and/or foreign markets as a result of noise
abatement practices or regulations imposed on carriers operating at such
airports; (vi) current and future regulatory requirements requiring additional
capital expenditures with respect to, among other things, noise abatement.
In addition, the Company and Karabu Corporation ("Karabu"), a Delaware
corporation controlled by Mr. Carl C. Icahn, are parties to an eight-year Karabu
Ticket Program Agreement (the "Ticket Agreement"). Tickets sold by the Company
to Karabu pursuant to the Ticket Agreement are priced at levels intended to
approximate current competitive discount fares available in the airline
industry. TWA believes that applicable provisions of the Ticket Agreement do not
allow Karabu to market or sell such tickets through travel agents. Karabu,
however, has been marketing tickets through travel agents. TWA has demanded that
Karabu cease doing so, and Karabu has stated that it disagrees with the
Company's interpretation concerning sales through travel agents. In December
1995, the Company filed a lawsuit against Karabu, Mr. Icahn and certain
affiliated companies seeking damages and to enjoin further violations of the
Ticket Agreement. Mr. Icahn countered by threatening to file his own lawsuit and
to declare a default on the financing of up to $200 million provided to TWA by
such in connection with the '93 Reorganization, which financing was secured by
receivables and certain flight equipment (the "Icahn Loans"), on a variety of
claims related to Mr. Icahn's interpretations of the security documents
applicable to such loans as well as certain alleged
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<PAGE> 10
violations of the Ticket Agreement by the Company. The Company's violation of
the Ticket Agreement could result in a cross-default under the Icahn Loans. Mr.
Icahn has also alleged independent violations of the Icahn Loans, including,
among other things, that the Company has not been maintaining, as the terms of
the Icahn Loans require, certain aircraft which TWA has retired from service and
stored and which are pledged as security for the Icahn Loans. To endeavor to
eliminate this issue from the various disputes with Mr. Icahn and his
affiliates, the Company has deposited an amount equal to the appraised fair
market value of such aircraft with State Street Bank and Trust Company of
Connecticut, N.A., as Security Trustee and requested the release of the liens on
such aircraft. To date, the trustee has not released such liens. The parties
negotiated a series of standstill agreements, pursuant to which TWA's original
lawsuit was withdrawn, while the Company and Mr. Icahn endeavored to negotiate a
settlement of their differences and respective claims. The final extension of
such a standstill expired on March 20, 1996.
On March 20, 1996, TWA was named as a defendant in a complaint (the "Icahn
Complaint") filed by Karabu and certain other affiliates of Mr. Icahn (the
"Icahn Entities"). The Icahn Complaint alleges, among other things, that the
Company has violated certain federal antitrust laws, breached the Ticket
Agreement and interfered with certain existing and prospective commercial
relations of the Icahn Entities. The Icahn Complaint is based upon an
interpretation by Mr. Icahn and the Icahn Entities that the Ticket Agreement
permits sales of tickets to the general public through travel agents and upon
certain actions the Company has taken to mitigate the adverse effects of the
Icahn Entities' ongoing marketing and sales of tickets to the general public
through travel agents. The Icahn Complaint seeks injunctive relief and actual
and punitive monetary damages, as well as the Icahn Entities' costs of
litigation. The Company believes it has meritorious defenses to the allegations
contained in the Icahn Complaint and intends to defend itself vigorously against
such allegations.
Also on March 20, 1996, the Company filed a Petition (the "TWA Petition")
against Mr. Icahn, Karabu and certain other entities affiliated with Icahn
(collectively, the "Icahn Defendants"). The TWA Petition alleges that the Icahn
Defendants are violating the Ticket Agreement and otherwise tortiously
interfering with the Company's business expectancy and contractual relationships
by, among other things, continuing to market and sell tickets purchased under
the Ticket Agreement to the general public through travel agents. The TWA
Petition seeks a declaratory judgment finding that the Icahn Defendants have
violated the Ticket Agreement, and seeks liquidated, compensatory and punitive
damages, as well as the Company's costs and attorneys fees. The Company believes
the allegations contained in the TWA Petition are meritorious.
In addition, TWA has sought, from the Delaware bankruptcy court in which
the '93 Reorganization plan was filed, a temporary restraining order and a
preliminary and permanent injunction against Karabu, Global Discount Travel
Services, another entity affiliated with Mr. Icahn, and the Security Trustee.
The purpose of the requested relief was to prevent Mr. Icahn or Karabu from
issuing or causing to be issued under the Icahn Loans any default notice based
upon Icahn's interpretation of the loan documents which he contends gives Karabu
a right of prior approval of any changes to TWA's maintenance program with
respect to certain of its flight equipment. The Delaware bankruptcy court, which
had retained jurisdiction from the '93 Reorganization case for the purpose of,
among other things, interpreting certain documents issued in connection with
such case and the '93 Reorganization plan, denied TWA's March 22, 1996 request
for a temporary restraining order, but specifically set trial on the permanent
injunction for July 16, 1996. Mr. Icahn has also alleged other violations of the
Icahn Loans, including, among other things, that the Company has not maintained
as the Icahn Loans require, certain aircraft which have been retired from
service and stored and which are pledged as security for the Icahn Loans. As
described above, the Company has deposited an amount equal to the appraised fair
market value of the aircraft with the Security Trustee and requested the liens
on such aircraft be released. To date, the Security Trustee has not released
such liens. The Company believes that no default exists under the Icahn Security
Agreement. There can be no assurance that the Delaware bankruptcy court will
ultimately grant the relief sought by the Company, or that the Company's
position with respect to any other claims of Icahn or the Icahn Entities will
ultimately be held to be correct. An Event of Default (as defined in the Icahn
Security Agreement) under the Icahn Security Agreement would constitute a
default under the instruments governing the Company's outstanding debt and
equity securities and leases of certain of the Company's flight equipment.
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<PAGE> 11
The Company intends to press its claims vigorously and believes its
defenses to Mr. Icahn's claims are meritorious. However, Karabu's interpretation
regarding discount ticket sales to the general public through travel agents
could be determined, either by a court or otherwise, to be correct. In such
event, unless the Company took appropriate action to mitigate the effect of such
sales, the Company could suffer significant loss of revenue that could reduce
overall passenger yields on a continuing basis during the term of the Ticket
Agreement. In addition, although the Company believes that no default exists
under the Icahn Security Agreement, any default by the Company under the Ticket
Agreement or directly on the Icahn Loans which resulted in an acceleration of
the Icahn Loans could result in a cross-default to the Company's other
indebtedness and leases and otherwise have a material adverse effect on the
Company. As of March 31, 1996, $43.6 million of tickets had been sold by the
Company under the Ticket Program. The impact of future ticket sales by Icahn
affiliates on the Company's results of operations, being dependent upon the
timing and volume thereof, among other things, cannot be predicted at this time.
Age of Fleet; Noise
At December 31, 1995, the average age of TWA's aircraft fleet was 18.6
years, making TWA's fleet one of the oldest of U.S. air carriers. As a result,
TWA incurs increased overall operating costs due to the higher maintenance and
other operating costs associated with older aircraft. The Company is in the
process of acquiring a number of new and later model aircraft and, based upon
current delivery schedules for firmly committed aircraft, TWA's composite fleet
age should be reduced to slightly under 18 years at December 31, 1996. As of
December 31, 1995, TWA's fleet included 101 aircraft which did not meet the
noise reduction requirements under the Noise Act and must therefore be retired
or substantially modified by the end of 1999. Although the Company has plans to
meet the Noise Act's noise reduction requirement, there can be no assurance that
such plans will be achieved. In addition, in 1990 the FAA issued several
Airworthiness Directives ("ADs") mandating changes to maintenance programs for
older aircraft to ensure that the oldest portion of the nation's fleet remains
airworthy. Most of the Company's aircraft are currently affected by these aging
aircraft ADs. During 1994 and 1995, TWA spent approximately $8.3 million to
comply with aging aircraft maintenance requirements. Based on current
information, TWA estimates that costs associated with complying with these aging
aircraft maintenance requirements will aggregate approximately $15.6 million
through the year 2000. These estimates assume that newer aircraft will replace
certain of TWA's existing aircraft and that as a result, the average age of
TWA's fleet will be reduced. There can be no assurance that TWA will be able to
implement fully its fleet plan or that the cost of complying with aging aircraft
maintenance requirements will not be significantly increased.
Potential Dilution; Corporate Governance Provisions; Special Voting
Arrangements
In connection with and as a precondition to the '95 Reorganization, in
August and September of 1994, the Company entered into agreements amending the
Company's existing collective bargaining agreements with the three unions
representing an aggregate of approximately 84% of the Company's employees (the
"'94 Labor Agreements"). In exchange for the concessions received in the '94
Labor Agreements, the Company, among other things, adopted an employee stock
incentive program (the "ESIP") designed to permit TWA's employees to increase
their level of ownership, through grants by the Company to its employees of
additional shares of a special class of preferred stock (the "Employee Preferred
Stock") issued to the Company's union employees and Common Stock, by up to 8% of
the then outstanding Common Stock and Common Stock equivalents over a five year
period commencing in July 1997 if the Common Stock is trading at certain target
levels in each such year. In addition, under the ESIP the Company agreed to
permit such employees to purchase, beginning in July 1997, additional shares in
an aggregate amount of up to 2% of then outstanding Common Stock and Common
Stock equivalents at a discount of 20% to the then market price of the Common
Stock. The ESIP provides for a limited acceleration of the stock grants and
purchase program in the event of a merger, consolidation or sale of all or
substantially all the Company's assets or upon certain issuances of Common Stock
by the Company. The ESIP will result in significant future dilution to other
holders of the Common Stock.
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In 1994, the Board of Directors of the Company (the "Board of Directors" or
the "Board") adopted the Company's 1994 Key Employee Stock Incentive Plan (the
"KESIP") to motivate, attract and retain the services of certain key employees
of the Company. The KESIP provides for the award of incentive and nonqualified
stock options for up to 7% of Common Stock and Employee Preferred Stock
outstanding as of December 16, 1995, subject to certain adjustments. As of May
1, 1996, 59 employees had been granted options to purchase shares of Common
Stock or Employee Preferred Stock at prices ranging from $4.64 to $18.37 per
share. All options granted under the KESIP have a five year life and vest at a
rate of 34%, 33% and 33% on the first three anniversaries of the award date of
such options. The KESIP provides for certain accelerated vesting rights in the
event the recipient dies or becomes disabled or upon a change in control (as
therein defined). The KESIP will result in significant future dilution to other
holders of the Common Stock.
The Company's Second Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") and Amended and Restated By-laws (the "By-laws")
contain provisions which authorize the Board of Directors to issue preferred
stock without stockholder approval, prohibit action by written consent of the
stockholders, authorize only the chairman of the Board of Directors or a
majority of the Board of Directors to call special meetings of the stockholders
and require advance notice for director nominations. These provisions of the
Certificate of Incorporation and By-laws, as well as federal laws limiting
foreign ownership of U.S. flag carriers and the prohibition on certain business
combinations contained in Section 203 of the Delaware General Corporation Law
(the "DGCL"), could have the effect of delaying, deferring or preventing a
change in control or the removal of existing management.
In addition, as a result of provisions of the '94 Labor Agreements, the
Certificate of Incorporation and By-laws contain provisions which allow certain
corporate actions requiring board approval, including mergers, consolidations
and sale of all or substantially all the assets of the Company, to be blocked by
a vote of six (four union elected directors and two other directors) of the
Company's fifteen directors.
Certain Potential Future Earnings Charges
There are a number of uncertainties relating to agreements with employees
of the Company, the resolution of which could result in significant non-cash
charges to TWA's future operating results. Shares granted or purchased at a
discount under the ESIP will generally result in a charge equal to the fair
value of shares granted and the discount for shares purchased at the time when
such shares are earned. If the ESIP's target prices for the Common Stock are
realized, the minimum aggregate charge for the years 1997 to 2002 would be
approximately $60 million based upon such target prices and the number of shares
of Common Stock and Employee Preferred Stock outstanding at December 31, 1995.
The charge for any year, however, could be substantially higher if the then
market price of the Common Stock exceeds the target price for such year ($11.00,
$12.10, $13.31, $14.64, $16.11 and $17.72 for the years 1997 to 2002).
Additionally, the allocation of approximately 1.1 million shares of Employee
Preferred Stock issued to a trust for employees represented by the Air Line
Pilots Association International ("ALPA") pursuant to the '95 Reorganization
will, when allocated to individual employees so represented, result in a charge
equal to the fair market value of the shares on the dates allocated. Finally,
the International Association of Machinists and Aerospace Workers (the "IAM")
has indicated that it does not agree with the Company's method of computing
certain amounts owed to IAM represented employees relating to overtime "bonus"
claims under the Company's 1992 concession agreements with its unions (the " '92
Labor Agreements"). The Company estimates its obligation to be approximately
$26.3 million and the IAM has, while not specifying an amount, indicated they
believe the amount owed is significantly greater. See Notes 11 and 14 to the
1995 Consolidated Financial Statements incorporated herein by reference.
Fresh Start Reporting
In connection with the '95 Reorganization, the Company adopted fresh start
reporting in accordance with the American Institute of Certified Public
Accountants' Statement of Position 90-7 " -- Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code" ("SOP 90-7"). The fresh start
reporting common equity value of the Company was determined by the Company, with
the assistance of its financial advisors, to be approximately $270.0 million
based, in part, on assumptions as to future results of operations. The carrying
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<PAGE> 13
value of the Company's assets does not reflect historical cost but rather
reflects current values determined by the Company as of the August 23, 1995
effective date of the '95 Reorganization (including values for intangible assets
such as routes, gates and slots of approximately $458.4 million). The difference
between (i) the equity valuation of the Company plus the estimated fair market
value of the Company's liabilities and (ii) the estimated fair market value of
its identifiable assets was allocated to "reorganization value in excess of
amounts allocable to identifiable assets" in the amount of approximately $839.1
million. In future periods, these intangible assets will be evaluated for
recoverability based upon estimated future cash flows. If expectations are not
substantially achieved, charges to future operations for impairment of these
assets might be required and such charges could be material. Due to the
significant adjustments relating to the '95 Reorganization and the adoption of
fresh start reporting, the pre-reorganization Consolidated Financial Statements
incorporated by reference in this Prospectus are not comparable to the
post-reorganization Consolidated Financial Statements. A vertical black line is
shown in the Consolidated Financial Statements incorporated by reference and
selected financial data presented herein to separate TWA's post-reorganization
Consolidated Financial Statements from its pre-'95 Reorganization Consolidated
Financial Statements since they have not been prepared on a consistent basis of
accounting. Similarly, the Company's Consolidated Financial Statements for the
periods prior to the '93 Reorganization are not consistent with periods
following the '93 Reorganization. See Note 17 to the 1995 Consolidated Financial
Statements incorporated herein by reference.
Absence of Trading Markets; Restrictions on Transfer
Prior to the Original Offering, there was no trading market for the
Preferred Stock or the Debentures, and there can be no assurance that a trading
market will develop or, if one does develop, of its liquidity or whether it will
be maintained. The Preferred Stock, the Debentures and the Common Stock issuable
upon conversion of the Preferred Stock and the Debentures have been designated
as eligible for trading in the National Association of Securities Dealers, Inc.
Private Offerings, Resales and Trading through Automated Linkages ("PORTAL")
market. PaineWebber Incorporated and Alex. Brown & Sons Incorporated (the
"Initial Purchasers") have made a market in the Preferred Stock and have
informed the Company that they presently intend to make a market in the
Debentures, if issued; however, they are not obligated to do so and any such
market making activity may be terminated at any time without notice. In
addition, such market making activity will be subject to the limits of the
Securities Act. Accordingly, the Preferred Stock (or the Debentures, if issued),
and the Common Stock issuable upon conversion thereof may only be resold,
pledged or transferred in accordance with the conditions set forth herein, and
only (a) to the Company, (b) pursuant to a registration statement that has been
declared effective under the Securities Act, (c) to a person the transferor
reasonably believes is a "qualified institutional buyer" as defined in Rule 144A
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) pursuant to offers and sales to non-U.S. persons that
occur outside the United States within the meaning of Regulation S, (e) to an
institutional "accredited investor" within the meaning of subparagraph (a) (1),
(2), (3) or (7) of Rule 501 under the Securities Act or (f) pursuant to another
available exemption from the registration requirements of the Securities Act.
Pursuant to the Registration Rights Agreement, the Company is required to
file the Registration Statement with the Commission within 90 days of the
original issuance of the Preferred Stock to register resales of the Preferred
Stock, the Debentures and the underlying shares of Common Stock issuable upon
conversion thereof. In addition, the Company must use its reasonable best
efforts to cause the Registration Statement to become effective within 150 days
from the date of such original issuance of the Preferred Stock and to keep the
Registration Statement effective until three years after the date of original
issuance of the Preferred Stock or, if the holding period specified in Rule 144
for such securities is shortened, such shorter period. The Company will be
required to pay Liquidated Damages to holders of the Preferred, Stock, the
Debentures or the underlying Common Stock, as applicable, under circumstances
where the Registration Statement is not filed or declared effective or otherwise
does not remain effective as herein provided. See "Registration Rights
Agreement."
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<PAGE> 14
INDUSTRY RELATED CONSIDERATIONS
Competition
The airline industry both domestically and internationally is highly
competitive. TWA competes with one or more major airlines on most of its routes
(including on all routes between major cities,) and with all forms of surface
transportation. Airline profit levels are highly sensitive to, and during recent
years have been adversely affected by, among other things, changes in fuel
costs, fare levels and passenger demand. Vigorous price competition exists, and
TWA and its competitors have frequently offered sharply reduced discount fares
in many markets. Airlines, including TWA, use discount fares and other
promotions to stimulate traffic during normally slack travel periods, to
generate cash flow and to increase relative market share in selected markets.
TWA has often elected to initiate or match discount or promotional fares in
certain markets in order to compete vigorously in those discounted markets or to
stimulate traffic. Passenger demand and fare levels have also been affected
adversely by, among other factors, the state of the economy and international
events.
The growth of the operations of low cost, low fare carriers in domestic
markets represents an intense competitive challenge for the Company, which has
higher operating costs than many of such low fare carriers and fewer financial
resources than many of its major competitors. Many of the traditional carriers
that compete with TWA have implemented, or are in the process of implementing,
measures to reduce their operating costs. In addition, the Company is more
highly leveraged and has significantly less liquidity than certain of its
competitors, several of whom have available lines of credit, significant
unencumbered assets and/or greater access to public capital markets.
Accordingly, TWA may be less able than certain of its competitors to withstand a
prolonged recession in the airline industry or prolonged periods of competitive
pressure.
Demand for air transportation historically has tended to mirror general
economic conditions. During the most recent economic recession in the United
States, the change in industry capacity failed to mirror the reduction in demand
for domestic air transportation due primarily to continued delivery of new
aircraft. While industry capacity has leveled off and the general economy has
improved, TWA expects that the airline industry will remain extremely
competitive for the foreseeable future.
Aircraft Fuel
Since fuel costs constitute a significant portion of the Company's
operating costs (approximately 13.9% in 1995), significant increases in fuel
costs would materially and adversely affect the Company's operating results.
Fuel prices continue to be susceptible to, among other factors, political events
and market factors beyond the Company's control, and the Company cannot predict
near or longer-term fuel prices. In the event of a fuel supply shortage
resulting from a disruption of oil imports or otherwise, higher fuel prices or
curtailment of scheduled service could result. In the first quarter of 1996, the
Company's per gallon cost of fuel (excluding taxes) increased approximately 15%
over the prior year, and such cost increased an additional 10% in April 1996. A
one cent change in the cost per gallon of fuel (based on 1995 consumption)
impacts operating expense by approximately $700,000 per month. Increases in fuel
prices may have a greater proportionate and more immediate impact on TWA than
many of its competitors because of the composition of its fleet and because the
Company does not presently maintain substantial reserves of fuel required for
its operations or otherwise hedge the cost of anticipated purchases of fuel.
In August 1993, the United States increased taxes on fuel, including
aircraft fuel, by 4.3c per gallon. Airlines were exempted from this tax increase
until October 1995. Pending legislation in Congress would continue the exemption
through September 30, 1997, subject to termination of the exemption on September
30, 1996 if excise taxes relating to certain aviation trust funds are not
extended. These excise taxes expired on December 31, 1995 and had not, as of May
, 1996, been extended. There can be no assurance that the continuation of the
fuel tax exemption will be enacted, or of the terms under and the period for
which the exemption will, if enacted, be effective. The additional fuel tax is
currently being collected. The expiration of the exemption in October increased
the Company's fourth quarter 1995 operating expenses by approximately $7
million. Based on TWA's 1995 fuel consumption levels, non-extension of the fuel
tax exemption would increase the Company's future annual operating expenses by
an estimated $28 million.
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Regulatory Matters
The airline industry is subject to extensive federal and international
government regulations relating to airline safety, security and scheduling, as
well as to local, state, federal, and international environmental laws. Adoption
of newly proposed regulations relating to these matters could increase the
Company's cost of compliance with governmental regulations, and could therefore
increase operating expenses and in some cases restrict the operations of
airlines, including TWA, thereby adversely affecting TWA's results of
operations.
During the last several years, the FAA has issued a number of maintenance
directives and other regulations relating to, among other things, collision
avoidance systems, airborne windshear avoidance systems, noise abatement and
increased inspection requirements, including added requirements for aging
aircraft. TWA believes, based on its current fleet, that it will incur
substantial capital expenditures to comply with the aging aircraft and noise
abatement regulations. The Company assumes that a number of aircraft will be
retired before major aging aircraft modifications and noise compliance will be
required, and required capital expenditures will vary depending upon changes in
TWA's planned fleet composition. Management expects that the cost of compliance
will be funded through a combination of internally generated funds and
utilization of cost sharing and/or funding provisions under certain lease
agreements and loan agreements. See "-- Company Related
Considerations -- Substantial Indebtedness; Future Capital Requirements;
Liquidity."
Additional laws and regulations have been proposed from time to time which
could significantly increase the cost of airline operations by, for instance,
imposing additional requirements or restrictions on operations. Laws and
regulations have also been considered from time to time that would prohibit or
restrict the ownership and/or transfer of airline routes or takeoff and landing
slots. Also, the award of international routes to U.S. carriers (and their
retention) is regulated by treaties and related agreements between the United
States and foreign governments which are amended from time to time. The Company
cannot predict what laws and regulations will be adopted or what changes to
international air transportation treaties will be effected, if any, or how they
will affect TWA.
USE OF PROCEEDS
The Selling Holders will receive all of the net proceeds from any sale of
the Preferred Stock, the Debentures and the shares of Common Stock issuable upon
conversion of the Preferred Stock or Debentures, and, accordingly, the Company
will receive none of the proceeds from the sales thereof.
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SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The selected financial data presented below relate to periods in the five
year period ended December 31, 1995 and the three months ended March 31, 1996
and 1995. This data should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements incorporated herein by reference. The
consolidated financial data for the periods in the five year period ended
December 31, 1995 were derived from the audited consolidated financial
statements of the Company. Certain amounts have been reclassified to conform
with presentations adopted in 1996.
During the period from 1992 through 1995, TWA underwent two separate
Chapter 11 reorganizations, the first in 1992-93 and the second in 1995. In
connection with the '95 Reorganization, TWA has applied fresh start reporting in
accordance with SOP 90-7, which has resulted in the creation of a new reporting
entity for accounting purposes and the Company's assets and liabilities being
adjusted to reflect fair values on August 23, 1995, the effective date of the
'95 Reorganization. A description of the adjustments to the financial statements
arising from the consummation of the '95 Reorganization and the application of
fresh start reporting is contained in Note 17 to the 1995 Consolidated Financial
Statements. For accounting purposes, the effective date of the '95
Reorganization is deemed to be September 1, 1995. Because of the application of
fresh start reporting, the financial statements for periods after the '95
Reorganization are not comparable in all respects to the financial statements
for periods prior to the reorganization. Similarly, the Consolidated Financial
Statements for the periods prior to the '93 Reorganization are not consistent
with periods subsequent to the '93 Reorganization. Accordingly, a vertical black
line separates these periods. Preferred Stock dividend requirements and earnings
per share of the predecessor companies have not been presented as the amounts
are not meaningful.
<TABLE>
<CAPTION>
REORGANIZED PREDECESSOR REORGANIZED
PRIOR PREDECESSOR COMPANY PREDECESSOR COMPANY COMPANY COMPANY COMPANY
---------------------------------- --------------------------------------- ------------ ------------ -----------
YEAR ENDED TEN MONTHS TWO MONTHS EIGHT MONTHS FOUR MONTHS THREE MONTHS ENDED
DECEMBER 31, ENDED ENDED YEAR ENDED ENDED ENDED MARCH 31,
---------------------- OCTOBER DECEMBER 31, DECEMBER 31, AUGUST 31, DECEMBER 31, -------------------------
1991 1992 31, 1993 1993 1994 1995 1995 1995 1996
---------- ---------- ---------- ------------ ------------ ----------- ------------ ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating
revenues... $3,651,380 $3,618,661 $2,633,937 $520,821 $3,407,702 $2,218,355 $1,098,474 $ 692,320 $ 782,433
Operating
income
(loss)
(1)....... (362,090) (420,432) (255,729) (58,251) (279,494) 14,642 10,446 (76,261) (54,191)
Loss before
income
taxes and
extraordinary
items
(2)....... (513) (314,292) (362,620) (88,140) (432,869) (338,309) (32,268) (122,753) (74,278)
Provision
(credit)
for income
taxes..... 10,259 3,361 1,312 (248) 960 (96) 1,370 42 (37,171)
Loss before
extraordinary
items..... (10,772) (317,653) (363,932) (87,892) (433,829) (338,213) (33,638) (122,795) (37,107)
Extraordinary
items
(3)....... 45,323 -- 1,075,581 -- (2,005) 140,898 3,500 -- --
Net income
(loss).... 34,551 (317,653) 711,649 (87,892) (435,834) (197,315) (30,138) (122,795) (37,107)
Preferred
stock
dividend
requirements... 4,751 3,750 23,998
Loss
applicable
to common
shares.... (34,889) (126,545) (61,105)
Per share
amounts
(4):
Loss before
extraordinary
items and
special
dividend
requirement... $ (1.15) $ (.98)
Extraordinary
items..... .10 --
Special
dividend
requirement --
redemption
of 12%
Preferred
Stock(5)... -- (.48)
Net loss.... (1.05) (1.46)
Ratio of
earnings
to
combined
fixed
charges
and
preferred
stock
dividends(6)... -- -- -- -- -- -- -- -- --
</TABLE>
15
<PAGE> 17
<TABLE>
<CAPTION>
REORGANIZED
PRIOR PREDECESSOR COMPANY PREDECESSOR COMPANY COMPANY
------------------------- ------------------------- -------------------------
DECEMBER 31, DECEMBER 31, MARCH 31,
----------------------------------------------------- ------------ ----------
1991 1992 1993 1994 1995 1996
----------- ----------- ----------- ----------- ------------ ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents(7)................ $ 260,874 $ 67,885 $ 187,717 $ 138,531 $ 304,340 $ 374,715
Current assets.............................. 940,761 602,007 706,462 584,765 728,523 896,108
Net working capital (deficiency)............ (1,629,612) (316,165) (150,744) (1,279,457) (111,570) (120,791)
Flight equipment, net....................... 1,100,601 827,747 660,797 508,625 455,434 483,617
Total property and equipment, net........... 1,444,829 1,114,345 886,116 693,045 600,066 625,520
Intangible assets, net...................... -- -- 1,024,846 921,659 1,275,995 1,259,859
Total assets................................ 2,709,533 2,158,143 2,958,862 2,512,435 2,868,211 3,074,869
Current maturities of long-term debt and
capital leases(8)......................... 1,446,523 327,251 108,345 1,149,739 110,401 111,788
Liabilities subject to Chapter 11
reorganization proceedings(9)............. -- 2,026,895 -- -- -- --
Long-term debt, less current
maturities(8)............................. -- -- 1,053,644 -- 764,031 740,129
Long-term obligations under capital leases,
less current maturities................... 692,292 -- 376,646 339,895 259,630 250,388
Shareholder's equity (deficiency)(10)....... (797,899) (1,149,733) 18,358 (417,476) 302,855 445,633
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
---------------------------- -----------------
1993 1994 1995 1995 1996
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
AIRLINE ONLY OPERATING DATA(11):
Revenue passenger miles (millions)(12)............................... 22,664 24,906 24,902 5,369 5,847
Available seat miles (millions)(13).................................. 35,678 39,191 37,905 8,682 9,188
Passenger load factor(14)............................................ 63.5% 63.5% 65.7% 61.8% 63.6%
Passenger yield (cents)(15).......................................... 11.35c 11.31c 11.39c 10.93c 11.59c
Passenger revenue per available seat mile (cents)(16)................ 7.21c 7.19c 7.48c 6.76c 7.38c
Operating cost per available seat mile (cents)(17)................... 9.08c 8.45c 8.28c 8.49c 8.87c
</TABLE>
- ---------------
(1) Includes special charges of $1.7 million in the eight months ended August
31, 1995 and $138.8 million in 1994. For a discussion of these and other
non-recurring items, see Notes 14 and 18 to the 1995 Consolidated Financial
Statements.
(2) The eight months ended August 31, 1995 includes charges of $242.2 million
related to reorganization items. The ten months ended October 31, 1993
includes a charge of $342.4 million related to the settlement of pension
obligations and income of $268.1 million related to reorganization items.
The 1992 and 1991 results include non-recurring gains of $254.6 million and
$681.7 million, respectively, from the disposition of assets.
(3) The extraordinary item in the four months ended December 31, 1995 was the
result of the settlement of a debt of a subsidiary, while the extraordinary
item in the eight months ended August 31, 1995 represents the gain on the
discharge of indebtedness pursuant to the consummation of the '95
Reorganization. The extraordinary item in 1994 represents the charge for a
prepayment premium related to the sale and lease back of four McDonnell
Douglas MD-80 aircraft. The extraordinary item in 1993 represents the gain
on discharge of indebtedness pursuant to the consummation of the '93
Reorganization. The extraordinary items in 1991 include a net gain of $27.9
million resulting from the early extinguishment of debt, and a tax benefit
of $17.4 million from the utilization of a portion of the Company's net
operating loss carry forward for financial reporting purposes.
(4) No effect has been given to stock options, warrants or potential issuances
of additional Employee Preferred Stock as the impact would have been
anti-dilutive.
(5) On March 22, 1996, the Company called for redemption of its outstanding 12%
Preferred Stock which resulted in a special preferred stock dividend
requirement in the three months ended March 31, 1996 of $20.0 million,
representing the excess of the early redemption price over the carrying
value of the 12% Preferred Stock.
(6) For purposes of determining the ratio of earnings to combined fixed charges
and preferred stock dividends, "earnings" consist of earnings before income
taxes, extraordinary items and fixed charges (excluding capitalized
interest), "fixed charges" consist of interest (including capitalized
interest) on all debt and that portion of rental expenses that management
believes to be representative of interest, and "preferred stock dividends"
consist of preferred stock dividend requirements divided by a fraction
equal to one less the effective income tax rate for the period. Earnings
were not sufficient to cover "combined fixed charges and preferred stock
dividends" as follows (in millions): for the three months ended March 31,
1996 and 1995, $81.5 and $128.9, respectively; for the four months ended
December 31, 1995, $40.1; for the eight months ended August 31, 1995,
$357.3; for the year ended December 31, 1994, $459.6; for the two months
ended December 31, 1993, $92.4; for the ten months ended October 31, 1993,
$481.3; and for the years ended December 31, 1992 and 1991, $457.3 and
$143.8, respectively.
(7) On April 26, 1996, the Company paid an aggregate of approximately $84.9
million in respect of the redemption of the 12% Preferred Stock.
(8) Long-term debt in 1994 was reclassified to current maturities as a result
of certain alleged defaults and payment defaults. See Note 7 to the 1995
Consolidated Financial Statements.
16
<PAGE> 18
(9) For periods after January 31, 1992 and before November 3, 1993, the
effective date of the '93 Reorganization, certain prepetition liabilities,
which were subject to compromise pursuant to the '93 Reorganization, were
classified as liabilities subject to Chapter 11 reorganization proceedings,
and the accrual of interest was discontinued on prepetition debt that was
unsecured or estimated to be undersecured.
(10) No dividends were paid on the Company's outstanding common stock during the
periods presented above.
(11) TWA's passenger traffic data for scheduled passengers only and excluding
Trans World Express.
(12) The number of scheduled miles flown by revenue passengers.
(13) The number of seats available for passengers multiplied by the number of
scheduled miles those seats are flown.
(14) Revenue passenger miles divided by available seat miles.
(15) Passenger revenue per revenue passenger mile.
(16) Passenger revenue divided by available seat miles.
(17) Operating expenses, excluding special charges, earned stock compensation
and other nonrecurring charges, divided by available seat miles.
SELLING HOLDERS
The Preferred Stock was issued and sold in March 1996 pursuant to the
Original Offering in transactions exempt from the registration requirements of
the Securities Act to persons reasonably believed by the Initial Purchasers to
be "qualified institutional buyers" (as defined by Rule 144A) or in transactions
complying with the provisions of Regulation S. The Preferred Stock, along with
the Debentures issuable upon exchange of the Preferred Stock and the shares of
Common Stock issuable upon conversion of the Preferred Stock or the Debentures,
may be offered and sold from time to time by the Selling Holders pursuant to
this Prospectus. The Registration Statement of which this Prospectus is a part
has been filed with the SEC pursuant to the Registration Rights Agreement.
The Registration Statement has been filed pursuant to Rule 415 under the
Securities Act to afford the holders of the securities offered hereby the
opportunity to sell such securities in a public transaction rather than pursuant
to an exemption from the registration and prospectus delivery requirements of
the Securities Act. In order for a Selling Holder to avail himself of that
opportunity, such holder must notify the Company in writing of his intention to
sell securities and request the Company to file a supplement to this Prospectus
or an amendment to the Registration Statement, if required, identifying such
holder as a Selling Holder and disclosing such other information concerning the
Selling Holder and the securities to be sold as may then be required by the
Securities Act and the rules of the Commission. No offer or sale pursuant to
this Prospectus may be made by any holder until such a request has been made and
until any such supplement has been filed or any such amendment has become
effective. The holders of securities who have made such a request and as to
which any such required supplement or amendment has been filed or become
effective are referred to herein as "Selling Holders."
As of the date of this Prospectus, no holder of securities has made such a
request and, accordingly, no Selling Holders are named herein. The Company will
from time to time supplement or amend this Prospectus to reflect the required
information concerning any Selling Holder.
17
<PAGE> 19
DESCRIPTION OF THE PREFERRED STOCK
The following description of certain provisions of the Certificate of
Designations, Preferences and Rights Relating to the Preferred Stock (the
"Certificate of Designations") is intended as a summary only and is qualified in
its entirety by reference to the Certificate of Designations, including the
definitions in that document of certain terms. Whenever particular articles,
sections or defined terms of the Certificate of Designations or the Registration
Rights Agreement are referred to herein, it is intended that those articles,
sections or defined terms are to be incorporated by reference into this
Prospectus.
GENERAL
The outstanding shares of Preferred Stock have been duly and validly
issued, fully paid and nonassessable, and the holders thereof have no preemptive
rights in connection therewith. The Preferred Stock is not subject to any
sinking fund or other obligation of the Company to redeem or retire such stock.
Unless converted, redeemed or exchanged, the Preferred Stock will remain
outstanding indefinitely. Any share of Preferred Stock converted, redeemed,
exchanged or otherwise acquired by the Company will be retired and canceled and
will upon cancellation be restored to the status of authorized but unissued
preferred stock, subject to reissuance by the Board of Directors as Preferred
Stock or as shares of preferred stock of any one or more other series. The
Preferred Stock ranks senior to the Common Stock, the Series A Preferred Stock,
if issued, and the Employee Preferred Stock, and on a parity with all other
preferred stock and any other class or series of stock of the Company, the terms
of which expressly provide that it ranks on a parity with the Preferred Stock,
with respect to the payment of dividends and amounts payable upon any
liquidation, dissolution or winding up of the Company ("Liquidation"). No class
or series of stock may be created that is senior to the Preferred Stock with
respect to the payment of dividends and amounts payable upon any liquidation of
the Company without the approval of the holders of at least a majority of shares
of the Preferred Stock then outstanding.
DIVIDENDS
Holders of the Preferred Stock are entitled to receive, when, as and if
declared by the Board of Directors out of the funds of the Company legally
available therefor, a cash dividend at the annual rate of 8% (equivalent to
$4.00 per share per annum). Dividends and Liquidated Damages, if any, with
respect to the Preferred Stock are payable quarterly in arrears on March 15,
June 15, September 15 and December 15 of each year, commencing June 15, 1996
(and, in the case of any accrued but unpaid dividends, at such additional times
and for such interim periods, if any, as determined by the Board of Directors).
Dividends on the Preferred Stock are cumulative and will accrue without interest
from the date of original issuance. Dividends and Liquidated Damages, if any,
will be payable to the holders of record as they appear on the stock books of
the transfer agent for the Company on such record dates, which shall be not more
than 30 days nor less than 10 days preceding the payment dates, as fixed by the
Board of Directors, provided that holders of shares of Preferred Stock called
for redemption on a redemption date falling between a dividend payment record
date and the dividend payment date shall, in lieu of receiving such dividend
payment and Liquidated Damages, if any, on the dividend payment date fixed
therefor, receive such dividend payment together with all other accrued and
unpaid dividends and Liquidated Damages, if any, on the date fixed for
redemption (unless such holders convert such shares in accordance with the
Certificate of Designations, in which case such holders will receive such
payment on the corresponding dividend payment date). See "-- Conversion Rights"
below. Dividends payable on the Preferred Stock for the initial dividend period
and dividends payable for any period shorter or longer than a full dividend
period will be computed on the basis of a 360-day year consisting of twelve
30-day months.
If dividends are not paid in full upon the Preferred Stock and any other
preferred stock ranking on a parity as to dividends with the Preferred Stock,
all dividends declared upon shares of Preferred Stock and such other preferred
stock ranking on a parity as to dividends with the Preferred Stock will be
declared pro rata so that in all cases the amount of dividends declared per
share on the Preferred Stock and such other preferred stock bear to each other
the same ratio that accrued and unpaid dividends per share on the shares of the
Preferred Stock and such other preferred stock bear to each other. Except as set
forth above, unless full
18
<PAGE> 20
cumulative dividends on the Preferred Stock have been paid and funds set aside,
and all Liquidated Damages, if any, paid, dividends (other than dividends paid
solely in Common Stock or other stock ranking junior as to dividends and
liquidation preference to the Preferred Stock and rights to acquire the
foregoing) may not be paid or declared and set aside for payment and other
distributions may not be made upon the Common Stock or on any other stock of the
Company ranking junior to or on a parity with the Preferred Stock as to
dividends and liquidation preference, nor may any Common Stock or any other
stock of the Company ranking junior to or on a parity with the Preferred Stock
as to dividends and liquidation preference be redeemed, purchased, or otherwise
acquired for any consideration by the Company (except for repurchases from
employees under employee benefit plans in effect on the date of this Prospectus
and by conversion into or exchange for stock of the Company ranking junior to
the Preferred Stock as to dividends and liquidation preference).
Under Delaware law, the Company may declare and pay dividends or make other
distributions on its capital stock only out of surplus, as defined in the DGCL
or, in the case there is no surplus, out of its net profits for the fiscal year
in which the dividend or distribution is declared and/or the prior fiscal year.
No dividend or distribution may be declared, paid or made if the Company is or
would be rendered insolvent by virtue of such dividend or distribution, or if
such declaration, payment or distribution would contravene the Certificate of
Incorporation.
CONVERSION RIGHTS
Each share of Preferred Stock may be converted at any time at the option of
the holder, unless previously redeemed or exchanged, into fully paid,
nonassessable shares of Common Stock at an initial conversion price of $20.269
per share of Common Stock (equivalent to a conversion rate of approximately
2.467 shares of Common Stock for each share of Preferred Stock), subject to
adjustment in certain circumstances. The right to convert Preferred Stock called
for redemption will expire at the close of business on the fifth business day
prior to the redemption date (the "Conversion Termination Date"). For
information as to notices of redemption, see "-- Optional Redemption by the
Company." Whenever the Company issues shares of Common Stock upon conversion of
Preferred Stock, the Company will, subject to certain conditions, issue,
together with each share of Common Stock, one Right, entitling the holder to
purchase one one-hundredth of a share of Series A Preferred Stock under certain
circumstances. See "Description of Capital Stock -- Rights Plan."
Holders of shares of Preferred Stock at the close of business on a dividend
payment record date shall be entitled to receive the dividends and Liquidated
Damages, if any, payable on such shares on the corresponding dividend payment
date notwithstanding the conversion thereof following the close of business on
such dividend payment record date and prior to the close of business on such
dividend payment date. However, shares of Preferred Stock surrendered for
conversion during the period between the close of business on any dividend
payment record date and the close of business on the corresponding dividend
payment date (except shares of Preferred Stock called for redemption or exchange
on a redemption date or exchange date or with a Conversion Termination Date
during such period) must be accompanied by payment of an amount equal to the
dividend payment and Liquidated Damages, if any, to be received on such dividend
payment date with respect to such shares of Preferred Stock presented for
conversion; provided, however, that no such payment need be made if, at the time
of conversion, dividends payable on the shares of Preferred Stock outstanding
shall be in arrears for more than 30 days beyond the previous dividend payment
date. Except as provided above, the Company shall make no payment or allowance
for unpaid dividends, whether or not in arrears, on converted shares or for
dividends on the shares of Common Stock issued upon such conversion.
No fractional shares of Common Stock will be issued upon conversion but, in
lieu thereof, an appropriate amount will be paid in cash based on the Closing
Price (as defined in the Certificate of Designations) on the last trading day
before the conversion date.
The conversion price is subject to adjustment upon the occurrence of
certain events, including (i) the issuance of shares of Common Stock as a
dividend or distribution on the Common Stock, (ii) the subdivision or
combination of the outstanding Common Stock, (iii) the issuance to all or
substantially all holders of Common Stock of warrants, options or other rights
to subscribe for or purchase Common Stock (or securities
19
<PAGE> 21
convertible into Common Stock) at a price per share less than the then Average
Current Market Price (as defined in the Certificate of Designations), (iv) the
distribution to all or substantially all holders of Common Stock of shares of
capital stock of the Company (other than shares of Series A Preferred Stock upon
exercise of a Right), evidences of indebtedness, or other non-cash assets
(including securities of any company other than the Company), (v) the
distribution to all or substantially all holders of Common Stock of warrants,
options or other rights to subscribe for its securities (other than those
referred to in (iii) above), and (vi) the distribution to all or substantially
all holders of Common Stock of cash in an aggregate amount that (together with
all other cash distributions to all or substantially all holders of Common Stock
made within the preceding 12 months not triggering a conversion price
adjustment) exceeds an amount equal to 20% of the Average Current Market Price
on the business day immediately preceding the day on which the Company declares
such distribution multiplied by the number of shares of Common Stock outstanding
on such date (excluding shares held in treasury of the Company). Issuances of
options and securities convertible into Common Stock are deemed to be issuances
of the underlying Common Stock for purposes of adjustments to the conversion
price. Whenever the conversion price is adjusted, the Company will promptly mail
to holders of Preferred Stock a notice of adjustment briefly stating the facts
requiring the adjustment and the manner of computing it. No adjustment of the
conversion price will be required to be made in any case until cumulative
adjustments amount to a change in the conversion price of 1% or more, but any
such adjustment that would otherwise be required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under the Certificate of Designations will be made either to the nearest cent or
the nearest 1/100 of a share.
Subject to the applicable right of the holders of shares of Preferred Stock
upon a Change in Control, if the Company reclassifies or changes its outstanding
Common Stock, or consolidates with or merges into or sells or conveys all or
substantially all of the assets of the Company as an entirety to any person, or
is a party to a merger or share exchange that reclassifies or changes its
outstanding Common Stock, shares of Preferred Stock will become convertible into
the kind and amount of shares of stock and other securities and property
(including cash) that the holders of shares of Preferred Stock would have owned
immediately after the transaction if the holders had converted such shares of
Preferred Stock into Common Stock immediately before the effective date of the
transaction. If in connection with any such reclassification, consolidation,
merger, sale, transfer, or share exchange each holder of shares of Common Stock
is entitled to elect to receive either securities, cash or other assets upon
completion of such transaction, the Company will provide or cause to be provided
to each holder of Preferred Stock the right to elect to receive the securities,
cash or other assets into which the Preferred Stock held by such holder will be
convertible after completion of any such transaction on the same terms and
subject to the same conditions applicable to holders of the Common Stock
(including, without limitation, notice of the right to elect, limitations on the
period in which such election will be made and the effect of failing to exercise
the election). The above will similarly apply to successive reclassifications,
consolidations, mergers, sales, transfers or share exchanges.
The Company will reserve and at all times keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
the Preferred Stock, such number of shares of its duly authorized Common Stock
as will from time to time be sufficient to effect the conversion of all
outstanding Preferred Stock.
OPTIONAL REDEMPTION BY THE COMPANY
The Preferred Stock may not be redeemed prior to March 15, 1999. On and
after such date, shares of Preferred Stock may be redeemed at the option of the
Company, in whole or in part (in any integral number of shares), upon not less
than 30 nor more than 60 days' prior notice to each holder of record of the
shares to be redeemed, by first-class mail at the redemption prices set forth
below during the twelve-month periods
20
<PAGE> 22
beginning on March 15 of the years shown below, plus in each case an amount
equal to accrued and unpaid dividends, if any, whether or not earned or
declared, and Liquidated Damages, if any, to the redemption date.
<TABLE>
<CAPTION>
REDEMPTION
PRICE PER
YEAR SHARE
-------------------------------------------------------------- ----------
<S> <C>
1999.......................................................... $52.80
2000.......................................................... 52.40
2001.......................................................... 52.00
2002.......................................................... 51.60
2003.......................................................... 51.20
2004.......................................................... 50.80
2005.......................................................... 50.40
2006 and thereafter........................................... 50.00
</TABLE>
If fewer than all of the shares of Preferred Stock are to be redeemed, the
shares to be redeemed shall be selected by lot or pro rata or by any other
equitable manner determined by the Board of Directors in its sole discretion. In
the event that the Company has failed to pay accrued and unpaid dividends on,
and Liquidated Damages, if any, with respect to, the Preferred Stock, it may not
redeem any of the then outstanding shares of the Preferred Stock until all such
accrued and unpaid dividends and Liquidated Damages (including accrued and
unpaid dividends, if any, whether or not earned or declared, and Liquidated
Damages, if any, from the most recent dividend payment date to and including the
redemption date) have been paid in full. On and after the date fixed for
redemption, provided that the redemption price (including any accrued and unpaid
dividends and Liquidated Damages, if any, to and including the date fixed for
redemption) has been duly paid or provided for, dividends shall cease to accrue
on the Preferred Stock called for redemption, such shares shall no longer be
deemed to be outstanding and all rights of the holders of such shares as
stockholders of the Company shall cease, except the right to receive the monies
payable upon such redemption, without interest thereon, upon surrender of the
certificates evidencing such shares.
SPECIAL CONVERSION RIGHTS UPON A CHANGE IN CONTROL
The Preferred Stock has a special conversion right that becomes effective
upon the occurrence of certain types of significant transactions affecting
corporate control or ownership of the Company or the market for the Common
Stock. The purpose of the special conversion right is to provide, as applicable,
partial loss protection to holders of the Preferred Stock upon the occurrence of
a Change in Control at a time when the Market Value (as defined below) of the
Common Stock is less than the then prevailing conversion price. In such
situations, the special conversion right would, for a limited period, reduce the
then prevailing conversion price to the Market Value of the Common Stock, except
that the conversion price will not be reduced to less than a minimum conversion
price of $11.75 per share of Common Stock (which is 66 2/3% of the closing price
of the Common Stock on the date of this Prospectus, and which is subject to
adjustment as described below). Consequently, to the extent that the Market
Value of the Common Stock is less than the minimum conversion price, a holder
will not be fully protected from loss upon exercise of the special conversion
right.
Under the Certificate of Designations, a "Change in Control" means the
occurrence of any of the following events: (i) any person (including any entity
or group deemed to be a "person" under Section 13 (d) (3) or Section 14 (d) (2)
of the Exchange Act) is or becomes the direct or indirect beneficial owner (as
determined in accordance with Rule 13d-3 under the Exchange Act) of shares of
the Company's capital stock representing greater than 50% of the total voting
power of all shares of capital stock of the Company entitled to vote in the
election of directors under ordinary circumstances or to elect a majority of the
Board of Directors, (ii) the Company sells, transfers or otherwise disposes of
all or substantially all of the assets of the Company, (iii) when, during any
period of 12 consecutive months after the date of original issuance of the
Preferred Stock, individuals who at the beginning of any such 12-month period
constituted the Board of Directors (together with any new directors whose
election by such Board or whose nomination for election by the stockholders of
the Company was approved by a vote of a majority of the directors still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so
21
<PAGE> 23
approved), cease for any reason to constitute a majority of the Board of
Directors then in office or (iv) the date of the consummation of the merger or
consolidation of the Company with another corporation where the stockholders of
the Company, immediately prior to the merger or consolidation, would not
beneficially own, immediately after the merger or consolidation, shares
entitling such stockholders to 50% or more of all votes (without consideration
of the rights of any class of stock to elect directors by a separate class vote)
to which all stockholders of the corporation issuing cash or securities in the
merger or consolidation would be entitled in the election of directors or where
members of the Board of Directors, immediately prior to the merger or
consolidation, would not immediately after the merger or consolidation,
constitute a majority of the board of directors of the corporation issuing cash
or securities in the merger or consolidation.
As used herein, "Market Value" of a share of the Common Stock will be the
average of the Closing Prices of the Common Stock for the five trading days
ending on the last trading day preceding the date of the Change in Control.
As used herein, "Special Conversion Price" will mean the higher of the
Market Value of the Common Stock or $11.75 per share (which amount will, each
time the conversion price is adjusted, be adjusted so that the ratio of such
amount to the conversion price, after giving effect to such adjustment, shall
always be the same as the ratio of $11.75 to the initial conversion price
without giving effect to any such adjustment).
If a Change in Control occurs, a holder exercising a special conversion
right will receive Common Stock or such other securities, property or cash as
may be issuable upon conversion as provided in the Certificate of Designations;
provided, however, the Company or its successor may, at its option, elect to
provide the holder with cash equal to the Market Value of the number of shares
of Common Stock into which the holder's Preferred Stock is convertible at the
Special Conversion Price. Preferred Stock that is not converted pursuant to a
special conversion right will continue to be convertible pursuant to the general
conversion rights described under the caption "-- Conversion Rights" above.
LIQUIDATION RIGHTS
In the event of any Liquidation of the Company, and after provision is made
for any preferential amounts to which the holders of any preferred stock ranking
senior to the Preferred Stock as to distributions of assets upon Liquidation may
be entitled, holders of Preferred Stock will be entitled to receive from the
Company's assets available for distribution to stockholders a liquidation
preference in the amount of $50.00 per share, plus all accrued and unpaid
dividends, whether or not declared, and Liquidated Damages, if any, with respect
thereto, to the date of Liquidation. Holders of Preferred Stock will be entitled
to receive such amount before any distribution is made on the Common Stock,
Employee Preferred Stock, Series A Preferred Stock or any other series or class
of stock hereinafter issued that ranks junior as to distribution upon
Liquidation to the Preferred Stock and will be entitled to such amount on a
parity with every other series of the Company's preferred stock that ranks on a
parity with the Preferred Stock as to distributions upon Liquidation. If the
Company's assets are insufficient to make the required payment to holders of
Preferred Stock and to the holders of all other series of then outstanding
preferred stock which rank on a parity as to distribution upon Liquidation with
the Preferred Stock, the Company's assets so available shall be distributed on a
pro rata basis among the holders of the respective series of the parity
preferred in proportion to the amount payable if the assets had been sufficient.
The Preferred Stock ranked junior as to distribution upon Liquidation to the 12%
Preferred Stock. Neither a consolidation or merger of the Company with another
corporation nor a sale or transfer of all or substantially all of the Company's
assets for cash, securities or other property will be considered a Liquidation
of the Company for these purposes.
VOTING RIGHTS
Except as otherwise required by law, holders of Preferred Stock will have
no voting rights. If at any time the equivalent of six quarterly dividends
payable on the Preferred Stock are accrued and unpaid (whether or not
consecutive and whether or not earned or declared), the holders of all
outstanding shares of Preferred Stock and any stock ranking on a parity as to
dividends with the shares of Preferred Stock and having similar voting rights
then exercisable, voting separately as a class without regard to series, will be
entitled to elect at
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<PAGE> 24
the next annual meeting of the stockholders of the Company two directors to
serve until all dividends accumulated and unpaid have been paid or declared and
funds set aside to provide for payment in full. In exercising any such vote,
each outstanding share of Preferred Stock will be entitled to one vote,
excluding shares held by the Company or any entity controlled by the Company,
which shares shall have no vote.
In addition, without the vote or consent of the holders of at least a
majority of shares of the Preferred Stock then outstanding, the Company may not
(a) create or issue or increase the authorized number of shares of any class or
series of stock ranking senior to the Preferred Stock either as to dividends or
upon Liquidation, or any security convertible into or exercisable or
exchangeable for such stock, (b) amend, alter or repeal any of the provisions of
the Certificate of Designations or any other provision of the Certificate of
Incorporation so as to affect adversely any right, preference, privilege or
voting power of the Preferred Stock or the holders thereof, including, without
limitation, the right of the holders of the Preferred Stock to receive
Debentures upon the exercise of the option of the Company to exchange the
Preferred Stock for Debentures as described below under "-- Exchange Provisions"
or (c) authorize any reclassification of the Preferred Stock by merger or
otherwise; provided, however, that any increase in the amount of authorized
shares of such series or of any other series of preferred stock, in each case
ranking on a parity with or junior to the Preferred Stock as to dividends and
the distribution of assets upon Liquidation, will not be deemed to affect
adversely such rights, preferences or voting powers.
EXCHANGE PROVISIONS
The Preferred Stock may be exchanged, in whole but not in part, at the
option of the Company, for Debentures on any dividend payment date beginning on
March 15, 1998 at the rate of $50.00 principal amount of Debentures for each
share of Preferred Stock outstanding at the time of exchange provided that all
accrued and unpaid dividends on, and Liquidated Damages, if any, with respect
to, the Preferred Stock through the date of exchange have been paid or set aside
for payment and certain other conditions are met. See "Description of the
Debentures." The Debentures will be issuable in denominations of $1,000 and
integral multiples thereof. If the exchange results in an amount of Debentures
that is not an integral multiple of $1,000, the amount in excess of the closest
integral multiple of $1,000 will be paid in cash by the Company. The Company
will mail written notice of its intention to exchange to each holder of record
of the Preferred Stock not less than 30 nor more than 60 days prior to the date
fixed for exchange.
Upon the date fixed for exchange of the Preferred Stock for Debentures (the
"Exchange Date"), the rights of holders of Preferred Stock as stockholders of
the Company shall cease (except the right to receive accrued and unpaid
dividends and Liquidated Damages, if any, to the Exchange Date) and their shares
of Preferred Stock no longer will be deemed outstanding and will represent only
the right to receive the Debentures and any accrued dividends on, and any
Liquidated Damages with respect to, the Preferred Stock. If full cumulative
dividends on, and Liquidated Damages, if any, with respect to, the Preferred
Stock through the Exchange Date have not been paid in full, or if funds have not
been set aside to provide for payment in full of such dividends and Liquidated
Damages, if any, the Company, may not exercise its option to exchange the
Preferred Stock for the Debentures. The exchange of the Preferred Stock for the
Debentures will be a taxable event and, therefore, may result in a tax liability
for the holder exchanging such stock without any correlative cash payment to
such holder.
In the event that the Company elects to exchange the Preferred Stock for
the Debentures, the Company will endeavor to comply with all federal and state
securities laws regulating the offer and delivery of the Debentures upon
exchange of the Preferred Stock, including compliance with the Trust Indenture
Act of 1939 (the "Trust Indenture Act").
REGISTRATION RIGHTS AGREEMENT
At the initial closing of the sale (the "Initial Closing") of the Preferred
Stock to the Initial Purchasers, the Company and the Initial Purchasers entered
into the Registration Rights Agreement providing for the registration of resales
of the Transfer Restricted Securities (as defined herein). See "Registration
Rights Agreement."
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<PAGE> 25
TRANSFER AGENT, REGISTRAR AND DIVIDEND DISBURSING AGENT
American Stock Transfer & Trust Company acts as transfer agent and
registrar for the Common Stock and as transfer agent, registrar and dividend
disbursing agent for the Preferred Stock.
DESCRIPTION OF THE DEBENTURES
If the Company elects to exchange the Preferred Stock for the Debentures,
the Company will issue the Debentures under an indenture (the "Indenture") to be
entered into between the Company and a trustee selected by the Company
reasonably satisfactory to the Initial Purchasers (together with any successor
trustee, the "Trustee"), at a rate of $50.00 principal amount of Debentures for
each share of Preferred Stock so exchanged. The terms of the Debentures include
those set forth in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act as in effect on the date of the Indenture.
The Debentures are subject to all such terms. Copies of the proposed form of the
Indenture can be obtained from the Initial Purchasers upon request. The
following description of certain provisions of the Indenture and the Debentures
is intended as a summary only and is qualified in its entirety by reference to
the Indenture and the Debentures, including the definitions in those documents
of certain terms. Whenever particular articles, sections or defined terms of the
Debentures, the Indenture or the Registration Rights Agreement are referred to,
it is intended that those articles, sections or defined terms are to be
incorporated by reference into this Prospectus.
GENERAL
The Debentures will be unsecured, subordinated obligations of the Company,
will be limited to an aggregate principal amount equal to the aggregate
liquidation preference of the Preferred Stock and will mature on March 15, 2006.
The Debentures will bear interest at the annual rate of 8%, which is equal to
the annual rate of dividends payable on the Preferred Stock, from the date of
issuance, or from the most recent interest payment date to which interest has
been paid or provided for, payable semiannually in arrears on March 15 and
September 15 of each year, commencing with the first of such dates to occur
after the Exchange Date, to the person in whose name the Debenture is registered
at the close of business on the preceding March 1 and September 1, as the case
may be. Interest and Liquidated Damages, if any, will be payable to the holders
of record as they appear on the register of the Company kept by the Registrar on
such record dates, provided that holders of Debentures called for redemption on
a redemption date falling between an interest payment record date and the
interest payment date shall, in lieu of receiving such interest and Liquidated
Damages, if any, on the interest payment date fixed therefor, receive such
interest payment together with all other accrued and unpaid interest and
Liquidated Damages, if any, on the date fixed for redemption (unless such
holders convert such Debentures in accordance with the Indenture, in which case
such holders will receive such payment on the corresponding interest payment
date). Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Debentures will not be subject to any sinking fund. Principal of and
premium, if any, and interest on, and Liquidated Damages, if any, with respect
to, the Debentures will be payable, and the transfer of the Debentures will be
registrable, at the office or agency of the Company maintained for such
purposes. In addition, payment of interest and Liquidated Damages, if any, may,
at the option of the Company, be made by check mailed to the address of the
person entitled thereto as it appears in the register of the holders of
Debentures.
The Debentures will be issued only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples of $1,000. No service
charge will be made for any registration of transfer or exchange of the
Debentures, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection with any such
transaction.
The Indenture does not contain any restriction on the payment of dividends
or the repurchase of securities of the Company (except in the case of an event
of default under the Indenture) or any financial covenants. The covenants and
provisions contained in the Debentures and the Indenture would not necessarily
afford the holders of the Debentures protection in the event of a highly
leveraged transaction involving the Company.
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<PAGE> 26
SUBORDINATION
The payment of principal of and premium, if any, and interest on, and
Liquidated Damages, if any, with respect to, the Debentures will, to the extent
set forth in the Indenture, be subordinated and subject in right of payment to
the prior payment in full of all Senior Indebtedness of the Company (as defined
below), whether outstanding at the date of the Indenture or later incurred. In
the event of any default in the payment of the principal of, or interest on, any
Senior Indebtedness or any default permitting the acceleration of Senior
Indebtedness, where notice of such default has been given to the Company, no
payment with respect to the payment of principal of and premium, if any, and
interest on, and Liquidated Damages, if any, with respect to, the Debentures
(including repurchases of the Debentures at the option of the holder) may be
made by the Company unless and until such default has been cured or waived;
provided that nothing in the above-described provision will prevent the making
of any payment in respect of the Debentures for a period of more than 89 days
after the date such written notice of default is given unless the maturity of
the Senior Indebtedness has been accelerated, in which case no payment on the
Debentures may be made until such acceleration has been waived or such Senior
Indebtedness has been paid in full. Upon any payment or distribution of the
Company's assets to creditors upon any dissolution, winding up, liquidation,
reorganization, bankruptcy, insolvency, receivership or other proceedings
relating to the Company, whether voluntary or involuntary, the holders of Senior
Indebtedness will first be entitled to receive payment in full of all amounts
due thereon before the holders of the Debentures will be entitled to receive any
payment upon the principal of, premium, if any, and interest on, and Liquidated
Damages, if any, with respect to, the Debentures.
By reason of such subordination, in the event of the insolvency of the
Company, holders of Debentures may recover less ratably than holders of Senior
Indebtedness and other creditors of the Company.
"Senior Indebtedness" is defined in the Indenture as the principal of,
premium, if any, and interest on (a) any and all other indebtedness and
obligations of the Company (including indebtedness of others guaranteed by the
Company) other than the Debentures, whether or not contingent and whether
outstanding on the date of the Indenture or thereafter created, incurred or
assumed, which (i) is for money borrowed; (ii) is evidenced by any bond, note,
debenture or similar instrument; (iii) represents the unpaid balance on the
purchase price of any property, business, or asset of any kind; (iv) is an
obligation of the Company as lessee under any and all leases of property,
equipment or other assets required to be capitalized on the balance sheet of the
lessee under generally accepted accounting principles; (v) is a reimbursement
obligation of the Company with respect to letters of credit; (vi) is an
obligation of the Company with respect to interest swap obligations and foreign
exchange agreements or (vii) is an obligation of others secured by a lien to
which any of the properties or assets (including, without limitation, leasehold
interests and any other tangible or intangible property rights) of the Company
are subject, whether or not the obligations secured thereby shall have been
assumed by the Company or shall otherwise be the Company's legal liability, and
(b) any deferrals, amendments, renewals, extensions, modifications and
refundings of any indebtedness or obligations of the types referred to above;
provided that Senior Indebtedness shall not include (i) the Debentures; (ii) any
indebtedness or obligation of the Company which, by its terms or the terms of
the instrument creating or evidencing it, is both subordinated to any other
indebtedness or obligations of the Company and is not superior in right of
payment to the Debentures; (iii) any indebtedness or obligation of the Company
to any of its subsidiaries and (iv) any indebtedness or obligation which is both
incurred by the Company in connection with the purchase of assets, materials or
services in the ordinary course of business and constitutes an unsecured trade
payable.
As of December 31, 1995, the amount of the Company's Senior Indebtedness
aggregated approximately $1,259,000,000, and the amount of the trade payables
and other indebtedness of the Company's subsidiaries was immaterial in amount.
The Debentures will be effectively subordinated to all rights of third party
creditors of the Company's subsidiaries. The Company and its subsidiaries expect
from time to time to incur additional indebtedness, including, but not limited
to, Senior Indebtedness. The Indenture will not prohibit or limit the incurrence
of such additional indebtedness.
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<PAGE> 27
CONVERSION RIGHTS
The Debentures may be converted in denominations of $1,000 or integral
multiples thereof at any time prior to maturity at the option of the holder into
fully paid, nonassessable shares of Common Stock at a conversion price equal to
the initial conversion price with respect to the Preferred Stock set forth on
the cover page of this Prospectus, as subsequently adjusted. The right to
convert Debentures called for redemption will expire at the close of business on
the fifth business day prior to the redemption date (the "Conversion Termination
Date") (unless the Company shall default in making the redemption payment when
due, in which case the conversion right shall terminate at the close of business
on the date such default is cured and such Debenture is redeemed). In the case
of redemption at the option of the holder as a result of a Change in Control,
such right will terminate upon receipt by the Company of a written notice of the
exercise of such option (unless the Company shall default in making the
repurchase payment when due, in which case the conversion right shall terminate
at the close of business on the date such default is cured and, such Debenture
is repurchased). For information as to notices of redemption, see "-- Optional
Redemption by the Company." Whenever the Company issues shares of Common Stock
upon conversion of the Debentures, the Company will, subject to certain
conditions, issue, together with each share of Common Stock, one Right,
entitling the holder to purchase one one-hundredth of a share of Series A
Preferred Stock under certain circumstances. See "Description of Capital
Stock -- Rights Plan."
Holders of Debentures at the close of business on an interest payment
record date shall be entitled to receive the interest and Liquidated Damages, if
any, payable on the corresponding interest payment date notwithstanding the
conversion thereof following the close of business on such interest payment
record date and prior to the close of business on such interest payment date.
However, Debentures surrendered for conversion during the period between the
close of business on any interest payment record date and the close of business
on the corresponding interest payment date (except Debentures called for
redemption on a redemption date or with a Conversion Termination Date during
such period) must be accompanied by payment of an amount equal to the interest
payment and Liquidated Damages, if any, to be received on such interest payment
date with respect to such Debentures presented for conversion. Except as
provided above, the Company shall make no payment or allowance for unpaid
interest on converted Debentures or for dividends on the shares of Common Stock
issued upon such conversion.
No fractional shares of Common Stock will be issued upon conversion but, in
lieu thereof, an appropriate amount will be paid in cash based on the Closing
Price (as defined in the Indenture) on the last trading day before the
conversion date.
The conversion price is subject to adjustment upon the occurrence of
certain events, including (i) the issuance of shares of Common Stock as a
dividend or distribution on the Common Stock, (ii) the subdivision or
combination of the outstanding Common Stock, (iii) the issuance to all or
substantially all holders of Common Stock of warrants, options or other rights
to subscribe for or purchase Common Stock (or securities convertible into or
exchangeable for Common Stock) at a price per share less than the then Average
Current Market Price, (iv) the distribution to all or substantially all holders
of Common Stock of shares of capital stock of the Company (other than Common
Stock and shares of Series A Preferred Stock upon exercise of Rights), evidences
of indebtedness, or other non-cash assets (including securities of any company
other than the Company), (v) the distribution to all or substantially all
holders of Common Stock warrants, options or other rights to subscribe for its
securities (other than those referred to in (iii) above) and (vi) the
distribution to all or substantially all holders of Common Stock of cash in an
aggregate amount that (together with all other cash distributions to all or
substantially all holders of Common Stock made within the preceding 12 months
not triggering a conversion price adjustment) exceeds an amount equal to 20% of
the Average Current Market Price on the business day immediately preceding the
day on which the Company declares such distribution multiplied by the number of
shares of Common Stock outstanding on such date (excluding shares held in the
treasury of the Company). Issuances of options and securities convertible into
Common Stock are deemed to be issuances of the underlying Common Stock for
purposes of adjustments to the conversion price. Whenever the conversion price
is adjusted, the Company will promptly mail to holders of the Debentures a
notice of adjustment briefly stating the facts requiring the adjustment and the
manner of computing it. No adjustment of the conversion price will be required
to be made in any case until cumulative
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<PAGE> 28
adjustments amount to a change in the conversion price of 1% or more, but any
such adjustment that would otherwise be required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under the Indenture will be made either to the nearest cent or the nearest 1/100
of a share.
Subject to the applicable right of the holders of the Debentures upon a
Change in Control, and subject to the provisions of the Indenture described
below under "-- Merger, Sale or Consolidation," if the Company reclassifies or
changes its outstanding Common Stock, or consolidates with or merges into or
sells or conveys all or substantially all of the assets of the Company as an
entirety to any person, or is a party to a merger or share exchange that
reclassifies or changes its outstanding Common Stock, the Debentures will become
convertible into the kind and amount of shares of stock and other securities and
property (including cash) that the holders of the Debentures would have owned
immediately after the transaction if the holders had converted the Debentures
into Common Stock immediately before the effective date of the transaction. If
in connection with any such reclassification, consolidation, merger, sale,
transfer, or share exchange each holder of shares of Common Stock is entitled to
elect to receive either securities, cash or other assets upon completion of such
transaction, the Company will provide or cause to be provided to each holder of
the Debentures the right to elect to receive the securities, cash or other
assets into which the Debentures held by such holder will be convertible after
completion of any such transaction on the same terms and subject to the same
conditions applicable to holders of the Common Stock (including, without
limitation, notice of the right to elect, limitations on the period in which
such election will be made and the effect of failing to exercise the election).
The above will similarly apply to successive reclassifications, consolidations,
mergers, sales, transfers or share exchanges.
The Company will reserve and at all times keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
the Debentures, such number of shares of its duly authorized Common Stock as
will from time to time be sufficient to effect the conversion of all outstanding
Debentures.
OPTIONAL REDEMPTION BY THE COMPANY
The Debentures may not be redeemed prior to March 15, 1999. On or after
such date, the Debentures may be redeemed at the option of the Company, in whole
or in part (in any integral multiple of $1,000), upon not less than 30 and no
more than 60 days' prior notice to each holder of the Debentures to be redeemed,
by first-class mail, at redemption prices (expressed as a percentage of
principal amount) as set forth below during the twelve-month periods beginning
on March 15 of the years shown below, plus in each case an amount equal to
accrued and unpaid interest and Liquidated Damages, if any, with respect to the
Debentures to and including the redemption date.
<TABLE>
<CAPTION>
REDEMPTION PRICE (AS A
PERCENTAGE OF
PRINCIPAL
YEAR AMOUNT)
--------------------------------------------------------- ----------------------
<S> <C>
1999..................................................... 105.60%
2000..................................................... 104.80
2001..................................................... 104.00
2002..................................................... 103.20
2003..................................................... 102.40
2004..................................................... 101.60
2005..................................................... 100.80
</TABLE>
If less than all of the Debentures are to be redeemed, the Debentures to be
redeemed shall be selected by lot or pro rata or by any other equitable manner
determined by the Trustee in its sole discretion. On or after the redemption
date, interest will cease to accrue on the Debentures or portions thereof called
for redemption.
PURCHASE OF DEBENTURES AT THE OPTION OF HOLDERS UPON A CHANGE IN CONTROL
If at any time there occurs a Change in Control of the Company, each holder
of Debentures shall have the right upon receipt of a Repurchase Right Notice (as
defined in the Indenture), at such holder's option, to
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<PAGE> 29
require the Company to repurchase all of such holder's Debentures, or a portion
thereof which is $1,000 or any integral multiple thereof, on the date (the
"Repurchase Date") that is no later than 45 days after the date of the
Repurchase Right Notice at a repurchase price equal to 100% of the principal
amount thereof, plus accrued and unpaid interest to the Repurchase Date and
Liquidated Damages, if any, with respect to the Debentures.
On or before the 30th day following any Change in Control, the Company, or,
at the request of the Company, the Trustee, shall mail the Repurchase Right
Notice to each holder of record of the Debentures and the Trustee stating (i)
that a Change in Control has occurred and that such holder has the right to
require the Company to repurchase such holder's Debentures, (ii) the Repurchase
Date, (iii) the date by which the right to cause repurchase must be exercised,
(iv) the price at which such repurchase is to be made, if the right to cause
repurchase is exercised and (v) a description of the procedure which such holder
must follow to exercise a right to cause repurchase. The Company shall deliver a
copy of the Repurchase Right Notice to the Trustee. The Company shall also place
such notice in a financial newspaper of general circulation in New York City. No
failure of the Company to give the foregoing notice shall limit any such
holder's right to exercise a repurchase right.
To exercise the repurchase right, on or before the 30th day after the date
of the Repurchase Right Notice, holders of Debentures must deliver written
notice to the Company (or an agent designated by the Company for such purposes)
of the holder's exercise of such right, together with the Debentures with
respect to which the right is being exercised, duly endorsed for transfer. Such
written notice shall be irrevocable except with respect to conversions permitted
prior to the Repurchase Date.
The definition of "Change in Control" in the Indenture will be identical to
the definition of such term in the Certificate of Designations. See "Description
of the Preferred Stock -- Special Conversion Rights Upon a Change in Control."
The right to require the repurchase of Debentures shall not continue after
a discharge of the Company from its obligations under the Debentures and the
Indenture in accordance therewith. See "-- Satisfaction and Discharge of the
Indenture." Repurchase of the Debentures may, under certain circumstances,
constitute a default or event of default under Senior Indebtedness then
outstanding and, in such instances, repurchase of the Debentures would be
prohibited unless and until such default has been cured or waived. See
"-- Subordination." The failure to repurchase the Debentures in such instance
would constitute an Event of Default. See "-- Events of Default."
If the Repurchase Date is between a regular record date for the payment of
interest and the next succeeding interest payment date, any Debenture to be
repurchased must be accompanied by payment of an amount equal to the interest
and Liquidated Damages, if any, payable on such succeeding interest payment date
on the principal amount to be repurchased, and the interest on the principal
amount of the Debenture being repurchased, and Liquidated Damages, if any, with
respect thereto, will be paid on such next succeeding interest payment date to
the registered holder of such Debenture on the immediately preceding record
date. A Debenture repurchased on an interest payment date need not be
accompanied by any payment, and the interest on the principal amount of the
Debenture being repurchased and Liquidated Damages, if any, with respect
thereto, will be paid on such interest payment date to the registered holder of
such Debenture on the corresponding record date.
If the Company is required to make an offer to repurchase the Debentures as
a result of the occurrence of Change in Control, there can be no assurance that
the Company will have sufficient funds available to pay the purchase price for
such Debentures or will be permitted by its other indebtedness agreements to
repurchase such Debentures.
If any repurchase pursuant to the foregoing provisions constitutes an
"issuer tender offer" as defined in Rule 13e-4 under the Exchange Act, the
Company will comply with the requirements of Rule 13e-4, Rule 14e-1 and any
other tender offer rules under the Exchange Act which then may be applicable,
including the filing of an Issuer Tender Offer Statement on Schedule 13E-4 with
the Commission and the furnishing of certain information contained therein to
the Debenture holders.
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<PAGE> 30
The Company could, in the future, enter into certain significant
transactions that would not constitute a Change in Control with respect to the
Change in Control purchase feature of the Debentures. The Change in Control
purchase feature of the Debentures may in certain circumstances make more
difficult or discourage a takeover of the Company and, thus, the removal of
incumbent management. The Change in Control purchase feature, however, is not
the result of management's knowledge of any specific effort to obtain control of
the Company by means of a merger, tender offer, solicitation or otherwise, or
part of a plan by management to adopt a series of anti-takeover provisions.
MERGER, SALE OR CONSOLIDATION
Without limitation of the provisions of the Indenture described above
regarding a Change in Control, the Company may merge, consolidate or transfer
all or substantially all of its properties and assets as an entirety and the
Company may permit any person to consolidate with or merge into the Company or
transfer all or substantially all of its properties and assets as an entirety to
the Company; provided that, among other things, (a) the successor person is the
Company or another corporation organized and existing under the laws of the
United States, any state thereof or the District of Columbia that assumes the
Company's obligations on the Debentures and under the Indenture and (b)
immediately before and immediately after giving effect to such transaction, no
Event of Default shall have occurred and be continuing.
EVENTS OF DEFAULT
The following shall constitute Events of Default with respect to the
Debentures: (i) failure to pay the principal of, premium, if any, on, and
Liquidated Damages, if any, with respect to, any Debenture when such amounts
become due and payable at maturity, upon acceleration or otherwise, whether or
not such payment is prohibited by the subordination provisions of the Indenture;
(ii) failure to pay interest on the Debentures when due, whether or not such
payment is prohibited by the subordination provisions of the Indenture, and such
failure continues for a 30-day period, (iii) a default in the observance or
performance of any other covenant or agreement of the Company in the Debentures
or the indenture that continues for the period and after the notice specified
below; (iv) an event of default shall have occurred and be continuing under any
other evidence of indebtedness of the Company or any of its subsidiaries,
whether such indebtedness now exists or is created hereafter, which event of
default results in the acceleration of such indebtedness which, together with
any such other indebtedness so accelerated, aggregates more than $15 million and
such acceleration is not rescinded or indebtedness is not paid or discharged for
the period and after the notice specified below; (v) any final judgment or
judgments for payment of money in excess of $15 million in the aggregate shall
be rendered against the Company or a subsidiary and shall remain unstayed,
unsatisfied or undischarged for the period and after the notice specified below
and (vi) certain events of bankruptcy, insolvency or reorganization. The Company
is required to deliver to the Trustees, within 120 days after the end of each
fiscal year of the Company, an officer's certificate stating whether or not the
signatories know of any default by the Company under the Indenture and the
Debentures and, if any default exists, describing such default.
A default under clause (iii), (iv) or (v) above is not an Event of Default
until the Trustee or the holders of at least 25% in principal amount of the then
outstanding Debentures notify the Company of the default and the Company does
not cure the default within 60 days with respect to clauses (iii) or (v), and
within 30 days with respect to clause (iv), after receipt of the notice. The
notice must specify the default, demand that it be remedied and state that the
notice is a "Notice of Default." If the holders of 25% or more in principal
amount of the then outstanding Debentures request the Trustee to give such
notice on their behalf, the Trustee shall do so.
In case an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization) shall have occurred and be continuing,
the Trustee, by notice to the Company, or the holders of 25% or more of the
principal amount of the Debentures then outstanding, by notice to the Company
and the Trustee, may declare the principal amount of the Debentures, plus
accrued interest and Liquidated Damages, if any, to be immediately due and
payable. In case an Event of Default resulting from certain events of
bankruptcy, insolvency or reorganization shall occur, such amounts shall be due
and payable without any declaration or any act on the part of the Trustee or the
holders of the Debentures. Such declaration of
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acceleration may be rescinded and past defaults may be waived by the holders of
a majority of the principal amount of the Debentures then outstanding upon
conditions provided in the Indenture, except a default in the payment of
principal, or interest on, or Liquidated Damages, if any, with respect to, any
Debenture or in respect of a covenant or provision of the Indenture which cannot
be modified or amended without the consent of the holder of each Debenture.
Except to enforce the right to receive payment when due of principal, premium,
if any, interest, and Liquidated Damages, if any, no holder of a Debenture may
institute any proceeding with respect to the Indenture or for any remedy
thereunder unless such holder has previously given to the Trustee written notice
of a continuing Event of Default and unless the holders of 25% or more of the
principal amount of the Debentures then outstanding have requested the Trustee
to institute proceedings in respect of such Event of Default and have offered
the Trustee reasonable indemnity against loss, liability and expense to be
thereby incurred, the Trustee has failed so to act for 60 days after receipt of
the same and during such 60-day period the holders of a majority of the
principal amount of the Debentures then outstanding have not given the Trustee a
direction inconsistent with the request. Subject to certain restrictions the
holders of a majority in principal amount of the Debentures then outstanding
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture, that is unduly prejudicial
to the rights of any holder of a Debenture or that would involve the Trustee in
personal liability, and the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
MODIFICATIONS AND WAIVERS OF THE INDENTURE
Supplemental indentures modifying or amending the Indenture may be made by
the Company and the Trustee with the consent of the holders of not less than a
majority in aggregate principal amount of the then outstanding Debentures (or,
prior to the issuance or the Debentures, with the consent of the holders of not
less than a majority of the number of then outstanding shares of Preferred
Stock); provided, however, that no such modification or amendment may, without
the consent of all of the holders of the Debentures then outstanding (or, prior
to the issuance of the Debentures, without the consent of all of the holders of
the then outstanding shares of Preferred Stock), (i) extend the fixed maturity
of any Debenture, reduce the rate or extend the time of payment of interest on,
or Liquidated Damages, if any, with respect to, any Debenture, reduce the
principal amount, or premium, if any, on, or Liquidated Damages, if any, with
respect to, any Debenture, alter the redemption or mandatory repurchase
provisions with respect to any Debenture, impair the right of a holder to
institute suit for payment thereof, change the currency in which the Debentures
are payable or impair the right to convert the Debentures into stock, securities
or other property or assets (including cash) subject to the terms set forth in
the Indenture, (ii) except as permitted under the Indenture, increase the
conversion price or otherwise modify or affect in any manner adverse to the
holders of the Debentures the conversion provisions of the Indenture, or (iii)
reduce the percentage of Debentures (or the number of shares of Preferred
Stock), the consent of the holders of which is required for any modification or
waiver. The Indenture may not be amended to alter the subordination of any
outstanding Debentures without consent of each holder of Senior Indebtedness
then outstanding that would be adversely affected thereby. Without the consent
of any holders of the Debentures, the Company and the Trustee may amend or
supplement the Debentures or the Indenture to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Debentures in addition to or in
place of certificated Debentures, to provide for the assumption of the Company's
obligations to holders of the Debentures in the case of a merger or
consolidation or transfer of all or substantially all of the Company's assets,
or to make any change that does not materially adversely affect the rights of
any holder of the Debentures.
The holders of a majority in aggregate principal amount of outstanding
Debentures may waive any past default under the Indenture, except a default in
the payment of principal, premium, if any, interest or Liquidated Damages, if
any, or default with respect to certain covenants under the Indenture.
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NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No past, present or future director, officer, employee, agent, manager,
stockholder or other affiliate, as such, of the Company shall have any liability
for any obligations of the Company under the Debentures or the Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each holder of the Debentures by accepting a Debenture waives and
releases all such liability.
SATISFACTION AND DISCHARGE OF THE INDENTURE
The Indenture will provide that the Company may terminate its obligations
under the Indenture at any time by delivering all outstanding Debentures to the
Trustee for cancellation and paying all sums required to be paid pursuant to the
terms of the Indenture. In addition, the Company will be permitted to terminate
all of its obligations under the Indenture by irrevocably depositing with the
Trustee money or U.S. government obligations sufficient to pay principal of and
interest on and Liquidated Damages, if any, with respect to the Debentures to
maturity or redemption and all other sums payable pursuant to the terms of the
Indenture, after complying with certain other procedures set forth in the
Indenture.
TRANSFER AND EXCHANGE
A holder may transfer or exchange the Debentures in accordance with the
Indenture. The Company may require a holder to, among other things, furnish
appropriate endorsements and transfer documents and pay any taxes and fees
required by law or permitted by the Indenture. The Company is not required to
transfer or exchange any Debenture selected for redemption. Also, the Company is
not required to transfer or exchange any Debenture for a period of 15 days
before a selection of Debentures to be redeemed.
The registered holder of a Debenture may be treated as the owner of it for
all purposes.
DELIVERY AND FORM
The Debentures to be issued upon exchange of the Preferred Stock as set
forth herein will be issued in registered form. Transfers of Debentures must be
made in accordance with the terms of the Indenture. For a description of the
restrictions on the transfer of Debentures, see "ERISA Considerations" and
"Transfer Restrictions."
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize on certain property received in respect of any such
claim as security or otherwise. Subject to the Trust Indenture Act, the Trustee
will be permitted to engage in other transactions; however, if it acquires any
conflicting interest, as described in the Trust Indenture Act, it must eliminate
such conflict or resign.
REGISTRATION RIGHTS AGREEMENT
At the Initial Closing, the Company and the Initial Purchasers entered into
the Registration Rights Agreement providing for the registration of the resales
of Transfer Restricted Securities. See "Registration Rights Agreement."
DESCRIPTION OF CAPITAL STOCK
Pursuant to TWA's Certificate of Incorporation, the Company has the
authority to issue 300 million shares of capital stock, consisting of 150
million shares of Common Stock and 137.5 million additional shares of preferred
stock. The Certificate of Incorporation authorizes the Board of Directors to
establish one or more series of preferred stock and to establish such relative
voting, dividend, redemption, liquidation, conversion and other powers,
preferences, rights, qualifications, limitations and restrictions as the Board
of Directors may determine without further approval of the stockholders of the
Company. The issuance of additional series of
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preferred stock by the Board of Directors could, among other things, adversely
affect the voting power of the holders of Common Stock and, under certain
circumstances, make it more difficult for a person or group to gain control of
the Company.
The issuance of any series of preferred stock, and the relative powers,
preferences, rights, qualifications, limitations and restrictions of such
series, if and when established, will depend upon, among other things, the
future capital needs of the Company, the then existing market conditions and
other factors that, in the judgment of the Board of Directors, might warrant the
issuance of preferred stock. At the date of this Prospectus, there are no plans,
agreements or understandings relative to the issuance of any additional series
of preferred stock other than the Preferred Stock and the Series A Preferred
Stock issuable pursuant to the Rights described below under "-- Rights Plan."
DESCRIPTION OF COMMON STOCK
The holders of the Common Stock are entitled to one vote per share on all
matters voted on by stockholders, including elections of directors, and, except
for the voting rights of the holders of Employee Preferred Stock (who are
entitled to elect a total of four directors to the Board) and, under certain
circumstances, the Preferred Stock, and as otherwise required by law or provided
in any resolution adopted by the Board of Directors with respect to any series
of the preferred stock, the holders of such shares exclusively possess all
voting power. Although the Certificate of Incorporation does not provide for
cumulative voting in the election of directors, the Board is classified meaning
that the holders of a majority of the shares entitled to vote at a meeting at
which a quorum is present can elect all of the directors of the class then to be
elected (except that the holders of a majority of the shares of Employee
Preferred Stock are exclusively entitled to elect four labor directors), and the
holders of the remaining shares would not be able to elect any directors at that
meeting. Subject to any preferential rights of any outstanding series of
preferred stock or the Preferred Stock, the holders of Common Stock are entitled
to such dividends as may be declared from time to time by the Board of Directors
from funds available therefor, and upon liquidation are entitled to receive pro
rata all assets of the Company available for distribution to such holders. The
holders of Common Stock have no preemptive rights and no rights to convert their
shares of Common Stock into any other security. It is not presently anticipated
that dividends will be paid on the Common Stock in the foreseeable future. All
outstanding shares of Common Stock are fully paid and nonassessable, and the
shares of Common Stock issuable upon conversion of the Preferred Stock and, if
issued, the Debentures will be, upon issuance, fully paid and nonassessable. As
of May 22, 1996, 36,945,517 shares of Common Stock were issued and outstanding
and were held by approximately 14,352 holders of record.
RIGHTS PLAN
The Board of Directors of the Company declared a dividend distribution of
one right (a "Right") for each outstanding share of Common Stock and Employee
Preferred Stock (collectively, the "Voting Stock") payable to holders of record
as of the close of business on January 12, 1996 (the "Record Date"). Each Right
entitles the holder to purchase, after the Distribution Date (as defined below),
from the Company one one-hundredth of a share of Series A Preferred Stock of the
Company at a price of $47.50 (the "Purchase Price"). The description and terms
of the Rights are set forth in a Rights Agreement dated as of December 19, 1995
between the Company and American Stock Transfer & Trust Company as Rights Agent
(the "Rights Agent") as supplemented. The Rights Plan is set forth in full in
the Rights Agreement and the description thereof herein is qualified in its
entirety by reference to such Rights Agreement.
Until the earlier to occur of (a) the tenth day after public announcement
that any person or group has become the beneficial owner of at least 15% of the
Company's Voting Stock (other than pursuant to a "Permitted Offer," as defined
below) and (b) the tenth business day after the date of the commencement of a
tender or exchange offer (other than a Permitted Offer) by any person which
would, if consummated, result in such person becoming the beneficial owner of at
least twenty percent (20%) of the Voting Stock (the earlier of such dates being
hereinafter called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Voting Stock certificates outstanding as of the Record
Date, by such Voting Stock certificates.
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Each share of Voting Stock issued or delivered by the Company (including
shares issued upon conversion of the Preferred Stock of the Debentures) after
the Record Date but prior to the earlier of the Distribution Date or the
expiration of the Rights shall be accompanied by one Right.
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Voting Stock. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender or
transfer of any certificates for Voting Stock in respect of which Rights have
been issued will also constitute the transfer of the Rights associated with the
Voting Stock represented by such certificates. As soon as practicable after the
Distribution Date, separate certificates evidencing the Rights (the "Right
Certificates") will be mailed to holders of record of the Voting Stock as of the
close of business on the Distribution Date and such separate Right Certificates
alone will evidence the Rights.
No Right is exercisable at any time prior to the Distribution Date. The
Rights will expire on January 21, 2006 (the "Final Expiration Date") unless
earlier exchanged or redeemed by the Company as described below. Until a Right
is exercised, the holder thereof, as such, will have no rights as a stockholder
of the Company, including without limitation the right to vote or to receive
dividends.
Upon exercise, each Right shall be converted into one one-hundredth of a
share of the Series A Preferred Stock. Holders of shares of Series A Preferred
Stock are entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available therefor, quarterly dividends in an
amount per share equal to the greater of (a) $1.00 and (b) 100 times the
aggregate per share amount of all cash dividends or other distributions (other
than dividends payable solely in shares of Common Stock), declared on the Common
Stock since the first dividend payment date with respect to the Series A
Preferred Stock. Dividends payable on the Series A Preferred Stock are
cumulative. In addition, in the event the Company enters into any consolidation,
merger, combination or other transaction in which shares of Common Stock are
exchanged for or changed into other Stock or securities, shares of Series A
Preferred Stock shall be similarly exchanged for or changed into 100 times the
aggregate amount of stock, securities cash or other consideration.
Subject to the rights of holders of the Preferred Stock, holders of shares
of Series A Preferred Stock are entitled to 100 votes on all matters submitted
to a vote of the stockholders of TWA, voting together as a single class, except
as otherwise required by applicable law. In the event dividends payable on the
Series A Preferred Stock shall be in arrears in an amount equal to six quarterly
payments, all holders of the Series A Preferred Stock together with other
holders of Preferred Stock entitled to vote, shall, voting together as a single
class be entitled to elect one director to the Company's Board of Directors.
In the event that any person or group (an "Acquiring Person") becomes the
beneficial owner of at least 15% of the Company's Voting Stock, then each Right
(other than Rights beneficially owned by the Acquiring Person and certain
affiliated persons) will entitle the holder to elect to receive, without payment
of the Purchase Price, a number of shares of the Company's Common Stock having a
market value equal to the Purchase Price. The term "Acquiring Person" does not
include (i) the Company, any of its subsidiaries or any employee benefit plan of
the Company, except for any such employee benefit plan acting in concert with a
third party (other than another employee benefit plan of the Company) or (ii)
any person or group which becomes the beneficial owner of at least 15% of the
Voting Stock pursuant to a "Permitted Offer" (as defined below).
"Permitted Offer" means a tender or exchange offer by a Person for all
outstanding shares of Voting Stock, which is made at a price and on such other
terms determined by at least a majority of the Continuing Directors (as defined
below) to be in the best interests of the Company and its stockholders.
In the event that, after any person has become an Acquiring Person, (i) the
Company is involved in a merger or other business combination in which the
Company is not the surviving corporation or its Voting Stock is exchanged for
the securities or assets or (ii) the Company and/or one or more of its
subsidiaries sell or otherwise transfer assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its subsidiaries,
taken as a whole, then each Right will entitle the holder to purchase, for the
Purchase Price, a number of shares of common Stock of the other party to such
business combination or sale (or in certain circumstances, an affiliate) having
a market value of two times the Purchase Price.
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At any time after any person has become an Acquiring Person (but before any
person becomes the beneficial owner of at least 50% of the Voting Stock), a
majority of the Company's Continuing Directors may exchange all or part of the
Rights (other than the Rights beneficially owned by the Acquiring Person and
certain affiliated persons) for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right.
"Continuing Director" means (i) any member of the Board of Directors who
was a member of the Board prior to the time an Acquiring Person becomes such or
(ii) any person subsequently elected to the Board if he is recommended or
approved by a majority of the Continuing Directors or, in the case of a
successor to a director elected by holders of a series of Employee Preferred
Stock, if such person is elected pursuant to the applicable terms of such
Employee Preferred Stock. Continuing Directors do not include an Acquiring
Person, an affiliate or associate of an Acquiring Person or any representative
or nominee of the foregoing.
The Company may redeem the Rights, in whole but not in part, at a price of
$.01 per Right at any time prior to the close of business on the tenth day after
public announcement that any person has become an Acquiring Person (subject to
extension by a majority of the Continuing Directors).
After the Distribution Date, the Rights Agreement may be amended in any
respect that does not adversely affect the Rights holders (other than any
Acquiring person and certain affiliated persons). In addition, after any person
has become an Acquiring Person, the Rights Agreement may be amended only with
the approval of a majority of the Continuing Directors.
DESCRIPTION OF EMPLOYEE PREFERRED STOCK
Pursuant to the '95 Reorganization, the Company issued an aggregate of
6,425,118 shares of Employee Preferred Stock to employee stock trusts for the
benefit of certain domestic employees of the Company represented by ALPA, the
IAM and the Independent Federation of Flight Attendants ("IFFA") pursuant to the
terms of the '94 Labor Agreements (collectively, the "Employee Stock Trusts").
The Employee Preferred Stock was issued in three series designated ALPA
Preferred Stock, IAM Preferred Stock and IFFA Preferred Stock. Except for an
exclusive right to elect a certain number of directors to the Board of Directors
and the liquidation preference described below under " -- Liquidation Preference
and Other Rights," the Employee Preferred Stock is the functional equivalent of
Common Stock. The Employee Preferred Stock is junior to the Preferred Stock,
both as to the payment of dividends and the distribution of assets upon
Liquidation.
Dividends
Subject to the issuance by the Company of preferred stock with senior
rights (including the Preferred Stock), the holders of the Employee Preferred
Stock are entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available therefor, dividends payable in cash,
stock or otherwise. No dividends may be paid on the Common Stock unless an
equivalent dividend is paid on the Employee Preferred Stock, and no dividends
may be paid on the Employee Preferred Stock unless an equivalent dividend is
paid on the Common Stock. It is not presently anticipated that dividends will be
paid on the Employee Preferred Stock in the foreseeable future.
Liquidation Preference and Other Rights
Subject to the issuance by the Company of preferred stock with senior
rights (including the Preferred Stock), upon any Liquidation of the Company,
holders of the Employee Preferred Stock will be entitled to a liquidation
preference equal to $.01 per share from TWA's net assets before any amounts are
paid to or on account of the holders of Common Stock, and thereafter the
remaining net assets of the Corporation will be distributed pro rata to the
holders of the Employee Preferred Stock, the Common Stock and other equity
securities of the Company which rank on a parity with such stock and with
respect to such rights, all in accordance with their respective rights and
interests. The Employee Preferred Stock does not have redemption rights.
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Automatic Conversion
Each share of Employee Preferred Stock will automatically convert into one
share of Common Stock upon the withdrawal of such share of Employee Preferred
Stock from the Employee Stock Trust in which such share is held.
Voting
So long as any shares of ALPA Preferred Stock are outstanding, the holders
of the ALPA Preferred Stock are entitled to one vote per share (i) on each
matter submitted to a vote at a meeting of stockholders other than the election
of directors and (ii) for the ALPA Director (defined below) to be elected at an
annual meeting of stockholders. Such holders have the exclusive right to elect
to the Board one (1) director (the "ALPA Director"), which director shall be a
Class II director.
So long as any shares of IFFA Preferred Stock are outstanding, the holders
of the IFFA Preferred Stock are entitled to one vote per share (i) on each
matter submitted to a vote at a meeting of stockholders other than the election
of directors and (ii) for the IFFA Director (defined below) to be elected at an
annual meeting of stockholders. Such holders have the exclusive right to elect
to the Board one (1) director (the "IFFA Director"), which director shall be a
Class II director.
So long as any shares of IAM Preferred Stock are outstanding, the holders
of the IAM Preferred Stock are entitled to one vote per share (i) on each matter
submitted to a vote at a meeting of stockholders other than the election of
directors and (ii) for the IAM Directors (defined below) to be elected at an
annual meeting of stockholders. Such holders have the exclusive right to elect
to the Board two (2) directors (the "IAM Director"), which directors shall be a
Class II directors.
Amendment
The Certificate of Designations, Preferences and Rights relating to each
series of Employee Preferred Stock may be amended only upon the unanimous
approval of the holders of the outstanding shares of such series of Employee
Preferred Stock.
REGISTRATION RIGHTS AGREEMENT
Pursuant to the Registration Rights Agreement between the Company and the
Initial Purchasers, the Company is required to file with the Commission, within
90 days after March 22, 1996, the date of original issuance of the Preferred
Stock, the Registration Statement to register the resales of Transfer Restricted
Securities by the holders thereof who satisfy certain conditions relating to the
provision of information in connection with the Registration Statement. The
Company is obligated to use its reasonable best efforts to cause the
Registration Statement to become effective within 150 days from the date of
original issuance of the Preferred Stock and to keep such Registration Statement
effective until the third anniversary of the date of original issuance of the
Preferred Stock unless the three year holding period under Rule 144 is
shortened, in which case the Company must use its reasonable best efforts to
keep such Registration Statement effective until the expiration of such
shortened holding period under Rule 144. For purposes of the foregoing,
"Transfer Restricted Securities" means each share of Preferred Stock, each
Debenture, or each share of Common Stock issuable upon conversion of the
Preferred Stock or the Debentures, as applicable, until the date on which such
share of Preferred Stock, Debenture or share of Common Stock, as applicable, has
been effectively registered under the Securities Act and disposed of in
accordance with the Registration Statement, the date on which such share of
Preferred Stock, Debenture or share of Common Stock, as applicable, is
distributed to the public pursuant to Rule 144 or the date on which such share
of Preferred Stock, Debenture or share of Common Stock, as applicable, may be
sold or transferred pursuant to Rule 144(k) (or any similar provisions then in
force).
If the Registration Statement (i) is not filed with the Commission within
90 days after March 22, 1996, the date of original issuance of the Preferred
Stock, (ii) has not been declared effective by the Commission within 150 days
after the date of original issuance of the Preferred Stock or (iii) is filed and
declared effective
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but shall thereafter cease to be effective (without being succeeded immediately
by an additional Registration Statement filed and declared effective for any
reason) for a period of time which shall exceed 90 days in the aggregate during
any calendar year (each such event referred to in clauses (i) through (iii), a
("Registration Default"), the Company will pay liquidated damages (the
"Liquidated Damages") to each holder of Transfer Restricted Securities, during
the first 90-day period immediately following the occurrence of such
Registration Default in an amount equal to $0.0025 per week per share of
Preferred Stock (subject to adjustment in the event of stock splits, stock
recombinations, stock dividends and the like), $0.05 per week per $1,000
principal amount of Debentures and $0.01 per week per share (subject to
adjustment in the event of stock splits, stock recombinations, stock dividends
and the like), $0.05 per week per $1,000 principal amount of Debentures and
$0.01 per week per share (subject to adjustment in the event of stock splits,
stock recombinations, stock dividends and the like) of Common Stock constituting
Transfer Restricted Securities held by such holder. The amount of the Liquidated
Damages will increase by an additional $0.0025 per week per share of Preferred
Stock (subject to adjustment as set forth above), $0.05 per week per $1,000
principal amount of Debentures or $0.01 per week per share (subject to
adjustment as set forth above) of Common Stock constituting Transfer Restricted
Securities for each subsequent 90-day period until the Registration Statement is
declared effective, or the Registration Statement again becomes effective, as
the case may be, up to a maximum amount of Liquidated Damages with respect to
any Registration Default of $0.0125 per week per share of Preferred Stock
(subject to adjustment as set forth above), $0.25 per week per $1,000 principal
amount of Debentures or $0.05 per week per share (subject to adjustment as set
forth above) of Common Stock constituting Transfer Restricted Securities. All
accrued Liquidated Damages shall be paid to holders of Transfer Restricted
Securities by wire transfer of immediately available funds or by Federal funds
check by the Company on each dividend payment date, interest payment date,
Repurchase Date (as defined in the Indenture), redemption date under the
Indenture or Redemption Date (as defined in the Certificate of Designations), as
applicable. If all of the outstanding shares of Preferred Stock or all of the
outstanding principal amount of the Debentures have been converted, then the
Liquidated Damages payment date will be the dividend payment date that would
have been applicable had such Preferred Stock not been converted (unless all of
the shares of Preferred Stock have been exchanged for Debentures, in which case
the Liquidated Damages payment date will be the interest payment date that would
have been applicable had such Debentures not been converted). Following the cure
of a Registration Default, Liquidated Damages will cease to accrue with respect
to such Registration Default. Liquidated Damages, to the extent payable, must be
paid on the applicable dividend payment date regardless of whether or not a
dividend on the Preferred Stock is paid on such date.
With respect to the Preferred Stock, the Debentures and the shares of
Common Stock issuable upon conversion of the Preferred Stock or Debentures,
holders of such securities will be required to make certain representations to
the Company (as described in the Registration Rights Agreement) and will be
required to deliver information to be used in connection with the Registration
Statement and to provide comments on the Registration Statement within the time
periods set forth in the Registration Rights Agreement in order to have such
securities included in the Registration Statement and benefit from the
provisions regarding Liquidated Damages set forth in the preceding paragraph.
The Company has agreed to use its reasonable best efforts to file on a timely
basis all such reports required to be filed under the Exchange Act as, and
endeavor in good faith to take such other actions as, are reasonably necessary
to enable any beneficial owner of such securities issuable upon conversion
thereof to sell Transfer Restricted Securities without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule 144,
as such rule may be amended from time to time, (ii) Rule 144A, as such rule may
be amended from time to time, or (iii) any similar rules or regulations
hereafter adopted by the SEC.
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION,
THE BY-LAWS AND DELAWARE LAW
The Certificate of Incorporation and the By-laws contain certain provisions
that could make more difficult the acquisition of the Company by means of a
tender offer, a proxy contest or otherwise. These provisions are expected to
discourage certain types of coercive takeover practices and inadequate takeover
bids and to encourage persons seeking to acquire control of the Company first to
negotiate with the Company. The
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Company believes that the benefits of increased protection of the Company's
potential ability to negotiate with the proponent of an unfriendly or
unsolicited proposal to acquire or restructure the Company outweigh the
disadvantages of discouraging such proposals because, among other things,
negotiation of such proposals could result in an improvement of their terms. In
addition, pursuant to the '95 Reorganization and in connection with the adoption
of the '94 Labor Agreements, the Company adopted certain amendments, both to the
Certificate of Incorporation and the By-laws, relating to corporate governance
matters. These amendments are designed to enhance the input of the Company's
union employees or the directors nominated by them in the governance of the
Company and to limit the ability to change the provisions of the Certificate of
Incorporation in general and the By-laws in particular without broad support
from the Company's voting stockholders. Such provisions will also make it more
difficult to enact any change in the By-laws or to take any of the specified
actions, if such changes or actions are opposed by a substantial constituency,
including the Company's employees who are represented by organized labor. The
description set froth below is intended as a summary only and is qualified in
its entirety by reference of the Certificate of Incorporation and the By-laws.
BOARD OF DIRECTORS
The Certificate of Incorporation and By-laws provide that the number of
directors constituting the entire Board of Directors will be fifteen (15).
Subject to any rights of holders of any class or series of the Company's
preferred stock, a majority of the remaining directors then in office has the
sole authority to fill any vacancies on the Board of Directors. Any director
elected to fill a vacancy will hold office for the remainder of the full term of
the class of directors in which the vacancy occurred and until the director's
successor is elected and qualified. The Certificate of Incorporation provides
that directors may be removed only by the affirmative vote of at least a
majority of the voting power of all the then outstanding shares of stock
entitled to vote generally in the election of directors, voting together as a
single class. The affirmative vote of at least eighty percent (80%) of the
Voting Stock, voting together as a single class, is required to amend or repeal,
or adopt any provision inconsistent with, the provision of the Certificate of
Incorporation relating to the number, election and terms of directors.
STOCKHOLDER ACTIONS AND SPECIAL MEETINGS
The Certificate of Incorporation provides that stockholder action can be
taken only at an annual or special meeting of stockholders, and prohibits,
subject to the rights of holders of any class or series of the Company's
preferred stock to the contrary, stockholder action by written consent in lieu
of a meeting. The Certificate of Incorporation and By-laws provide that, subject
to the rights of holders of any series of preferred stock, special meetings of
stockholders can be called only by (i) the Chairman of the Board of Directors,
(ii) the Corporate Secretary of the Company within ten (10) calendar days after
receipt of the written request of a majority of the total number of directors
that the Company would have if there were no vacancies, and (iii) the Board of
Directors after receipt by the Company of a written request executed by the
holders of at least 35% of the outstanding Voting Stock of the Company;
provided, however, that no separate special meeting will be required to be
convened if the Board of Directors calls an annual or special meeting to be held
no later than ninety (90) calendar days after receiving the request for a
meeting and the purposes of such annual or special meeting of stockholders
called by the Board of Directors include the purposes specified in the request.
Business permitted to be conducted at a special meeting of stockholders is
limited to the business (x) specified in the notice of meeting given by or at
the director of the chairman of the meeting or a majority of the entire Board of
Directors or (y) otherwise properly brought before the meeting by the chairman
of the meeting or at the direction of a majority of the entire Board of
Directors. Moreover, the chairman of the annual or special meeting of the
stockholders will determine whether any business sought to be brought before the
meeting is properly brought.
Pursuant to the Certificate of Incorporation, the By-laws establish an
advance notice procedure with regard to the nomination, other than by or at the
direction of the Board of Directors, of candidates for election as directors and
with regard to business to be brought before an annual meeting of stockholders
of the Company.
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AMENDMENT OF THE CERTIFICATE OF INCORPORATION AND BY-LAWS
The Certificate of Incorporation contains provisions requiring the
affirmative vote of the holders of at least 80% of the Voting Stock, voting
together as a single class to amend certain provisions of the Certificate of
Incorporation, primarily those related to anti-takeover provisions. In addition,
the Certificate of Incorporation requires the affirmative vote of at least
three-fourths of its issued and outstanding Voting Stock, voting as a single
class and not as separate classes, to amend the By-laws by stockholder action.
"Voting Stock" means the outstanding shares of all classes and series of capital
stock of the Company entitled to vote generally in the election of directors of
the Company and does not include any class or series of preferred stock of the
Company unless the certificate of designations, preferences and rights for such
class or series specifically states that such class or series shall be deemed
"Voting Stock" for purposes of the Certificate of Incorporation. Employee
Preferred Stock has been deemed Voting Stock and the Preferred Stock is not
Voting Stock. See "Description of Capital Stock."
BLOCKING COALITION
Pursuant to the '94 Labor Agreements and in connection with the '95
Reorganization, the Company amended the By-laws to provide that certain actions
(as set forth in the next paragraph) may not be approved by the Board of
Directors if votes are cast against such actions by directors sufficient to
constitute a "Blocking Coalition." A Blocking Coalition is defined as the
negative votes of (i) a total of the four directors elected by the holders of
the Employee Preferred Stock plus (ii) the negative votes of any two of the
Company's other directors.
Actions subject to disapproval by the Blocking Coalition include (a) any
sale, transfer or disposition, in a single or series of transactions, of at
least twenty percent (20%) of the Company's assets, except for transactions in
the ordinary course of business including aircraft transactions as part of a
fleet management plan; (b) any merger of the Company into or with, or
consolidation of the Company with any other entity; (c) any business combination
within the meaning of Section 203 of the DGCL; (d) any dissolution or
liquidation of the Company; (e) any filing of a petition for bankruptcy,
reorganization or receivership under any state or federal bankruptcy,
reorganization or insolvency law; (f) any repurchase, retirement or redemption
of the Company's capital stock or other equity securities prior to their
scheduled maturity or expiration, except for redemptions out of the proceeds of
any substantially concurrent offering of comparable or junior securities and
mandatory redemptions of any redeemable preferred stock of the Company; (g) any
acquisition of assets, not related to the Company's current business as an air
carrier, in a single transaction or a series of related transactions exceeding
$50 million adjusted annually by the consumer price index; or (h) any sale of
the Company's capital stock or securities convertible into capital stock of the
Company to any person if (i) at the time of issuance or (ii) assuming conversion
of all outstanding securities of the Company convertible into capital stock,
such person or entity would beneficially own at least twenty percent (20%) of
the capital stock of the Company.
SUPER MAJORITY VOTING PROVISIONS
At all times before September 1, 2000, the Company must obtain the approval
of at least two-thirds of the issued and outstanding Voting Stock of the
Company, voting as a single class and not as separate classes, for the holders
of such Voting Stock to approve certain actions, unless such matters have been
approved by a vote of at least eighty percent (80%) of the Board of Directors
then in office. Actions requiring such approval are the following: (i) any
merger of the Company into or with, or consolidation of the Company with, any
other entity; (ii) any business combination within the meaning of Section 203 of
the DGCL; (iii) any dissolution or liquidation of the Company; or (iv) any
repurchase, retirement or redemption of the Company's capital stock or other
equity securities prior to their scheduled maturity or expiration, except for
redemptions out of the proceeds of any substantially concurrent offering of
comparable or junior securities, and mandatory redemptions of any redeemable
preferred stock of the Company.
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PREFERRED STOCK
The Company believes that the ability of the Board of Directors to issue
one or more series of preferred stock of the Company provides TWA with increased
flexibility in structuring possible future financings and in meeting other
corporate needs that might arise. The authorized shares of preferred stock, as
well as shares of Common Stock, will be available for issuance without further
action by TWA's stockholders, unless such action is required by applicable law
or the rules of any stock exchange on which TWA securities may be listed. If the
approval of TWA's stockholders is not required for the issuance of shares of
preferred stock or Common Stock, the Board of Directors does not intend to seek
stockholder approval. Although the Board of Directors has no intention of doing
so, it could issue a series of preferred stock that could, depending on the
terms of such series, impede the completion of a merger, tender offer or other
takeover attempt. The Board of Directors will make any determination to issue
such shares based on its judgment as to the best interests of TWA and its
stockholders. The Board of Directors, in so acting, could issue preferred stock
having terms that could discourage an acquisition attempt or other transaction
that some, or a majority, of the stockholders might believe to be in their best
interests or in which stockholders might receive a premium for their stock over
the then current market price of such stock.
RIGHTS TO PURCHASE STOCK
The Rights are intended to protect TWA's stockholders from certain
non-negotiated takeover attempts which present the risk of a change of control
on terms which may be less favorable to TWA's stockholders than would be
available in a transaction negotiated with and approved by the Board of
Directors. Although there can be no certainty as to the results of any
particular negotiation, the Board of Directors believes that the interests of
the stockholders are best served if any acquisition of TWA or a substantial
percentage of the Common Stock results from arms-length negotiations and
reflects the Board's or stockholders' careful consideration of the proposed
terms of a transaction. In particular, the Rights are intended to help (a)
reduce the risk of coercive, two-tiered, front-end loaded or partial offers
which may not offer fair value to all stockholders, (b) mitigate against market
accumulators who through open market or private purchases may achieve a position
of substantial influence or control without paying to selling or remaining
stockholders a fair control premium, and (c) deter market accumulators who are
simply interested in putting a company "in play." See "Description of Capital
Stock -- Rights Plan."
ANTI-TAKEOVER STATUTE
Section 203 of the DGCL is applicable to corporate takeovers in Delaware.
Subject to certain exceptions set forth therein, Section 203 of the DGCL
provides that a corporation shall not engage in any business combination with
any "interested stockholder" for a three-year period following the date that
such stockholder becomes an interested stockholder unless (a) prior to such
date, the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder, (b) upon consummation of the transaction which resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding certain shares) or
(c) on or subsequent to such date, the business combination is approved by the
board of directors of the corporation and by the affirmative vote of at least
66 2/3% of the outstanding voting stock which is not owned by the interested
stockholder. Except as specified therein, an interested stockholder is defined
to include any person that is the owner of 15% or more of the outstanding voting
stock of the corporation, or is an affiliate or associate of the corporation and
was the owner of 15% or more of the outstanding voting stock of the corporation,
at any time within three years immediately prior to the relevant date, and the
affiliates and associates of such person. Under certain circumstances, Section
203 of the DGCL makes it more difficult for an "interested stockholder" to
effect various business combinations with a corporation for a three-year period,
although the stockholders may, by adopting an amendment to the corporation's
certificate of incorporation or by-laws, elect not to be governed by this
section, effective twelve months after adoption. The Certificate of
Incorporation and the By-laws do not exclude TWA from the restrictions imposed
under Section 203 of the DGCL, but do provide that a business combination within
the meaning of Section 203 of the DGCL (i) may be approved
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without the approval of at least 66 2/3% of the Voting Stock if the business
combination is approved by at least 80% of the directors then in office and (ii)
may not be approved if votes are cast against the action by the Blocking
Coalition. It is anticipated that the provisions of Section 203 of the DGCL and
the provisions of the Certificate of Incorporation may encourage companies
interested in acquiring TWA to negotiate in advance with the Board of Directors
since the stockholder approval requirement would be avoided if 80% of the
directors then in office approve either the business combination or the
transaction which resulted in the stockholder becoming an interested
stockholder.
PLAN OF DISTRIBUTION
The Company will not receive any of the proceeds from the sale of any
Preferred Stock, Debentures or shares of Common Stock issuable upon conversion
of the Preferred Stock or the Debentures pursuant to this Prospectus, all of
which will be sold by Selling Holders. Such securities as offered hereby may be
sold from time to time to purchasers directly by the Selling Holders;
alternatively, the Selling Holders may from time to time offer such securities
to and through underwriters, broker/dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Holders or the purchasers of such securities for whom they may
act as agents. The Selling Holders and any underwriters, broker/dealers or
agents that participate in the distribution of such securities may be deemed to
be "underwriters" within the meaning of the Securities Act and any profit on the
sale of such securities by them and any discounts, commissions, concessions or
other compensation received by any such underwriter, broker/dealer or agent may
be deemed to be underwriting discounts and commissions under the Securities Act.
The Preferred Stock, the Debentures and the shares of Common Stock issuable
upon conversion of such Preferred Stock or Debentures offered hereby may be sold
from time to time in one or more transactions at fixed prices, at prevailing
market prices at the time of sale, at varying prices determined at the time of
sale or at negotiated prices. The sale of the such securities may be effected in
transactions (which may involve crosses or block transactions) (i) on any
national securities exchange or quotation service on which the such securities
may be listed or quoted at the time of sale, (ii) in the over-the-counter
market, (iii) in transactions otherwise than on such exchanges or in the
over-the-counter market, or (iv) through the writing of options. At the time a
particular offering of the such securities is made, a Prospectus Supplement, if
required, will be distributed which will set forth the aggregate amount and type
of securities being offered and the terms of the offering, including the name or
names of any underwriters, broker/dealers or agents, any discounts, commissions
and other terms constituting compensation from the Selling Holders and any
discounts, commissions or concessions allowed or reallowed or paid to
broker/dealers.
To comply with the securities laws of certain jurisdictions, if applicable,
the Preferred Stock, the Debentures and the shares of Common Stock issuable upon
conversion of such Preferred Stock or Debentures will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain jurisdictions, such securities may not be offered or sold
unless they have been registered or qualified for sale in such jurisdictions or
any exemption from registration or qualification is available and is complied
with.
Pursuant to the Registration Rights Agreement, all expenses of the
registration of Preferred Stock, the Debentures and the shares of Common Stock
issuable upon conversion of such Preferred Stock or Debentures will be paid by
the Company, including, without limitation, SEC filing fees and expenses of
compliance with state securities or "blue sky" laws; provided, however, that the
Selling Holders will pay all underwriting discounts and selling commissions, if
any. The Company will indemnify the Selling Holders against certain civil
liabilities, including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material federal income tax consequences
to purchasing, acquiring and owning the Preferred Stock, the Debentures and the
shares of Common Stock issuable either upon conversion of the Preferred Stock or
the Debentures or pursuant to the Sales Agency Agreement. The summary is based
on the Code, Treasury regulations, court decisions and IRS rulings now in
effect, all of which are subject to change. The summary assumes that Preferred
Stock and Debentures are held as "capital assets" as defined in the Code. The
summary does not address: (1) tax consequences to any holder of the Preferred
Stock, Debentures or Common Stock under any federal tax laws (including, without
limitation, estate and gift tax laws) other than income tax laws or under any
foreign, state or local tax laws of any type; (2) special rules pertaining to
integrated transactions of which the ownership of the Preferred Stock,
Debentures or Common Stock is a part, such as hedging, conversion or straddle
transactions; or (3) tax consequences that result from the tax status or
particular circumstances of the holder. Thus, for example, the summary does not
discuss the treatment of holders that are subject to special tax rules, such as
banks, insurance companies, regulated investment companies, personal holding
companies, corporations subject to the alternative minimum tax, and tax-exempt
entities. PROSPECTIVE PURCHASERS ARE STRONGLY URGED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE TAX CONSEQUENCES OF ACQUIRING, HOLDING OR DISPOSING OF
THE PREFERRED STOCK, DEBENTURES OR COMMON STOCK IN LIGHT OF THEIR PERSONAL
INVESTMENT CIRCUMSTANCES, AND THE CONSEQUENCES UNDER FEDERAL, STATE, LOCAL AND
FOREIGN TAX LAWS.
DIVIDENDS ON PREFERRED STOCK
Distributions with respect to the Preferred Stock will constitute dividends
to the extent that the Company has current or accumulated earnings and profits
for federal income tax purposes. Dividends paid to corporations will generally
be eligible for the dividends received deduction under section 243 of the Code,
subject to the limitations contained in sections 246 and 246A of the Code.
In general, the dividends received deduction is available only if the
Preferred Stock in respect of which the dividends are paid is held for at least
46 days, or at least 91 days in the case of a dividend attributable to a period
or periods aggregating more than 366 days. A taxpayer's holding period for these
purposes is reduced by periods during which the taxpayer's risk of loss with
respect to the stock is considered diminished by reason of the existence of
options, contracts to sell or other similar transactions. The dividends received
deduction will also not be available if the taxpayer is under an obligation to
make related payments with respect to positions in substantially similar or
related property. The dividends received deduction will be limited to specified
percentages of the holder's taxable income and may be reduced or eliminated if
the holder has indebtedness "directly attributable to its investment" in the
stock. Prospective corporate purchasers of Preferred Stock should consult their
own tax advisors to determine whether these limitations might apply to them.
If distributions with respect to the shares of Preferred Stock exceed the
Company's current and accumulated earnings and profits, the excess will be
applied against and reduce the holder's tax basis in the Preferred Stock. Any
amount in excess of the amount of the dividend and the amount applied against
basis will be treated as capital gain, which will be long-term if the holder's
holding period for the Preferred Stock exceeds one year.
Due to, among other things, the '93 and '95 Reorganizations, the amount, if
any, at December 31, 1995 of the Company's accumulated earnings and profits for
federal income tax purposes is unclear and no assurance can be given that the
Company will have current earnings and profits in any period. As a result, no
assurance can be given that any distribution on the Preferred Stock will be
treated as a dividend for which the dividends received deduction will be
available.
Legislation recently proposed by the Clinton administration, if enacted,
would reduce the inter-corporate dividends received deduction (currently 70
percent for corporations owning less than 20 percent of the distributing
corporation) to 50 percent. In addition, the 46 day (or 91 day) holding period
would have to be satisfied during the period beginning 45 (or 90) days before
the ex-dividend date and ending 45 (or 90) days thereafter.
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EXTRAORDINARY DIVIDENDS
If a corporate holder of Preferred Stock receives an "extraordinary
dividend" from the Company with respect to stock which it has not held for two
years on the dividend announcement date, the basis of the Preferred Stock will
be reduced (but not below zero) by the non-taxed portion of the dividend; i.e.,
the portion of the dividend which is not taxed because of the dividend received
deduction. If, because of the limitation on reducing basis below zero, any
amount of the non-taxed portion of an extraordinary dividend has not been
applied to reduce basis, such amount will be treated as gain from the sale or
exchange of stock when such stock is disposed of. An "extraordinary dividend" on
the Preferred Stock would include (i) a dividend that equals or exceeds 5% of
the holder's adjusted tax basis in the stock, treating all dividends having
ex-dividend dates within a period of 85 consecutive days as one dividend, or
(ii) all dividends on such stock received by such holder if the aggregate amount
of such dividends having ex-dividend dates within a period of 365 consecutive
days exceeds 20% of the holder's adjusted tax basis in the stock. A holder may
elect to use the fair market value of the stock rather than its adjusted basis
for purposes of applying the 5% or 20% limitation if the holder is able to
establish such fair market value to the satisfaction of the IRS. An
"extraordinary dividend" would also include any amount treated as a dividend in
the case of a redemption of the Preferred Stock that is non-pro rata as to all
shareholders, without regard to the period the holder held the stock.
Special rules apply with respect to "qualified preferred dividends." A
qualified preferred dividend is any fixed dividend payable with respect to
preferred stock which (i) provides for fixed preferred dividends payable no less
often than annually and (ii) is not in arrears as to dividends when acquired,
provided the actual rate of return on such stock, as determined under section
1059 (e) (3) of the Code, does not exceed 15%. Where a qualified preferred
dividend exceeds the 5% or 20% limitation described above, the extraordinary
dividend rules will not apply if the taxpayer holds the stock for more than five
years. If the taxpayer disposes of the stock before it has been held for more
than five years, the aggregate reduction in basis will not exceed the excess of
the qualified preferred dividends paid on such stock during the period held by
the taxpayer over the qualified preferred dividends which would have been paid
during such period on the basis of the stated rate of return as determined under
section 1059 (e) (3) of the Code. The length of time that a taxpayer is deemed
to have held stock for this purpose is determined under principles similar to
those applicable for purposes of the dividends received deduction discussed
above.
Recently proposed legislation, if enacted, would amend section 1059 of the
Code in certain respects and would require immediate gain recognition whenever
the basis of the stock with respect to which any extraordinary dividend was
received would otherwise be reduced below zero.
REDEMPTION PREMIUM
Under section 305 of the Code, if a corporation issues preferred stock that
may be redeemed at a price higher than the issue price, the difference (the
redemption premium) may be treated in certain circumstances as a constructive
distribution of additional stock on preferred stock that is taken into account
under principles similar to those described under "-- Original Issue Discount"
below. In that event, a holder would be required to include in gross income
(irrespective of its method of accounting) a portion of the redemption premium
(which would be taxable as a dividend to the extent of the Company's current or
accumulated earnings and profits) for each year during which it holds the
Preferred Stock. Under recently promulgated Treasury Regulations, constructive
distribution treatment is required in the case of callable preferred stock, such
as the Preferred Stock, only if, based on all of the facts and circumstances as
of the issue date, redemption pursuant to such call right is more likely than
not to occur. In the case of stock which may be redeemed at more than one time,
constructive distribution treatment is determined by reference to the time and
price at which redemption is most likely to occur (based on the facts and
circumstances as of the issue date), which, in the case of the time, generally
is the date on which the corporation minimizes the rate of return to the holder.
Even if redemption is more likely than not to occur, constructive distribution
treatment is not required if the redemption premium is solely in the nature of a
penalty for premature redemption; i.e., it is a premium paid as a result of
changes in economic or market conditions over which neither the issuer nor the
holder has legal or practical control. The Treasury Regulations also provide a
safe harbor pursuant to which an issuer's right to redeem will not be treated as
more likely than not to occur if: (i) the issuer and the holder are not related
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parties (as defined in the Regulations); (ii) there are no plans, arrangements,
or agreements that effectively require or are intended to compel the issuer to
redeem the stock; and (iii) exercise of the right to redeem would not reduce the
yield of the stock, as determined under principles similar to those described
under "-- Original Issue Discount" below. The Company anticipates that the
Preferred Stock will satisfy the requirements for the safe harbor and that
constructive distribution treatment of the redemption premium will not be
required.
LIQUIDATED DAMAGES
The tax treatment of any Liquidated Damages which become payable with
respect to the Preferred Stock is unclear. Such Liquidated Damages could be
treated as dividend distributions to the extent of the Company's current or
accumulated earnings and profits, in which case the receipt or accrual of such
Liquidated Damages could be eligible for the dividends received deduction
discussed above under "-- Dividends on Preferred Stock." In that case it is not
clear whether a holder of the Preferred Stock would include the amount of such
Liquidated Damages in income (to the extent that the dividends received
deduction is not available) when received or accrued in accordance with the
holder's method of accounting for federal income tax purposes, or alternatively
whether it must be accrued into income under principles similar to those
applicable to contingent interest described under "-- Original Issue Discount."
However, such Liquidated Damages could also be treated as the payment of damages
in satisfaction of a claim for breach of a contractual obligation rather than a
dividend distribution. In that case, the receipt or accrual of such Liquidated
Damages would be taken into income in accordance with the holder's method of
accounting for federal income tax purposes and the dividends received deduction
would not be applicable. If Liquidated Damages become payable, the Company
intends to treat the Liquidated Damages on the Preferred Stock as the payment of
damages in satisfaction of a claim for breach of a contractual obligation.
SALE OR REDEMPTION FOR CASH
A sale of Preferred Stock generally will give rise to gain or loss to the
holder measured by the difference between the amount realized on such sale and
the holder's tax basis in the shares sold. In general, a holder who sells
Preferred Stock after the record date for a dividend distribution will be
treated as the recipient of the dividend income.
A redemption of shares of Preferred Stock by the Company for cash will be a
taxable event. A redemption of Preferred Stock for cash will be treated under
section 302 of the Code as a distribution taxable as a dividend to redeeming
holders to the extent of the Company's current or accumulated earnings and
profits unless the redemption: (i) results in a "complete termination" of the
holder's interest in the Company (within the meaning of section 302(b)(3) of the
Code); (ii) is "substantially disproportionate" with respect to the holder under
section 302(b)(2) of the Code; or (iii) is "not essentially equivalent to a
dividend" (within the meaning of section 302 (b)(l) of the Code). In determining
whether any of these tests has been met, shares considered to be owned by the
holder by reason of the constructive ownership rules set forth in section 318 of
the Code, as well as shares actually owned, will be taken into account. If any
of the foregoing tests are met, the redemption of shares of Preferred Stock for
cash will result in taxable gain or loss equal to the difference between the
amount of cash received and the holder's tax basis in the redeemed shares. Any
such gain or loss will be capital gain or loss and will be long-term capital
gain or loss if the holder's holding period for the redeemed shares exceeds one
year.
If a redemption of the Preferred Stock is treated as a distribution that is
taxable as a dividend, the holder will be taxed on the payment received in the
same manner as described above under "-- Dividends on Preferred Stock," and the
holder's adjusted tax basis in the redeemed Preferred Stock will be transferred
to any remaining shares held by such holder in the Company. If the holder does
not retain any stock ownership in the Company, then such holder may lose such
basis completely. Any redemption of the Preferred Stock that is treated as a
dividend and that is non-pro rata as to all stockholders may be subject to the
"extraordinary dividend" provisions of section 1059 of the Code applicable to
certain corporate holders as discussed above. See "-- Dividends on Preferred
Stock."
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Recently proposed legislation, if enacted, would require a corporate
shareholder to recognize gain immediately with respect to any redemption treated
as a dividend when the non-taxed portion of the dividend exceeds the basis of
the shares surrendered, if the sale or redemption is treated as a dividend due
to options being counted as stock ownership.
CLASSIFICATION OF THE DEBENTURES
Although the characterization of an instrument as debt or equity must be
based on all facts and circumstances, which, in the case of the Debentures
(which will be issued no earlier than March 15, 1998), cannot presently be
known, the Company anticipates that the Debentures will be treated as debt for
federal income tax purposes. Accordingly, the remainder of this discussion
assumes that the Company will so treat the Debentures and that such treatment
will be respected.
EXCHANGE FOR DEBENTURES
An exchange of shares of Preferred Stock for Debentures would also be
subject to the rules of section 302 of the Code described above. Since a holder
of Debentures will be treated under the constructive ownership rules as owning
the Common Stock into which the Debentures are convertible, the exchange by
itself would not qualify under the "complete termination" test described above.
The "not essentially equivalent to a dividend" or "substantially
disproportionate" tests could be met only if the exchange were regarded as
resulting in a reduction in the holder's proportionate interest in the Company.
If none of these tests is met, the fair market value of the Debentures received
upon the exchange will be taxable as a dividend to the extent of the Company's
current or accumulated earnings and profits (although such treatment would be
changed for corporations under pending legislation described above). Prospective
purchasers should consult their own tax advisors regarding satisfaction of the
Code section 302 tests in their particular circumstances, including the
possibility that a sale of a part of the holder's Preferred Stock or the
Debentures received might be regarded as reducing the holder's interest in the
Company, thereby satisfying one of the tests under section 302(b) of the Code.
In such a case, the shareholder will recognize capital gain or loss on the
exchange (and, in addition, a holder who exchanges Preferred Stock after the
record date for a dividend distribution will be treated as the recipient of the
dividend income). For purpose of determining the amount of gain or loss, the
amount realized in the exchange attributable to the Debenture will be the issue
price of the Debenture as determined for original issue discount purposes. See
"-- Original Issue Discount" below. Such gain or loss will be long-term capital
gain or loss if the holder's holding period for the Preferred Stock exceeds one
year. The installment method will not be available for reporting such gain in
the event that either the Preferred Stock or the Debentures are traded or
readily tradable on an established securities market.
If the redemption does not satisfy the tests of section 302 (b) of the Code
and the fair market value of the Debentures exceeds the Company's current and
accumulated earnings and profits, the excess will be treated as a return of
capital to the extent of the holder's tax basis in the Preferred Stock. Any
amount in excess of the amount of the dividend and the return of capital will be
treated as capital gain, which will be long-term if the holding period exceeds
one year. If the holder retains any stock in the Company, the remaining tax
basis in the Preferred Stock will be transferred to the retained stock. If the
holder retains no stock in the Company, it is unclear whether the remaining tax
basis in the Preferred Stock will be transferred to the Debentures or will be
lost. As noted above, an "extraordinary dividend" includes any redemption of
stock that is treated as a dividend and that is non-pro rata as to all
stockholders, irrespective of the holding period. Consequently, an exchange of
Preferred Stock for Debentures that is treated as a dividend may constitute an
extraordinary dividend.
The Debentures for which Preferred Stock may be exchanged will be issuable
only in denominations of $1,000 and integral multiples thereof. See "Description
of the Preferred Stock -- Exchange Provisions." Accordingly, a holder exchanging
Preferred Stock for Debentures will receive cash (rather than Debentures) to the
extent that, absent the foregoing rule, the exchange would result in the receipt
of an amount of Debentures that is not an integral multiple of $1,000. Any
Preferred Stock for which cash is received in an exchange for Debentures under
this rule will be treated as redeemed for cash, with the results described above
under "-- Sale or Redemption for Cash."
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<PAGE> 46
STATED INTEREST
Stated interest on the Debentures will be includable in income in
accordance with the holder's method of accounting.
ORIGINAL ISSUE DISCOUNT
If the Preferred Stock is exchanged for Debentures having a stated
redemption price at maturity that exceeds their issue price by an amount equal
to or greater than one-fourth of one percent of the stated redemption price at
maturity multiplied by the number of complete years to maturity, the Debentures
will be treated as having original issue discount equal to the entire amount of
such excess. In the event that, at any time during the 60-day period ending 30
days after the issue date, the Debentures are traded on an established
securities market, the issue price of the Debentures will be their fair market
value as determined as of the issue date. If the Debentures are not traded on an
established securities market during the above-described 60-day period, but the
Preferred Stock is so traded, the issue price of the Debentures will be the fair
market value of the Preferred Stock as of the issue date. In the event that
neither the Preferred Stock nor the Debentures are traded on an established
securities market within the above-described 60-day period, the issue price of
the Debentures will be their stated principal amount, unless (i) the Debentures
do not bear "adequate stated interest" within the meaning of section 1274 of the
Code, in which case the issue price will be equal to their "imputed principal
amount" as determined under section 1274 of the Code or (ii) the Debentures are
issued in a so-called "potentially abusive situation," as defined in the
regulations under section 1274 of the Code (including a situation involving a
recent sales transaction), in which case the issue price of the Debentures will
be the fair market value of the Preferred Stock surrendered in exchange
therefor.
A holder of a Debenture would generally be required to include in gross
income (irrespective of its method of accounting) a portion of the original
issue discount for each year during which it holds the Debenture, even though
the cash to which such income is attributable would not be received until
maturity or redemption of the Debenture. The amount of any original issue
discount included in income for each year would be calculated under a
constant-yield-to-maturity formula that would result in the allocation of less
original issue discount to the early years of the term of the Debenture and more
original issue discount to later years. In determining the yield and maturity of
a debt instrument which contains a call option, such as the Debentures, the
Company would be deemed to exercise the call option in a manner that minimizes
the yield on the debt instrument.
In addition, because the Debentures provide for payment of Liquidated
Damages under certain conditions, the amount of such Liquidated Damages might be
treated as contingent interest payable on the Debentures rather than damages
payable in satisfaction of a claim for breach of contract. If the Liquidated
Damages are considered to be contingent interest on the Debentures, under
current law, it appears that a holder of Debentures generally will be required
to include contingent interest in income when received or accrued in accordance
with the holder's method of accounting for federal income tax purposes. However,
there is no controlling authority directly on point, and the Internal Revenue
Service might assert and a court might find that contingent interest should be
treated in some other manner which could affect the amount, character and timing
of income recognized by a holder with respect to a Debenture. If the Liquidated
Damages on the Debentures become fixed in amount, a holder could be required to
accrue the Liquidated Damages in income after the amount thereof becomes fixed.
In addition, under proposed Treasury Regulations issued December 15, 1994 with
respect to contingent payments to be effective for debt instruments issued on or
after the date that is 60 days after the date final regulations are published in
the Federal Register, interest (including contingent interest, stated interest
and original issue discount) on the Debentures could accrue based upon a
projected payment schedule which the Company would be obligated to prepare and
which generally would be binding on a holder. If Liquidated Damages become
payable, the Company intends to treat Liquidated Damages on the Debentures as
the payment of damages in satisfaction of a claim for breach of contract.
If a Debenture is issued with a yield to maturity at least 5 percentage
points above the applicable federal rate in effect for the month in which it is
issued and with "significant original issue discount" (within the meaning of
section 163 (1)(2) of the Code), the Debenture would generally be subject to the
"high yield
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<PAGE> 47
discount obligations" rules under section 163 (e)(5)(C) of the Code. In such a
case, the Company would not be entitled to a deduction with respect to a certain
portion of the original issue discount (the "Disqualified Portion" within the
meaning of section 163 (e)(5)(C) of the Code), and the remainder of the original
issue discount would not be deductible by the Company until paid. In addition,
the Disqualified Portion of the original issue discount would be treated as a
distribution with respect to the stock of the Company and the rules applicable
to distributions with respect to the Preferred Stock would apply.
BOND PREMIUM ON DEBENTURES
If the Debentures are acquired in an exchange for Preferred Stock at a time
when the issue price of the Debentures exceeds the amount payable at the
maturity (or earlier call date, if appropriate) of the Debentures, or if the
Debentures are acquired by a subsequent purchaser for an amount in excess of the
amount payable at maturity or earlier call date, such excess (excluding the
amount thereof attributable to the conversion feature) will be deductible by the
holder of such Debentures as amortizable bond premium over the term of the
Debentures (taking into account earlier call dates, as appropriate), under a
constant-yield-to-maturity formula, if an election by the taxpayer under section
171 of the Code is in effect or is made. Such election would apply to all
obligations owned or subsequently acquired by the taxpayer. Except as may
otherwise be provided in future regulations, the amortizable bond premium will
be treated as an offset to interest income on the Debentures rather than as a
separate deduction item.
MARKET DISCOUNT ON RESALE OF DEBENTURES
The market discount provisions of sections 1276 through 1278 of the Code
may adversely affect a disposition (including a redemption or retirement) of the
Debentures. If a holder acquires (other than at original issue) a Debenture at a
market discount which equals or exceeds one-fourth of 1% of the stated
redemption price at maturity times the number of remaining complete years to
maturity and thereafter recognizes gain upon a disposition of the Debenture, the
lesser of (i) such gain, or (ii) the portion of the market discount which
accrued while the Debenture was held by such holder, will be treated as ordinary
income (and not as capital gain) at the time of the disposition. For these
purposes, market discount equals the excess of the stated redemption price at
maturity (or, if the Debenture is issued with original issue discount, its
revised issue price as defined in the Code) over the adjusted tax basis of the
Debenture in the hands of a holder immediately after its acquisition. Market
discount would generally accrue on a straight line basis over the term of the
Debenture, except that, at the election of the holder, it will accrue on an
economic accrual basis. A holder of the Debenture may elect to include any
market discount in income currently rather than upon disposition of the
Debenture. This election is recoverable only with the consent of the Internal
Revenue Service and applies to all market discount bonds acquired by the holder
on or after the first day of the taxable year in which the holder makes the
election.
A holder of any Debenture who acquired it at a market discount may be
required to defer the deduction of all or a portion of any interest paid or
accrued on any indebtedness incurred or continued to purchase or carry the
Debenture until the market discount is recognizable upon a subsequent
disposition of the Debenture. Such deferral is not required, however, if the
holder elects to include accrued market discount in income currently.
REDEMPTION OR SALE OF DEBENTURES
Generally a redemption or sale of the Debentures will result in taxable
gain or loss equal to the difference between the amount of cash and fair market
value of other property received and the bolder's adjusted tax basis in the
Debentures. To the extent that the amount received is attributable to accrued
interest, however, that amount will be taxed as ordinary income. The tax basis
of a holder who received the Debentures in exchange for shares of Preferred
Stock will generally be equal to the fair market value of the Debentures at the
time of exchange plus any original issue discount included in the holder's
income or minus any premium previously allowed as an offset to interest income
on the Debentures. Such gain or loss will be capital gain or loss and will be
long-term gain or loss if the holder's holding period for the Debentures exceeds
one year. Any unamortized bond premium as of the time of a complete redemption
will be deductible as an ordinary loss.
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<PAGE> 48
If the Debentures are issued with original issue discount and the Company
were found to have had an intention at the time the Debentures were issued to
call them before maturity, any gain realized on a sale or redemption of
Debentures prior to maturity would be considered ordinary income to the extent
of any unamortized original issue discount for the period remaining to the
stated maturity of the Debentures. The Company cannot predict whether it would
be found to have an intention to call the Debentures before their maturity.
CONVERSION OF PREFERRED STOCK OR DEBENTURES INTO COMMON STOCK
No gain or loss will generally be recognized upon conversion of shares of
Preferred Stock or Debentures into shares of Common Stock, except with respect
to any cash paid in lieu of fractional shares of Common Stock and except
possibly to the extent, if any, that Rights are received with the Common Stock
that are deemed to constitute property with value separate from the Common
Stock. Pursuant to a published ruling of the IRS, the Company believes that the
Rights should not be deemed to constitute property with value separate from the
Common Stock so long as the Rights remain contingent, nonexercisable, and
subject to redemption by the Company. However, there can be no assurance that
the IRS will not take a contrary view with respect to the tax treatment of the
receipt of the Rights. Additionally, if the conversion takes place when there is
a dividend arrearage on the Preferred Stock and the fair market value of the
Common Stock exceeds the issue price of the Preferred Stock, a portion of the
Common Stock received might be treated as a dividend distribution, taxable as
ordinary income. Assuming the conversion is not treated as resulting in the
payment of a dividend, the tax basis of the Common Stock received upon
conversion will be equal to the tax basis of the shares of Preferred Stock or
the Debentures converted therefor (other than the portion of the tax basis of
the Preferred Stock or Debentures attributed to a fractional share of Common
Stock for which cash is received by the holder) and the holding period of the
Common Stock received upon conversion will include the holding period of the
shares of Preferred Stock or the Debentures converted. The tax basis of any
Common Stock treated as a dividend will be equal to its fair market value on the
date of the distribution.
ADJUSTMENT OF CONVERSION PRICE
Holders of convertible preferred stock or convertible debentures may be
deemed to have received constructive distributions where the conversion price is
adjusted to reflect property distributions with respect to stock into which such
preferred stock or debentures are convertible. Adjustments to the conversion
price made pursuant to a bona fide reasonable adjustment formula which has the
effect of preventing the dilution of the interest of the holders of the
preferred stock or debentures, however, will generally not be considered to
result in a constructive distribution of stock. Certain of the possible
adjustments provided in the Preferred Stock and the Debentures may not qualify
as being pursuant to a bona fide reasonable adjustment formula. If such
adjustments were made, the holders of Preferred Stock or Debentures might be
deemed to have received constructive distributions taxable under the rules
described above. Similarly, in certain circumstances, the failure to make
appropriate adjustments to the conversion price of the Preferred Stock or the
Debentures may be treated as a constructive distribution.
BACKUP WITHHOLDING
Under the backup withholding provisions of the Code and applicable Treasury
regulations, a holder of Preferred Stock, Debentures or Common Stock may be
subject to backup withholding at the rate of 31% with respect to dividends or
interest paid on, original issue discount accrued with respect to, or the
proceeds of a sale, exchange or redemption of, Preferred Stock, Debentures or
Common Stock, unless such holder (a) is a corporation or comes within certain
other exempt categories and when required demonstrates this fact or (b) provides
a taxpayer identification number, certifies as to no loss of exemption from
backup withholding, and otherwise complies with applicable requirements of the
backup withholding rules. The amount of any backup withholding from a payment to
a holder will be allowed as a credit against the holder's federal income tax
liability and may entitle such holder to a refund, provided that the required
information is furnished to the IRS.
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<PAGE> 49
SPECIAL TAX RULES APPLICABLE TO FOREIGN HOLDERS
For purposes of the following discussion, a "United States Alien Holder" is
any holder who, for United States federal income tax purposes, is a foreign
corporation, a nonresident alien individual, a nonresident alien fiduciary of a
foreign estate or trust, or a foreign partnership.
Income received by a United States Alien Holder in the form of dividends on
Preferred Stock or Common Stock or interest and original issue discount on the
Debentures will be subject to a United States federal withholding tax at a 30%
rate upon the actual payment of the dividends, interest or original issue
discount except as described below and except where an applicable tax treaty
provides for the reduction or elimination of such withholding tax. However, a
United States Alien Holder generally will be taxed in the same manner as a
United States corporation or resident with respect to such income if such income
is effectively connected with the conduct of a trade or business in the United
States. Such effectively connected income received by a United States Alien
Holder which is a corporation may in certain circumstances be subject to an
additional "branch profits tax" at a 30% rate, or, if applicable, a lower treaty
rate.
Payments of interest and original issue discount on the Debentures received
by a United States Alien Holder will not be subject to United States federal
withholding tax provided that (a) the holder does not actually or constructively
own 10% or more of the total combined voting power of all classes of stock of
the Company entitled to vote, (b) the holder is not a controlled foreign
corporation that is related to the Company through stock ownership, (c) the
holder is not party to a conduit financing arrangement involving a person
described in (a) or (b) above, and (d) either (1) the beneficial owner of the
Debenture, under penalties of perjury, provides the Company or its agent with
its name and address and certifies that it is not a United States person or (2)
the holder is a securities clearing organization, bank, or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "financial institution") and certifies to the Company or its
agent, under penalties of perjury, that such a statement has been received from
the beneficial owner by it or another financial institution and furnishes to the
Company or its agent a copy thereof.
A United States Alien Holder generally will not be subject to United States
federal income or withholding tax on gain realized on the sale or exchange of
Preferred Stock, Common Stock, or Debentures unless (i) the holder is an
individual who was present in the United States for 183 days or more during the
taxable year or (ii) the gain is effectively connected with a United States
trade or business of the holder. Upon a redemption of the Preferred Stock for
cash or Debentures, the Company may be required to withhold tax on the entire
amount of the proceeds at a 30% rate or a lower treaty rate applicable to
dividends. In the case of an exchange of Preferred Stock for Debentures, this
requirement would result in a United States Alien Holder receiving a reduced
principal amount of Debentures.
Dividends paid to United States Alien Holders outside the United States
that are subject to the withholding tax described above will generally be exempt
from United States backup withholding tax and United States information
reporting requirements, other than reporting of dividend payments for purposes
of the withholding tax noted above. Backup withholding and information reporting
generally will not apply to payments of interest outside the United States if
the certification described above is received, provided the payor does not have
actual knowledge that the holder is a United States person. The payor of the
dividends may generally rely on a payee's address outside the United States in
determining that the regular withholding tax discussed above applies and
consequently that the back-up withholding provisions do not apply. It is not
clear how withholding would apply to constructive dividends under section 305 of
the Code.
The payment of the proceeds of the sale of Preferred Stock, Common Stock or
Debentures to or through the United States office of a broker will be subject to
information reporting and possible backup withholding at a rate of 31% unless
the owner certifies its non-United States status under penalties of perjury or
otherwise establishes an exemption. The payment of the proceeds of the sale of
Preferred Stock, Common Stock or Debentures to or through the foreign office of
a broker generally will not be subject to this backup withholding tax. In the
case of the payment of proceeds from the disposition of Preferred Stock, Common
Stock or Debentures through a foreign office of a broker that is a United States
person or a "United States related person," existing regulations require
information reporting on the payment unless the broker has documentary evidence
in its files that the owner is a non-United States person and the broker has no
actual knowledge to
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<PAGE> 50
the contrary. For this purpose, a "United States related person" is (i) a
"controlled foreign corporation" for United States federal income tax purposes,
or (ii) a foreign person 50% or more of whose gross income from all sources for
a specified period is derived from activities that are effectively connected
with the conduct of a United States trade or business. Regulations currently in
effect reserve on the question of whether reportable payments made through
foreign offices of a broker that is a United States person or "United States
related person" will be subject to backup withholding. Any amounts withheld
under the backup withholding rules from a payment to a United States Alien
Holder will be allowed as a refund or a credit against such United States Alien
Holder's United States federal income tax, provided that the required
information is furnished to the IRS.
VALIDITY OF SHARES
The validity of the securities offered hereby was passed upon for the
Company by Smith, Gambrell & Russell, 1230 Peachtree Street, NE, Suite 3100,
Atlanta, Georgia 30309.
EXPERTS
The consolidated financial statements and related schedules of the Company
incorporated in this Prospectus and elsewhere in the Registration Statement by
reference to the Company's Annual Report on Form 10-K for the most recent fiscal
year ended December 31, 1995 have been audited by KPMG Peat Marwick LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports. Their report refers to the application of fresh
start reporting in connection with the '95 Reorganization and the '93
Reorganization.
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF OR THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 3
Incorporation of Certain Documents by
Reference........................... 3
Prospectus Summary.................... 5
Risk Factors.......................... 6
Use of Proceeds....................... 14
Selected Consolidated Financial and
Operating Data...................... 15
Selling Holders....................... 17
Description of the Preferred Stock.... 18
Description of the Debentures......... 24
Description of Capital Stock.......... 31
Registration Rights Agreement......... 35
Certain Provisions of the Certificate
of Incorporation, the By-Laws and
Delaware Law........................ 36
Plan of Distribution.................. 40
Certain Federal Income Tax
41 Consequences..................... 41
Validity of Shares.................... 49
Experts............................... 49
</TABLE>
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TRANS WORLD
AIRLINES, INC.
3,869,000 SHARES
OF
8% CUMULATIVE CONVERTIBLE
EXCHANGEABLE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
$193,450,000 PRINCIPAL AMOUNT
OF
8% CONVERTIBLE SUBORDINATED
DEBENTURES DUE 2006
9,544,823 SHARES OF
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------------------------------------------
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<PAGE> 52
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC registration fee......................................................... $ 66,707
Accounting fees.............................................................. 50,000*
Legal fees................................................................... 120,000*
Qualification under state securities laws.................................... 5,000*
Miscellaneous................................................................ 25,293
--------
TOTAL.............................................................. $267,000
========
</TABLE>
- ---------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Delaware General Corporation Law (the "DGCL"), directors,
officers, employees and other individuals may be indemnified against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with specified actions, suits or proceedings, whether civil,
criminal, administrative or investigative (other than a derivative action) if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of TWA and, with respect to any criminal
action or proceeding, had no reasonable cause to believe their conduct was
unlawful. A similar standard of care is applicable in the case of a derivative
action, except that indemnification only extends to expenses (including
attorneys' fees) incurred in connection with the defense or settlement of such
an action, and the DGCL requires court approval before there can be any
indemnification of expenses where the person seeking indemnification has been
found liable to TWA.
The eleventh article of TWA's Second Amended and Restated Certificate of
Incorporation ("Article Eleventh") provides that the Company shall indemnify any
person who was or is a party or is threatened to be made a party to, or
testifies in, any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative in nature, by reason of
the fact that such person is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding to the full extent permitted by law, and the Company may adopt
By-Laws or enter into agreements with any such person for the purpose of
providing for such indemnification.
To the extent that a director or officer of the Company has been successful
on the merits or otherwise (including without limitation settlement by nolo
contendere) in defense of any action, suit or proceeding referred to in the
immediately preceding paragraph, or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including attorneys'
fees) actually and reasonable incurred by such person in connection therewith.
Expenses incurred by an officer, director, employee or agent in defending
or testifying in a civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the Company in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount if it shall ultimately be
determined that such director or officer is not entitled to be indemnified by
the Company against such expenses as authorized by Article Eleventh and the
Company may adopt By-Laws or enter into agreements with such persons for the
purpose of providing for such advances.
The indemnification permitted by Article Eleventh shall not be deemed
exclusive of any other rights to which any person may be entitled under any
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in such person's official capacity and as to action in another
capacity while holding an office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such person.
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<PAGE> 53
The Company shall have power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
employee benefit plan trust or other enterprise, against any liability asserted
against such person and incurred by such person in any such capacity, or arising
out of such person's status as such, whether or not the Company would have the
power to indemnify such person against such liability under the provisions of
Article Eleventh or otherwise.
If the DGCL is amended to further expand the indemnification permitted to
directors, officers, employees or agents of the Company, then the Company shall
indemnify such persons to the fullest extent permitted by the DGCL, as so
amended.
The obligations of the Company to indemnify any person serving as one of
its directors, officers or employees as of or following the Company's '93
Reorganization, by reason of such person's past or future service in such a
capacity, or as a director, officer or employee of another corporation,
partnership or other legal entity, to the extent provided in Article Eleventh or
in similar constituent documents or by statutory law or written agreement of or
with the Company, shall be deemed and treated as executory contracts assumed by
the Company pursuant to the Company's '93 Reorganization. Accordingly, such
indemnification obligations survive and were unaffected by the entry of the
order confirming the Company's '93 Reorganization. The obligations of the
Company to indemnify any person who, as of the '93 Reorganization, was no longer
serving as one of its directors, officers or employees, which indemnity
obligation arose by reason of such person's prior service in any such capacity,
or as a director, officer or employee of another corporation, partnership or
other legal entity, to the extent provided in the certificate of incorporation,
by-laws or other constituent documents or by statutory law or written agreement
of or with TWA were terminated and discharged pursuant to Section 502(e) of the
United States Bankruptcy Code or otherwise, as of the date the '93
Reorganization was confirmed. Nothing contained in the Second Amended and
Restated Certificate of Incorporation of the Company shall be deemed to
reinstate any obligation of the Corporation to indemnify any person or entity,
which was otherwise released under or in connection with the Comprehensive
Settlement Agreement entered into pursuant to the '93 Reorganization.
ITEM 16. EXHIBITS
<TABLE>
<S> <C> <C>
*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 Reorganization (Exhibit
2.3 to 6/95 10-Q)
*2.4 -- Joint Plan of Reorganization, dated May 12, 1995 (Appendix B to the Registrant's
Registration Statement on Form S-4, Registration Number 33-84944, 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)
*2.7 -- Final Decree, dated December 28, 1995, related to the '95 Reorganization
(Exhibit 2.7 to 12/31/95 Form 10-K)
*3(i) -- Amended and Restated Certificate of Incorporation of Trans World Airlines, Inc.
(2)
</TABLE>
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<PAGE> 54
<TABLE>
<S> <C> <C>
*3(ii) -- Amended and Restated By-Laws of Trans World Airlines, Inc., effective July 25,
1995 (Exhibit 3(ii) to 6/95 10-Q)
*3(iii) -- Second Amended and Restated Certificate of Incorporation of the Registrant
(Exhibit 3(iii) to 12/31/95 Form 10-K)
3(iv) -- Third Amended and Restated Certificate of Incorporation of the Registrant
*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)
*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 (Exhibit 4.12 to 9/95 10-Q)
*4.13 -- TWA Air Line Pilots Supplemental Stock Plan, effective September 1, 1994
(Exhibit 4.13 to 9/95 10-Q)
*4.14 -- TWA Air Line Pilots Supplemental Stock Plan Trust, effective August 23, 1995
(Exhibit 4.14 to 9/95 10-Q)
*4.15 -- TWA Air Line Pilots Supplemental Stock Plan Custodial Agreement, effective
August 23, 1995 (Exhibit 4.15 to 9/95 10-Q)
5 -- Opinion of Smith, Gambrell & Russell, Counsel of the Registrant
*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)
</TABLE>
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<PAGE> 55
<TABLE>
<S> <C> <C>
*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)
*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)
*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)
</TABLE>
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<PAGE> 56
<TABLE>
<S> <C> <C>
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)
*10.10.2 -- 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)
*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)
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)
</TABLE>
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<PAGE> 57
<TABLE>
<S> <C> <C>
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)
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(1)
*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)
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)
</TABLE>
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<PAGE> 58
<TABLE>
<S> <C> <C>
10.33.1 -- Key Employee Stock Incentive Plan(1)
10.33.2 -- Form of Option Agreements for options issued pursuant to the 1994 Key Employee
Stock Incentive Plan(1)
10.34 -- Form of Pledge and Security Agreement dated as of August 23, 1995 by TWA Gate
Holdings, Inc. in favor of First Security Bank of Utah, National Association, as
trustee for the 12% Senior Preferred Stock(1)
*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
(Exhibit 10.37 to 9/95 10-Q)
*10.37.1 -- Karabu Ticket Program Agreement between TWA and Karabu Corp. 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 (Exhibit 10.38 to 9/95 10-Q)
*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 (Exhibit 10.39 to 9/95 10-Q)
*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 (Exhibit 10.40
to 9/95 10-Q)
*10.41 -- Equity Rights Put Agreement dated as of September 15, 1995 between TWA and
Elliott Associates L.P., a Delaware limited partnership (Exhibit 10.41 to 9/95
10-Q)
*10.42 -- Equity Rights Put Agreement dated as of September 15, 1995 between TWA and
Westgate International L.P., a Cayman Islands limited partnership (Exhibit 10.42
to 9/95 10-Q)
*10.43 -- Equity Rights Put Agreement dated as of September 15, 1995 between TWA and
United Equities (Commodities) Company, a New York general partnership (Exhibit
10.43 to 9/95 10-Q)
*10.44 -- Equity Rights Put Agreement dated as of September 15, 1995 between TWA and Grace
Brothers, Ltd., an Illinois limited partnership (Exhibit 10.44 to 9/95 10-Q)
*10.45 -- Equity Rights Put Agreement dated as of September 15, 1995 between TWA and First
Capital Alliance, L.P., an Illinois limited partnership (Exhibit 10.45 to 9/95
10-Q)
*10.46 -- Equity Rights Put Agreement dated as of September 15, 1995 between TWA and
Romulus Holdings Corp. a Delaware Corporation (Exhibit 10.46 to 9/95 10-Q)
*10.47 -- Letter Agreement, dated August 22, 1995 between TWA and Marilyn M. Hoppe
relating to employment by TWA (Exhibit 10.47 to 9/95 10-Q)
*10.48 -- Purchase Agreement, dated February 9, 1996 between The Boeing Company and TWA
relating to Boeing Model 757-231 Aircraft (Purchase Agreement Number 1910)
(Exhibit 10.48 to 12/31/95 Form 10-K)
</TABLE>
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<TABLE>
<S> <C> <C>
*10.49 -- Employee Stock Incentive Program dated as of August 23, 1995 by TWA (Exhibit
10.49 to 12/31/95 Form 10-K)
10.50 -- Registration Rights Agreement dated March 22, 1996 between TWA and PaineWebber
Incorporated and Alex. Brown & Sons Incorporated, as initial purchasers
10.51 -- Trans World Airlines, Inc. 1995 Outside Directors' Stock Ownership and Stock
Option Plan
12 -- Computation of Ratio of Earnings to Combined fixed Charges and Preferred Stock
Dividend
23.1 -- Consent of KPMG Peat Marwick LLP
23.2 -- Consent of Smith, Gambrell & Russell, counsel of the Registrant (included in
Exhibit 5)
24 -- Powers of Attorney
</TABLE>
- ---------------
* Incorporated by reference
(1) Incorporated herein by reference to the exhibit of the same number in the
Registrant's Registration Statement on Form S-4, Registration Number
33-84944.
(2) Incorporated herein by reference to Exhibit 3.1.3 to the Registrant's
Registration Statement on Form S-4, Registration Number 33-84944.
REPORTS ON FORM 8-K
None
ITEM 17. UNDERTAKINGS
A. Undertaking Pursuant to Rule 415
The Company hereby undertakes:
(1) To file, during any period in which offers of sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs A(1)(i) and A(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such posteffective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. Undertaking Regarding Filings Incorporating Subsequent Exchange Act
Documents by Reference
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of its Annual
Report pursuant to Section 13(a) or Section 15(d) of the Exchange
II-8
<PAGE> 60
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act); that is incorporated by
reference in the Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
C. Undertaking in Respect of Indemnification
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 15 or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-9
<PAGE> 61
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED IN THE CITY OF ST. LOUIS, STATE OF MISSOURI, ON MAY 31, 1996.
TRANS WORLD AIRLINES, INC.
By: JEFFREY H. ERICKSON
---------------------------------
Jeffrey H. Erickson,
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ----------------------------------------------- -------------------------- ------------------
<S> <C> <C>
/s/ JEFFREY H. ERICKSON President, Chief Executive May 31, 1996
- ----------------------------------------------- Officer and Director
Jeffrey H. Erickson
/s/ ROBERT A. PEISER Executive Vice May 31, 1996
- ----------------------------------------------- President -- Finance,
Robert A. Peiser Chief Financial Officer
/s/ JODY A. RUTH Vice President and May 31, 1996
- ----------------------------------------------- Controller
Jody A. Ruth
* Chairman of the Board May 31, 1996
- -----------------------------------------------
Thomas F. Meagher
* Director May 31, 1996
- -----------------------------------------------
John W. Bachmann
* Director May 31, 1996
- -----------------------------------------------
William F. Compton
* Director May 31, 1996
- -----------------------------------------------
Eugene P. Conese
* Director May 31, 1996
- -----------------------------------------------
William M. Hoffman
* Director May 31, 1996
- -----------------------------------------------
Gerald L. Gitner
Director
- -----------------------------------------------
Thomas H. Jacobsen
* Director May 31, 1996
- -----------------------------------------------
Jewel LaFontant-Mankarious
</TABLE>
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<PAGE> 62
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ----------------------------------------------- -------------------------- ------------------
<S> <C> <C>
* Director May 31, 1996
- -----------------------------------------------
Myron Kaplan
* Director May 31, 1996
- -----------------------------------------------
James A. Lawrence
Director
- -----------------------------------------------
William O'Driscoll
* Director May 31, 1996
- -----------------------------------------------
G. Joseph Reddington
* Director May 31, 1996
- -----------------------------------------------
Lawrence K. Roos
* Director May 31, 1996
- -----------------------------------------------
William W. Winpisinger
* Signed pursuant to power of attorney:
/s/ RICHARD P. MAGURNO
- -----------------------------------------------
Richard P. Magurno,
as Attorney-in-Fact
</TABLE>
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<PAGE> 63
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
- ----------- -------------------------------------------------------------------- -------------
<S> <C> <C> <C>
*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 Reorganization
(Exhibit 2.3 to 6/95 10-Q)..........................................
*2.4 -- Joint Plan of Reorganization, dated May 12, 1995 (Appendix B to the
Registrant's Registration Statement on Form S-4, Registration Number
33-84944, 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).............................
*2.7 -- Final Decree, dated December 28, 1995, related to the '95
Reorganization (Exhibit 2.7 to 12/31/95 Form 10-K)..................
*3(i) -- Amended and Restated Certificate of Incorporation of Trans World
Airlines, Inc.(2)...................................................
*3(ii) -- Amended and Restated By-Laws of Trans World Airlines, Inc.,
effective July 25, 1995 (Exhibit 3(ii) to 6/95 10-Q)................
*3(iii) -- Second Amended and Restated Certificate of Incorporation of the
Registrant (Exhibit 3(iii) to 12/31/95 Form 10-K)...................
3(iv) -- Third Amended and Restated Certificate of Incorporation of the
Registrant..........................................................
*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)..................................
</TABLE>
<PAGE> 64
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
- ----------- -------------------------------------------------------------------- -------------
<S> <C> <C> <C>
*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)..................................
*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 (Exhibit 4.12 to 9/95 10-Q).........
*4.13 -- TWA Air Line Pilots Supplemental Stock Plan, effective September 1,
1994 (Exhibit 4.13 to 9/95 10-Q)....................................
*4.14 -- TWA Air Line Pilots Supplemental Stock Plan Trust, effective August
23, 1995 (Exhibit 4.14 to 9/95 10-Q)................................
*4.15 -- TWA Air Line Pilots Supplemental Stock Plan Custodial Agreement,
effective August 23, 1995 (Exhibit 4.15 to 9/95 10-Q)...............
5 -- Opinion of Smith, Gambrell & Russell, counsel of the Registrant.....
*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).......................
*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)..........................................................
</TABLE>
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*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).........
*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)...............................
</TABLE>
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*10.10.2 -- 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)........................................................
*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)........
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)............................................................
</TABLE>
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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)........................................
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(1).......................................
*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)...
</TABLE>
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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(1)................................
10.33.2 -- Form of Option Agreements for options issued pursuant to the 1994
Key Employee Stock Incentive Plan(1)................................
10.34 -- Form of Pledge and Security Agreement dated as of August 23, 1995 by
TWA Gate Holdings, Inc. in favor of First Security Bank of Utah,
National Association, as trustee for the 12% Senior Preferred
Stock(1)............................................................
*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 (Exhibit 10.37 to 9/95 10-Q)....................
*10.37.1 -- Karabu Ticket Program Agreement between TWA and Karabu Corp. 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 (Exhibit 10.38 to 9/95
10-Q)...............................................................
*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 (Exhibit 10.39
to 9/95 10-Q).......................................................
*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 (Exhibit 10.40 to 9/95 10-Q).................
*10.41 -- Equity Rights Put Agreement dated as of September 15, 1995 between
TWA and Elliott Associates L.P., a Delaware limited partnership
(Exhibit 10.41 to 9/95 10-Q)........................................
*10.42 -- Equity Rights Put Agreement dated as of September 15, 1995 between
TWA and Westgate International L.P., a Cayman Islands limited
partnership (Exhibit 10.42 to 9/95 10-Q)............................
*10.43 -- Equity Rights Put Agreement dated as of September 15, 1995 between
TWA and United Equities (Commodities) Company, a New York general
partnership (Exhibit 10.43 to 9/95 10-Q)............................
*10.44 -- Equity Rights Put Agreement dated as of September 15, 1995 between
TWA and Grace Brothers, Ltd., an Illinois limited partnership
(Exhibit 10.44 to 9/95 10-Q)........................................
</TABLE>
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*10.45 -- Equity Rights Put Agreement dated as of September 15, 1995 between
TWA and First Capital Alliance, L.P., an Illinois limited
partnership (Exhibit 10.45 to 9/95 10-Q)............................
*10.46 -- Equity Rights Put Agreement dated as of September 15, 1995 between
TWA and Romulus Holdings Corp. a Delaware Corporation (Exhibit 10.46
to 9/95 10-Q).......................................................
*10.47 -- Letter Agreement, dated August 22, 1995 between TWA and Marilyn M.
Hoppe relating to employment by TWA (Exhibit 10.47 to 9/95 10-Q)....
*10.48 -- Purchase Agreement, dated February 9, 1996 between The Boeing
Company and TWA relating to Boeing Model 757-231 Aircraft (Purchase
Agreement Number 1910) (Exhibit 10.48 to 12/31/95 Form 10-K)........
*10.49 -- Employee Stock Incentive Program dated as of August 23, 1995 by TWA
(Exhibit 10.49 to 12/31/95 Form 10-K)...............................
10.50 -- Registration Rights Agreement dated March 22, 1996 between TWA and
PaineWebber Incorporated and Alex. Brown & Sons Incorporated, as
initial purchasers..................................................
10.51 -- Trans World Airlines, Inc. 1995 Outside Directors' Stock Ownership
and Stock Option Plan...............................................
12 -- Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends...........................................
23.1 -- Consent of KPMG Peat Marwick LLP....................................
23.2 -- Consent of Smith, Gambrell & Russell, counsel of the Registrant
(included in Exhibit 5)
24 -- Powers of Attorney..................................................
</TABLE>
<PAGE> 1
EXHIBIT 3 (iv)
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
----------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THAT THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "TRANS WORLD AIRLINES, INC.", FILED IN THIS OFFICE ON THE
TWENTY-FOURTH DAY OF MAY, A.D. 1996, AT 12:30 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
[SEAL] ----------------------------------
Edward J. Freel, Secretary of State
0858577 8100 AUTHENTICATION: 7960174
960151548 DATE: 05-24-96
<PAGE> 2
THIRD AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
TRANS WORLD AIRLINES, INC.
(which further amends and restates the
Second Amended and Restated Certificate of Incorporation of
Trans World Airlines, Inc.
originally incorporated on August 15, 1978 as
"New TWA Corporation")
The undersigned, Jeffrey H. Erickson, President and Chief Executive
Officer of Trans World Airlines, Inc. (the "Corporation"), a corporation
organized and existing under and by virtue of the provisions of the General
Corporation Law of the State of Delaware ("GCL"), does hereby certify on behalf
of the Corporation as follow:
That pursuant to the provisions of Section 245 of the GCL, the
Corporation's Second Amended and Restated Certificate of Incorporation dated
November 16, 1995 be amended and restated by deleting the text therein in its
entirety and inserting in lieu thereof the following:
ARTICLE FIRST. The name of the corporation is Trans World Airlines,
Inc. (the "Corporation").
ARTICLE SECOND. The address of the Corporation's registered office in
the State of Delaware is 1209 Orange Street, City of Wilmington, County of New
Castle, Delaware 19801. The name of the Corporation's registered agent at such
address is The Corporation Trust Company.
ARTICLE THIRD. The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the GCL,
except that the Corporation shall not in any state, territory, district,
possession or country carry on any business or exercise any powers which a
corporation organized under the laws thereof could not carry on or exercise.
ARTICLE FOURTH. Intentionally left blank.
ARTICLE FIFTH. Section 1. Authorized Capital Stock. The Corporation
is authorized to issue two classes of capital stock. The total number of
shares of capital stock that the Corporation is authorized to issue is two
hundred eighty seven million five hundred thousand (287,500,000) shares,
consisting of (i) one hundred fifty million (150,000,000) shares of common
stock with a par value of $.01 per share (the "Common Stock") and (ii) one
hundred thirty seven million five hundred thousand (137,500,000) shares of
preferred stock with a par value of $.01 per share (the "Preferred Stock").
Section 2. Intentionally left blank.
<PAGE> 3
Section 3. Common Stock. Except as may otherwise be provided in any
Preferred Stock Designation (as hereinafter defined), the holders of Common
Stock will be entitled to one vote for each share of Common Stock held of
record by such holder as of the record date for such meeting (i) on each matter
submitted to a vote at a meeting of stockholders and (ii) for each of the
directors to be elected at an annual meeting of shareholders. Except as may
otherwise be provided in any Preferred Stock Designations, (i) the holders of
the Common Stock shall be entitled to receive, when, as and if declared by the
Board of Directors of the Corporation (the "Board"), out of funds legally
available therefor, dividends payable in cash, stock or otherwise, and (ii)
upon any liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the remaining net assets of the Corporation shall be
distributed pro rata to the holders of the Common Stock in accordance with
their respective rights and interests.
Section 4. Preferred Stock. The Preferred Stock shall be issued in
one or more series. The Board is hereby authorized to issue shares of
Preferred Stock and to fix before issuance the number of shares to be issued
and the designation, relative powers, preferences, and rights and
qualifications, limitations, or restrictions of all shares. The authority of
the Board will include, without limiting the generality of the foregoing, the
determination of any or all of the following: (a) the number of shares and the
designation to distinguish the shares; (b) the voting powers, if any, and
whether such voting powers are full or limited; (c) the redemption provisions,
if any, including the redemption price or prices to be paid; (d) whether
dividends, if any, will be cumulative or noncumulative, the dividend rate, and
the dates and preferences of dividends; (e) the rights upon the voluntary or
involuntary dissolution of, or upon any distribution of the assets of, the
Corporation; (f) the provisions, if any, of a sinking fund; and (g) any other
relative, participating, optional, or other special powers, preferences,
rights, qualifications, limitations, or restrictions thereof; all as may be
determined by the Board and stated in the resolution or resolutions providing
for the issuance or issuances of such Preferred Stock (each such designation is
collectively, the "Preferred Stock Designation").
ARTICLE SIXTH. The Board may make, amend, and repeal the By-Laws of
the Corporation. Any By-Law made by the Board under the powers conferred
hereby may be amended or repealed by the Board (except as specified in any such
By-Law so made or amended) or by the Corporation's stockholders in the manner
provided in the By-Laws of the Corporation; provided, however, that
notwithstanding anything in the By-Laws to the contrary, no provision of the
By-Laws may be adopted, amended, altered or repealed by the holders of the
Company's capital stock other than by the affirmative vote of the holders of
three-fourths or more of the then outstanding shares of Voting Stock (defined
below) voting together as a single class. The Corporation may in its By-Laws
confer powers upon the Board in addition to the foregoing and in addition to
the powers and authorities expressly conferred upon the Board by applicable
law. For the purposes of this Third Amended and Restated Certificate of
Incorporation, the term "Voting Stock" means stock of the Corporation of all
classes and series entitled to vote generally in the election of directors and
shall not include any class or series of preferred stock of the Corporation
unless the certificate of designations, preferences and rights for such class
or series shall specifically state that such class or series shall be deemed
Voting Stock for purposes of this Article Sixth. Notwithstanding anything
contained in this Third Amended and Restated Certificate of Incorporation to
the contrary, the affirmative vote of the holders of at least three-
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<PAGE> 4
fourths of the Voting Stock, voting together as a single class, is required to
amend or repeal, or to adopt any provisions inconsistent with, this Article
Sixth.
ARTICLE SEVENTH. The existence of the Corporation shall be perpetual.
ARTICLE EIGHTH. Subject to the rights of holders of Preferred Stock:
(a) any action required or permitted to be taken by the stockholders
of the Corporation must be effected at duly called annual or
special meeting of stockholders of the Corporation and may not be
effected by any consent in writing of such stockholders; and
(b) special meetings of stockholders of the Corporation may be called
only by (i) the Chairman of the Board (the "Chairman"), (ii) the
Corporate Secretary of the Corporation (the "Secretary") within ten
(10) calendar days after receipt of the written request of a
majority of the total number of Directors that the Corporation
would have if there were no vacancies, provided, however, that the
total number of Directors shall be determined without inclusion of
Directors to be named by holders of Preferred Stock until such
persons have been elected in accordance with the By-Laws of the
Corporation (the "Whole Board"), and (iii) as provided in Section
2.3(b) of the By-Laws.
At any annual meeting or special meeting of stockholders of the Corporation,
only such business will be conducted or considered as has been brought before
such meeting in the manner provided in the By-Laws of the Corporation.
Notwithstanding anything contained in this Third Amended and Restated
Certificate of Incorporation to the contrary, the affirmative vote of at least
a majority of the Voting Stock, voting together as a single class, will be
required to amend or repeal, or adopt any provision inconsistent with, this
Article Eighth.
ARTICLE NINTH. Section 1. Number, Election and Terms of Directors.
The Board shall be reconstituted pursuant to the Plan of Reorganization and
Section 303 of the GCL. Subject to the rights, if any, of the holders of
Preferred Stock to elect additional Directors under circumstances specified in
the Preferred Stock Designation, the number of Directors of the Corporation
shall be fifteen (15). The Directors, other than those who may be elected by
the holders of Preferred Stock, shall be classified with respect to the time
for which they severally hold office into three (3) classes of five (5)
Directors per class, designated Class I, Class II and Class III. Effective
upon November 3, 1993, the following persons shall be Directors of the
Corporation pursuant to the Confirmation Order and Section 303 of the GCL: in
Class I, William R. Howard, Glenn R. Zander, Robert H. H. Wilson, Eugene
Conese, Sr. and Lawrence K. Roos; in Class II, Gerald Gitner, Myron Kaplan,
William O'Driscoll, William Compton and Victoria Frankovich; in Class III,
James A. Lawrence, Thomas Meagher, Joseph Reddington, Donald Craib and Timothy
Connolly. The Directors first appointed to Class I will hold office for a term
expiring at the annual meeting of stockholders to be held in 1994; the
Directors first appointed to Class II will hold office for a term expiring at
the annual meeting of stockholders to be
-3-
<PAGE> 5
held in 1995; and the Directors first appointed to Class III will hold offices
for a term expiring at the annual meeting of stockholders to be held in 1996.
The members of each such class will hold office until their successors are
elected and qualified. The subsequent terms of service for all Directors will
be three (3) years for the second term and one (1) year for each term
thereafter for all Directors, regardless of their classification. Subject to
the rights, if any, of the holders of Preferred Stock to elect additional
Directors under circumstances specified in the Preferred Stock Designation,
Directors may be elected by the stockholders only at an annual meeting of
stockholders. Election of Directors need not be by written ballot unless
requested by the Chairman or by the holders of a majority of the Voting Stock
present in person or represented by proxy at a meeting of the stockholders at
which Directors are to be elected.
Section 2. Nomination of Director Candidates. Except as otherwise
provided herein, advance notice of stockholder nominations for the election of
Directors must be given in the manager provided in the By-Laws of the
Corporation. The reconstituted Board of Directors, as set forth in Section 1
of this Article Ninth, was nominated as follows: the management of the
Corporation nominated William R. Howard, Glenn R. Zander, and Robert H.H.
Wilson as Directors in Class I; the Creditors' Committee (as hereinafter
defined) nominated Eugene Conese, Sr. and Lawrence K. Roos as Directors in
Class I, Gerald Gitner and Myron Kaplan as Directors in Class II and James A.
Lawrence, Thomas Meagher, Joseph Reddington and Donald Craib as Directors in
Class III; IAM (as hereinafter defined) nominated William O'Driscoll as a
Director in Class II and Timothy Connolly as a Director in Class III; ALPA (as
hereinafter defined) nominated William Compton as a Director in Class II; and
IFFA nominated Victoria Frankovich as a Director in Class II. In connection
with the first three annual elections of Directors following November 3, 1993,
the Board will, at least seventy-five (75) calendar days prior to the date of
the relevant election, request the continuing Directors who were nominated by
the same Original Nominating Entity (as hereinafter defined) as the Director
whose term is then expiring to nominate a person to succeed the retiring
Director. If no such Directors remain, the Board will, at least seventy-five
(75) calendar days prior to the date of the relevant election, request
nomination of a person from such Original Nominating Entity. Such nomination
shall be accompanied by the signed consent of the nominee to serve as Director
of the Corporation if elected and information about the nominee as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission had the nominee been nominated, or
intended to be nominated, by the Board. Not more than five (5) business days
after receipt of the nomination, the Board of Directors will advise the
nominating Directors or the Original Nominating Entity, as the case may be, if
the nominee is not acceptable. If such notice of unacceptability is given, the
Directors or entity making the nomination will provide an additional nominee or
nominees. A notice of unacceptability may be given by the Board of Directors
only after obtaining an opinion of outside counsel stating that the acceptance
of the relevant nominee would be a breach of fiduciary duty of the Board to the
stockholders of the Corporation. If no notice of unacceptability is given, the
nominee shall be deemed to be acceptable to the Board of Directors to fill the
position of the vacating director. If a notice of unacceptability is given, the
Original Nominating Entity or Directors, as the case may be, and the Board of
Directors will, in good faith, repeat the foregoing procedures until an
acceptable nominee if found.
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<PAGE> 6
Vacancies on the Board created by resignation, removal or otherwise and
occurring prior to the third annual election of Directors and as to Directors
elected at such third annual election shall be filled by a nominee of the
remaining Directors who were nominated by the same Original Nominating Entity
as the vacating Director. If no such Directors remain, the Board will request
nomination of a person for the vacant directorship from the Original Nominating
Entity which nominated the vacating Director. Promptly upon receipt of such
name, the Board will advise the nominating Director or entity, as the case may
be, if the nominee is not acceptable. If such notice of unacceptability is
given, the Directors or entity making the nomination will provide an additional
nominee or nominees. A notice of unacceptability may be given by the Board
only after obtaining an opinion of outside counsel stating the acceptance of
the relevant nominee would be a breach of fiduciary duty of the Board to the
stockholders of the Corporation. If no notice of unacceptability is given, the
nominee shall fill the position of the vacating Director. If a notice of
unacceptability is given, the Original Nominating Entity or Directors, as the
case may be, and the Board will, in good faith, repeat the foregoing procedures
until an acceptable nominee is found.
The following terms shall have the following meanings:
"ALPA" mean the Air Line Pilots Association, International.
"Creditors' Committee" means the Official Unsecured Creditors' Committee
of the Corporation appointed by the Office of the United States Trustee
pursuant to Section 1102 of the Bankruptcy Code in the bankruptcy case
captioned In re Trans World Airlines, Inc. (Case No. 92-115) filed in the
United States Bankruptcy Court for the District of Delaware.
"IAM" means the International Association of Machinists and Aerospace
Workers.
"IFFA" means the Independent Federation of Flight Attendants.
"Original Nominating Entity" means, as applicable, each of the
management of the Corporation, ALPA, IAM, IFFA and the Creditors' Committee
until dissolved and thereafter in lieu thereof, the Voting Trust.
"Voting Trust" means the voting trust established pursuant to the Plan
of Reorganization for holding shares of Common Stock.
Section 3. Newly Created Directorships and Vacancies. Subject to the
rights, if any, of the holders of Preferred Stock to elect additional Directors
under circumstances specified in the Preferred Stock Designation, and subject
to the provisions of Section 2 of this Article Ninth and Article III of the
By-Laws regarding appointment of successor Directors, any vacancies on the
Board resulting from death, resignation, disqualification, removal or other
cause will be filed solely by the affirmative vote of a majority of the
remaining Directors then in office, even though less than a quorum of the
Board, or by a sole remaining Director. Any Director elected in accordance
with the preceding sentence will hold office for the remainder of the full
term of the class of Directors in which the vacancy occurred and
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<PAGE> 7
until such Director's successor has been elected and qualified. No decrease in
the number of Directors constituting the Board may shorten the term of any
incumbent Director.
Section 4. Removal. Subject to the rights, if any, of the holders of
Preferred Stock to elect additional Directors under circumstances specified in
the Preferred Stock Designation, and Section 2 of this Article Ninth and
Article III of the By-Laws, any Director may be removed from office by the
stockholders only for cause and only in the manner provided in this Section 4.
At any annual meeting or special meeting of the stockholders, the notice of
which states that the removal of a Director or Directors is among the purposes
of the meeting, the affirmative vote of the holders of at least a majority of
the Voting Stock, voting together as a single class, may remove such Director or
Directors for cause.
Section 5. Meetings of Board. Except as otherwise provided herein, at
all meetings of the Board, a majority of the Whole Board shall be required to
constitute a quorum for the transaction of business. No action may be taken at
a meeting at which a quorum is not present, except to vote to adjourn such
meeting or fill a vacancy on the Board. Except as otherwise provided herein,
no action shall be taken by the Corporation unless such action is authorized by
the affirmative vote of a majority of the Directors in attendance at a meeting
at which a quorum is present.
Section 5. Amendment, Repeal, Etc. Notwithstanding anything contained
in this Amended and Restated Certificate of Incorporation to the contrary, the
affirmative vote of at least eighty percent (80%) of the Voting Stock, voting
together as a single class, is required to amend or repeal, or adopt any
provision inconsistent with, this Article Ninth.
ARTICLE TENTH. To the full extent permitted by the GCL or any
applicable law currently or hereinafter in effect, a Director of the
Corporation shall not be personally liable either to the Corporation or to any
stockholder for monetary damages for breach of fiduciary duty as a Director,
except for liability of a Director (i) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions
which are not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for an act or omission for which the liability
of such Director is expressly provided under the GCL or (iv) for any
transaction from which the Director derived an improper personal benefit.
Neither amendment nor repeal of this Article Tenth nor the adoption of any
provision of this Third Amended and Restated Certificate of Incorporation
inconsistent with this Article Tenth shall eliminate or reduce the effect of
this Article Tenth in respect of any matter occurring or any cause of action,
suit or claim that, but for this Article Tenth, would accrue or arise, prior to
such amendment, repeal or adoption of an inconsistent provision. This Article
Tenth shall not eliminate or limit the personal liability of a Director for any
act or omission occurring prior to the effective date hereof.
No contact or transaction between the Corporation and one or more of
its directors, officers, or stockholders or between the Corporation or any
person (as used herein "person" means any other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its directors,
officers, or stockholders are directors, officers, or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or
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<PAGE> 8
solely because the director or officer is present at or participates in the
meeting of the Board or committee which authorizes the contract or transaction,
or solely because his, her or their votes are counted for such purpose, if: (i)
the material facts as to his, her or their relationship or interest and as to
the contract or transaction are disclosed or are known to the Board or the
committee, and the Board or the committee, in good faith, authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors are less than
a quorum; or (ii) the material facts as to his, her or their relationship or
interest and as to the contact or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved, or ratified by the Board, a committee thereof, or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board or of a committee which
authorizes the contract or transaction. Any amendment or repeal of, or
adoption of any provision inconsistent with, this Article Tenth will not
adversely affect any right or protection existing hereunder, or arising out of
facts occurring, prior to such amendment, repeal, or adoption, and no such
amendment, repeal, or adoption will affect the legality, validity, or
enforceability of any contact entered into or right granted prior to the
effective date of such amendment, repeal, or adoption.
ARTICLE ELEVENTH. The Corporation shall indemnity any person who was or
is a party or is threatened to be made a party to, or testifies in, any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in nature, by reason of the fact that
such person is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, employee benefit plan, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding to the full extent permitted by law, and the Corporation may
adopt By-Laws or enter into agreements with any such person for the purpose of
providing for such indemnification.
To the extent that a director or officer of the Corporation has been
successful on the merits or otherwise (including without limitation settlement
by nolo contendere) in defense of any action, suit or proceeding referred to in
the immediately preceding paragraph, or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
therewith.
Expenses incurred by an officer, director, employee or agent in
defending or testifying in a civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or office to repay such amount
if it shall ultimately be determined that such director or officer is not
entitled to be indemnified by the Corporation against such expenses as
authorized by this Article Eleventh, and the Corporation may adopt By-Laws or
enter into agreements with such persons for the purpose of providing for such
advances.
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<PAGE> 9
The indemnification permitted by Article Eleventh shall not be deemed
exclusive of any other rights to which any person may be entitled under any
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in such person's official capacity and as to action in another
capacity while holding an office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such person.
The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, employee benefit plan trust or other enterprise, against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under the
provisions of this Article Eleventh or otherwise.
If the GCL is amended to further expand the indemnification permitted
to directors, officers, employees or agents of the Corporation, then the
Corporation shall indemnify such persons to the fullest extent permitted by the
GCL, as so amended.
Nothing contained in this Third Amended and Restated Certificate of
Incorporation shall be deemed to reinstate any obligation of the Corporation to
indemnify any person or entity, which was otherwise released under or in
connection with that certain Settlement Agreement, dated as of January 5, 1993
(the "Settlement Agreement") among Trans World Airlines, Inc., Official
Unsecured Creditors' Committee of Trans World Airlines, Inc., Pension Benefit
Guaranty Corporation, International Association of Machinists and Aerospace
Workers, Independent Federation of Flight Attendants, Air Line Pilots
Association, International, Transport Workers Union of America, Carl C. Icahn,
The Icahn Entities (as set forth therein), and Pichin Corp., as the Icahn
Sponsor or which was otherwise expressly released or discharged.
ARTICLE TWELFTH. The Corporation reserves the right to amend, alter,
change or repeal any provision of this Third Amended and Restated Certificate
of Incorporation in the manner now or hereafter prescribed by statute or
herein, and all rights conferred upon stockholders herein are granted subject
to this reservation.
ARTICLE THIRTEENTH. The affirmative vote of at least two-thirds of the
Voting Stock of the Corporation, voting together as a single class, shall be
necessary for the purpose of authorizing or effecting any of the following
actions prior to September 1, 2000: (a) any merger or consolidation of the
Corporation with or into any other entity; (b) any business combination within
the meaning of Section 203 of the Delaware General Corporation Law; (c) any
dissolution or liquidation of the Corporation; and (d) any repurchase,
retirement or redemption of the Corporation's capital stock or other
securities, issued after the effective date of this Article Thirteenth, prior
to their scheduled maturity or expiration except for mandatory redemptions of
any redeemable preferred stock of the Corporation and redemptions out of the
proceeds of any substantially concurrent offering of comparable or junior
securities unless such matter referred to in (a) through (d) shall have been
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<PAGE> 10
approved by a vote of at least eighty percent (80%) of the Board of Directors
then in office in which event no vote by the holders of Voting Stock shall be
required except to the extent otherwise required by this Certificate of
Incorporation, by law or as the Board of Directors may recommend by the
affirmative vote of a majority of the Board of Directors then in office. This
Article Thirteenth will terminate on September 1, 2000.
IN WITNESS WHEREOF, Jeffrey H. Erickson, a duly authorized
representative of the Corporation, has signed this Third Amended and Restated
Certificate of Incorporation on this, the 23rd day of May, 1996.
TRANS WORLD AIRLINES, INC.
By: /s/ Jeffrey H. Erickson
----------------------------------------
Jeffrey H. Erickson
Its: President and Chief Executive Officer
ATTEST:
By: /s/ Kathleen A. Soled
-----------------------------
Kathleen A. Soled
Its: Corporate Secretary
[CORPORATE SEAL]
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<PAGE> 11
STATE OF MISSOURI )
) SS
COUNTY OF ST. LOUIS CITY )
The undersigned, a Notary Public in and for the aforesaid County and
State, certifies that on this 23rd day of May, 1996, Jeffrey H. Erickson, the
President and Chief Executive Officer of Trans World Airlines, Inc. (the
"Corporation") and Kathleen A. Soled, Corporate Secretary of the Corporation,
known to me personally to be such, duly executed the foregoing Certificate
before me and acknowledged said Certificate to be their act and deed made on
behalf of the Corporation, and acknowledged that the facts stated therein are
true. The signatures on the attached Certificate of said President and Chief
Executive Officer and Corporate Secretary of the Corporation are in the
handwriting of said President and Chief Executive Officer and said Corporate
Secretary, respectively, and the seal affixed to the Certificate is the
corporate seal of the Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office this
23rd day of May, 1996.
/s/ Barbara A. Creely
---------------------
Notary Public
Barbara A. Creely, Notary Public
(Notarial Seal) St. Louis County, State of Missouri
My Commission Expires 6/30/97
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<PAGE> 1
EXHIBIT 5
<TABLE>
SMITH, GAMBRELL & RUSSELL
A Partnership of Professional Corporations and Individuals
ATTORNEYS AT LAW
<S> <C> <C>
(404) 815-3500 Suite 3100, Promenade II ATLANTA FINANCIAL CENTER
Telecopier (404) 815-3509 1230 Peachtree Street, N.E. Suite 1800
Atlanta, Georgia 30309-3592 3343 Peachtree Road, N.E.
May 24, 1996 Atlanta, Georgia 30326-1010
(404) 264-2620
Telecopier (404) 264-2652
</TABLE>
ESTABLISHED 1893
Trans World Airlines, Inc.
One City Centre
515 N. Sixth Street
St. Louis, Missouri 63101
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have served as counsel for Trans World Airlines, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, pursuant to a Registration Statement on Form
S-3 (the "Registration Statement"), of 3,869,000 shares of the Company's 8%
Cumulative Convertible Exchangeable Preferred Stock, $.01 par value per share
(the "Preferred Stock"), along with $193,500,000 aggregate principal amount of
the Company's 8% Convertible Subordinated Debentures due 2006 (the "Debentures")
issuable upon exchange of the Preferred Stock and up to 9,544,823 shares of the
Company's Common Stock, $.01 par value per share (the "Common Stock"), issuable
upon conversion of the Preferred Stock or the Debentures, subject to adjustment
under certain circumstances (the Preferred Stock, the Debentures and the Common
Stock are collectively referred to herein as the "Securities").
We have examined and are familiar with originals or copies (certified,
photostatic or otherwise identified to our satisfaction) of such documents,
corporate records and other instruments relating to the incorporation of the
Company and the authorization and issuance of the Securities as we have deemed
necessary and advisable.
In all such examinations, we have assumed the genuineness of all
signatures on all originals and copies of documents we have examined, the
authenticity of all documents submitted to us as originals and the conformity
to original documents of all certified, conformed or photostatic copies. As to
questions of fact material and relevant to our opinion, we have relied upon
certificates or representations of Company officials and of appropriate public
officials.
We express no opinion as to matters under or involving laws of any
jurisdiction other than the State of Delaware and its political subdivisions.
Based upon and subject to the foregoing and having regard for such legal
considerations as we have deemed relevant, it is our opinion that:
<PAGE> 2
Trans World Airlines, Inc.
May 24, 1996
Page 2
i. the Company is a corporation in good standing, duly
organized and validly existing under the laws of the
State of Delaware;
ii. the necessary corporate proceedings and actions
legally required for the registration of the
Securities have been held and taken;
iii. the issuance and sale of the Securities have been
duly and validly authorized; and
iv. the Securities when issued will be fully paid,
non-assessable and free of preemptive rights.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to this firm under the caption
"Validity of Shares" in the Prospectus. In giving this consent, we do not
thereby admit we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, or the rules and regulations of
the Securities and Exchange Commission thereunder.
Very truly yours,
SMITH, GAMRELL & RUSSELL
/s/ Howard E. Turner
-------------------------
Howard E. Turner
<PAGE> 1
EXHIBIT 10.50
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of March 22, 1996, by and among Trans World Airlines, Inc., a
Delaware corporation (the "Company"), and Paine Webber Incorporated and Alex.
Brown & Sons Incorporated (together, the "Initial Purchasers"), who have (i)
purchased 3,500,000 shares of 8% Cumulative Convertible Exchangeable Preferred
Stock, par value $.01 per share of the Company (the "8% Preferred Stock")
exchangeable for 8% Convertible Subordinated Debentures due 2006 (the
"Debentures") of the Company and (ii) the right to acquire an additional
525,000 shares of 8% Preferred Stock, (the "Option Shares") in each case
pursuant to the Purchase Agreement dated as of March 18, 1996 (the "Purchase
Agreement"), among the Company and the Initial Purchasers.
This Agreement is made pursuant to the Purchase Agreement. In order to
induce the Initial Purchasers to enter into the Purchase Agreement, the Company
has agreed to provide the registration rights set forth in this Agreement. The
execution and delivery of this Agreement is a condition to the closing of the
Purchase Agreement. All defined terms used but not defined herein shall have
the meanings ascribed to them in the Indenture governing the Debentures (as
defined below).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Closing Date: The date on which the initial closing of the sale of
shares of 8% Preferred Stock to the Initial Purchasers is consummated.
Commission: The United States Securities and Exchange Commission and
any successor federal agency having similar powers.
Common Stock: Includes any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Company and which is not subject to redemption by the Company. However, shares
issuable upon conversion of 8% Preferred Stock or Debentures shall include only
shares of the class designated as Common Stock of the Company (including the
associated Rights) at the date of this instrument or shares of any class or
classes resulting from any reclassification or reclassifications thereof
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation) and which have no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
<PAGE> 2
2
Company and which are not subject to redemption by the Company, provided that
if at any time there shall be more than one such resulting class, the shares of
each such class then so issuable shall be substantially in the proportion which
the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications. Unless the context otherwise
requires, all references to Common Stock shall include the associated Rights.
Damages Payment Date: With respect to the 8% Preferred Stock, each
dividend payment date and each Redemption Date (as defined in the Designation
of the Preferred). With respect to the Debentures, each interest payment date,
each Repurchase Date (as defined in the Indenture) and each redemption date
under the Indenture. In the event the 8% Preferred Stock or the Debentures are
called for redemption on a redemption date falling between a dividend payment
record date or an interest payment record date and the dividend payment date or
interest payment date, holders of shares of 8% Preferred Stock or Debentures
shall in lieu of receiving liquidated damages on the dividend payment date or
interest payment date receive such liquidated damages on the date fixed for
redemption (unless such holders convert such shares or Debentures in accordance
with the Designation of the Preferred or the Indenture, in which case such
holders will receive such payment on the corresponding dividend payment date or
interest payment date). With respect to Common Stock issuable upon conversion
of the 8% Preferred Stock or the Debentures, the Damages Payment Date shall be
the dividend payment date (unless all of the shares of 8% Preferred Stock have
been exchanged for Debentures, in which case the Damages Payment Date will be
the interest payment date applicable to the Debentures).
Designation of the Preferred: The Certificate of Designations,
Preferences and Rights Relating to the 8% Preferred Stock.
Effectiveness Target Date: As defined in Section 3.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the 8% Preferred Stock (i) inside the United States to (A)
certain "qualified institutional buyers" (as such term is defined in Rule 144A
under the Act) and (B) certain "accredited investors" (as defined in Rule 501
of Regulation D under the Act), and (ii) outside the United States in reliance
on Regulation S under the Act.
Holder: As defined in Section 2(b) hereof.
Indenture: The Indenture, dated as of the Exchange Date (as defined in
the Designation of the Preferred) between the Company and a trustee selected by
the Company and reasonably satisfactory to the Initial Purchasers (the
"Trustee"), pursuant to which the Debentures are to be issued, as such
Indenture is amended or supplemented from time to time in accordance with the
terms thereof.
NASD: National Association of Securities Dealers, Inc.
<PAGE> 3
3
Offering Memorandum: The Offering Memorandum, dated March 18, 1996, and
all amendments and supplements thereto, and including all materials
incorporated by reference therein, relating to the 8% Preferred Stock and
prepared by the Company pursuant to the Purchase Agreement.
Option Closing Date: The date on which the closing of the sale of the
Option Shares to the Initial Purchasers is consummated.
Person: An individual, partnership, corporation, limited liability
company, trust or unincorporated organization or other entity, or a government
or agency or political subdivision thereof.
8% Preferred Stock: 8% Cumulative Convertible Exchangeable Preferred
Stock, par value $.01 per share, of the Company.
Prospectus: The prospectus included in the Shelf Registration
Statement, as amended or supplemented by any prospectus supplement and by all
other amendments and supplements to the prospectus included in the Shelf
Registration Statement, including post-effective amendments, and all material
which may be incorporated by reference into such prospectus.
Record Holder: (i) With respect to any Damages Payment Date relating to
the 8% Preferred Stock, each Person who is a Holder of 8% Preferred Stock on
the record date with respect to the Dividend Payment Date on which such Damages
Payment Date shall occur, (ii) with respect to any Damages Payment Date
relating to the Debentures, each Person who is a Holder of Debentures on the
record date with respect to the Interest Payment Date on which such Damages
Payment Date shall occur and (iii) with respect to any Damages Payment Date
relating to the Common Stock, each Person who is a Holder of Common Stock
issued upon conversion of 8% Preferred Stock or Debentures on the record date
with respect to the Dividend Payment Date on which such Damages Payment Date
shall occur (unless all of the shares of 8% Preferred Stock have been exchanged
for Debentures, in which case the Record Holder shall be each Person who is a
Holder of Common Stock on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur).
Registrar: As defined in the Indenture.
Registration Default: As defined in Section 4 hereof.
Rights: The Rights of the Company entitling the holder to purchase one
one-hundredth of a share of the Company's Series A Participating Preferred
Stock, par value $.01 per share, under certain circumstances issued pursuant to
the Rights Agreement dated as of December 19, 1995 between the Company and
American Stock Transfer & Trust Company as Rights Agent as it may be amended or
supplemented from time to time.
Shelf Registration Statement: As defined in Section 3(a) hereof.
<PAGE> 4
4
TIA: The Trust Indenture Act of 1939, as amended, as in effect on the
date of the Indenture.
Transfer Restricted Securities: Each share of 8% Preferred Stock, each
Debenture issued upon exchange thereof, and each share of Common Stock issued
upon conversion of the 8% Preferred Stock or the Debentures, until the date on
which each such share of 8% Preferred Stock, Debenture or share of Common Stock
(i) has been effectively registered under the Act and disposed of in accordance
with the Shelf Registration Statement or (ii) is distributed to the public
pursuant to Rule 144 under the Act or is saleable pursuant to Rule 144(k) under
the Act (or similar provisions then in force).
Usable: Complies with the applicable rules and regulations of the
Securities Act of 1933, as amended, including, without limitation, Rule 3-12 of
Regulation S-X and Item 512 of Regulation S-K.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled
to the benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is
deemed to be a holder of record of Transfer Restricted Securities (each, a
"Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. SHELF REGISTRATION
(a) The Company shall file with the Commission, as soon as
practicable after the Closing Date, but in any event on or prior to the date 90
days after the Closing Date, a shelf registration statement pursuant to Rule
415 under the Act (the "Shelf registration Statement") on Form S-1, Form S-2 or
Form S-3, as determined by the Company, if the use of such form is then
available, to cover resales of all Transfer Restricted Securities by the
Holders thereof who have provided the information required by Section 3(b)
hereof. The Company will use its reasonable best efforts to cause such Shelf
Registration Statement to be declared effective by the Commission within 150
days after the Closing Date (the "Effectiveness Target Date"). The Company
shall use its reasonable best efforts to keep such Shelf Registration Statement
continuously effective, subject to the provisions of Section 5 hereof, for a
period of three years following the later of the Closing Date or the Option
Closing Date, if any, or such shorter period that will terminate when each of
the Transfer Restricted Securities covered by the Shelf Registration Statement
shall cease to be a Transfer Restricted Security. Subject to the right of the
Company to have the Shelf Registration Statement not be effective for periods
of time set forth in Section 5 hereof, the Company further agrees to use its
reasonable best efforts to prevent the happening of any event that would cause
the Shelf Registration Statement to contain a material misstatement or omission
or to be not effective and usable for resale of the Transfer Restricted
Securities during the period that such Shelf Registration Statement is required
to be effective and usable. Upon the occurrence of any event that would cause
the Shelf Registration Statement (i) to contain a material misstatement or
omission or (ii) to be not effective or usable
<PAGE> 5
5
for resale of Transfer Restricted Securities during the period that such Shelf
Registration Statement is required to be effective and usable, the Company
shall promptly file an amendment to the Shelf Registration Statement, in the
case of clause (i), correcting any such misstatement or omission, and in the
case of either clause (i) or (ii), use its reasonable best efforts to cause
such amendment to be declared effective and such Shelf Registration Statement
to become usable as soon as practicable thereafter.
(b) No Holder of Transfer Restricted Securities may include any of
its Transfer Restricted Securities in any Shelf Registration Statement pursuant
to this Agreement unless such Holder furnishes to the Company in writing,
within 10 business days after receipt of a request therefor, such information
and representations and warranties as the Company may reasonably request for
use in connection with any Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein. No Holder of Transfer Restricted
Securities shall be entitled to liquidated damages pursuant to Section 4 hereof
if such Holder's Transfer Restricted Securities are excluded from a Shelf
Registration Statement because such Holder failed to furnish the Company in
writing such information and representations and warranties reasonably
requested by the Company for use in connection with such Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein. Each
Holder as to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously provided to the Company by such Holder
not materially misleading.
SECTION 4. LIQUIDATED DAMAGES
Each of the Company and the Initial Purchasers (on behalf of
themselves and each subsequent Holder of Transfer Restricted Securities) agrees
that (a) the Holders of Transfer Restricted Securities will suffer damages if
the Shelf Registration Statement is not filed with and declared effective by,
the Commission and maintained in the manner and within the time periods
contemplated by Section 3 hereof and (b) it would not be feasible to ascertain
the extent of such damages with precision. Accordingly, if (i) the Shelf
Registration Statement is not filed with the Commission on or prior to the date
90 days after the Closing Date, (ii) the Shelf Registration Statement has not
been declared effective by the Commission on or prior to the Effectiveness
Target Date or (iii) the Shelf Registration Statement is filed and declared
effective but shall thereafter cease to be effective (without being succeeded
immediately by an additional Shelf Registration Statement filed and declared
effective) or usable for a period of time which shall exceed 90 days in the
aggregate during any year (defined as any period of 365 days commencing on or
after the date the Shelf Registration Statement is declared effective or the
Effectiveness Target Date, as the case may be) (each such event referred to in
clauses (i) through (iii), a "Registration Default"), the Company shall pay
liquidated damages to each Holder of Transfer Restricted Securities who has
complied with such Holder's obligations hereunder, during the first 90-day
period immediately following the occurrence of such Registration Default in an
amount equal to $0.0025 per week per share of 8% Preferred Stock (subject to
adjustment in the event of stock splits, stock recombinations, stock dividends
and the like), and, if applicable, $0.05 per week per $1,000 principal amount
of Debentures and, if applicable, $0.01 per week per share (subject to
adjustment in the event of stock splits, stock recombinations, stock dividends
and the
<PAGE> 6
6
like) of Common Stock constituting Transfer Restricted Securities held by such
Holder. The amount of the liquidated damages will increase by an additional
$0.0025 per week per share of 8% Preferred Stock (subject to adjustment as
set forth above), $0.05 per week per $1,000 principal amount of Debentures or
$0.01 per week per share (subject to adjustment as set forth above) of Common
Stock constituting Transfer Restricted Securities held by such Holder for each
subsequent 90-day period until the Shelf Registration Statement is filed,
declared effective or again becomes effective and usable, as the case may be,
up to a maximum amount of liquidated damages with respect to any such
Registration Default of $0.0125 per week per share of 8% Preferred Stock
(subject to adjustment as set forth above), $0.25 per week per $1,000
principal amount of Debentures or $0.05 per week per share (subject to
adjustment as set forth above) of Common Stock constituting Transfer Restricted
Securities. All accrued liquidated damages shall be paid to Record Holders by
wire transfer of immediately available funds or by federal funds check by the
Company on each Damages Payment Date. Following the cure of a Registration
Default, liquidated damages will cease to accrue with respect to such
Registration Default.
All of the Company's obligations to pay accrued but unpaid liquidated
damages set forth in the preceding paragraph which are outstanding with respect
to any Transfer Restricted Security at the time such security ceases to be a
Transfer Restricted Security shall survive until such time as all such
obligations with respect to such security shall have been satisfied in full.
The parties hereto agree that the liquidated damages provided in this
Section 4 constitute a reasonable estimate of the damages that will be incurred
by Holders of Transfer Restricted Securities by reason of the failure of the
Shelf Registration Statement to be filed, declared effective or to remain
effective, as the case may be.
SECTION 5. REGISTRATION PROCEDURES
In connection with the Shelf Registration Statement, the Company will
use its reasonable best efforts to effect such registration to permit the sale
of the Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution or disposition thereof, and pursuant
thereto the Company will as expeditiously as possible:
(a) on or prior to the date 90 days after the Closing Date, prepare
and file with the Commission a Shelf Registration Statement relating to the
registration on any appropriate form under the Act, as selected by the Company,
which form shall be available for the sale of the Transfer Restricted
Securities in accordance with the intended method or methods of distribution
thereof and shall include or incorporate all required financial statements,
reports, schedules, exhibits and other documents; cooperate and assist in any
filings required to be made with the NASD and use its reasonable best efforts
to cause such Shelf Registration Statement to become effective and approved on
or prior to the Target Effectiveness Date by such governmental agencies or
authorities as may be necessary to enable the selling Holders to consummate the
disposition of such Transfer Restricted Securities; provided that before filing
a Shelf Registration Statement or any Prospectus, or any amendments or
supplements thereto, including documents
<PAGE> 7
7
incorporated by reference after the initial filing of the Shelf Registration
Statement, the Company shall furnish to the Holders and underwriters, if any,
copies of all such documents proposed to be filed, which documents shall be
subject to the review of such Holders, and the company shall not file any Shelf
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto (including such documents incorporated by reference) to which the
Holders of the Transfer Restricted Securities covered by such Shelf
Registration Statement or the underwriters, if any, shall reasonably object on
the grounds that such Shelf Registration Statement, Prospectus, amendment or
supplement does not comply in all material respects with the requirements of
the Act or the rules and regulations thereunder in writing within four business
days after the receipt thereof;
(b) prepare and file with the commission such amendments and
post-effective amendments to the Shelf Registration Statement as may be
necessary to keep the Shelf Registration Statement effective for the applicable
period set forth in Section 3(a) hereof; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 under the Act, and to comply fully with the
applicable provisions of Rule 424 under the Act in a timely manner; and comply
with the provisions of the Act with respect to the disposition of all
securities covered by such Shelf Registration Statement during the applicable
period in accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Shelf Registration Statement or supplement to
the Prospectus;
(c) advise the selling Holders promptly and, if requested by such
Persons, to confirm such advice in writing, (i) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to the Shelf Registration Statement or any post-effective amendment
thereto, when the same has become effective, (ii) of any request by the
Commission for amendments to the Shelf Registration Statement or amendments or
supplements to the Prospectus or for additional information relating thereto,
(iii) of the issurance by the Commission of any stop order suspending the
effectiveness of the Shelf Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (iv) if at any
time the representations and warranties of the Company contemplated by
paragraph (l)(i) below cease to be true and correct, and (v) of the existence
of any fact and the happening of any event that makes any statement of a
material fact made in the Shelf Registration Statement, the Prospectus, any
amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
the Shelf Registration Statement or the Prospectus, any amendment or
supplement thereto, or any document incorporated by reference therein in order
to make the statements therein not misleading in the light of the circumstances
then existing. If at any time the Commission shall issue any stop order
suspending the effectiveness of the shelf Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Transfer
Restricted Securities under the state securities or Blue Sky laws, the Company
shall use its best efforts to obtain the withdrawal or lifting of such order at
the earliest possible time;
<PAGE> 8
8
(d) promptly prior to the filing of any document that is to
be incorporated by reference into the Shelf Registration Statement or the
Prospectus (after the initial filing of the Shelf Registration Statement),
provide copies of such document to the selling Holders and underwriters, if
any, make the Company's representatives available at reasonable times for
discussion of such document and include such information in such document prior
to the filing thereof as such selling Holders or underwriters may reasonably
and timely request;
(e) furnish to each selling Holder and underwriter, if any,
without charge, at least one copy of the Shelf Registration Statement, as first
filed with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(f) deliver to each selling Holder and underwriter, if any,
without charge, as many copies of the Prospectus (including each preliminary
Prospectus) and any amendment or supplement thereto as such Persons may
reasonably request; the Company consents to the use of the Prospectus and any
amendment or supplement thereto by each of the selling Holders and
underwriters, if any, in connection with the public offering and sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment or
supplement thereto;
(g) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and underwriters, if any, and
their respective counsel in connection with the registration and qualification
of the Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as the selling Holders and underwriters, if any, may
reasonably request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the Shelf Registration Statement; provided,
however, that the Company shall be required neither to register or qualify as a
foreign corporation where it is not now so qualified nor to take any action
that would subject it to the service of process in suits or to taxation, other
than as to matters and transactions relating to the Shelf Registration
Statement, in any jurisdiction where it is not now so subject;
(h) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the selling Holders to facilitate the
timely preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any restrictive legends; and
enable such Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders may request at least two business days
prior to any sale of Transfer Restricted Securities made by such Holders;
(i) use its best efforts to cause the Transfer Restricted
Securities covered by the Shelf Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof to consummate the disposition of such
Transfer Restricted Securities, subject to the proviso contained in clause (g)
above;
(j) if any fact or event contemplated by clause (v) of
paragraph (c) above shall exist or have occurred, as promptly as practicable
thereafter, prepare a supplement or post-
<PAGE> 9
9
effective amendment to the Shelf Registration Statement, or related Prospectus
or any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(k) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Shelf Registration
Statement and provide the Trustee under the Indenture and the transfer agent
for the 8% Preferred Stock and Common Stock with printed certificates for the
Transfer Restricted Securities which are in a form eligible for deposit with
the Depositary Trust Company;
(1) enter into such agreements and take all such other
actions consistent with its obligations hereunder in connection therewith and
as may be reasonably required in order to expedite or facilitate the
disposition of the Transfer Restricted Securities pursuant to the Shelf
Registration Agreement, and in such connection the Company shall (i) make such
representations and warranties to the Holders and underwriters, if any, in
form, substance and scope as are customarily made by issuers to underwriters in
primary underwritten offerings and covering matters including, but not limited
to, those set forth in the Purchase Agreement; (ii) obtain opinions of counsel
to the Company and updates thereof (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the Holders of the Transfer
Restricted Securities being sold and underwriters, if any) addressed to each
selling Holder requesting the same and covering such matters as are customarily
covered in company counsel opinions to underwriters in primary underwritten
offerings; (iii) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the selling
Holders of Transfer Restricted Securities and underwriters, if any, requesting
the same, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters to underwriters in connection
with primary underwritten offerings; and (iv) deliver such documents and
certificates as may be reasonably requested by the Holders of the Transfer
Restricted Securities being sold and underwriters, if any, to evidence
compliance with clause (i) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Company
pursuant to this clause (1);
(m) subject to appropriate confidentiality arrangements
being entered into, make available at reasonable times for inspection by the
Holders of the Transfer Restricted Securities participating in any disposition
pursuant to such Shelf Registration Statement, any underwriters and any
attorney or accountant retained by such selling Holders or underwriters, all
financial and other records, pertinent corporate documents and properties of
the Company and cause the Company's officers, directors and employees to supply
all information reasonably requested by any such Holder, underwriter, attorney
or accountant at reasonable times in connection with such Shelf Registration
Statement subsequent to the filing thereof and prior to its effectiveness;
(n) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as
<PAGE> 10
10
reasonably practicable, a consolidated earnings statement (which need not be
audited) for the twelve-month period, beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of the Shelf
Registration Statement;
(o) cause the Indenture to be qualified under the TIA, and,
in connection therewith, cooperate with the Trustee and the Holders to effect
such changes to the Indenture as may be required for such Indenture to be so
qualified in accordance with the terms of the TIA; and execute and use its best
efforts to cause the Trustee to execute, all documents as may be required to
effect such changes and all other forms and documents required to be filed with
the Commission to enable such Indenture to be so qualified in a timely manner;
(p) use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of the Shelf Registration Statement
at the earliest possible moment; use its reasonable best efforts (i) to prevent
the entry of any stop order affecting the Registration Statement and (ii) to
remove any such stop order if entered;
(q) cause all Transfer Restricted Securities which are
Common Stock covered by the Shelf Registration Statement to be listed on each
securities exchange or quotation system on which the Company's Common Stock is
then listed no later than the date the Shelf Registration Statement is declared
effective;
(r) cooperate and assist in any filings required to be made
with the NASD; and
(s) use its best efforts to cause the Transfer Restricted
Securities to be eligible for inclusion in the National Association of
Securities Dealers, Inc. Private Offerings, Resales and Trading through
Automated Linkages ("PORTAL") trading system.
The Company agrees that it will not include in the
registration contemplated by the Shelf Registration Statement any securities
other than the Transfer Restricted Securities and the securities (the "PBGC
Shares") required to be registered by the Company pursuant to the Registration
Rights Agreement (the "PBGC Registration Rights Agreement"), dated as of August
23, 1995, by and among the Company, American National Bank and Trust Company of
Chicago as Settlement Trustee under the Settlement Fund Agreement dated as of
January 5, 1993, as amended, by and among the Company and American National
Bank and Trust Company of Chicago, the Pension Benefit Guaranty Corporation and
Pichin Corp. The Company represents and warrants to the Initial Purchasers that
they will not be required to reduce the number or amount of Transfer Restricted
Securities covered by the Shelf Registration Statement as the result of the
inclusion under such Shelf Registration Statement of the PBGC Shares.
The Initial Purchasers on behalf of themselves and each
subsequent Holder of Transfer Restricted Securities agree by acquisition of
such Transfer Restricted Securities that, upon receipt of any notice from the
Company of the existence of any fact or the happening of any event of the kind
described in clause (v) of Section 5(c) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the Shelf
Registration
<PAGE> 11
11
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(j) hereof, or until it is advised
in writing (the "Advice") by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings
which are incorporated by reference in the Prospectus. If so directed by the
Company, each Holder will, or will request the managing underwriter or
underwriters, if any, to deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such Holder's possession, of
the Prospectus covering such Transfer Restricted Securities current at the time
of receipt of such notice.
SECTION 6. REGISTRATION EXPENSES
All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless whether
a Shelf Registration Statement becomes effective, including without limitation:
(i) all registration and filing fees and expenses;
(ii) fees and expenses of compliance with federal securities
or state blue sky laws (including reasonable fees and disbursements of counsel
to the Holders and the underwriters, if any, in connection with blue sky
qualifications of the Transfer Restricted Securities);
(iii) expenses of printing (including, without limitation,
expenses of printing or engraving certificates for the Transfer Restricted
Securities in a form eligible for deposit with Depository Trust Company,
expenses of printing or engraving certificates for the Common Stock, the
Debentures and the 8% Preferred Stock and expenses of printing prospectuses),
messenger and delivery services and telephone;
(iv) fees and disbursements of counsel for the Company and
reasonable fees and disbursements of one counsel for the Holders of the
Transfer Restricted Securities chosen by the Holders of a majority of the
outstanding Transfer Restricted Securities (determined as provided in Section
10(d));
(v) fees and disbursements of all independent certified
public accountants of the Company (including the expenses of any special audit
and "cold comfort" letters required by or incident to such performance);
(vi) filing fees associated with any NASD filing required to
be made in connection with the Shelf Registration Statement;
(vii) fees and expenses of listing the Transfer Restricted
Securities on any securities exchange or quotation system in accordance with
Section 5(q) hereof or on PORTAL pursuant to Section 5(s); and
<PAGE> 12
12
(vii) securities acts liability insurance, if the Company
desires such insurance. All expenses described in classes (i) to (viii) are
referred to herein as "Registration Expenses."
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, and the fees and expenses of any Person, including special experts,
retained by the Company. The Holders of Transfer Restricted Securities shall
bear the expense of any broker's commission or underwriters' discount or
commission.
SECTION 7. UNDERWRITING
If any of the Transfer Restricted Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
investment banker(s) and manager(s) that will manage the offering will be
selected by the Holders of a majority of the then outstanding Transfer
Restricted Securities (determined in accordance with Section 10(d)) included in
such offering (after consultation with the Company as to such selection and
upon the written consent of the Company, which consent shall not be
unreasonably withheld or delayed). If requested by the underwriters, the
Company will promptly enter into an underwriting agreement reasonably
acceptable to the Company with such underwriters for such offering, such
agreement to contain such representations and warranties by the Company and
such other terms and conditions as are customary for underwriting agreements
with respect to secondary offerings, including without limitation, indemnities
to the effect and to the extent provided in Section 8 hereof. The Holders of
Transfer Restricted Securities on whose behalf such securities are being
distributed shall be party to any such underwriting agreement. Such Holders
shall not be required by the Company to make any representations or warranties
to the underwriters with respect to the Company or the Transfer Restricted
Securities (other than that the Holders are conveying such securities free and
clear of all pledges, security interests, liens, charges, encumbrances,
agreements, equities, claims and options of whatever nature), and the Holders
shall not be required to indemnify the Company or the underwriters (other than
with respect to the matters, and to the extent, provided in Section 8).
Furthermore, the Company shall make available for inspection by the Holders,
any underwriter participating in any disposition pursuant to such Shelf
Registration Statement, and any attorney, accountant or other agent retained.
by the Holders or underwriter, all financial and other records and other
information, pertinent corporate documents and properties of the Company as
shall be reasonably necessary to enable them to exercise their due diligence
responsibilities.
No Holder of Transfer Restricted Securities may participate in
any underwritten distribution hereunder unless such holder (a) agrees to sell
such Holder's Transfer Restricted Securities on the basis provided in any
underwriting arrangements approved in accordance with the terms hereof, and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
<PAGE> 13
13
The Company agrees not to effect any private or public sale or
distribution of any of its equity securities or securities convertible into or
exchangeable or exercisable for any such securities during the period beginning
seven days prior to, and ending 90 days after, the date on which the Shelf
Registration Statement becomes effective, except for (i) shares of Common Stock
issuable upon conversion of the 8% Preferred Stock or Debentures, (ii) shares
of Common Stock issuable upon the exercise of the presently outstanding stock
options and other options to be granted under the Company's Key Employee Stock
Incentive Program, Employee Stock Incentive Plan and 1995 Outside Directors'
Stock Option and Stock Compensation Plan in accordance with the terms thereof,
(iii) shares of Common Stock issuable pursuant to the exercise of warrants
outstanding as of the date hereof, the conversion of shares of the Company's
Employee Preferred Stock, the payment of dividends on the Company's 12%
Cumulative Preferred Stock or interest on the Company's 12% Senior Secured
Reset Notes due 1998, (iv) shares of Common Stock or Employee Preferred Stock
issuable under the Company's plan of reorganization, (v) shares of the
Company's Series A Cumulative Preferred Stock issuable upon conversion of the
Rights or (vi) securities issuable pursuant to registrations by the Company on
Form S-4 and Form S-8 or any successor thereto.
SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each
Holder (each such Holder an "Indemnified Holder") and each person that controls
each Indemnified Holder within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, and the agents, employees, officers and directors of
any such Indemnified Holder or any such controlling person of any Indemnified
Holder from and against any and all losses, claims, damages, judgments,
liabilities and expenses (including the reasonable fees and expenses of counsel
and other expenses in connection with investigating, defending or settling any
such action or claim), joint or several, as they are incurred arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus or Shelf Registration Statement or any supplement
or amendment thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except the Company
shall not be liable to any Indemnified Holder in any such case insofar as such
losses, claims, damages, judgments, liabilities or expenses arise out of, or
are based upon, any such untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
relating to such Indemnified Holder furnished in writing by such Indemnified
Holder to the Company expressly for use therein; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made on
any preliminary Prospectus if (i) such Holder failed to send or deliver a copy
of the Prospectus with or prior to the delivery of written confirmation of the
sale of Transfer Restricted Securities if the Company furnished the Holder with
sufficient copies thereof, and (ii) the Prospectus would have corrected such
untrue statement or omission; and provided further, that the Company shall not
be liable in any case to the extent that any loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission in the Prospectus, if such untrue
statement or alleged untrue statement or omission or alleged
<PAGE> 14
14
omission is corrected in an amendment or supplement to the Prospectus if,
having previously been furnished by or on behalf of the Company with copies of
the Prospectus as so amended or supplemented, such Holder thereafter fails to
deliver such Prospectus as so amended or supplemented, prior to or concurrently
with the sale of a Transfer Restricted Security to the person asserting such
loss, claim, damage, liability or expense who purchased such Transfer
Restricted Security which is the subject thereof from such Holder.
(b) If any action or proceeding (including any governmental
or regulatory investigation or proceeding) shall be brought or asserted against
any Indemnified Holder with respect to which indemnity may be sought against
the Company pursuant to this Section 8, such Indemnified Holder shall promptly
notify the Company in writing, and the Company shall have the right to assume
the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Holder and payment of all fees and expenses;
provided, that the omission so to notify the Company shall not relieve the
Company from any liability that it may have to any Indemnified Holder (except
to the extent that the Company is actually materially prejudiced or otherwise
forfeited material substantive rights or defenses by reason of such failure).
An Indemnified Holder shall have the right to employ separate counsel in any
such action or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Holder unless (i) the employment of such counsel has been specifically
authorized in writing by the Company, which authorization shall not be
unreasonably withheld, (ii) the Company has failed promptly to assume the
defense and employ counsel reasonably satisfactory to the Indemnified Holder,
(iii) the named parties to any such action or proceeding (including any
impleaded parties) include both the Indemnified Holder and the Company and such
Indemnified Holder shall have been advised by its counsel that there may be one
or more legal defenses available to it that are different from or additional to
those available to the Company (in which case the Company shall not have the
right to assume the defense of such action on behalf of such Indemnified
Holder) or (iv) a conflict or potential conflict exists (based on advice of
counsel to the Indemnified Holder) between the Indemnified Holder and the
Company (in which case the Company will not have the right to direct the
defense of such action on behalf of the Indemnified Holder). It is understood
that the Company shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel) at any time for such Indemnified Holder, which firm shall be
designated in writing by the Indemnified Holder, and that all such fees and
expenses shall be reimbursed promptly following receipt of invoices therefor as
they are incurred. The Company shall not be liable for any settlement of any
such action effected without the written consent of the Company, such consent
not to be unreasonably withheld or delayed, but if settled with the written
consent of the Company, or if there is a final judgment with respect thereto,
the Company agrees to indemnify and hold harmless each Indemnified Holder from
and against any loss or liability by reason of such settlement or judgment.
The Company shall not, without the prior written consent of each Indemnified
Holder affected thereby, effect any settlement of any pending or threatened
proceeding in which such Indemnified Holder has sought indemnity hereunder,
which (i) does not include an unconditional release of such Indemnified Holder
from all liability arising out of
<PAGE> 15
15
such action, claim, litigation or proceeding and/or (ii) would impose
injunctive relief on such Indemnified Holder.
(c) Each Indemnified Holder is hereby deemed to have agreed
to indemnify and hold harmless the Company, its directors, any person
controlling the Company and such person's agents, employees, officers and
directors (collectively, the "Company Indemnified Parties") to the same extent
as the foregoing indemnity from the Company to any Indemnified Holder, but only
with respect to information relating to each Indemnified Holder furnished to
the Company in writing by each Indemnified Holder, respectively, expressly for
use in a Prospectus, the Shelf Registration Statement or any supplement or
amendment thereto. In case any action shall be brought against any Company
Indemnified Party based on a Prospectus, Shelf Registration Statement or any
supplement or amendment thereto and in respect of which indemnity may be sought
against each Indemnified Holder pursuant to this Section 8(c), each Indemnified
Holder shall have the rights and duties given to the Company by Section 8(b)
(except that if the Company shall have assumed the defense thereof, each
Indemnified Holder may, but shall not be required to employ separate counsel
therein and participate in the defense thereof and the fees and expenses of
such counsel shall be at the expense of the Indemnified Holder) and the Company
Indemnified Parties shall have the rights and duties given to the Indemnified
Holders by Section 8(b).
(d) If the indemnification provided for in this Section 8 is
unavailable to any party entitled to indemnification pursuant to Section 8(a)
or 8(c), or is insufficient to hold any party entitled to indemnification
pursuant to 8(a) or 8(c) harmless with respect to any losses, claims, damages,
judgments, liabilities and expenses referred to in Section 8(a) or 8(c), then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, judgments, liabilities and expenses (including
any investigative, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted, but after deducting any contribution received by the
Company from persons other than the Indemnified Holders, such as persons who
control the Company within the meaning of the Securities Act or the Exchange
Act and officers and directors of the Company, who also may be liable for
contribution) (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and each Indemnified Holder on
the other from the offering of the Transfer Restricted Securities pursuant to
the Shelf Registration Statement or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and each
Indemnified Holder on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, judgments, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and each Indemnified Holder on
the other shall be deemed to be in the same proportions as the total net
proceeds from the initial sale of 8% Preferred Stock to the Initial Purchasers
(before deducting expenses) received by the Company bear to the total proceeds
(before expenses) to the applicable Indemnified Holder from the offering of the
Transfer Restricted Securities pursuant to the Shelf Registration Statement, in
the case of an Indemnified Holder. The relative fault of the
<PAGE> 16
16
Company on the one hand and each Indemnified Holder on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company on the one
hand or by each Indemnified Holder on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(e) The Company and each Indemnified Holder agree that it
would not be just and equitable if contributions pursuant to Section 8(d) were
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in Section
8(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. No person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not found guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in
this Section 8 are in addition to any liability that any indemnifying party may
otherwise have to any indemnified party.
SECTION 9. RULE 144 AND RULE 144A
The Company shall use its reasonable best efforts to file on a
timely basis all such reports required to be filed under the Exchange Act as,
and endeavor in good faith to take such other actions as, are reasonably
necessary to enable Holders to sell Transfer Restricted Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, (b) Rule 144A under the Securities Act, as such Rule may be
amended from time to time, and (c) any similar rules or regulations hereafter
adopted by the Commission. Upon request of any Holder of Transfer Restricted
Securities, the Company will deliver a written statement as to whether it has
complied with such requirements and will, at its expense, forthwith upon the
request of the Initial Purchasers, deliver to the Initial Purchasers a
certificate, signed by the Company's principal financial officer, stating (a)
the Company's name, address and telephone number (including area code), (b) the
Company's Internal Revenue Service identification number, (c) the Company's
Commission file number, (d) the number of shares of each class of capital stock
outstanding as shown by the most recent report or statement published by the
Company, and (e) whether the Company has filed the reports required to be filed
under the Exchange Act for a period of at least ninety (90) days prior to the
date of such certificate and in addition has filed the most recent annual
report required to be filed thereunder.
SECTION 10. MISCELLANEOUS
(a) Remedies. Each Holder of Transfer Restricted
Securities, in addition to being entitled to exercise all rights provided
herein, and as provided in the Purchase Agreement
<PAGE> 17
17
and granted by law, including the recovery of damages, shall be entitled to
specific performance of such Holder's rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees in any action for specific performance to waive the defense that
a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company has not and
shall not on or after the date of this Agreement enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders of Transfer Restricted Securities in this Agreement or otherwise
conflicts with the provisions hereof. The rights granted to the Holders of
Transfer Restricted Securities hereunder do not and will not in any way
conflict with and are not and will not be inconsistent with the rights granted
to the Holders of the Company's securities under any other agreements. No
holder of securities of the Company has rights to the registration of any
securities of the Company because of the execution, delivery or performance by
the Company of this Agreement or as a result of the filing of the Shelf
Registration Statement other than the holders of the PBGC Shares.
(c) No Adverse Action Affecting the Transfer Restricted
Securities. The Company has not taken and will not take, any action, or permit
any change to occur with respect to the Transfer Restricted Securities which
would adversely affect the ability of any of the Holders of Transfer Restricted
Securities to include such Transfer Restricted Securities in a registration
undertaken pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained the written
consent of Holders of a majority of the outstanding shares of 8% Preferred
Stock, principal amount of Debentures and shares of Common Stock constituting
Transfer Restricted Securities, as the case may be (with Holders of shares of
8% Preferred Stock or Debentures deemed to be Holders of the Common Stock into
which such securities may be converted for purposes of such calculation).
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders of Transfer
Restricted Securities whose securities are being sold pursuant to the Shelf
Registration Statement and that does not directly or indirectly affect the
rights of other Holders of Transfer Restricted Securities may be given by the
Holders of a majority of the Transfer Restricted Securities being sold.
(e) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail (registered or certified, return receipt requested), telex,
telecopier, or air courier guaranteeing overnight deliver:
(i) if to a Holder of Transfer Restricted Securities,
at the address set forth on the records of the Company or the
Registrar under the Indenture, with a copy to the Registrar, and
if to each of the Initial Purchasers, at the addresses set forth
in the Purchase Agreement; and
<PAGE> 18
18
(ii) if to the Company, initially at its address
set forth in the Purchase Agreement and thereafter at such other
address, notice of which is given in accordance with the
provisions of this Section.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications shall
be concurrently delivered by the Person giving the same to the Trustee under
the Indenture at the address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to
the benefit and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities.
(g) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to the securities sold pursuant to the Purchase Agreement
except as provided in the Designation
<PAGE> 19
19
of the Preferred or the Indenture and in the Purchase Agreement. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
TRANS WORLD AIRLINES, INC.
By: /s/ M. J. Palumbo
----------------------------------
Name: Michael J. Palumbo
Title: VP & Treasurer
PAINEWEBBER INCORPORATED
ALEX. BROWN & SONS
INCORPORATED
By: PaineWebber Incorporated
By: /s/ Joseph M. Cerulli
----------------------------
Name: Joseph M. Cerulli
Title: First Vice President
<PAGE> 1
EXHIBIT 10.51
TRANS WORLD AIRLINES, INC.
1995 OUTSIDE DIRECTORS'
STOCK OWNERSHIP AND STOCK OPTION PLAN
1. Purpose. The Trans World Airlines, Inc. 1995 Outside Directors' Stock
Ownership and Stock Option Plan (the "Plan") is intended to provide an
incentive to Outside Directors (as defined below) of Trans World Airlines,
Inc., a Delaware corporation (the "Company"), to remain in the service of the
Company and to increase their efforts for the success of the Company, and to
encourage such Outside Directors to own shares of the Company's stock, thereby
aligning their interests more closely with the interests of the Company's
stockholders.
2. Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means a committee consisting of members of the
Board authorized to administer the Plan.
(c) "Common Stock" means the common stock, par value $.01 per
share, of the Company.
(d) "Deferred Percentage" shall have the meaning set forth in
Section 6(b) hereof.
(e) "Deferred Retainer Account" shall have the meaning set forth
in Section 6 hereof.
(f) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(g) "Exchange Act" means the Securities and Exchange Act of 1934,
as amended.
(h) "Fair Market Value" means (i) the closing price of the Common
Stock on the principal stock exchange or the National Association of
Securities Dealer Automated Quotation National Market
("NASDAQ/National Market"), as the case may be, on which such Common
Stock is then listed or admitted to trading, (ii) if no sale takes
place on such day on such exchange or the NASDAQ/National Market, as
the case may be, the average of the last reported closing bid and
asked prices on such day as officially quoted on such exchange or the
NASDAQ/National Market, as the case may be, (iii) if the Common Stock
is not then listed or admitted to trading on any stock exchange or the
NASDAQ/National Market, as the case may be, the average of the last
reported closing bid and asked prices on such day in the
over-the-counter market, as furnished by the NASDAQ/National Market or
the National Quotation Bureau, Inc., (iv) if neither such corporation
at the time is exchanged in the business of reporting such prices, as
furnished by any similar firm then
<PAGE> 2
engaged in such business, or (v) if there is no such firm, as
furnished by any member of the National Association of Securities
Dealers ("NASD") selected mutually by the Outside Director and the
Company, or if they cannot agree upon such selection, as selected by
two such members of the NASD, one of which shall be selected by the
Outside Director and one of which shall be selected by the Company.
(i) "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended.
(j) "Legal Representative" means an Outside Director's legal
guardian, or a deceased Outside Director's Executors, legal heirs,
administrators, testamentary trustees and beneficiaries or
distributees, whichever is applicable at any time.
(k) "Outside Directors" means members of the Board of the Company
who are not members of the management of, nor are otherwise employed
by, the Company or any subsidiary of the Company.
(l) "options" means the options to purchase shares of Common Stock
granted pursuant to this Plan.
(m) "Retainer" means the $20,000 annual retainer, payable in
advance as of January 1 of each year, scheduled to be paid to each
Outside Director for service on the Board for a fiscal year.
(n) "Rule 16b-3" means Rule 16b-3 of the Exchange Act, as amended
from time to time.
(o) "Securities Act" means the Securities Act of 1933, as amended.
(p) "Withdrawal Date" shall have the meaning set forth in Section
6(d) hereof.
3. Administration of the Plan.
(a) COMMITTEE. This Plan shall be self-administering; provided,
however, that to the extent the Plan is not self-administering, the
Plan shall be administered, construed and interpreted by the Company's
existing Compensation Committee or a sub-committee thereof (the
"Committee"). No member of the Committee, while serving as such, who
has not recused himself or herself from all administration,
construction of or interpretation of the Plan on behalf of the
Company, shall be eligible to participate thereunder and any Committee
member administering the Plan shall, to the extent required to comply
with the provisions of Rule 16b-3 or any successor provision, be a
"disinterested person" as from time to time defined therein.
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<PAGE> 3
(b) AUTHORITY OF THE COMMITTEE. The Committee shall adopt such
rules as it may deem appropriate in order to carry out the purpose of
the Plan. All questions of interpretation, administration and
application of the Plan shall be determined by a majority of the
members of the Committee then in office, except that the Committee may
authorize any one or more of its members or any officer of the Company
to execute and deliver documents on behalf of the Committee. The
determination of such majority shall be final and binding on all
matters related to the Plan. No member of the Committee shall be
liable for any act done or omitted to be done by such member or by any
other member of the Committee in connection with the Plan, except for
such member's own willful misconduct or as expressly provided by law.
Business shall be transacted by a vote of the members of the
Committee, and any decision or determination reduced to writing and
signed by the members shall be as fully effective as if it had been
made by a vote at a meeting duly called and held.
4. Stock Reserved for the Plan. The aggregate number of shares of Common
Stock authorized for issuance under the Plan is three hundred thousand
(300,000), subject to adjustment pursuant to Section 10 hereof. Shares of
Common Stock delivered hereunder may be either authorized but unissued shares
or previously issued shares reacquired and held by the Company. In the event
that any outstanding option (or portion thereof) under the Plan for any reason
expires unexercised or terminates without vesting or exercise prior to the end
of the period during which options may be granted, the shares of Common Stock
allocable to the unexercised portion of such option again may be subjected to
an option under the Plan.
5. Required Ownership of Common Stock. Subject to any trading
restrictions imposed by applicable securities laws, as of the later to occur of
(i) the date on which this Plan is approved by the stockholders of the Company
or (ii) the date on which an individual later elected as an Outside Director is
nominated for election, each Outside Director (or future Outside Director, as
the case may be) shall be required to own, and shall provide the Company with
written certification of such ownership substantially in the form provided in
Exhibit "A" hereto, at least one thousand (1,000) shares of Common Stock. Each
Outside Director (or future Outside Director, as the case may be) shall
maintain ownership of such number of shares of Common Stock until such Outside
Director ceases to serve as a member of the Board. In addition, Outside
Directors whose term of service on the Board began before the 1995 Annual
Meeting of Stockholders may elect to purchase up to an additional two thousand
(2,000) shares of Common Stock, which shares the Plan shall not require such
Outside Director to retain. The purchase price for shares of Common Stock
purchased by Outside Directors (or future Outside Director, as the case may be)
pursuant to this Section 5 shall be as follows: (x) $4.1875 (which is the same
as the Subscription Price for the Equity Rights issued to holders of the
Company's equity securities as of August 23, 1995, the Effective Date of the
Company's Plan of Reorganization) per share for shares of Common Stock
purchased by Outside Directors whose current term of service on the Board began
at or before the 1995 Annual Meeting of Stockholders, and (y) the Fair Market
Value
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<PAGE> 4
of the Common Stock on the date of purchase for shares of Common Stock
purchased by Outside Directors whose Board service begins after the 1995 Annual
Meeting of Stockholders.
6. Payment of Retainer.
(a) ELECTION OF PAYMENT. Subject to Section 10 hereto and during
the term of this Plan, each Outside Director may elect to receive the
Retainer payable to such Outside Director in (i) cash, (ii) shares of
Common Stock, or (iii) any combination of (i) and (ii). Alternatively,
each Outside Director may elect to defer all or any portion of his or
her annual Retainer by investing such Retainer in "Deferred Retainer
Account" maintained by the Company. If the Outside Director makes no
annual election regarding payment of the Retainer payable to him or
her, such Outside Director's Retainer for such year will be paid
entirely in cash.
To make an election regarding his or her annual Retainer, each
Outside Director must annually execute and deliver to the Secretary of
the Company a written election substantially in the form set forth in
Exhibit "B" hereto as follows: (i) for elections relating to Retainers
payable during 1995, on or prior to thirty (30) days following the
later to occur of (a) the date on which this Plan is approved by the
Board or (b) the commencement of such Outside Director's directorship;
and (ii) for elections relating to Retainers payable during years
subsequent to 1996, on or prior to December 31 of the preceding year
for which such election is being made. Once made, elections are
irrevocable for the year. An Outside Director who elects to receive
shares of Common Stock or to participate in the Deferred Retainer
Account program shall have no rights as a stockholder with respect to
shares of Common Stock issuable in payment of his or her Retainer or
credited to his Deferred Retainer Account until and unless shares of
Common Stock are issued to the Outside Director. No Outside Director
may assign or transfer entitlements relating to Deferred Retainer
Account balances, except by will or by the laws of descent and
distribution or pursuant to a domestic relations order as defined in
the Internal Revenue Code or Title I of ERISA, or the rules
thereunder.
(b) DEFERRED RETAINER ACCOUNT. Upon an Outside Director's proper
election to participate in the Retainer Account Program, the Company
will create a separate Deferred Retainer Account on behalf of such
Outside Director. On the first business day following January 1 of
each fiscal year for which such Outside Director elects to participate
in the Deferred Retainer Account program, the Company will credit to
such participating Outside Director's Deferred Retainer Account that
number of shares of Common Stock equaling (i) that percentage of such
Outside Director's Retainer which is being deferred (the "Deferred
Percentage") x $20,000, divided by (ii) (x) the $4.1875 Subscription
Price for Retainer amounts payable for 1996; and (y) the Fair Market
Value of the Common Stock on the date on which such Retainer became
payable for Retainer amounts payable after
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<PAGE> 5
1996. In the event the Company pays any dividend on the Common Stock
during the period any Outside Director's Retainer Account remains in
effect, a number of shares of Common Stock will be credited to such
Retainer Account, with the number of shares credited equaling (a) in
the event of a cash dividend, the per share cash dividend amount times
the balance of shares of Common Stock in the Deferred Retainer
Account divided by (x) the $4.1875 Subscription Price for dividends
payable in 1996; and (y) the Fair Market Value of the Common Stock on
the dividend date for dividends payable after 1996; or (b) in the
event of a stock dividend, (a) the per share dividend amount times (b)
the balance of shares of Common Stock in the Deferred Retainer
Account.
Upon the earlier to occur of (i) December 31, 2000 and (ii)
the last date of a participating Outside Director's service on the
Board (the "Withdrawal Date"), each participating Outside Director
will be entitled to a payment from the Company consisting of (i)
shares of Common Stock, (ii) cash, or (iii) a combination of (i) and
(ii). Such payment will be valued as follows: such Outside Director
will receive (a) shares of Common Stock equaling the product of the
balance of the Deferred Retainer Account and the percentage of such
Outside Director's account to be paid in shares of Common Stock; and
(b) cash in an amount equaling the product of the balance of the
Deferred Retainer Account and the percentage of such Outside
Director's account to be paid in cash multiplied by the Fair Market
Value of the Common Stock on such payment date.
(c) PAYMENT OF RETAINERS IN SHARES OF COMMON STOCK. During the
term of this Plan, upon an Outside Director's proper election to
receive part or all of his or her annual Retainer in shares of Common
Stock, the Company will make a payment, payable in advance as of
January 1 of each fiscal year for which such Outside Director has made
such election, of shares of Common Stock and/or cash in the
proportions elected. The number of shares of Common Stock issuable to
such Outside Director shall be a number of shares determined by
dividing (a) the percentage of his or her Retainer the Outside
Director has elected to receive in shares of Common Stock times
$20,000 by (b) the Fair Market Value of the Common Stock on the date
on which the Retainer became payable.
7. Option Grants. Options granted pursuant to the Plan shall be
evidenced by option certificates in such form as the Committee from time to
time shall approve; such certificates and the options granted hereby or
thereby, shall comply with and be subject to the following terms and
conditions:
(a) NUMBER OF SHARES. Each option certificate shall state the
total number of shares of the Common Stock to which it pertains. Each
Outside Director shall be granted annually, as of the first business
day following the later to occur of (i) January 1, 1997 or (ii) the
January 1 next following the first anniversary of qualification as an
Outside Director, an option to purchase an aggregate of one thousand
five hundred (1,500) shares of Common Stock subject, to adjustment
under Section 10 hereto.
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<PAGE> 6
(b) OPTION PRICE. The option price per share shall be the Fair
Market Value per share of the Common Stock on the date of grant.
(c) MEDIUM AND TIME OF PAYMENT. The option price shall be payable
upon the exercise of the option in an amount equal to the number of
shares then being purchased times the per share option price. Payment
at the election of the optionee, shall be (i) in cash; (ii) by
delivery to the Company of a certificate or certificates for shares of
the Common Stock duly endorsed for transfer to the Company with
signature guaranteed, if requested by the Company, by a member firm of
the New York Stock Exchange or by a national banking association; or
(iii) by a combination of (i) and (ii). In the event of any payment
by delivery of shares of the Common Stock, such shares shall be valued
on the basis of their respective Fair Market Values on the date of
exercise. If payment is made by delivery of shares of the Common
Stock, the value of such stock shall not exceed the total option price
payment.
(d) TERMS OF OPTIONS. Terms of options granted under the Plan
shall commence on the date of grant and shall expire on the tenth
anniversary of the date of grant, subject to Section 10 hereto. No
option may be granted under the Plan after December 31, 2000.
(e) VESTING. Each option shall vest twenty percent (20%) on the
first year's anniversary of the date of grant, forty percent (40%) on
the second year's anniversary of the date of grant, and the remaining
forty percent (40%) on the third year's anniversary of the date of
grant. Options shall be exercisable immediately upon vesting;
provided, however, that no option granted to a person who is subject
to Section 15 of the Exchange Act or the rules and regulations
promulgated thereunder shall be subject to exercise prior to the
expiration of six months from the date of grant, and further provided,
however, that all outstanding options shall also vest and be
exercisable on the date of the consummation of a "change in control."
For purposes of this section, a change in control will be deemed to be
deemed to have occurred if any "person" or "group" of persons (as
determined pursuant to Sections 14(d) and 15(d) of the Exchange Act
and the rules and regulations promulgated thereunder) (i) becomes the
beneficial owner, directly or indirectly, of voting securities of the
Company, or securities convertible into, or exchangeable for, voting
securities, representing more than 50% of the combined voting power of
the Company's then outstanding securities or (ii) acquires the right
or power to nominate and/or control, directly or indirectly, a
majority of the members of the Board, without having first received
the prior written consent of at least two-thirds of the members of the
entire Board in office prior to any such person or group of persons
acquiring such right or power.
(f) METHOD OF EXERCISE. All options granted hereunder shall be
exercised by written notice directed to the Secretary of the Company
at its principal place of business, accompanied by payment made in
accordance with subsection (c) above. The Company shall make delivery
of such shares within a reasonable period of time; provided, however,
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<PAGE> 7
that if any law or regulation requires the Company to take any action
(including but not limited to the filing of a registration statement
under the Securities Act and causing such registration statement to
become effective) with respect to the shares specified in such notice
before the issuance thereof, then the date of delivery of such shares
shall be extended for the period necessary to take such action.
(g) WHO MAY EXERCISE; NON-TRANSFERABILITY OF STOCK OPTIONS. No
option shall be assignable or transferable by the optionee except by
will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined in the Internal Revenue
Code or Title I of ERISA, or the rules thereunder; and, during the
lifetime of an optionee, the option shall be exercisable only by the
optionee.
(h) OPTIONEE'S AGREEMENT. If, in the opinion of counsel for the
Company, such action is necessary or desirable, no option shall be
granted to any optionee unless at such time such optionee truly
represents and warrants that the stock will be acquired for investment
only and not for purposes of resale or distribution and makes such
further representation and warranties as are deemed necessary or
desirable by counsel to the Company with regard to holding and resale
of the stock. If at the time of the exercise of any option, in the
opinion of counsel for the Company, it is necessary or desirable, in
order to comply with any applicable laws or regulations relating to
the sale of securities, that the optionee shall truly represent and
warrant that he or she is purchasing the shares that are subject to
the option for investment and not with any present intention to resell
or distribute the same or make other and further representations and
warranties with regard to the holding and resale of the shares, the
optionee, upon the request of the Committee, will execute and deliver
to the Company an agreement or affidavit to such effect. All
certificates issued pursuant to the exercise of any option shall be
marked with a restrictive legend, if such marking, in the option of
counsel to the Company, is necessary or desirable.
(i) RIGHTS AS A STOCKHOLDER. An optionee shall have no rights as
a stockholder with respect to shares of Common Stock covered by his or
her option until the date of the issuance of the shares to him or her
and only after such shares are fully paid. Unless specified in
Section 5(i) hereof, no adjustment will be made for dividends or other
rights for which the record date is prior to the date of such
issuance.
(j) TERMINATION OF SERVICES. In the event an optionee during his
or her life ceases to be an Outside Director of the Company for any
reason, any vested option or unexercised portion thereof granted to
him or her shall terminate on or shall not be exercisable after the
earlier to occur of (i) the expiration date of the option, or (ii)
ninety (90) days after termination of service as an Outside Director.
In the event of the death of the optionee while he or she is an
Outside Director of the Company, any vested option or unexercised
portion thereof granted to him or her may be exercised by his or her
personal representatives, heirs or legatees at any time prior to the
expiration of six (6) months from
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<PAGE> 8
the date of the death of the optionee, but in no event later than the
date of expiration of the option period. In the event an optionee
ceases to be an Outside Director of the Company for any reason, any
non-vested options shall terminate as of the date such person ceases
to be an Outside Director.
(k) MISCELLANEOUS PROVISIONS. The stock option certificates
authorized under the Plan shall contain such other provisions,
including, without limitation, restriction upon the exercise of the
option as the Committee shall deem advisable.
8. Withholding. An Outside Director shall be responsible for all
federal, state or local taxes, including, without limitation, FICA and FUTA
taxes, if any, (collectively "Withholding Taxes") with respect to the exercise
of options or the payment of Retainers, whether such Retainers are payable in
cash, Common Stock, or by means of a Deferred Retainer Account. The Company
shall have the right to deduct a sufficient number of shares and/or cash or to
require the Outside Director or his or her Legal Representative to tender
sufficient cash or shares of Common Stock to the Company to pay any Withholding
Taxes required upon the exercise of options or the payment of Retainers, or to
take such other action as may be necessary to satisfy any such Withholding Tax
obligations. Shares of Common Stock withheld shall be valued at their Fair
Market Value on the date the tax withholding is effective.
9. Adjustments Upon Changes in Capitalization. In the event that the
outstanding shares of Common Stock of the Company are hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company, in any such case by reason of a
recapitalization, reclassification, stock split, combination of shares or
dividends payable in shares of the Common Stock, an adjustment of like kind
shall automatically be made in the number and kind of shares available for
grant under the Plan, subject to the right of the Committee to make such
further adjustment as it shall deem necessary to effect the provisions of this
Section. No fractional shares shall be issued in making the foregoing
adjustments. No increase in or exchange of outstanding shares of Common Stock
for fair value approved by the Board, whether or not in connection with a
recapitalization or reclassification, will result in any adjustment to the
number of shares issuable hereunder. All adjustments, if any, made by the
Committee under this paragraph shall be conclusive and binding on the Outside
Director.
Subject to any required action by the stockholders, if the Company
shall be a party to any reorganization involving merger, consolidation,
acquisition of the stock or acquisition of the assets of the Company, the
Committee, in its discretion, may declare (a) that all shares granted hereunder
shall pertain to and apply with appropriate adjustment as determined by the
Committee to the securities of the resulting Corporation to which a holder of
the number of shares of Common Stock would be entitled; provided, however, that
in the absence of any such determination (b) the right of an Outside Director
to receive shares of Common Stock pursuant to this Plan shall terminate and the
Company shall pay such Outside Director in cash in lieu
-8-
<PAGE> 9
thereof the Retainers which he would otherwise be entitled to but for his or
her election to participate in the Plan.
10. Fractional Shares. In no event shall the Company be required to issue
fractional shares. Whenever under the terms of this Section a fractional share
of Common Stock would otherwise be required to be issued, an amount in lieu
thereof shall be paid in cash based upon the Fair Market Value of such
fractional share as of the last business day of the year during which the
fractional share is payable.
11. Term of Plan. The Plan shall become effective upon adoption of the
Plan by the Board; provided, however, such effectiveness shall be subject to
the approval of the Plan by the holders of a majority of the voting power of
the outstanding shares of the Company's Common Stock and Employee Preferred
Stock, voting together, within twelve months of adoption by the Board if, in
the opinion of counsel to the Company, such approval is required by Section 16
of the Exchange Act or by any other federal or state law, securities law or
rule or regulation promulgated thereunder. The Plan shall terminate at
midnight, Eastern Standard Time, on December 31, 2000, but the Board may
terminate the Plan at any time prior to said time and date. Such termination
of the Plan by the Board shall not alter or impair any of the rights or
obligations under any grant of Restricted Stock Award, Deferred Retainer
Account balance, or other grant previously granted unless the affected Outside
Director shall so consent. Upon termination of the Plan by the Board, all
previously granted options, Restricted Stock Awards, Deferred Retainer credits
or elections to receive shares of Common Stock in lieu of cash shall be
immediately vested, and such Outside Directors shall become immediately
entitled to receive the Common Stock relating thereto. However, after
termination of the Plan, no Outside Director shall be entitled to receive any
further options, Restricted Stock Award credits, or Deferred Retainer Credits
pursuant to this Plan.
12. Amendment; Termination. The Board may at any time and from time to
time alter, amend, suspend or terminate the Plan in whole or in part; provided,
however, that no amendment which requires stockholder approval in order for the
exemption available under Rule 16b-3 to be applicable to the Plan and the
Outside Directors shall be effective unless the same shall be approved by the
stockholders of the Company entitled to vote thereon; and provided further,
that the provisions of Section 6(a) hereof shall not be amended more than once
every six months, other than to comply with changes in the Internal Revenue
Code of 1986 or ERISA, or the rules thereunder.
13. Nature of Shares Issuable Under the Plan. Shares of Common Stock
issued pursuant to the Plan may but need not be registered under the Securities
Act and, in the case of any unregistered shares, shall bear such restrictive
legends on the certificates representing such shares as the Company shall deem
appropriate. If any law or any regulation of any commission or agency of
competent jurisdiction shall require the Company or the Outside Director to
take any action with respect to the Common Stock acquired under the Plan, then
the date upon which the Company shall issue or cause to be issued the
certificate or certificates for the shares shall be
-9-
<PAGE> 10
postponed until full compliance has been made with all such requirements of law
or regulations; provided, however, that the Company shall use its reasonable
best efforts to take all necessary action to comply with such requirements of
law or regulation.
14. Outside Director Representations. By participating in the Plan, an
Outside Director represents and, if requested by the Company, shall, at or
before the time of the issuance of the shares with respect to which an eligible
grant has been made, deliver to the Company his or her written statement
satisfactory in form and content to the Company that he intends to hold the
shares so acquired by him for investment and not with a view to resale or other
distribution thereof to the public in violation of the Securities Act.
Moreover, in the event that the Company shall determine that, in compliance
with the Securities Act or other applicable statutes or regulations, it is
necessary to register any of the shares with respect to which an eligible grant
has been made, or to qualify any such shares for exemption from any of the
requirements of the Securities Act or any other applicable statute or
regulation, no shares shall be issued to the Outside Director until the
required action has been completed; provided, however, that the Company shall
use its reasonable best efforts to take all action necessary to comply with
such requirements of law or regulation.
15. Restriction on Transfer. Notwithstanding anything contained herein to
the contrary (but subject to the provisions of Section 5 hereto), no shares
issued pursuant to this Plan may be resold or transferred for a period of two
(2) years after their issuance to Outside Directors.
16. No Vested Rights.
(a) RETENTION AS AN OUTSIDE DIRECTOR. Nothing contained in the
Plan or with respect to any grant shall interfere with or limit in any
way the right of the stockholders of the Company to remove any Outside
Director from the Board pursuant to the Certificate of Incorporation
and By-laws of the Company, nor confer upon any Outside Director any
right to continue in the service of the Company as an Outside
Director.
(b) NON-TRANSFERABILITY. No right or interest of any Outside
Director in any grant shall be assignable or transferrable during the
lifetime of the Outside Director, either voluntarily or involuntarily,
or subjected to any lien directly or indirectly, by operation of law
or otherwise, including execution, levy, garnishment, attachment,
pledge or bankruptcy. In the event of an Outside Director's death, an
Outside Director's rights and interests in a grant shall be
transferrable by testamentary will or the laws of dissent and
distribution to an Outside Director's Legal Representative. The
Committee may require any person claiming such status to present
evidence satisfactory to the Committee of such status. Nothing herein
shall be deemed to require the Company to apply for or to obtain such
listing, registration or qualification.
17. Plan Interpretation. The Plan is intended to comply with Rule 16b-3
and shall be construed to so comply. The validity, construction,
interpretation and effect of the Plan and all rights of any persons having or
claiming to have any interest in the Plan shall, to the extent such
-10-
<PAGE> 11
questions are governed by state law, be governed by the internal laws of the
State of Missouri without regard to its conflict of law rules and all share
issuable under this Plan shall be issued in all offers to purchase such shares
shall be made in the State of Missouri.
18. Headings. The headings of sections and sub-sections herein are
included solely for convenience of reference and shall not effect the meaning
or interpretation of any of the provisions of the Plan.
ADOPTED, this _________ day of _______________________________, 1995.
TRANS WORLD AIRLINES, INC.
By:_____________________________________
Its:____________________________________
-11-
<PAGE> 12
Exhibit "A"
OUTSIDE DIRECTOR'S CERTIFICATE
Pursuant to the requirements of Section 5 of that certain 1995 Outside
Directors' Stock Ownership and Stock Option Plan (the "Plan"), the undersigned
hereby certifies as follows:
1. As of the date hereof, the undersigned was a duly elected
Outside Director (as defined in the Plan) of the Board of Directors of
Trans World Airlines, Inc. (the "Company").
2. As of the later to occur of (i) November 14, 1995, the date on
which the Plan was approved by the stockholders of the Company at the
Annual Meeting of Stockholders of the Company or (ii) the date on
which the undersigned was nominated for election as an Outside
Director, the undersigned owned at least one thousand (1,000) shares
of the common stock of the Company, $.01 par value per share.
3. Pursuant to the requirements of the Plan, the undersigned has
agreed to maintain ownership of at least one thousand (1,000) shares
of the Company's common stock from the date specified in paragraph (2)
above until the undersigned's service as a member of the Board of
Directors of the Company ceases.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of __________, 199__.
Signature
________________________________________
Name (Please Print)________________________________
<PAGE> 13
Exhibit "B"
1995 OUTSIDE DIRECTORS'
STOCK OWNERSHIP AND STOCK OPTION PLAN
ANNUAL RETAINER ELECTION FORM
To: Corporate Secretary
Trans World Airlines, Inc. (the "Company")
Pursuant to the requirements of Section 6 of the Trans World Airlines,
Inc. 1995 Outside Directors' Stock Ownership and Stock Option Plan (the
"Plan"), the undersigned, an Outside Director of the Company, hereby elects to
receive the Retainer payable to the undersigned as provided below. All
capitalized terms not otherwise defined have the meanings ascribed to such
terms in the Plan.
1. ALLOCATION OF RETAINER.
I the undersigned, an Outside Director pursuant to the Trans
World Airlines, Inc. 1995 Outside Directors' Stock Ownership and Stock
Option Plan (the "Plan"), hereby elect to receive my annual Retainer
(as such term is defined in the Plan) as follows:
[ ] I elect to receive my annual Retainer entirely in cash.
[ ] I elect to receive my annual Retainer entirely in shares of
Common Stock.
[ ] I elect to defer all of my annual Retainer, and to invest all
of such annual Retainer in a Deferred Retainer Account.
[ ] I elect to allocate my annual Retainer by (a) receiving the
following percentages of cash and shares of Common Stock and
(b) deferring the following percentage by investing such
percentage in a Deferred Retainer Account:
A. __________ % Cash
B. __________ % shares of Common Stock
C. __________ % deferred and invested in a Deferred
Retainer Account
D. 100 % TOTAL (must be the sum of A, B and C)
2. ELECTION YEAR
This election is made for the year ending December 31, 199__.
<PAGE> 14
3. TIMELINESS OF ELECTION
The undersigned acknowledges that this election, which is made as of
the date below, is made in a timely fashion according to the requirements of
Section 6 (a) of the Plan.
I UNDERSTAND THAT IF I FAIL TO MARK A BOX ON THIS ELECTION FORM, I
WILL BE DEEMED TO HAVE ELECTED TO RECEIVE MY ANNUAL RETAINER ENTIRELY IN CASH.
Date____________________________________
Signature_______________________________
Name (Please Print)_____________________________
-14-
<PAGE> 1
EXHIBIT 12
TRANSWORLD AIRLINES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
Prior Predecessor Company Predecessor Company
--------------------------------------- ----------------------------------------
Ten months Two months Eight months
---------- ---------- ------------
Year ended ended ended Year ended ended
---------- ----- ----- ---------- -----
December 31, December 31, October 31, December 31, December 31, August 31,
------------ ------------ ----------- ------------ ------------ ----------
1991 1992 1993 1993 1994 1995
---- ---- ---- ---- ---- ----
(Amounts in Thousands, except for ratio)
<S> <C> <C> <C> <C> <C> <C>
Loss from operations
before income taxes $ (513) $(314,292) $(362,620) $(88,140) $(432,869) $(338,309)
Add:
Interest on
indebtedness (1) 333,810 110,096 91,877 31,204 195,352 123,247
Portion of rents
representative of the
interest factor 67,594 67,700 57,821 12,198 87,122 60,849
-------- --------- --------- -------- --------- ---------
Income as adjusted $400,891 $(136,496) $(212,922) $(44,738) $(150,395) $(154,213)
-------- --------- --------- -------- --------- ---------
Fixed charges:
Interest on
indebtedness $333,810 $ 110,096 $ 91,877 $ 31,204 $ 195,352 $ 123,247
Capitalized interest 3,536 3,099 2,104 267 2,133 -
Portion of rents
representative of the
interest factor 67,594 67,700 57,821 12,198 87,122 60,849
-------- --------- --------- -------- --------- ---------
Fixed charges $404,940 $ 180,895 $ 151,802 $ 43,669 $ 284,607 $ 184,096
-------- --------- --------- -------- --------- ---------
Preferred stock dividends:
Preferred stock dividend
requirements (2) $ 85,249 $ 85,350 $ 71,125 $ 2,425 $ 15,000 $ 11,554
Tax adjustment 54,503 54,568 45,473 1,550 9,590 7,387
-------- --------- --------- -------- --------- ---------
Preferred stock dividends $139,752 $ 139,918 $ 116,598 $ 3,975 $ 24,590 $ 18,941
-------- --------- --------- -------- --------- ---------
Combined Fixed Charges and
Preferred Stock Dividends $544,692 $ 320,813 $ 268,400 $ 47,644 $ 309,197 $ 203,037
-------- --------- --------- -------- --------- ---------
Ratio of earnings to combined
fixed charges and preferred
stock dividends 0.74 (0.43) (0.79) (0.94) (0.49) (0.76)
-------- --------- --------- -------- --------- ---------
Deficiency $143,801 $ 457,309 $ 481,322 $ 92,382 $ 459,592 $ 357,250
-------- --------- --------- -------- --------- ---------
<CAPTION>
Reorganized Predecessor Reorganized
Company Company Company
----------- ------------ ------------
Four months Three months Three months
----------- ------------ ------------
ended ended ended
----- ----- -----
December 31, March 31, March 31,
------------ --------- ---------
1995 1995 1996
---- ---- ----
(Amounts in Thousands, except for ratio)
<S> <C> <C> <C>
Loss from operations
before income taxes $(32,268) $(122,753) $(74,278)
Add:
Interest on
indebtedness (1) 45,917 51,937 33,547
Portion of rents
representative of the
interest factor 32,131 23,168 23,435
-------- --------- --------
Income as adjusted $ 45,780 $ (47,648) $(17,296)
-------- --------- --------
Fixed charges:
Interest on
indebtedness $ 45,917 $ 51,937 $ 33,547
Capitalized interest - - 650
Portion of rents
representative of the
interest factor 32,131 23,168 23,435
-------- --------- --------
Fixed charges $ 78,048 $ 75,105 $ 57,632
-------- --------- --------
Preferred stock dividends:
Preferred stock dividend
requirements (2) $ 4,751 $ 3,750 $ 3,997
Tax adjustment 3,038 2,398 2,555
-------- --------- --------
Preferred stock dividends $ 7,789 $ 6,148 $ 6,552
-------- --------- --------
Combined Fixed Charges and
Preferred Stock Dividends $ 85,837 $ 81,253 $ 64,184
-------- --------- --------
Ratio of earnings to combined
fixed charges and preferred
stock dividends 0.53 (0.59) (0.27)
-------- --------- --------
Deficiency $ 40,057 $ 128,901 $ 81,480
-------- --------- --------
</TABLE>
(1) Includes amoritization of debt expense.
(2) Preferred stock dividend requirements for the three months ended March
31, 1996 exclude special dividend requirements of $20.0 million in
connection with the early redemption of the 12% Preferred Stock.
<PAGE> 1
EXHIBIT 23.1
ACCOUNTANTS' CONSENT
The Board of Directors
Trans World Airlines, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference of our firm under the heading "Experts" in the prospectus. Our
report, dated March 6, 1996, refers to the application of fresh start reporting
as of September 1, 1995 and November 1, 1993.
/s/ KPMG Peat Marwick LLP
----------------------------
KPMG Peat Marwick LLP
Kansas City, Missouri
May 23, 1996
<PAGE> 1
EXHIBIT 24
STATE OF MISSOURI
COUNTY OF ST. LOUIS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, William M. Hoffman, a Director
of TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Richard P. Magurno my true and lawful attorney-in-fact,
with full power of substitution for me in any and all capacities, to sign,
pursuant to the requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in connection with the
registration of 3,869,000 shares of the Company's 8% Cumulative Convertible
Exchangeable Preferred Stock ("Preferred Stock"), along with the $193,450,000
principal amount of the Company's 8% Convertible Subordinated Debentures due
2006 (the "Debentures") issuable upon exchange of the Preferred Stock and the
9,544,923 shares of the Company's Common Stock issuable upon conversion of the
Preferred Stock or the Debentures, subject to adjustment under certain
circumstances, and to file the same with the Securities and Exchange
Commission, together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead, in any and all
capacities, any amendments and supplements to said Registration Statement
(including any post-effective amendments), incorporating such changes as any of
the said attorney-in-fact deems appropriate, in the matter of the proposed
shelf registration by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 24th day
of May, 1996.
/s/ William M. Hoffman
----------------------
William M. Hoffman
ACKNOWLEDGEMENT
BEFORE me this 24th day of May, 1996, came WILLIAM M. HOFFMAN,
personally known to me, who in my presence did sign and seal the above and
foregoing Power of Attorney and acknowledged the same as his true act and deed.
/s/ Barbara A. Creely
---------------------
NOTARY PUBLIC
State of Missouri
My Commission Expires:
Barbara A. Creely, Notary Public
St. Louis County, State of Missouri
My Commission Expires 6/30/97
NOTARY SEAL
<PAGE> 2
STATE OF MISSOURI
COUNTY OF ST. LOUIS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Thomas F. Meagher, Chairman of
the Board of Directors of TRANS WORLD AIRLINES, INC. (the "Company"), a
Delaware corporation, do constitute and appoint Richard P. Magurno my true and
lawful attorney-in-fact, with full power of substitution for me in any and all
capacities, to sign, pursuant to the requirements of the Securities Act of
1933, the Registration Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the registration of 3,869,000 shares of the Company's 8%
Cumulative Convertible Exchangeable Preferred Stock ("Preferred Stock"), along
with the $193,450,000 principal amount of the Company's 8% Convertible
Subordinated Debentures due 2006 (the "Debentures") issuable upon exchange of
the Preferred Stock and the 9,544,923 shares of the Company's Common Stock
issuable upon conversion of the Preferred Stock or the Debentures, subject to
adjustment under certain circumstances, and to file the same with the
Securities and Exchange Commission, together with all exhibits thereto and
other documents in connection therewith, and to sign on my behalf and in my
stead, in any and all capacities, any amendments and supplements to said
Registration Statement (including any post-effective amendments), incorporating
such changes as any of the said attorney-in-fact deems appropriate, in the
matter of the proposed shelf registration by the Company of the securities
registered pursuant to said Registration Statement, hereby ratifying and
confirming all that said attorney-in-fact, or his substitute or substitutes,
may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 23rd day
of May, 1996.
/s/ Thomas F. Meagher
----------------------
Thomas F. Meagher
ACKNOWLEDGEMENT
BEFORE me this 23rd day of May, 1996, came THOMAS F. MEAGHER,
personally known to me, who in my presence did sign and seal the above and
foregoing Power of Attorney and acknowledged the same as his true act and deed.
/s/ Barbara A. Creely
---------------------
NOTARY PUBLIC
State of Missouri
My Commission Expires:
Barbara A. Creely, Notary Public
St. Louis County, State of Missouri
My Commission Expires 6/30/97
NOTARY SEAL
<PAGE> 3
STATE OF MISSOURI
COUNTY OF ST. LOUIS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, John W. Bachmann, a Director
of TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Richard P. Magurno my true and lawful attorney-in-fact,
with full power of substitution for me in any and all capacities, to sign,
pursuant to the requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in connection with the
registration of 3,869,000 shares of the Company's 8% Cumulative Convertible
Exchangeable Preferred Stock ("Preferred Stock"), along with the $193,450,000
principal amount of the Company's 8% Convertible Subordinated Debentures due
2006 (the "Debentures") issuable upon exchange of the Preferred Stock and the
9,544,923 shares of the Company's Common Stock issuable upon conversion of the
Preferred Stock or the Debentures, subject to adjustment under certain
circumstances, and to file the same with the Securities and Exchange
Commission, together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead, in any and all
capacities, any amendments and supplements to said Registration Statement
(including any post-effective amendments), incorporating such changes as any of
the said attorney-in-fact deems appropriate, in the matter of the proposed
shelf registration by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 23rd day
of May, 1996.
/s/ John W. Bachmann
----------------------
John W. Bachmann
ACKNOWLEDGEMENT
BEFORE me this 23rd day of May, 1996, came JOHN W. BACHMANN,
personally known to me, who in my presence did sign and seal the above and
foregoing Power of Attorney and acknowledged the same as his true act and deed.
/s/ Barbara A. Creely
---------------------
NOTARY PUBLIC
State of Missouri
My Commission Expires:
Barbara A. Creely, Notary Public
St. Louis County, State of Missouri
My Commission Expires 6/30/97
NOTARY SEAL
<PAGE> 4
STATE OF MISSOURI
COUNTY OF ST. LOUIS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, William F. Compton, a Director
of TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Richard P. Magurno my true and lawful attorney-in-fact,
with full power of substitution for me in any and all capacities, to sign,
pursuant to the requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in connection with the
registration of 3,869,000 shares of the Company's 8% Cumulative Convertible
Exchangeable Preferred Stock ("Preferred Stock"), along with the $193,450,000
principal amount of the Company's 8% Convertible Subordinated Debentures due
2006 (the "Debentures") issuable upon exchange of the Preferred Stock and the
9,544,923 shares of the Company's Common Stock issuable upon conversion of the
Preferred Stock or the Debentures, subject to adjustment under certain
circumstances, and to file the same with the Securities and Exchange
Commission, together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead, in any and all
capacities, any amendments and supplements to said Registration Statement
(including any post-effective amendments), incorporating such changes as any of
the said attorney-in-fact deems appropriate, in the matter of the proposed
shelf registration by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 28th day
of May, 1996.
/s/ William F. Compton
---------------------------
William F. Compton
ACKNOWLEDGEMENT
BEFORE me this 28th day of May, 1996, came WILLIAM F. COMPTON,
personally known to me, who in my presence did sign and seal the above and
foregoing Power of Attorney and acknowledged the same as his true act and deed.
/s/ Barbara A. Creely
---------------------
NOTARY PUBLIC
State of Missouri
My Commission Expires:
Barbara A. Creely, Notary Public
St. Louis County, State of Missouri
My Commission Expires 6/30/97
NOTARY SEAL
<PAGE> 5
STATE OF MISSOURI
COUNTY OF ST. LOUIS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Gerald L. Gitner, a Director
of TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Richard P. Magurno my true and lawful attorney-in-fact,
with full power of substitution for me in any and all capacities, to sign,
pursuant to the requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in connection with the
registration of 3,869,000 shares of the Company's 8% Cumulative Convertible
Exchangeable Preferred Stock ("Preferred Stock"), along with the $193,450,000
principal amount of the Company's 8% Convertible Subordinated Debentures due
2006 (the "Debentures") issuable upon exchange of the Preferred Stock and the
9,544,923 shares of the Company's Common Stock issuable upon conversion of the
Preferred Stock or the Debentures, subject to adjustment under certain
circumstances, and to file the same with the Securities and Exchange
Commission, together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead, in any and all
capacities, any amendments and supplements to said Registration Statement
(including any post-effective amendments), incorporating such changes as any of
the said attorney-in-fact deems appropriate, in the matter of the proposed
shelf registration by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 24th day
of May, 1996.
/s/ Gerald L. Gitner
----------------------
Gerald L. Gitner
ACKNOWLEDGEMENT
BEFORE me this 24th day of May, 1996, came GERALD L. GITNER,
personally known to me, who in my presence did sign and seal the above and
foregoing Power of Attorney and acknowledged the same as his true act and deed.
/s/ Barbara A. Creely
---------------------
NOTARY PUBLIC
State of Missouri
My Commission Expires:
Barbara A. Creely, Notary Public
St. Louis County, State of Missouri
My Commission Expires 6/30/97
NOTARY SEAL
<PAGE> 6
STATE OF MISSOURI
COUNTY OF ST. LOUIS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, William W. Winpisinger, a
Director of TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation,
do constitute and appoint Richard P. Magurno my true and lawful
attorney-in-fact, with full power of substitution for me in any and all
capacities, to sign, pursuant to the requirements of the Securities Act of
1933, the Registration Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the registration of 3,869,000 shares of the Company's 8%
Cumulative Convertible Exchangeable Preferred Stock ("Preferred Stock"), along
with the $193,450,000 principal amount of the Company's 8% Convertible
Subordinated Debentures due 2006 (the "Debentures") issuable upon exchange of
the Preferred Stock and the 9,544,923 shares of the Company's Common Stock
issuable upon conversion of the Preferred Stock or the Debentures, subject to
adjustment under certain circumstances, and to file the same with the
Securities and Exchange Commission, together with all exhibits thereto and
other documents in connection therewith, and to sign on my behalf and in my
stead, in any and all capacities, any amendments and supplements to said
Registration Statement (including any post-effective amendments), incorporating
such changes as any of the said attorney-in-fact deems appropriate, in the
matter of the proposed shelf registration by the Company of the securities
registered pursuant to said Registration Statement, hereby ratifying and
confirming all that said attorney-in-fact, or his substitute or substitutes,
may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 28th day
of May, 1996.
/s/ William W. Winpisinger
----------------------------
William W. Winpisinger
ACKNOWLEDGEMENT
BEFORE me this 28th day of May, 1996, came WILLIAM W. WINPISINGER,
personally known to me, who in my presence did sign and seal the above and
foregoing Power of Attorney and acknowledged the same as his true act and deed.
/s/ Barbara A. Creely
---------------------
NOTARY PUBLIC
State of Missouri
My Commission Expires:
Barbara A. Creely, Notary Public
St. Louis County, State of Missouri
My Commission Expires 6/30/97
NOTARY SEAL
<PAGE> 7
STATE OF MISSOURI
COUNTY OF ST. LOUIS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, James A. Lawrence, a Director
of TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Richard P. Magurno my true and lawful attorney-in-fact,
with full power of substitution for me in any and all capacities, to sign,
pursuant to the requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in connection with the
registration of 3,869,000 shares of the Company's 8% Cumulative Convertible
Exchangeable Preferred Stock ("Preferred Stock"), along with the $193,450,000
principal amount of the Company's 8% Convertible Subordinated Debentures due
2006 (the "Debentures") issuable upon exchange of the Preferred Stock and the
9,544,923 shares of the Company's Common Stock issuable upon conversion of the
Preferred Stock or the Debentures, subject to adjustment under certain
circumstances, and to file the same with the Securities and Exchange
Commission, together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead, in any and all
capacities, any amendments and supplements to said Registration Statement
(including any post-effective amendments), incorporating such changes as any of
the said attorney-in-fact deems appropriate, in the matter of the proposed
shelf registration by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 28th day
of May, 1996.
/s/ James A. Lawrence
----------------------
James A. Lawrence
ACKNOWLEDGEMENT
BEFORE me this 28th day of May, 1996, came JAMES A. LAWRENCE,
personally known to me, who in my presence did sign and seal the above and
foregoing Power of Attorney and acknowledged the same as his true act and deed.
/s/ Barbara A. Creely
---------------------
NOTARY PUBLIC
State of Missouri
My Commission Expires:
Barbara A. Creely, Notary Public
St. Louis County, State of Missouri
My Commission Expires 6/30/97
NOTARY SEAL
<PAGE> 8
STATE OF MISSOURI
COUNTY OF ST. LOUIS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, G. Joseph Reddington, a
Director of TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware
corporation, do constitute and appoint Richard P. Magurno my true and lawful
attorney-in-fact, with full power of substitution for me in any and all
capacities, to sign, pursuant to the requirements of the Securities Act of
1933, the Registration Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the registration of 3,869,000 shares of the Company's 8%
Cumulative Convertible Exchangeable Preferred Stock ("Preferred Stock"), along
with the $193,450,000 principal amount of the Company's 8% Convertible
Subordinated Debentures due 2006 (the "Debentures") issuable upon exchange of
the Preferred Stock and the 9,544,923 shares of the Company's Common Stock
issuable upon conversion of the Preferred Stock or the Debentures, subject to
adjustment under certain circumstances, and to file the same with the
Securities and Exchange Commission, together with all exhibits thereto and
other documents in connection therewith, and to sign on my behalf and in my
stead, in any and all capacities, any amendments and supplements to said
Registration Statement (including any post-effective amendments),
incorporating such changes as any of the said attorney-in-fact deems
appropriate, in the matter of the proposed shelf registration by the Company
of the securities registered pursuant to said Registration Statement, hereby
ratifying and confirming all that said attorney-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 28th day
of May, 1996.
/s/ G. Joseph Reddington
------------------------
G. Joseph Reddington
ACKNOWLEDGEMENT
BEFORE me this 28th day of May, 1996, came G. JOSEPH REDDINGTON,
personally known to me, who in my presence did sign and seal the above and
foregoing Power of Attorney and acknowledged the same as his true act and deed.
/s/ Barbara A. Creely
---------------------
NOTARY PUBLIC
State of Missouri
My Commission Expires:
Barbara A. Creely, Notary Public
St. Louis County, State of Missouri
My Commission Expires 6/30/97
NOTARY SEAL
<PAGE> 9
STATE OF MISSOURI
COUNTY OF ST. LOUIS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, John W. Bachmann, a Director
of TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Richard P. Magurno my true and lawful attorney-in-fact,
with full power of substitution for me in any and all capacities, to sign,
pursuant to the requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in connection with the
registration of 3,869,000 shares of the Company's 8% Cumulative Convertible
Exchangeable Preferred Stock ("Preferred Stock"), along with the $193,450,000
principal amount of the Company's 8% Convertible Subordinated Debentures due
2006 (the "Debentures") issuable upon exchange of the Preferred Stock and the
9,544,923 shares of the Company's Common Stock issuable upon conversion of the
Preferred Stock or the Debentures, subject to adjustment under certain
circumstances, and to file the same with the Securities and Exchange
Commission, together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead, in any and all
capacities, any amendments and supplements to said Registration Statement
(including any post-effective amendments), incorporating such changes as any of
the said attorney-in-fact deems appropriate, in the matter of the proposed
shelf registration by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 23rd day
of May, 1996.
/s/ John W. Bachmann
----------------------
John W. Bachmann
ACKNOWLEDGEMENT
BEFORE me this 23rd day of May, 1996, came JOHN W. BACHMANN,
personally known to me, who in my presence did sign and seal the above and
foregoing Power of Attorney and acknowledged the same as his true act and deed.
/s/ Barbara A. Creely
---------------------
NOTARY PUBLIC
State of Missouri
My Commission Expires:
Barbara A. Creely, Notary Public
St. Louis County, State of Missouri
My Commission Expires 6/30/97
NOTARY SEAL
<PAGE> 10
STATE OF MISSOURI
COUNTY OF ST. LOUIS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Eugene P. Conese, a Director
of TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Richard P. Magurno my true and lawful attorney-in-fact,
with full power of substitution for me in any and all capacities, to sign,
pursuant to the requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in connection with the
registration of 3,869,000 shares of the Company's 8% Cumulative Convertible
Exchangeable Preferred Stock ("Preferred Stock"), along with the $193,450,000
principal amount of the Company's 8% Convertible Subordinated Debentures due
2006 (the "Debentures") issuable upon exchange of the Preferred Stock and the
9,544,923 shares of the Company's Common Stock issuable upon conversion of the
Preferred Stock or the Debentures, subject to adjustment under certain
circumstances, and to file the same with the Securities and Exchange
Commission, together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead, in any and all
capacities, any amendments and supplements to said Registration Statement
(including any post-effective amendments), incorporating such changes as any of
the said attorney-in-fact deems appropriate, in the matter of the proposed
shelf registration by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 24th day
of May, 1996.
/s/ Eugene P. Conese
----------------------
Eugene P. Conese
ACKNOWLEDGEMENT
BEFORE me this 24th day of May, 1996, came EUGENE P. CONESE,
personally known to me, who in my presence did sign and seal the above and
foregoing Power of Attorney and acknowledged the same as his true act and deed.
/s/ Barbara A. Creely
---------------------
NOTARY PUBLIC
State of Missouri
My Commission Expires:
Barbara A. Creely, Notary Public
St. Louis County, State of Missouri
My Commission Expires 6/30/97
NOTARY SEAL
<PAGE> 11
STATE OF MISSOURI
COUNTY OF ST. LOUIS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Lawrence K. Roos, a Director
of TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Richard P. Magurno my true and lawful attorney-in-fact,
with full power of substitution for me in any and all capacities, to sign,
pursuant to the requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in connection with the
registration of 3,869,000 shares of the Company's 8% Cumulative Convertible
Exchangeable Preferred Stock ("Preferred Stock"), along with the $193,450,000
principal amount of the Company's 8% Convertible Subordinated Debentures due
2006 (the "Debentures") issuable upon exchange of the Preferred Stock and the
9,544,923 shares of the Company's Common Stock issuable upon conversion of the
Preferred Stock or the Debentures, subject to adjustment under certain
circumstances, and to file the same with the Securities and Exchange
Commission, together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead, in any and all
capacities, any amendments and supplements to said Registration Statement
(including any post-effective amendments), incorporating such changes as any of
the said attorney-in-fact deems appropriate, in the matter of the proposed
shelf registration by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 24th day
of May, 1996.
/s/ Lawrence K. Roos
----------------------
Lawrence K. Roos
ACKNOWLEDGEMENT
BEFORE me this 24th day of May, 1996, came LAWRENCE K. ROOS,
personally known to me, who in my presence did sign and seal the above and
foregoing Power of Attorney and acknowledged the same as his true act and deed.
/s/ Barbara A. Creely
---------------------
NOTARY PUBLIC
State of Missouri
My Commission Expires:
Barbara A. Creely, Notary Public
St. Louis County, State of Missouri
My Commission Expires 6/30/97
NOTARY SEAL
<PAGE> 12
STATE OF MISSOURI
COUNTY OF ST. LOUIS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Jewel LaFontant-Mankarious, a
Director of TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware
corporation, do constitute and appoint Richard P. Magurno my true and lawful
attorney-in-fact, with full power of substitution for me in any and all
capacities, to sign, pursuant to the requirements of the Securities Act of
1933, the Registration Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the registration of 3,869,000 shares of the Company's 8%
Cumulative Convertible Exchangeable Preferred Stock ("Preferred Stock"), along
with the $193,450,000 principal amount of the Company's 8% Convertible
Subordinated Debentures due 2006 (the "Debentures") issuable upon exchange of
the Preferred Stock and the 9,544,923 shares of the Company's Common Stock
issuable upon conversion of the Preferred Stock or the Debentures, subject to
adjustment under certain circumstances, and to file the same with the
Securities and Exchange Commission, together with all exhibits thereto and
other documents in connection therewith, and to sign on my behalf and in my
stead, in any and all capacities, any amendments and supplements to said
Registration Statement (including any post-effective amendments), incorporating
such changes as any of the said attorney-in-fact deems appropriate, in the
matter of the proposed shelf registration by the Company of the securities
registered pursuant to said Registration Statement, hereby ratifying and
confirming all that said attorney-in-fact, or his substitute or substitutes,
may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 23rd day
of May, 1996.
/s/ Jewel LaFontant-Mankarious
------------------------------
Jewel LaFontant-Mankarious
ACKNOWLEDGEMENT
BEFORE me this 23rd day of May, 1996, came JEWEL LAFONTANT-MANKARIOUS,
personally known to me, who in my presence did sign and seal the above and
foregoing Power of Attorney and acknowledged the same as his true act and deed.
/s/ Barbara A. Creely
---------------------
NOTARY PUBLIC
State of Missouri
My Commission Expires:
Barbara A. Creely, Notary Public
St. Louis County, State of Missouri
My Commission Expires 6/30/97
NOTARY SEAL
<PAGE> 13
STATE OF NEW YORK
COUNTY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Myron Kaplan, a Director
of TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Richard P. Magurno my true and lawful attorney-in-fact,
with full power of substitution for me in any and all capacities, to sign,
pursuant to the requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in connection with the
registration of 3,869,000 shares of the Company's 8% Cumulative Convertible
Exchangeable Preferred Stock ("Preferred Stock"), along with the $193,450,000
principal amount of the Company's 8% Convertible Subordinated Debentures due
2006 (the "Debentures") issuable upon exchange of the Preferred Stock and the
9,544,923 shares of the Company's Common Stock issuable upon conversion of the
Preferred Stock or the Debentures, subject to adjustment under certain
circumstances, and to file the same with the Securities and Exchange
Commission, together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead, in any and all
capacities, any amendments and supplements to said Registration Statement
(including any post-effective amendments), incorporating such changes as any of
the said attorney-in-fact deems appropriate, in the matter of the proposed
shelf registration by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 23rd day
of May, 1996.
/s/ Myron Kaplan
----------------------
Myron Kaplan
ACKNOWLEDGEMENT
BEFORE me this 23rd day of May, 1996, came MYRON KAPLAN, personally
known to me, who in my presence did sign and seal the above and foregoing Power
of Attorney and acknowledged the same as his true act and deed.
/s/ Grace Emilio
---------------------
NOTARY PUBLIC
State of New York
My Commission Expires:
August 18, 1996
Grace Emilio
Notary Public, State of New York
No. 43-4869024
Qualified in Richmond County
Commission Expires August 18, 1996
NOTARY SEAL
