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Registration No. 33- __________
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 1997.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
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)
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DELAWARE 4512 43-1145889
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(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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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)
RETIREMENT SAVINGS PLAN FOR FLIGHT ATTENDANTS OF TWA
(Full title of the Plan)
RICHARD P. MAGURNO
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
TRANS WORLD AIRLINES, INC.
ONE CITY CENTRE
515 N. SIXTH STREET
ST. LOUIS, MISSOURI 63101
(314) 589-3000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
HOWARD E. TURNER, ESQ.
SMITH, GAMBRELL & RUSSELL, LLP
SUITE 3100, PROMENADE II
1230 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309-3592
(404) 815-3500
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF AMOUNT TO BE MAXIMUM MAXIMUM
SECURITIES TO BE REGISTERED (1) OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
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Common Stock, 800,000 $6.1875 $4,950,000(3) $1,500.00
par value $.01 shares(2)
per share
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(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
as amended (the "Securities Act"), this Registration Statement also covers an
indeterminate amount of interests to be offered or sold pursuant to the employee
benefit plan described above.
(2) This Registration Statement also relates to such indeterminate number
of additional shares of Common Stock of the Registrant as may be issuable as a
result of stock splits, stock dividends or similar transactions.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to the provisions of Rule 457(c) & (h)(1) under the Securities Act.
Based on prices of the Common Stock on the American Stock Exchange Composite
Tape as of July 24, 1997.
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PROSPECTUS
RETIREMENT SAVINGS PLAN
FOR FLIGHT ATTENDANTS
OF TRANS WORLD AIRLINES, INC.
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PARTICIPATIONS IN THE RETIREMENT SAVINGS PLAN FOR FLIGHT ATTENDANTS OF
TRANS WORLD AIRLINES, INC. (THE "PLAN") AND AN INDETERMINATE NUMBER OF SHARES OF
COMMON STOCK OF TRANS WORLD AIRLINES, INC. ARE OFFERED, AS SET FORTH HEREIN, TO
ELIGIBLE EMPLOYEES OF TRANS WORLD AIRLINES, INC. AND OF SUCH OF THEIR
SUBSIDIARIES AND AFFILIATES AS ARE OR BECOME AN EMPLOYER UNDER THE PLAN.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN AS CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR
IN THE EXHIBITS TO THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A
PART, IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON. 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 JURISDICTION IN
WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION
OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF TRANS WORLD AIRLINES, INC. OR THE PLAN SINCE THE DATE HEREOF OR THAT
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
The date of this Prospectus is July 30, 1997.
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Table of Contents
PAGE PAGE
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Available Information............................ 2 Experts...........................................22
Incorporation of Certain Documents by Reference....2 Legal Opinions....................................22
The Company........................................3 Indemnification of Officers and Directors.........23
The Plan...........................................4
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AVAILABLE INFORMATION
Trans World Airlines, Inc. (the "Company" or "TWA") is subject to the
informational requirements of the Securities Exchange Act of 1934 (hereinafter
referred to as the "Exchange Act") and in accordance therewith, files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following
regional offices of the Commission located at: 7 World Trade Center, New York,
New York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such material can be obtained from
the Public Reference Section of the Commission, at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 upon payment of prescribed fees. Certain
information may also be available from the Commission through its worldwide web
site at http://www.sec.gov. Such reports, proxy statements and other information
regarding the Company can also be inspected at the offices of the American Stock
Exchange.
The Company has filed a Registration Statement (herein, together with
all amendments thereto, called the "Registration Statement") with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the interests of participation in the Plan and shares of Common Stock
offered hereunder. This Prospectus does not contain all the information included
in the Registration Statement and the exhibits and schedules thereto. For
further information with respect to the Registration Statement, the Plan and the
Common Stock of the Company, reference is hereby made to the Registration
Statement and the exhibits and schedules thereto. Statements contained herein
concerning the provisions of documents are necessarily summaries of such
documents, and each such statement is qualified in its entirety by reference to
the copy of the applicable document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference herein (a) the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, filed with the
Securities and Exchange Commission (the "Commission") pursuant to Section 13 of
the Exchange Act; (b) the Company's Quarterly
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Report on Form 10-Q for the quarter ended March 31, 1997; (c) the description of
the Company's Common Stock contained in the Form 8-A Registration Statement
filed with the Commission on August 1, 1995, including any amendment or reports
filed for the purpose of updating such description; (d) when filed, the
Company's latest employee plan annual report, whether filed on Form 11-K or Form
10-K; and (e) all documents subsequently filed by the Company and the Plan
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this prospectus and
to be a part hereof from the date 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 which also is incorporated or 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 AND THE PLAN HEREBY UNDERTAKE TO PROVIDE WITHOUT CHARGE TO
EACH PERSON TO WHOM A PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF
SUCH PERSON, A COPY OF ANY AND ALL OF THE DOCUMENTS INCORPORATED BY REFERENCE IN
THIS PROSPECTUS (OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO THE DOCUMENTS THAT THE PROSPECTUS
INCORPORATES), AND, UNLESS FURNISHED HEREWITH, A COPY OF THE COMPANY'S MOST
RECENT ANNUAL REPORT TO SHAREHOLDERS. WRITTEN OR ORAL REQUESTS FOR SUCH COPIES
SHOULD BE DIRECTED TO TRANS WORLD AIRLINES, INC., ONE CITY CENTRE, 515 NORTH
SIXTH STREET, ST. LOUIS, MISSOURI 63101, ATTENTION: LEGAL DEPARTMENT. TELEPHONE
NUMBER: (314) 589- 3285.
Participants in the Plan may obtain additional information about the
Plan and its Administrators by contacting TWA's Benefits Administrative Center
care of American Century Services Corporation ("American Century"), P. O. Box
419385, Kansas City, Missouri 641441- 6385. American Century may also be
contacted via telephone at 1 (800) 345-2345.
THE COMPANY
The Company is incorporated under the laws of the State of Delaware.
Its principal executive offices are located at One City Centre, 515 North Sixth
Street, St. Louis, Missouri 63101 and its telephone number is (314) 589-3000.
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THE PLAN
ADOPTION AND PURPOSE
Effective as of March 1, 1965, the Board of Directors of the Company
initially adopted the Plan for eligible flight attendants (hereinafter "Eligible
Employees") of Trans World Airlines, Inc. See Appendix B. The Company amended
and restated the Plan in its entirety effective as of November 1, 1988. The Plan
was subsequently amended in March 1995, to effect various changes and again in
July 1997 to provide for an investment vehicle to permit investment in the
Company's common stock, par value $0.01 per share (the "Common Stock"). The
provisions relating to the ability of participants in the Plan ("Participants")
to invest in Common Stock, will be effective July 14, 1997.
The purposes of the Plan are to provide eligible employees with a
convenient and systematic means of saving and investing a part of their salary
for retirement or future financial needs and to afford employees an opportunity
to become shareholders of the Company, thereby increasing their economic
interest in its progress and success. Participants have the option of directing
that up to 15% of their account balance, measured at the time of a Participant's
initial investment in the Company Common Stock Fund, be invested in such Fund.
New Contributions (which are not rollover contributions) may be invested 100% in
Common Stock if a Participant so elects.
The Plan is administered by the Company (the "Plan Administrator")
which utilizes an independent Recordkeeper for certain administrative functions
and who acts on behalf of the Company and The International Association of
Machinists and Aerospace Workers ("IAM") in their role as plan fiduciaries. (See
Administration of the Plan below). Investment decisions for the Plan are made by
an investment committee (the "Investment Committee") composed of members
selected by the Company (the "Company Members"), by IAM (the "IAM Members") and
jointly by the Company Members and the IAM Members ("Joint Members"). See
Administration of the Plan. Individual investment decisions are the
responsibility of the Participant.
A description of the Plan (the "Summary Plan Description") has been
previously, or concurrently with this document is being, delivered to each
participating employee, which contains a summary of certain of its more
important provisions, but is not complete. In particular, such Summary Plan
Description may not describe the Company Common Stock Fund, which is described
herein. A copy of the text of the Plan document itself is available from the
Company and has been filed as an exhibit to the Registration Statement for the
Plan. The Annual Reports, when filed, for the Plan will contain current
financial data and other information about the Plan. To the extent required by
law, any changes to the Plan and to the information presented herein subsequent
to the date hereof will be described in an appendix to this prospectus.
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TERM
The Plan has no fixed expiration date; however, the Company and IAM
reserve the right, at any time by joint agreement, to alter, amend, modify,
suspend or terminate the Plan, with or without notice, at any time.
PARTICIPATING COMPANIES
Trans World Airlines, Inc. is the only company initially participating
in the Plan (the "Employing Company"). The Board of Directors of the Company has
the power to admit additional subsidiaries or affiliates of the Company to
participation in the Plan at any time.
CONTRIBUTION LIMITATIONS
Total annual employee contributions, tax deferred contributions and any
similar contributions to similar plans, including any employing company
contributions and forfeitures, if applicable, are subject to a limit on annual
additions and certain other complex limits (see Certain Federal Income Tax
Consequences below). Among other things, a Participant's total contribution
cannot exceed twenty percent (20%) of his total compensation and may be further
limited by contributions by the Company to this Plan and by the Participant or
the Company to other Company benefit plans. If these limits are exceeded, excess
amounts will be distributed to the affected Participants, or held in a suspense
account and credited against future contributions as provided for by the Plan.
CONTRIBUTORY PROVISIONS OF THE PLAN INCLUDING REQUIRED EMPLOYER CONTRIBUTIONS
Employer Basic Contribution Account
The Employer is required to make monthly contributions of the Plan
which are equal to 6.2% of aggregate eligible earnings of all eligible
Participants. These contributions are allocated to eligible Participants on an
age-weighted basis. Effective September 1, 1997, a portion of the Employer Basic
Contribution will be first allocated to Flight Service Managers ("FSM") at the
rate of 5% of each FSM's eligible earnings with the remaining Employer Basic
Contribution to be allocated to all eligible Participants (including FSMs) on
the age-weighted basis used prior to that date.
Salary Deferral Contribution Account
Each eligible Participant is permitted to make before-tax contributions
to the Plan by deferring up to 20% of eligible salary. These contributions are
not subject to income taxes until the amounts are withdrawn from the Plan.
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New After-Tax Contribution Account
Each eligible Participant is permitted to make after-tax contributions
to the Plan in amounts up to 20% of eligible salary. These contributions are
subject to income taxes in the year the earnings are paid to the Participant.
Rollover Contribution Account
Each eligible Participant is permitted to make roll-over contributions
to the Plan for distributions from other qualified employer pension plans.
Other Contribution Accounts
Participants may have balances in other accounts due to the Plan's
prior contribution provisions. These accounts are (1) Prior Plan Employer
Contribution; (2) Prior Plan Employee Contribution; and (3) Old After-Tax
Contribution.
INVESTMENT OPTIONS
The Investment Committee may select from time to time the funds or
other investment options, which may include direct investments (all such
investment options hereinafter sometimes being referred to as the "Investment
Funds") which will be available for investment of the Plan's assets, and the
manner in which such funds shall be invested. Participants in the Plan generally
may invest their accounts in one or more Investment Funds. As of the date of
this Prospectus, there were ten such Investment Funds denominated as follows:
(1) the Interest Fund; (2) the Conservative Equity Fund; (3) the S&P 500 Index
Fund; (4) the International Equity Fund; (5) the Growth Equity Fund; (6) the
Aggressive Equity Fund; (7) the Conservative Balanced Portfolio; (8) the
Moderate Balanced Portfolio; (9) the Aggressive Balanced Portfolio; and (10) the
Company Common Stock Fund. As of the date of this Prospectus, the Balanced
Portfolio Investment Funds invest in multiple investment funds; the other funds
utilize single investment vehicles.
This Prospectus relates to the Investment Funds, other than the Company
Common Stock Fund, only to the extent the availability of such investment
options constitutes "an interest in the Plan" and a security which is required
to be registered under the Securities Act. Summary information regarding the
specific Investment Funds is contained in the "planning kit" for Participants
and in the prospectuses covering those funds or the components thereof
(additional information regarding the Company Common Stock Fund is set forth
herein), which may be obtained by any Participant from the Recordkeeper or the
Plan Administrator. Participants are strongly cautioned not to make any
investment under the Plan, whether in the Company Common Stock Fund or
otherwise, without receiving and reviewing a current prospectus for such
Investment Fund or components thereof. Except for the Company Common Stock Fund,
the Interest Fund, the S&P 500 Equity Index Fund and the BZW TAA portion of the
Balanced Portfolio, separate prospectuses are available for each of the
Investment Funds or the components thereof comprising such funds.
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A brief description of the ten Investment Funds is set forth below.
The Interest Fund is composed of a single fund which invests in a
variety of guaranteed investment contracts issued by insurance companies and
other securities, including bonds. The stated objective of this fund is to
preserve principal while maintaining a reasonable level of current income.
The Conservative Equity Fund is composed of a single fund which invests
in stocks, bonds and other investment contracts. The stated objective of this
fund is to seek capital appreciation over time with a reasonable level of income
for stock-based investing.
The S&P 500 Index Fund has the stated goal of reproducing the
performance of the S&P 500 Index, by investing assets in all of the S&P 500
stocks with industry allocations the same as the S&P 500 Index.
The International Equity Fund invests in a single fund which invests in
stocks and bonds of companies primarily located outside the United States. The
stated objective of this fund is capital appreciation with little regard for
current income.
The Growth Equity Fund invests in a single fund which invests primarily
in common stock. The stated objective of the Growth Equity Fund is capital
appreciation with little regard for current income.
The Aggressive Equity Stock Fund is composed of a single fund which
invests primarily in equity securities. The stated objective of this fund is
maximum capital appreciation through investment in equity securities of small to
medium companies with no regard for current income.
The Conservative Balanced Portfolio allocates approximately 60% of its
investments to fixed income fund investments and approximately 40% to equity
investments. The stated objective of this multiple fund investment vehicle is a
high level of current income and longer term capital appreciation.
The Moderate Balanced Portfolio allocates approximately 60% of its
investments to equity investments and approximately 40% to fixed income assets.
The stated objective of this multiple fund investment vehicle is capital
appreciation and a reasonable level of current income.
The Aggressive Balanced Portfolio allocates approximately 80% of its
investments to equity funds and approximately 20% to fixed income funds. The
stated objective of this multiple fund investment vehicle is capital
accumulation with only minimal consideration for current income.
Investments in the Company Common Stock Fund will be invested and
reinvested directly in the Common Stock of the Company. INVESTMENTS IN THE
COMMON STOCK FUND INVOLVE A HIGH DEGREE OF RISK. SEE APPENDIX C: "RISKS FACTORS
FOR INVESTMENTS IN THE COMMON STOCK FUND" FOR A DISCUSSION OF CERTAIN RISKS AND
OTHER FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS
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IN SUCH FUND. Contributions which are not sufficient to purchase whole shares
may be invested in short-term, fixed return investments. The Common Stock Fund
is not a pooled investment but rather a direct investment by the individual
Participant. This means the Participant actually is the beneficial owner of the
shares of Common Stock, rather than being the beneficial owner of units in a
fund which, in turn, owns the Common Stock. Participants who wish to invest in
the Company and can accept the likely volatility in the share price of the stock
can invest in Company Common Stock. Such investors should understand that
investing in a single security involves greater risk than investing in a stock
mutual fund, which invests in many securities. Participants in the Company
Common Stock Fund will be credited with a specified number of shares of Company
Common Stock and an account balance representing assets in the account. Cash
dividends, if any, on Common Stock in the Company Common Stock Fund will be
credited to the Participant's account and will be used to purchase additional
shares of Common Stock or will be invested temporarily in short-term fixed
return investments. Stock dividends, if any, on Common Stock in the Company
Common Stock Fund will be credited to the Participant's account. See
"Administration of the Plan" for a discussion of Plan expenses.
The Investment Committee may add, modify or eliminate Investment Funds,
at any time and from time to time, at its discretion.
INVESTMENT OF CONTRIBUTIONS; REINVESTMENT OF EXISTING BALANCES
All contributions made under the Plan are paid over to a trustee (the
"Trustee") selected by the Investment Committee and are invested in the name of
the Trustee. Shares of Common Stock of the Company may be purchased by the
Trustee in the open market or, if the Company and the Investment Committee so
agree, may be purchased directly from the Company. Purchases of Common Stock by
the Trustee from the Company, if any, shall be made at not more than the fair
market value of such shares at the time of purchase as determined by the Company
and agreed to by the Investment Committee.
A Participant may elect to invest up to 100% of future Rollover, Salary
Deferral, and New After-Tax contributions in any Investment Fund, except that
future rollover contributions may not be invested in the Company Common Stock
Fund. A Participant may also elect to have all or any portion of his/her
existing interest in an Investment Fund or Funds transferred from those
Investment Fund or Funds to any other Investment Fund or Funds; however, any
transfer into the Company Common Stock Fund is not permitted if such transfer
would result in a total investment in the Company Common Stock Fund of more than
15% of the Participant's total account measured at the time of the transfer.
A Participant may change his election as to the investment of his
future contributions under the Plan by written or telephonic notice to the
Recordkeeper. A Participant may change the investment of future contributions in
one percent (1%) increments among the Investment Funds. Any change will be
effective with respect to Salary Deferral Contributions as of the Valuation
Date. The Valuation Date is defined under the Plan as the last business day of
each calendar month or such more frequent time as may be determined by the
Company. As of the date of this Prospectus, any
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change in Salary Deferral Contributions will be effective on the same business
day a Participant's request is made (if received prior to 3:00 p.m. C.S.T.) or
the next business day (if received after 3:00 p.m. C.S.T.). In the event a
Participant fails to make an investment election, then his contributions and any
Company contributions for his account will be invested in the Conservative
Balanced Portfolio for contributions made prior to August 1, 1997. Effective on
August 1, 1997, contributions made on and after that date, for which no
investment election is made, will be invested in the Moderate Balanced
Portfolio.
A Participant may elect to change the investment of amounts already in
his account ("current accounts") among the Investment Funds in 1% increments.
Any change in current accounts will be effective on the Valuation Date or the
settlement date in the case of the Company Common Stock Fund, which settlement
date generally will be three (3) business days following the transaction date.
As of the date of this Prospectus, changes in current accounts, other than the
Company Common Stock Fund, will be effective on the same business day a
Participant's request is made (if received prior to 3:00 p.m. C.S.T.) or the
next business day (if received after 3:00 p.m. C.S.T.).
Until a transfer is effected, a Participant's account will remain in
the Investment Fund or Funds specified in his last previous election and,
therefore, will be credited with any income and appreciation on the securities
in such Fund or Funds and charged with any losses and decreases in value of such
securities.
Requests for change must be made to the Recordkeeper. Written
confirmations of transaction changes in current accounts will be sent to the
Participant's home address within three (3) business days after the date a
Participant gives investment directions. In the event of an error or other
dispute concerning investment directions in current accounts, a Participant must
file a claim with the Plan Administrator within thirty (30) days from the date
he receives written confirmation of the transaction (or if the Participant does
not receive written confirmation, within thirty (30) days from the date the
Participant receives the statement for the month in which the transaction
occurred or would have occurred).
All cash received by the Trustee as a result of interest, dividends or
the sale of securities will be reinvested by the Trustee in the same Investment
Fund in which such cash arose for the respective accounts of the Participants
having an interest in such Investment Fund.
An interest in the Plan generally is represented by the number of
shares or units credited to a Participant's separate account. The value of a
mutual fund share is determined by dividing the net assets of each Investment
Fund by the total number of shares of that Investment Fund outstanding. Shares
of Common Stock are valued based on market price. Contributions which are
insufficient to purchase an entire share of Common Stock may be invested in a
money market investment sub-account for the Participant in the Common Stock
Fund. The number of additional shares credited to a Participant's separate
account is determined by dividing the Participant's interest in the current
month's contributions by the applicable share purchase price, net of transaction
costs. The number of shares deducted from an Investment Fund as a result of a
distribution is also based on the
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valuation of the shares at the effective date of the distribution. For purposes
of share calculations, securities are included in the net assets of the
Investment Funds at their current market values.
To enable the Trustee to invest contributions in accordance with
Participants' investment elections, as soon as practicable after the
contributions are made or in anticipation of such contributions, the Trustee
will buy or sell shares of Common Stock (in market transactions or otherwise as
determined pursuant to the Plan) on behalf of the Plan as required. The value of
the Trust and the amounts invested will reflect the proceeds from the purchase
or sale of such shares which may differ from the value of these shares at the
time they are acquired by the Trust. At any time when it would be unlawful for
the Trustee to purchase or sell shares (each, a "Blackout Period"), the Trustee
will invest the cash on behalf of Participants. With respect to purchases of
Common Stock, promptly upon expiration of a Blackout Period, it is expected that
the Trustee will purchase shares of Common Stock (at market prices at the time
of such purchase) using cash contributed during such Blackout Period. In
connection therewith, the Trustee may sell shares of Common Stock and/or other
assets of the Trust in anticipation of such purchases.
Selection of Brokers
The Plan does not expressly impose any limitations on the selection of
brokers who will effect transactions in Plan securities. Accordingly, brokers
which effect securities transactions for the Plan may be selected by the
Investment Committee on the basis of, among other things, the following factors:
price of securities; commissions charged; execution capability, including
reference to volume and timing; and market availability (for example, a
particular broker may be a "market maker"). There is no broker selection, as
such, for commingled trust funds. Pursuant to the terms of the Trust Agreement
between the Investment Committee and the Plan Trustee, the Trustee has the
implicit power to select brokers for Plan transactions.
Pro Forma Investment Performance
Reference is made to Appendix A, the Investment Performance Index, for
a table that presents the relative performance of an investment in the
Investment Funds, assuming reinvestment of dividends and interest as of the
dates indicated.
DISTRIBUTIONS AND WITHDRAWALS UNDER THE PLAN
Distribution Upon Termination of Service
If the Participant terminates service with the Company or other
Employer under the Plan for any reason other than death, the entire balance of
his Salary Deferral Contribution Account, and, if applicable, his Prior Plan
Employee Account, Old After-Tax Account, New After-Tax Account, Prior Plan
Employer Account, and Rollover Account shall become distributable to him valued
in the manner set forth in the Plan with respect to valuation of accounts for
distribution.
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Small Benefits
Notwithstanding any provision of the Plan to the contrary, if the total
value of a terminating Participant's Accounts at the time of his termination of
employment is three thousand five hundred dollars ($3,500) or less (and was not
more than three thousand five hundred dollars ($3,500) at the time of any prior
distribution or withdrawal), the entire value of the Participant's Accounts will
automatically be distributed to the Participant in a single lump sum payment as
soon as practicable following the termination of employment.
Timing of Distribution
If the total value of a Participant's Accounts at the time of his
termination of employment is more than three thousand five hundred dollars
($3,500) (or was more than three thousand five hundred dollars ($3,500) at the
time of any prior distribution or withdrawal), payments will commence as soon as
administratively possible following the Plan Administrator's receipt of notice
of the Participant's Retirement, Disability or Termination of Employment.
Payment will not commence prior to the Participant's attainment of age sixty-two
(62) without the Participant's written consent obtained within ninety (90) days
prior to the date payment is to begin. Spousal consent may be required in the
case of certain types of accounts.
Notwithstanding the foregoing, unless the Participant elects a later
commencement date in writing, payments will not commence later than sixty (60)
days after the end of the Plan Year in which occurs the latest of: (i) the
Participant's attainment of Normal Retirement Age; (ii) the tenth (10th)
anniversary of the commencement of his Plan participation; or (iii) his
termination of employment.
Notwithstanding any other provisions of the Plan to the contrary, the
entire balance of all of a Participant's Accounts must be distributed or must
begin to be distributed no later than April 1 of the calendar year immediately
following the date the Participant attains age seventy and one-half (70 1/2),
even if the Participant is still employed. Distributions are subject to certain
minimum distribution rules. If a Participant receives such a distribution while
still employed, any additional amounts allocated to the Participant's Accounts
as of any succeeding December 31 will be distributed no later than the end of
the following calendar year.
Valuation of Accounts for Distribution
The Participant's Accounts will be valued as of the last business day
of the month or such other time as the Company may decide (currently the date of
the distribution).
Effect of Death of Participant on Distributions
If a Participant dies before the entire balance of his Accounts has
been distributed to him, the remaining interest will be distributed to the
Participant's Beneficiary as soon as reasonably practicable following the
Valuation Date coincident with or next following the Participant's death.
11
<PAGE> 13
Upon a Participant's death, a spousal Beneficiary may elect to receive any Death
Benefit payable under the Plan in any of the distribution options available to
Participants, with the exception of the fifty percent (50%) joint and survivor
annuity with ten year term guarantee. However, if the value of the deceased
Participant's Accounts is more than three thousand five hundred dollars
($3,500), the Beneficiary may elect to have the deceased Participant's Accounts
remain in the Plan until the Beneficiary requests distribution. If the
Beneficiary makes such an election, the Beneficiary generally is permitted to
direct the investment of the Accounts among the Investment Funds and will be
permitted to make withdrawals of all or part of the deceased Participant's
Accounts. Upon the Beneficiary's election to receive distribution from the
Accounts, the benefit shall be paid in the manner set forth in the Plan.
Notwithstanding the foregoing, at such time as the deceased Participant's
Accounts are less than three thousand five hundred dollars ($3,500), the entire
balance shall automatically be distributed in a single lump sum payment.
Notwithstanding any provision of the Plan to the contrary, a distribution to a
deceased Participant's nonspouse Beneficiary shall be completed within five (5)
years of the Participant's death. A distribution to a deceased Participant's
Spouse shall commence no later than the date the deceased Participant would have
attained age seventy and one-half (70 1/2) and shall be paid over a period not
longer than the Spouse's life expectancy.
Form of Distribution
Distribution of a Participant's Accounts generally will be made in a
single lump sum cash payment. However, any Participant or the Beneficiary of a
deceased Participant may, if the value of the Participant or deceased
Participant's Accounts is more than three thousand five hundred dollars
($3,500), elect to have the Accounts paid in the form of periodic installments
or annuities in the amount and over such period as the Participant or
Beneficiary may elect, subject to applicable limitations.
In-Service Withdrawals by Participants
A Participant may, while employed by the Company, withdraw amounts from
his Plan Accounts, provided the withdrawal satisfies the relevant terms and
conditions of the Plan. An in-service withdrawal pursuant to a Non-Hardship
Withdrawal or withdrawals after age 59 1/2 will be made not more than thirty
(30) days after receipt of the Participant's written request. A hardship
withdrawal will be made as soon as reasonably practicable after the
Participant's written request is approved by the Plan Administrator. All
withdrawals shall be accomplished by a proportionate reduction of the applicable
Accounts' investment in the Investment Funds. Only one in-service withdrawal is
permitted per calendar quarter.
Non-Hardship Withdrawals
Prior to the Participant's attainment of age fifty-nine and one-half
(59 1/2), the Participant may make an in-service withdrawal from his Accounts
(other than from the Employer Basic Account), of an amount not more than the
value of such Account(s) (less any amount held as security for a loan from the
Plan), in a single lump sum cash payment. The minimum amount of an
12
<PAGE> 14
in-service withdrawal is the lesser of $500 or such "Maximum Withdrawal Amount"
as is established pursuant to the Plan. Spousal consent may be required for
certain withdrawals. Non- Hardship withdrawals will be made from the
Participant's Accounts in the following order:
(i) any Prior Plan Employee Accounts;
(ii) any Old After-Tax Account;
(iii) any New After-Tax Account;
(iv) any Prior Plan Employer Account; and
(v) Rollover Account.
Hardship Withdrawals
Prior to age fifty-nine and one-half (59 1/2), a Participant may
withdraw his Salary Deferral Contributions only upon his establishment to the
satisfaction of the Plan Administrator that the withdrawal is necessary to
alleviate a financial hardship. No hardship withdrawal may be made until (i) the
Participant has obtained all non-hardship withdrawals permitted under all plans
maintained by the Company and Affiliates (including those non-hardship
withdrawals permitted under the Plan) and (ii) the Participant has obtained all
nontaxable loans available under all deferred compensation plans of the Company
and Affiliates.
Financial hardship means an immediate and heavy financial need of the
Participant which cannot be satisfied from other reasonably available resources
on account of:
(i) Medical expenses incurred by the Participant, his spouse or
his dependents, or expenses necessary to obtain medical care;
(ii) The purchase of a principal residence of the Participant (not
including mortgage payments);
(iii) The payment of tuition and fees for the next twelve (12)
months of post-secondary education for the Participant, his
spouse or his dependents;
(iv) The need to prevent eviction of the Participant from his
principal residence or foreclosure on the mortgage of such
principal residence; or
(v) payment of funeral expenses for the Participant's Spouse or
any lineal ascendant or descendant of the Participant or the
Participant's Spouse;
A Participant may not make Salary Deferral Contributions to the Plan
and other elective deferrals (as defined in Section 402(g)(3) of the Code) made
to any other plan of the Company and
13
<PAGE> 15
its Affiliates for the taxable year immediately following the taxable year of
the Participant's hardship withdrawal in excess of the applicable limit under
Section 402(g) of the Code, less the amount of the Participant's Employee
Contributions for the taxable year of the hardship withdrawal.
Withdrawals After 59-1/2
A Participant who has attained age fifty-nine and one-half (59 1/2) may
make an in-service withdrawal of up to the entire balance of all his Plan
Accounts (less any amount held as security for a loan from the Plan) in a single
lump sum cash payment. Such withdrawals pursuant to this provision will be made
from a Participant's Accounts in the order described above with respect to
Non-Hardship withdrawals and then from the Participant's Salary Deferral
Contributions. Early withdrawals may not be made from the Employer Basic Account
or the Prior Plan Employer Account.
Transfers of Accounts to Other Qualified Plans
At the election of a Participant who is eligible for a distribution
from the Plan that is an "eligible rollover distribution" (within the meaning of
Section 402 of the Code), the Plan Administrator will authorize the direct
transfer of the distributed amount from the Trust Fund of this Plan to a
qualified trust" or "eligible retirement plan" (within the meaning of Section
401(a)(31) of the Code). Such direct transfers will be made in accordance with
procedures established by the Plan Administrator conforming to the requirements
of Section 401(a)(31) of the Code and regulations thereunder.
DEFAULTS AND FORFEITURES
If a Participant should not be in compliance with the terms of any Plan
loan as of a date which is thirty (30) days after the date of a notice to the
Participant of a potential default, the Plan Administrator may declare the loan
in default, in which event the entire amount of unpaid principal and accrued
interest shall immediately become due and payable. Without further action or
notice to the Participant, the Plan Administrator will direct the Trustee to
reduce the amount of the Participant's Plan Accounts which are available for
in-service withdrawals by the total amount due and payable. During such delay,
the outstanding balance of the loan shall continue to accrue interest until
fully repaid. If the loan is not repaid, the Plan Administrator may take such
other action as may be necessary or appropriate to secure repayment; provided,
however, that the default may not be satisfied out of the Participant's interest
in the Plan prior to his or her entitlement to a distribution under the Plan.
LIENS
The Trust Agreement provides that the Trustee's compensation, including
fees, legal and consulting expenses and disbursements generally will be paid
from the Trust Fund.
14
<PAGE> 16
NON-ALIENATION OF INTERESTS
Except as provided with respect to loans under the Plan, no benefit or
interest under the Plan, regardless of whether or not vested, is subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge. No such benefit or interest shall be liable for or
subject to the debts, contracts, liabilities, engagements or torts of the person
entitled to such benefit or interest. If any Participant, former Participant or
beneficiary becomes bankrupt or attempts to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge any benefit or interest under the
Plan, the Company may, in its discretion, direct the Trustee to terminate any
payment of benefits to which such Participant, former Participant or beneficiary
is then or may thereafter become entitled and to hold such amount in further
trust and to apply such amount to the benefit of such Participant, former
Participant or beneficiary in a manner determined by the Company. However, an
exception to such non-alienation of interests exists for qualified domestic
relations orders. For this purpose, a domestic relations order is any judgment,
decree or order (including approval of a property settlement agreement), which
(i) relates to the provision of child support, alimony payments or marital
property rights to a spouse, former spouse, child or other dependent of a
Participant, and (ii) is made pursuant to a state domestic relations law
(including a community property law). In order to be "qualified," a domestic
relations order must meet the requirements set forth in Section 414(p) of the
Code.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Company received a determination from the Internal Revenue Service
dated September 11, 1995, on the Plan to the effect that the Plan qualifies
under Section 401(a) of the Code, and that the "fund" created as part of the
Plan is exempt from federal income tax under Section 501(a) of the Code. The
Company has not applied to the Internal Revenue Service for a determination on
the 1996 amendments of the Plan, although the Company intends to make such an
application by the applicable deadline.
The following description of tax effects assumes that the Plan and Fund
will comply with applicable provisions of the Internal Revenue Code (the "Code")
and continue to remain qualified and tax-exempt, respectively, under the Code.
The description also assumes contributions are made on a pre-tax basis.
Reference is made to the Appendices for certain material changes, if any, in the
federal income tax law applicable to participation in the Plan, which were made
or are effective subsequent to the date as of which such tax information is
presented in this prospectus.
For federal income tax purposes, the Company is entitled to a deduction
from gross income for Participant contributions, subject to the deductibility
limits under Section 404(a) of the Code. Participant contributions, up to $7,000
per year (or such higher amount as adjusted yearly by a cost of living index;
e.g., $9,500 for 1996), are made on a pretax basis and are not subject to
federal income tax until distributed or withdrawn. In accordance with rules
summarized below, federal income taxation of interests of Participants in the
Plan is deferred until those interests are distributed to recipients.
Participant contributions are subject, however, to FICA taxes.
15
<PAGE> 17
Until distribution, a Participant will not be subject to federal income
tax on contributions, dividends, income or gains realized by the Plan nor will
the Plan be subject to tax on dividends, income or realized gains.
Distributions
Generally, a distribution from the Plan will be ordinary income to the
Participant in the year in which the distribution is made and will be subject to
federal income tax at the then current applicable rate. However, certain
favorable tax treatment may be available if the distribution constitutes a
"lump-sum distribution," as discussed below.
Lump Sum Distributions
If the balance to the credit of a Participant under the Plan becomes
payable to the recipient (1) on account of the Participant's death, (2) after
the Participant attains age 59 1/2, or (3) on account of the Participant's
separation from service and is distributed to the recipient within any one
taxable year of the recipient, the distribution will constitute a "lump-sum
distribution." If such distribution includes Company Common Stock, the portion
of such distribution which represents net unrealized appreciation in the value
of the Company Common Stock generally will not be taxable to the recipient at
the time of distribution unless the recipient otherwise elects. When the
recipient sells the Company Common Stock, the previously untaxed net unrealized
appreciation will be taxable as a capital gain. If the recipient dies before
disposing of the Company Common Stock, the previously untaxed net unrealized
appreciation may constitute income in respect of a decedent, taxable to the
person inheriting the Company Common Stock as a capital gain. If the Participant
elects not to have the special rule apply to the net unrealized appreciation,
such net unrealized appreciation will be taxed in the year the Participant
receives the Company Common Stock, unless the Participant rolls over the Stock.
The remainder of such lump-sum distribution will be taxed as ordinary
income at the regular rates in effect in the year of distribution unless the
recipient is eligible to elect, and does elect, special favorable tax treatment.
If the recipient is at least age 59 1/2 at the time the distribution is made,
the recipient may, until 2000, elect to have such remainder taxed under a
special five-year forward-averaging provision which has the effect of lowering
the effective tax rate. Such an election (which may not be made by a recipient
other than an individual, estate or trust) may be made only once with respect to
a Participant. If the distribution is made to an employee or former employee,
the election may not be made unless the recipient has been a Participant under
the Plan for five or more taxable years prior to the taxable year in which the
distribution is made. Subject to certain grandfather rules, five-year forward
averaging was repealed for distributions after December 31, 1999 by the Small
Business Job Protection Act of 1996.
If the recipient of such a lump-sum distribution attained age 50 before
January 1, 1986, the recipient may, instead, elect to have the taxable portion
of such a distribution taxed under 10-year forward-averaging provisions under
the tax rates in effect for calendar year 1986. This election precludes an
election under the general rule for five-year averaging after age 59 1/2.
16
<PAGE> 18
If the distribution qualifies as an "eligible rollover distribution"
(explained below under "Rollovers"), the Participant, the Participant's
surviving spouse, or an alternate payee under a qualified domestic relations
order may defer the imposition of tax if the distribution is paid in a direct
rollover to an individual retirement account or to another employer's retirement
plan that will accept the direct rollover.
10% Penalty Tax if the Participant is under age 59 1/2
Distributions made from the Plan to a Participant before the
Participant attains age 59 1/2 may be subject to a special 10% additional tax on
the amount of the distribution that is includable in the Participant's income.
This additional tax will not be applicable if the distribution is made because
the Participant has become disabled or if the Participant has separated from
service with the employer after reaching the age of 55. Further, the additional
tax will not be applicable to a distribution to the extent the distribution does
not exceed the amount allowable as a deduction under Section 213 of the Code for
amounts paid during the taxable year for medical care or to a distribution made
to an alternate payee pursuant to a qualified domestic relations order.
15% Excise Tax on Excess Distributions
If a taxpayer receives more than the greater of $150,000 or $112,500
(subject to certain adjustments for inflation) from all tax-qualified retirement
plans (including individual retirement accounts or annuities) during a year, he
may be subject to an excise tax equal to 15% of the amount of the distribution
in excess of that dollar amount. Such dollar amount may be increased under
certain circumstances (such as to take into account income averaging available
with respect to a lump-sum payment). This tax is not applicable to death benefit
payments; however, there may be a comparable increase in an individual's estate
tax under certain circumstances. The Small Business Job Protection Act of 1996
exempts from the 15% excise tax distributions made in 1997, 1998 and 1999. This
moratorium does not affect estate taxes, however.
Rollovers
The Code classifies distributions into two types: (1) distributions
that a Participant may roll over ("eligible rollover distributions"), and (2)
distributions that a Participant may not roll over. In general, for this Plan,
an eligible rollover distribution means any distribution of all or any portion
of the Participant's account balance, other than (i) a distribution of
Participant's after-tax contributions, or (ii) a distribution that is required
to be made when the Participant attains age 70 1/2.
A Participant may elect a direct rollover of all or any portion of an
eligible rollover distribution. If the Participant elects a direct rollover, the
Plan will pay the eligible rollover distribution directly to the Participant's
IRA or to another employer's plan that the Participant has designated and which
will accept the direct rollover. (The term "IRA" includes individual retirement
accounts and individual retirement annuities.) A direct rollover of an eligible
rollover distribution is not subject to taxation until the Participant later
receives a distribution from the IRA or employer's plan.
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<PAGE> 19
The portion of an eligible rollover distribution that the Participant
elects to receive is taxable to the Participant unless within 60 days, the
Participant rolls over the portion he or she elected to receive to an IRA or
another employer's plan. The portion of the Participant's distribution that the
Participant elects to roll over is not subject to taxation until the Participant
receives a distribution from the IRA or employer's plan. However, the taxable
portion of the Participant's eligible rollover distribution which the
Participant elected to receive is subject to mandatory 20% federal income tax
withholding. For example, if the Participant's eligible rollover distribution is
$5,000, the Plan will pay the Participant only $4,000, and remit to the IRS
$1,000 as income tax withholding. The Participant receives a Form 1099-R from
the Plan, which reports the full $5,000 as a distribution. The $1,000
withholding amount applies against any federal income tax the Participant may
owe for the year. A direct rollover is the only means of avoiding this 20%
withholding.
The 20% mandatory withholding does not apply to any portion of a
Participant's taxable distribution that is not an eligible rollover
distribution. The Participant may elect whether to have federal income tax
withholding apply to that portion.
Prior to making a distribution to a Participant, the Plan will furnish
the Participant a Special Tax Notice Regarding Plan Payments, which explains the
above rules in more detail. IRS Publication 575 and IRS Publication 590 provide
additional information about the tax treatment of Plan distributions and
rollovers.
Plan Loans
Receipt of amounts from the Plan pursuant to qualifying loans will
generally not be taxable as distributions to a Participant, provided that the
loans satisfy applicable Code requirements and are repaid in accordance with the
terms of such loans. However, if a Participant defaults in payment on a Plan
loan and his account balance is applied to pay off such loan, the amount in
default may be deemed to be a taxable distribution to such Plan Participant. No
interest deductions will be allowed when Plan loans are made to certain key
employees or, as is the case under the Plan, secured by Tax Deferred
Contributions.
-----------------------------
THE FOREGOING IS ONLY A GENERAL SUMMARY OF CERTAIN FEDERAL INCOME TAX
PROVISIONS APPLICABLE TO PARTICIPATION IN THE PLAN AND DOES NOT PURPORT TO BE
COMPLETE. AMONG OTHER ITEMS, IT DOES NOT ADDRESS STATE AND LOCAL TAX
CONSEQUENCES APPLICABLE TO PARTICIPATION IN THE PLAN. THE LAW AND
INTERPRETATIONAL AUTHORITIES ON WHICH SUCH SUMMARY IS BASED ARE SUBJECT TO
CHANGE AT ANY TIME.
Each Participant should consult his own tax advisor concerning the
applicability of federal taxes, as well as any state, local or foreign taxes,
with respect to all aspects of participation in the Plan, including the tax
consequences of withdrawals and distributions from the Plan. In particular,
Participants are urged to consult with their individual tax advisors regarding
Plan distributions,
18
<PAGE> 20
because the federal, state and local income tax treatment will vary depending on
the Participant's individual circumstances.
APPLICABLE REQUIREMENTS OF ERISA
The Plan is a "defined contribution plan" described in section 3(34) of
ERISA. As such, the Plan is subject to the applicable provisions set forth in
Part I (Reporting and Disclosure), Part 2 (Participation and Vesting), Part 4
(Fiduciary Responsibility) and Part 5 (Administration and Enforcement) of
Subtitle B of Title I of ERISA, which relate to employee pension benefit plans
which are defined contribution plans.
The Plan is not subject to Part 3 (Funding) of Subtitle B of Title I of
ERISA nor is it subject to any of the provisions in Title IV (Pension Benefit
Guaranty Corporation Plan Termination Insurance) of ERISA. Those portions of
ERISA pertain to "defined benefit plans" described in section 3(35) of ERISA.
Accordingly, such provisions do not apply to the Plan (which is a defined
contribution, individual account plan), and the protections afforded thereby
will not be extended to Participants.
ADMINISTRATION OF THE PLAN
The Company, the Trustee, the Plan Administrator, the Investment
Committee, the Investment Advisors, the Retirement Board and the Investment
Manager each is a "named fiduciary" as such term is used in ERISA. The Plan
Administrator has general authority to control and manage the administration of
the Plan subject to the allocation of specific responsibilities to the Company,
the Investment Committee and other persons or entities as designated in the
Plan.
Pursuant to Article Eleventh of the Company's Certificate of
Incorporation and the relevant provisions of its Bylaws, the Company has agreed
to indemnify each director, officer, employee or agent who is involved in the
administration of the Plan against expenses (including attorney's fees),
judgments, fines, amounts paid in settlement and actually and reasonably
incurred in connection with any action or proceeding, whether civil, criminal,
administrative or investigative, or any claim or demand made by reason of such
employee's actions to the full extent provided by law, provided the employee,
with respect to civil claims and suits and criminal actions or proceedings,
acted in good faith for a purpose which he reasonably believed to be in
accordance with the intent of the Plan, and with respect to criminal actions or
proceedings also had no reasonable cause to believe that his conduct was
unlawful.
Expenses of Plan administration are allocated among the Plan, IAM and
the Company. The Trust bears the following expenses, which expenses are paid
directly from Plan assets or by brokerage commissions, as determined by the
Investment Committee and as may be permitted under ERISA:
(1) The reasonable fees and expenses of the Trustee, Plan
Administrator, Recordkeeper and Investment Manager;
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<PAGE> 21
(2) The reasonable fees and expenses of the outside members of the
Investment Committee;
(3) The reasonable fees and expenses for services contracted for
by the Investment Committee, including services for the
operation of Plan assets, which services may include, but are
not limited to, legal, administration, management, actuarial,
accounting, auditing, clerical and consulting services;
(4) The reasonable costs of operating the fund administration
office;
(5) The reasonable compensation and expenses of an executive
director of the Plan or other Plan employees;
(6) The cost of fiduciary liability insurance;
(7) The payment of auditors;
(8) Unreimbursed expenses incurred as a result of a service
provider's errors and omissions;
(9) Cost of printing and distribution of information in connection
with the Plan.
IAM bears the following expenses:
(1) The reasonable compensation expenses of the IAM members of the
Investment Committee;
(2) The reasonable compensation and expenses of IAM appointed
members of the Retirement Board;
(3) 1/2 of the reasonable compensation expenses of any impartial
referee selected to serve on the Retirement Board;
(4) The compensation and expenses of consultants engaged by IAM.
The Company bears the following expenses:
(1) The reasonable compensation and expenses of the Company
members of the Investment Committee;
(2) The reasonable compensation and expenses of the Company -
appointed members of the Retirement Board;
20
<PAGE> 22
(3) 1/2 of the reasonable compensation expenses of any impartial
referee selected to serve on the Retirement Board;
(4) The compensation and expenses of consultants engaged by the
Company;
(5) Expenses incurred in connection with payroll deductions and
maintenance of employee census;
(6) Compensation expenses of Company employees.
EXPENSES RELATED TO INVESTMENTS OF THE INVESTMENT FUNDS, SUCH AS
BROKERAGE COMMISSIONS, STOCK TRANSFER TAXES AND OTHER CHARGES INCURRED IN THE
ACQUISITION OR DISPOSITION OF SUCH INVESTMENTS, MAY BE PAID OUT OF THE
APPLICABLE PARTICIPANT ACCOUNT. IN THE CASE OF THE COMPANY COMMON STOCK FUND,
THE PARTICIPANT WILL BEAR THE BROKERAGE FEES AND OTHER TRANSACTION COSTS
ASSOCIATED WITH A PARTICIPANT'S DIRECTION TO INVEST FUTURE SALARY DEFERRAL
CONTRIBUTIONS DIRECTLY INTO SUCH FUND. A PARTICIPANT'S INDIVIDUAL ACCOUNT WILL
BEAR, IN THE CASE OF THE COMPANY COMMON STOCK FUND, QUARTERLY ACCOUNT
MAINTENANCE FEES (CURRENTLY .025% PER QUARTER OF A PARTICIPANT'S BALANCE IN SUCH
COMPANY COMMON STOCK FUND AS OF THE MEASUREMENT DATE) AND THE BROKERAGE FEES AND
OTHER TRANSACTION COSTS ASSOCIATED WITH THE PARTICIPANT'S DIRECTIONS TO TRANSFER
HIS CURRENT ACCOUNT BALANCES INTO OR OUT OF THE COMPANY COMMON STOCK FUND.
COMMON STOCK PURCHASED ON THE OPEN MARKET IS SUBJECT TO BROKERAGE COMMISSIONS
AND OTHER TRANSACTION COSTS. ANY COMMON STOCK PURCHASED DIRECTLY FROM OR SOLD TO
THE COMPANY WILL NOT BEAR ANY COMMISSION COSTS.
VOTING
The Plan provides that Participants in the Company Common Stock Fund
will be entitled to direct the Plan's Trustee (through the Investment Committee)
with respect to the voting of full and fractional shares, if any, of Common
Stock credited to their accounts. The Plan further provides that full and
fractional shares, if any, of Common Stock for which no direction is received by
the Trustee in a timely fashion will be voted in proportion to the votes of the
shares for which direction was received unless the Trustee, in its sole
discretion, elects to vote such undirected shares in another way in order to
meet its fiduciary duties under ERISA.
REPORTS TO PARTICIPANTS
As soon as practicable after the end of each quarter, each Participant
is furnished with a statement of his account under the Plan as of the end of
such quarter. This statement will be deemed accepted as correct if no written
objection thereto has been received within 30 days after the statement is
rendered. In addition, Participants are furnished a Summary Annual Report
containing financial information relating to the Plan in each year.
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<PAGE> 23
AMENDMENTS TO, OR MODIFICATION OR TERMINATION OF, THE PLAN
Although the Plan is intended to be permanent, the Company and IAM have
the right by joint agreement to amend or terminate it at any time, either
prospectively or retroactively, except that no amendment may reduce the interest
in the Fund, whether vested or contingent, of any Participant, former
Participant or designated beneficiary without his consent. Upon complete
discontinuance of contributions by the Company, the complete or partial
termination of the Plan or the final liquidation and dissolution of the Company,
the interest of each Participant affected thereby would become fully vested and
non-forfeitable and, after provision for the payment of all liabilities and
expenses, would be distributed in accordance with one of the specified methods
of payment.
RESALE RESTRICTIONS
Resales by "affiliates" of the Company of shares issued under the Plan
may be subject to limitations imposed by Rule 144 under the Securities Act.
* * * * * *
The foregoing description is a summary of certain provisions of the
Plan and Trust Agreement. Copies of Plan documents have been filed as exhibits
to the Registration Statement. Reference is made to such exhibits for a full
statement of the Plan and Trust Agreement, and the foregoing summaries are
subject thereto and qualified in their entirety by such reference.
EXPERTS
The consolidated financial statements and financial statement schedule
of Trans World Airlines, Inc. as of December 31, 1996 and 1995 and for each of
the periods in the three year period ended December 31, 1996, included in Trans
World Airlines, Inc.'s Annual Report (Form 10-K) for the year ended December 31,
1996, have been audited by KPMG Peat Marwick LLP, independent certified public
accountants, as set forth in their report thereon, included therein and
incorporated herein by reference. The report of KPMG Peat Marwick LLP contains
an explanatory paragraph indicating that the Company's recurring losses from
operations and its limited sources of additional liquidity raise substantial
doubt about the Company's ability to continue as a going concern. In addition,
their report refers to the application of fresh start reporting in connection
with the 1995 Reorganization. See the Consolidated Financial Statements
incorporated by reference herein. Such financial statements and schedule are
incorporated herein in reliance upon the report of KPMG Peat Marwick LLP and
upon the authority of such firm as experts in auditing and accounting.
LEGAL OPINIONS
The legality of the Common Stock and the participations in the Plan
offered hereby and the compliance of the Plan, as amended, with Section 401(a)
of the Code has been passed upon for the Company by Smith, Gambrell & Russell,
LLP, 1230 Peachtree Street, N.E., Promenade II, Suite 3100, Atlanta, Georgia
30309-3592.
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<PAGE> 24
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The By-Laws of the Company require the Company to indemnify its
directors and officers to the fullest extent permitted by Delaware law. In
addition, the Company has purchased insurance policies which provide coverage
for its directors and officers in certain situations where the Company cannot
directly indemnify such directors or officers.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act, and is, therefore,
unenforceable.
23
<PAGE> 25
APPENDIX A TO PROSPECTUS
FOR
TRANS WORLD AIRLINES, INC. RETIREMENT PLAN FOR FLIGHT ATTENDANTS
<TABLE>
<CAPTION>
INVESTMENT PERFORMANCE*
Through December 31
INVESTMENT OPTIONS AND SELECTED 1 YEAR 3 YEARS 5 YEARS
PORTFOLIO BENCHMARKS FOR CERTAIN
FUNDS
<S> <C> <C> <C>
Interest Fund 6.22% 6.47% 6.71%
Conservative Equity Fund 24.25% 24.94% N/A
S&P 500 Index Fund 34.35% 28.42% N/A
International Equity Fund 27.93% 14.38% 14.28%
Growth Equity Fund 21.93% 25.00% 21.24%
Aggressive Equity Fund (8.06)% 21.97% 13.87%
Conservative Balanced Portfolio 14.32% 13.24% N/A
Moderate Balanced Portfolio 13.34% 16.76% N/A
Aggressive Balanced Portfolio 4.58% 18.85% N/A
</TABLE>
(N/A = Not Available)
<TABLE>
<CAPTION> TARGET
INVESTMENT OPTIONS MANAGER(S) OR FUND VEHICLE ALLOCATIONS
<S> <C> <C>
Interest Fund PRIMCO Capital Management 100%
Conservative Equity Fund American Century Investment 100%
Management, Inc.
S&P 500 Index Fund BZW Barclays Global 100%
Investors
</TABLE>
A-1
<PAGE> 26
<TABLE>
<S> <C> <C>
International Equity Fund American Century Investment 100%
Management, Inc.
Growth Equity Fund American Century Investment 100%
Management, Inc.
Aggressive Equity Fund American Century Investment 100%
Management, Inc.
Conservative Balanced Portfolio Barclays Daily Tactical Assets
Allocation Fund J. 35%
Interest Fund 45%
Conservative Equity Fund 20%
Moderate Balanced Portfolio Barclays Daily Tactical Assets
Allocation Fund J. 50%
Interest Fund 20%
Conservative Equity Fund 15%
Aggressive Equity Fund 15%
Aggressive Balanced Portfolio Barclays Daily Tactical Assets
Allocation Fund J. 30%
International Equity Fund 20%
Growth Equity Fund 20%
Aggressive Equity Fund 20%
Interest Fund 10%
</TABLE>
- -----------
* As reported by Recordkeeper. Data represents change in blended net
asset value of investment options. A Participant's individual return
may vary slightly because of contribution timing, transfers, etc.
The performance information presented here includes changes in principal value,
reinvested dividends, and capital gain distributions. Total return represents
past performance. Past performance cannot guarantee future results. Investment
return and principal value will vary, and shares may be worth more or less at
redemption than at original purchase. The prospectuses for the individual funds
or components thereof, contain more complete information, including management
fees and expenses.
A-2
<PAGE> 27
Data Regarding Common Stock of TWA
The Common Stock is listed on the American Stock Exchange. The
following table sets forth the range of quarterly high and low prices for shares
of Common Stock on the composite tape (as reported in The Wall Street Journal).
Information regarding the trading prices of Common Stock equivalents prior to
August 23, 1995, the Effective Date of the Company's Prepackaged Plan of
Reorganization is not comparable with the data provided below and is not
included herein.
<TABLE>
<CAPTION>
PERIOD HIGH LOW
- ------ ---- ---
<S> <C> <C>
1995
Third Quarter (Beginning August 23, 1995) $ 8.00 $ 5.313
Fourth Quarter $ 14.625 $ 6.500
1996
First Quarter $ 20.50 $ 9.125
Second Quarter $ 23.75 $14.125
Third Quarter $ 14.875 $ 9.625
Fourth Quarter $ 9.250 $ 6.563
1997
First Quarter $ 8.4375 $5.1875
Second Quarter $10.8125 $ 5.875
Third Quarter (through July 28, 1997) $ 8.75 $ 6.00
</TABLE>
Investments in the TWA Common Stock Fund are not pooled investments.
Nevertheless, future data regarding the value of a Participant's shares in the
TWA Common Stock Fund may not be identical with reported prices of the Common
Stock due to deductions for expenses and transaction costs.
------------
The date of this Appendix is July 30, 1997.
A-3
<PAGE> 28
APPENDIX B TO PROSPECTUS
FOR
RETIREMENT SAVINGS PLAN FOR FLIGHT ATTENDANTS
OF TRANS WORLD AIRLINES, INC.
This Appendix presents certain information which should be read in
conjunction with the Prospectus dated February 3, 1997 relating to the
Retirement Savings Plan for Flight Attendants of Trans World Airlines, Inc. (the
"Prospectus"). The Company hereby undertakes to furnish a copy of the Prospectus
to each person to whom this Appendix is delivered, upon the written or oral
request of any such person. Written or oral requests should be directed to Trans
World Airlines, Inc., One City Centre, 515 North Sixth Street, St. Louis,
Missouri 63101, Attention: Legal Department. Telephone number: (314) 589-3285.
Defined terms used in this Appendix shall have their respective meanings as set
forth in the Prospectus.
PARTICIPATING COMPANIES
The companies participating in the Plan (the "Employing Companies") at
the date of this Appendix include:
Trans World Airlines, Inc............................ One City Centre
515 North Sixth Street
St. Louis, Missouri 63101
The Board of Directors of the Company has the power to admit additional
subsidiaries or affiliates of the Company to participation in the Plan at any
time.
ELIGIBLE EMPLOYEES
As of November 1, 1988, each "Employee" who was a Participant in the
Plan on its Effective Date may continue as a Participant without any further
action on his part. All other employees employed after the Effective Date become
eligible to become a Participant as of the first day of the next month on or
after his date of employment as an employee. An employee who is employed by the
Company who is not an eligible employee, but who later becomes an employee shall
be eligible to become a Participant as of the first day of the month following
the date he becomes an eligible employee. For purposes of the Plan, an Employee
means any person employed by the Company or any other participating Employer as
an International or Domestic Flight Attendant of the Company or an Affiliate.
The term "Employee" also includes Leased Employees. The term "Leased
Employee" means any person (other than an Employee of the Recipient Employer)
who pursuant to an agreement between the Company or any other participating
employer (the "Recipient Employer" and any other person ("leasing organization")
has performed services for the Recipient Employer (or for the
B-1
<PAGE> 29
Recipient Employer and related persons determined in accordance with section
414(n)(6) of the Code) on a substantially full time basis for a period of at
least one year and such services are of a type historically performed by Company
or any other participating Employees in the business field of the Recipient
Employer. Contributions or benefits provided to a leased Employee by the leasing
organization which are attributable to services performed for the Recipient
Employer shall be treated as provided by the Recipient Employer.
A leased Employee shall not be considered an Employee of the Recipient
Employer if (i) such Employee is covered by a money purchase pension Plan
providing: (a) a non-integrated employer contribution rate of at least 10
percent of Compensation, as defined in section 415(c)(3) of the Code, but
including amounts contributed pursuant to a salary reduction agreement which are
excludable from the Employee's gross income under sections 125, 402(a)(8),
402(h) or 403(b) of the Code, (b) immediate participation, and (c) full and
immediate vesting; and (ii) leased Employees do not constitute more than 20
percent of the Recipient Employer's highly compensated workforce.
ADMINISTRATION OF THE PLAN
The individuals charged with administering the Plan at the date of this
Appendix, together with their respective positions with the Company or its
subsidiaries or IAM, are as follows:
NAME POSITION
- ---- --------
Larry G. Cleveland Director - Employee Benefits
11500 Ambassador Drive
2nd Floor
Kansas City, Missouri 64153
The members of the Investment Committee and their addresses at the date of this
appendix, together with their position with the Company or IAM, if any, are as
follows:
NAME POSITION
- ---- --------
Sherry Cooper IAM Member
c/o IAM Local 1997
Room MTS2359A
St. Louis International Airport
10701 Natural Bridge Road
St. Louis, Missouri 63145
B-2
<PAGE> 30
NAME POSITION
- ---- --------
Rocky Miller IAM Member
c/o IAM Local 1997
Room MTS2359A
St. Louis International Airport
10701 Natural Bridge Road
St. Louis, Missouri 63145
Mr. Gary D. Dilley Outside Member
10709 West 128th Street
Overland Park, Kansas 66213
Ms. Janice Yount TWA Member, Manager, Pension Finance
TWA - KCAC
P.O. Box 20007
Kansas City, MO 64153
Mr. Larry G. Cleveland TWA Member, Director, Employee Benefits
TWA - KCAC
P.O. Box 20007
Kansas City, MO 64153
The delegated administrative duties and responsibilities relate to the
respective employees of each participating company, and consist primarily of the
authority to determine the amount of benefits payable under the Plan and the
manner of payment, and to review the disclosure of information to Participants
and beneficiaries under the Plan.
Additional information about the Plan may be obtained from the following
information contacts:
AMERICAN CENTURY
P. O. Box 419385
Kansas City, Missouri 641441-6385
Information Line: 1-800-345-2345
TWA BENEFITS
Kansas City Administrative Center
11500 Ambassador Drive
Kansas City, Missouri 64153
Telephone: 816-464-6450
--------------
The date of this Appendix is July 30, 1997.
B-3
<PAGE> 31
APPENDIX C TO PROSPECTUS
FOR
RETIREMENT SAVINGS PLAN FOR FLIGHT ATTENDANTS
OF TRANS WORLD AIRLINES, INC.
RISK FACTORS FOR INVESTMENTS IN THE COMMON STOCK FUND
In order to evaluate the Company and its business, prospective investors in
the Common Stock Fund should carefully consider the risk factors set forth
below, as well as the other information appearing in this Prospectus, before
investing in the Common Stock.
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 forwardlooking
statements within the meaning of Section 21E of the Exchange Act, and each of
them is therefore 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 vary 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.
RISK FACTORS RELATED TO THE COMPANY
Substantial Indebtedness; Capital Expenditure Requirements; Liquidity
The Company believes that a substantial improvement in its operating
results is necessary for TWA to maintain adequate liquidity to meet its
obligations throughout the remainder of 1997. The Company's auditors included in
their report dated March 24, 1997 on TWA's consolidated financial statements for
the year ended December 31, 1996 an explanatory paragraph to the effect that
substantial doubt exists regarding the Company's ability to continue as a going
concern due to the Company's recurring losses from operations and limited
sources of additional liquidity. See the Consolidated Financial Statements
incorporated herein by reference.
The Company is highly leveraged and has and will continue to have
significant debt service obligations. See Note 8 to the Company's 1996
consolidated financial statements incorporated by reference into this Prospectus
(including the notes thereto, the "1996 Consolidated Financial Statements"). As
of March 31, 1997, the Company's ratio of long-term debt and capital leases
(including current maturities) to shareholders' equity was 5.29 to 1. As of
March 31, 1997, the Company's total long-term debt and capital leases (including
current maturities) was $983.5 million. In addition, at March 31, 1997, TWA's
estimated minimum payment obligations under noncancellable operating leases were
approximately $309.5 million for the remainder of 1997 and the first quarter of
1998 and approximately $2,855.9 million for periods thereafter. Over the last
several years, the Company's earnings have not been sufficient to cover fixed
charges. The deficiency of earnings to cover fixed charges was $107.0 million
and $74.9 million in the three months ended March 31, 1997 and 1996,
respectively, $280.0 million in the year ended December 31, 1996, $32.3 million
in the four months ended December 31, 1995, $338.3 million in the eight months
ended August 31, 1995, $435.0 in the year ended December 31, 1994, $88.4 million
in the two months ended December 31, 1993, $364.7 in the ten months ended
October 31, 1993, and $317.4 in the year ended December 31, 1992.
The degree to which the Company is leveraged could have important
consequences to holders of the Common Stock 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 existing indebtedness; (iii) the Company
is placed at a relative competitive
<PAGE> 32
disadvantage to its less highly leveraged competitors and is more vulnerable to
economic downturns; and (iv) 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
"--Uncertainties Related to Icahn Loans" for a description of an alleged default
under a loan agreement of the Company which could result in a cross-default
under substantially all of the Company's other indebtedness and leases and which
would otherwise have a material adverse effect on the Company.
As of May 1, 1997, TWA's capital expenditures for 1997 were anticipated to
total approximately $107 million, including approximately $91 million for flight
equipment related expenditures (e.g., progress payments for aircraft and the
purchase of aircraft engines and spare parts). While the Company is seeking
financing for certain of its planned capital expenditures, a substantial portion
of such expenditures are expected to utilize internally generated funds. The
inability to finance or otherwise fund such expenditures could have a material
adverse effect on the ability of the Company to implement its strategic plan.
On June 30, 1997, the Company's consolidated cash and cash equivalents
balance was approximately $102.6 million (including amounts held in TWA's
international operations and by subsidiaries which, based upon various monetary
regulations and other factors, might not be immediately available to the
Company), a $79.0 million decrease from the $181.6 million balance at December
31, 1996. This reduction in the Company's cash balances resulted from, among
other factors, continued adverse effects during the first half of 1997 of the
negative impact on consumer demand of the loss of Flight 800 in July 1996 and
difficulties experienced in the last two quarters of 1996 in operating
performance. Although the Company's operating performance has substantially
improved during 1997, the residual effects of these 1996 events continued
throughout the first two quarters of 1997 and may continue in subsequent
quarters.
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. See "Management's
Discussion and Analysis of Financial Conditions and Results of
Operations--General" incorporated herein by reference for a description of the
actions taken by the Company to improve its liquidity during the first quarter
of 1997. Substantially all of TWA's strategic assets, including its owned
aircraft and overhaul facilities, have been pledged to secure various issues of
outstanding indebtedness of the Company. Sales of such other 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. 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. See
"--Availability of NOLs" for a discussion of the status of the Company's net
operating loss carryforwards.
The Company's long-term viability as well as its ability to meet its
existing debt and other obligations and future capital commitments depends upon
the Company's financial and operating performance, which in turn is subject to,
among other things, prevailing economic conditions and to certain other
financial, business and other factors beyond the Company's control. As
discussed elsewhere herein, in late 1996 and early 1997, the Company began
implementing certain operational changes which are intended to improve the
Company's financial results through, among other things, higher yields and load
factors; increased fuel, pilot and other aircraft operating efficiencies; and a
decrease in maintenance-related expenditures, employee headcount and
JFK-related operating costs. Although management believes that such operational
changes will be successful and that the Company's cash flow from its operations
and financing activities should therefore be sufficient in the foreseeable
future to meet the Company's debt and other obligations and future capital
commitments, the airline industry in general and the Company in particular are
subject to significant risks and uncertainties referred to in this Prospectus
including under these Risk Factors. Therefore, there can be no assurance that
the Company's operating results and financing activities will be sufficient in
the foreseeable future to meet its debt and other obligations and future
capital commitments.
Availability of NOLs
Based on recent analysis, the Company presently estimates that it had, for
federal income tax purposes, net
<PAGE> 33
operating loss carryforwards ("NOLs") amounting to approximately $625 million at
December 31, 1996, which includes increases in the NOLs as originally filed.
Such NOLs expire in 2008 through 2011 if not utilized before then to offset
taxable income. Section 382 of the Internal Revenue Code of 1986, as amended
(the "Code"), and regulations issued thereunder impose limitations on the
ability of corporations to use NOLs, if the corporation experiences a more than
50% change in ownership during certain periods. In connection with the change of
ownership caused by the '95 Reorganization, the Company elected to reduce its
NOLs in accordance with Section 382 of the Code and regulations issued
thereunder. If another ownership change were to occur prior to September 1997,
the annual limitation on the Company's utilization of its then existing NOLs
would be reduced to zero. Changes in ownership in periods thereafter could
substantially restrict the Company's ability to utilize its tax net operating
loss carryforwards. The Company believes that no ownership change has occurred
subsequent to the '95 Reorganization or will occur as a result of the resale
offering of the Warrants issued in the Private Placement and the shares of
Common Stock issuable upon the exercise of such Warrants (the "Resale
Offering"). There can be no assurance, however, that the Resale Offering will
not be a contributing factor to an ownership change or that an unrelated
ownership change will not occur in the future. In addition, the 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. For the
foregoing reasons, prospective purchasers of the Common Stock should not assume
the unrestricted availability of the Company's currently existing NOLs, if any,
in making their investment decisions. For financial reporting purposes, the tax
benefits from substantially all of the tax net operating loss carryforwards
will, to the extent realized in future periods, have no impact on the Company's
operating results, but instead be applied to reduce reorganization value in
excess of amounts allocable to identifiable assets.
Uncertainties Related to Icahn Loans
The Company and Karabu Corporation ("Karabu"), a Delaware corporation
controlled by Mr. Carl C. Icahn, entered into an eight-year ticket agreement
(the "Ticket Agreement") pursuant to the '95 Reorganization. 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 to the general
public. 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 Karabu in connection with the '93 Reorganization (the "Icahn Loans"), which
financing is secured by receivables and certain flight equipment pledged under a
security agreement (the "Karabu Security Agreement") with State Street Bank and
Trust Company of Connecticut N.A., as security trustee (the "Security Trustee").
Mr. Icahn's position was based upon a variety of claims related to his
interpretations of the Karabu Security Agreement as well as certain alleged
violations of the Ticket Agreement by the Company. A violation of the Ticket
Agreement by the Company could result in a cross-default under the Icahn Loans.
An event of Default (as defined in the Icahn Loans), if resulting in an
acceleration of the indebtedness due thereunder, would constitute a default
under the instruments governing substantially all of the Company's other
indebtedness and leases and would have a material adverse effect on the Company.
Mr. Icahn has also alleged independent violations of the Icahn Loans, including,
among other things, that the Company has not been maintaining, in accordance
with the terms of the Karabu Security Agreement, 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 the Security Trustee and
requested the release of the liens on such aircraft. To date, the Security
Trustee has not released such liens. In addition, Mr. Icahn has asserted that
the approval of the Security Trustee is required for any modification to the
FAA-approved maintenance program affecting aircraft pledged as security under
the Karabu Security Agreement. 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 standstill agreement expired
on March 20, 1996.
On March 20, 1996, the Company filed a Petition (the "TWA Petition")
commencing a lawsuit against Mr.
<PAGE> 34
Icahn, Karabu and certain other entities affiliated with Icahn (collectively,
the "Icahn Defendants"). The TWA Petition, which is pending in the Circuit Court
for St. Louis County, Missouri, 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,
marketing and selling 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 also seeks liquidated, compensatory and punitive damages, in addition to the
Company's costs and attorney's fees.
Also 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. The Icahn
Complaint seeks injunctive relief and actual and punitive monetary damages, as
well as the Icahn Entities' costs of litigation. On June 13, 1996, following
TWA's filing of a motion to dismiss the Icahn Complaint, the Icahn Entities
amended the Icahn Complaint to delete the federal antitrust claims and to add
new allegations and theories with respect to claimed violations of the federal
antitrust laws and the Lanham Act (the "Amended Icahn Complaint"). On March 24,
1997, the United States District Court for the Southern District of New York, on
the Company's motion, dismissed the suit in its entirety.
On June 6, 1996, Karabu forwarded a letter to TWA advising the Company of
Karabu's possible intention to instruct the PBGC to require the Security Trustee
to give a 30 day default notice to TWA in respect of certain alleged instances
of non-compliance by TWA with the provisions of the Karabu Security Agreement
relating to, among other things, four Boeing 727-100 aircraft which are no
longer being flown by TWA in active service and changes by TWA to the
FAA-approved scheduled maintenance of such aircraft and other aircraft pledged
under the Karabu Security Agreement without obtaining approval of the Security
Trustee. Karabu also forwarded with such letter a draft of a proposed complaint
which it threatened to file a declaratory judgment that Karabu would be entitled
to instruct the PBGC to require the Security Trustee to give TWA such notice of
default. The complaint was filed in a New York state court and was served on TWA
on June 28, 1996.
On June 26, 1996, Karabu formally requested the PBGC to instruct the
Security Trustee to give TWA a notice of default under the Karabu Security
Agreement. On June 27, 1996, the PBGC declined to so instruct the Security
Trustee, advising Karabu that the PBGC did not believe TWA was in default and,
even if a default were determined to exist, any such default would be technical
only and Karabu would not be harmed by such default.
On June 28, 1996, Karabu brought an action against the PBGC in the United
States District Court for the Southern District of New York, seeking a
declaratory judgment for the purpose of determining Karabu's rights with respect
to the Karabu Security Agreement. TWA then sought to intervene in such lawsuit
and was granted the right to do so whereupon the Company filed a motion to
dismiss Karabu's complaint and for summary judgment. Karabu then withdrew its
separate suit in New York state court for a declaratory judgment previously
filed on June 28, 1996.
Although the Company intends to press its claims vigorously, it is possible
that Karabu's interpretation of the Ticket Agreement regarding discount ticket
sales by the Icahn Defendants 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, any default by the Company under the Ticket Agreement or directly
on the Icahn Loans which resulted in an acceleration of the Icahn Loans would
result in a cross-default under substantially all of the Company's other
indebtedness and leases and otherwise have a material adverse effect on the
Company. As of March 31, 1997, an aggregate principal amount of $104.5 million
was outstanding under the Icahn Loans.
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
<PAGE> 35
operations. During the early 1990s, both the airline industry and the Company
experienced periods of significant losses, with unprecedented losses incurred by
the domestic airline industry during the years 1990-1993. Although the airline
industry has generally seen strengthened performance in recent years,
particularly in 1995 and 1996 when many airlines reported record profits, the
Company has continued to report significant net losses. For example, the Company
reported a net loss of $368.4 million for the combined 12-month period ended
December 31, 1995 (excluding extraordinary gains related to the '95
Reorganization), while reporting an operating profit of $25.1 million (including
$58.0 million of non-cash expense relating to the distribution of stock to
employees as part of the '95 Reorganization), representing the Company's first
operating profit since 1989. The Company's reported net loss of $284.8 million
for 1996 represented a $57.3 million increase over the 1995 net loss, while the
Company reported a $198.5 million operating loss for 1996 (including special
charges of $85.9 million), which represented a $223.6 million decline from its
operating profit in 1995. During the first quarter of 1997, the Company reported
a net loss of $71.6 million, which represented a $34.5 million increase over the
$37.1 net loss for the first quarter of 1996, and a $99.5 million operating
loss, which represented a $45.3 million increase over the operating loss
reported for the first quarter of 1996. During the second quarter of 1997, the
Company reported operating revenue of $844.4 million, which represented a $121.4
million (12.6%) decrease from the second quarter of 1996, when the Company's
operating revenue totaled $965.8 million. The reduced revenue during the second
quarter of 1997 as compared with the same period of 1996 reflected, among other
things, a planned reduction in capacity resulting from the ongoing replacement
of 747 and L1011 aircraft with smaller 767 and 757 aircraft. Operating expenses
of $838.5 million during the second quarter of 1997 reflected a $65.3 million
(7.2%) decrease as compared with the same period of 1996, when the Company's
operating expenses totaled $903.8 million. Approximately $23.7 million of such
operating expense decrease resulted from declines in jet fuel prices and jet
fuel consumption, while aircraft maintenance materials and repair expense
decreased approximately $18.8 million, primarily due to the operating of newer
aircraft. In addition, payroll expenses declined $5.2 million. As a result of
the above, in the second quarter of 1997, TWA experienced operating income of
$5.9 million and a net loss of $14.4 million, as compared with operating income
of $62.0 million and a net profit of $25.3 million in the second quarter of
1996. As part of the Company's effort to continue to improve operating results,
on July 22, 1997, the Company announced the planned reduction of approximately
1,000 jobs during the remainder of 1997 in the areas of maintenance, airport
operations and reservations. The decreased headcount in maintenance reflects
reduced maintenance needs for the newer aircraft added to the Company's fleet
during 1996 and 1997. The reductions are being made through a combination of
layoffs and attrition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" incorporated herein by reference. Although
the Company has taken a number of actions which management believes will improve
future results, the Company will incur additional expenses relating to these
actions, including pilot training and aircraft leases, and there can be no
assurance that such actions will make the Company's future operations
profitable. See "--Substantial Indebtedness; Capital Expenditure Requirements;
Liquidity."
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 and the nature of such uncertainties is subject to constant change, the
Company is unable to predict the potential impact of any of such uncertainties
upon its results of operations. Among the other uncertainties that might
adversely impact TWA's future results of operations are: (i) competitive pricing
and scheduling initiatives; (ii) the availability and cost of capital; (iii)
increases in fuel and other operating costs; (iv) insufficient levels of air
passenger traffic resulting from, among other things, war, threat of war,
terrorism or changes in the economy; (v) governmental limitations on the ability
of TWA to service certain airports and/or foreign markets; (vi) regulatory
requirements requiring additional capital or operating expenditures; (vii) the
outcome of certain upcoming labor negotiations (see "--'94 Labor Agreements");
and (viii) the possible reduction in yield due to the discount ticket program
entered into between the Company and Karabu in connection with the '95
Reorganization (see "--Uncertainties Related to Icahn Loans.")
Crash of Flight 800
On July 17, 1996, TWA Flight 800 crashed shortly after departure from JFK
en route to Paris, France. There were no survivors among the 230 passengers and
crew members aboard the Boeing 747 aircraft. The Company is cooperating fully
with all federal, state and local regulatory and investigatory agencies to
ascertain the cause of the crash, which to date has not been determined. TWA is
currently a defendant in a number of lawsuits relating to the
<PAGE> 36
crash, but it is unable to predict the amount of claims which may ultimately be
made against the Company or how those claims might be resolved. TWA maintains
substantial insurance coverage and, at this time, management has no reason to
believe that such insurance coverage will not be sufficient to cover the claims
arising from the crash. Therefore, TWA believes that the resolution of such
claims will not have a material adverse effect on its financial condition or
results of operations. The Company is unable to identify or predict the extent
of any adverse effect on its revenues, yields, or results of operations which
has resulted or may result from the public perception of the crash.
Changes to Management Team
Commencing in June 1996, the Company experienced a substantial number of
changes in its executive management team. In June 1996, the Company announced
the separation of Messrs. Robert A. Peiser and Mark J. Coleman, Chief Financial
Officer and Senior Vice President-Marketing, respectively, from the Company.
Messrs. Peiser and Coleman differed with the determination of the Board of
Directors, as expressed by its unanimous vote, to continue the management
approach of the Company's President and Chief Executive Officer in implementing
the next phase of the Company's rebuilding process. On August 21, 1996, Edward
Soule was elected to the position of Executive Vice President and Chief
Financial Officer. On September 3, 1996, Roden A. Brandt was elected to the
position of Senior Vice President--Planning. On October 24, 1996, the Company
announced that Jeffery H. Erickson, President and Chief Executive Officer had
informed the Board of his intention to leave the Company in January 1997. On
December 14, 1996, the Board appointed Gerald L. Gitner, a member of the Board,
to serve as Vice Chairman and Acting Chief Executive Officer; David M. Kennedy,
a member of the Board, to serve as Acting Executive Vice President and Chief
Operating Officer; and William F. Compton, also a member of the Board, to serve
as Acting Executive Vice President--Operations. On December 20, 1996, Michael J.
Palumbo was appointed as Senior Vice President and Chief Financial Officer,
succeeding Mr. Soule, who had resigned from such positions on December 19, 1996.
On February 12, 1997, the Board of Directors elected Mr. Gitner to serve as
Chairman and Chief Executive Officer. On February 14, 1997, Don Monteath, who
had served as the Company's Senior Vice President--Operations, left the Company.
On March 13, 1997, Mr. Compton was appointed Executive Vice
President--Operations, subject to Board approval. On March 27, 1997, the Board
confirmed Mr. Compton's appointment. On May 29, 1997, Donald M. Casey was
elected to serve as the Company's Executive Vice President--Marketing. It was
also announced on May 29, 1997 that Mr. Kennedy would leave his interim
position, which was not considered to be permanent, as Acting Executive Vice
President and Chief Operating Officer. Mr. Kennedy, whose services have been
retained on a consulting basis, will also remain as a director and as chairman
of the Finance Committee of the Board of Directors. In addition, effective as of
August 1, 1997, Charles J. Thibaudeau, Senior Vice President--Employee
Relations, announced his retirement from the Company after 32 years of service.
The Company does not believe that such changes have unduly affected its ongoing
operations or implementation of the Company's business strategy, although there
can be no assurance that such changes will not have a material adverse effect on
future operations.
'94 Labor Agreements
As of March 31, 1997, the Company had approximately 24,170 full-time
employees (based upon full-time equivalents which include part-time employees).
Of these, approximately 82% were represented by the Air Line Pilots Association,
International ("ALPA") and the International Association of Machinists and
Aerospace Workers ("IAM"). On March 6, 1997, the IAM was certified to replace
the Independent Federation of Flight Attendants ("IFFA") as the bargaining
representative of the Company's flight attendants. The Company's currently
effective '94 Labor Agreements (as defined) with each such union contain more
favorable work rules than in prior contracts and wage levels which the Company
believes to be below many other U.S. airlines. The '94 Labor Agreements are
three year agreements which become amendable after August 31, 1997. Negotiations
on a new collective bargaining agreement with the IAM regarding the Company
employees represented by the IAM (other than the flight attendants) commenced in
February 1997 and are currently ongoing. Negotiations on a new collective
bargaining agreement with ALPA commenced in June 1997 and are currently ongoing,
while negotiations with the IAM commenced in July 1997 and are also currently
ongoing . Under the Railway Labor Act (the "RLA"), workers whose contracts have
become amendable are required to continue to work under the "status quo" (i.e.,
under the terms of employment antedating the amendable date) until the RLA's
procedures are exhausted. Under the RLA, the Company and its unions are
obligated to continue to bargain until agreement is reached or until a mediator
is appointed and concludes
<PAGE> 37
that negotiations are deadlocked and mediation efforts have failed. The mediator
must then further attempt to induce the parties to agree to arbitrate the
dispute. If either party refuses to arbitrate, then the mediator must notify the
parties that his efforts have failed and, after a 30-day cooling-off period, a
strike or other direct action may be taken by the parties.
The Company's financial resources are not as great as those of most of its
competitors, and, therefore, management believes that any substantial increase
in its labor costs as a result of any new labor agreements or any cessation or
disruption of operations due to any strike or work action could be particularly
damaging to the Company.
Age of Fleet; Noise
At May 1, 1997, the average age of TWA's aircraft fleet was 18.3 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, fuel and
other operating costs associated with older aircraft. The Company is in the
process of acquiring a number of new and later model used aircraft and, based
upon current delivery schedules for firmly committed aircraft, TWA's composite
fleet age should be reduced to slightly under 17 years at December 31, 1997. As
of December 31, 1996, TWA's fleet included 70 aircraft which did not meet the
noise reduction requirements under the Airport Noise and Capacity Act of 1990
(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 Federal Aviation Administration (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. In 1995 and 1996, TWA spent approximately $2.6
million and $3.4 million, respectively, to comply with aging aircraft
maintenance requirements. Based on information currently available to TWA and
its current fleet plan, TWA estimates that costs associated with complying with
these aging aircraft maintenance requirements will aggregate approximately $18.7
million through the year 2000. These cost estimates assume, among other things,
that newer aircraft will replace certain of TWA's existing aircraft and that as
a result certain aircraft will be retired by the Company before TWA would be
required to make certain aging aircraft maintenance expenditures. 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. See "--Substantial Indebtedness; Capital Expenditure
Requirements; Liquidity," and "--Aging Aircraft Maintenance."
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 the '94 Labor Agreements.
In exchange for the concessions received in the '94 Labor Agreements, the
Company, among other things, adopted the ESIP to permit TWA's employees to
increase their level of ownership, through grants by the Company to its
employees of additional shares of Employee Preferred Stock 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 the 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 also provides that if additional shares
are distributed following the '95 Effective Date (as defined) in respect of the
'95 Reorganization, employees will be entitled to receive an additional number
of shares of Common Stock and Employee Preferred Stock (the "Fill-Up Shares")
such that the employees retain the same level of ownership as before the
additional distribution. Union representatives and the Company have tentatively
agreed that the number of Fill-Up Shares to be issued pursuant to the ESIP is
approximately 932,000. The issuance of additional shares of Common Stock under
the ESIP will result in significant future dilution to other holders of the
Common Stock.
In 1994, 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. As amended, the KESIP provides
<PAGE> 38
for the award of incentive and nonqualified stock options for up to 14% of the
aggregate number of shares of Common Stock and Employee Preferred Stock
outstanding at the start of each fiscal year. As of July 24, 1997, 65 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 generally vest at a rate of
34%, 33% and 33% on the first three anniversaries of the award date of such
options.
In March 1996, the Company issued 3,869,000 shares of the Company's 8%
Cumulative Convertible Exchangeable Preferred Stock (the "8% Preferred Stock"),
which are convertible 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 (equivalent to a conversion rate of approximately 2.467 shares of Common
Stock for each share of 8% Preferred Stock), subject to adjustment under certain
circumstances. Based on the current conversion price, upon conversion of all
shares of 8% Preferred Stock into shares of Common Stock, an aggregate of
9,544,823 additional shares of Common Stock would be issued.
Pursuant to the Private Placement effected in March 1997, the Company
issued the Warrants, with each of the 50,000 redeemable Warrants issued granting
its holder the right to purchase 126.26 shares of Common Stock at an exercise
price of approximately $7.92 per Warrant. The Warrants are exercisable
commencing on March 31, 1998. An aggregate of 6,313,000 shares of Common Stock
would be issued upon exercise of all of the Warrants.
In addition, as a result of provisions of the '94 Labor Agreements, the
Company's Third Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") and Amended and Restated By-laws (the "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. See
"Certain Provisions of the Certificate of Incorporation, the By-laws and
Delaware Law."
Anti-takeover Provisions in Certificate of Incorporation and By-laws
The Certificate of Incorporation and 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 the Federal Aviation Act of 1958, which generally prohibits
non U.S. citizens from owning more than 25% of the voting interest in U.S. air
carriers, and the prohibition on certain business combinations contained in
Section 203 of the Delaware General Corporation Law ("DGCL"), could have the
effect of delaying, deferring or preventing a change in control or the removal
of existing management.
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
market 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 $58 million based upon such target prices and the number of shares
of Common Stock and Employee Preferred Stock outstanding at December 31, 1996.
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,
respectively). Additionally, the allocation of approximately 1.1 million shares
of Employee Preferred Stock issued to a trust for employees represented by 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 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
<PAGE> 39
believe the amount owed is significantly greater. See Notes 1 and 12 to the
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
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 (the " '95 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 are not comparable to the post-reorganization
consolidated financial statements. A vertical black line is shown in the
Consolidated Financial Statements 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. See Note 19 to the
Consolidated Financial Statements incorporated herein by reference.
In the fourth quarter of 1996, the Company reported a special charge of
$26.7 million relating to the write-down of the carrying value of TWA's
JFK-Athens route authority, reflecting the Company's decision to terminate
service on such route after April 18, 1997.
RISK FACTORS RELATED TO THE INDUSTRY
Competition
The airline industry operates in an intensely competitive environment. 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. The
airline industry is also cyclical due to, among other things, a close
relationship of yields and traffic to general U.S. and worldwide economic
conditions. Small fluctuations in revenue per available seat mile and cost per
available seat mile can have a significant impact on the Company's
financial results. 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 airline industry has consolidated in recent years as a result of
mergers and liquidations, and further consolidation may occur in the future.
This consolidation has, among other things, enabled certain of the Company's
major competitors to expand their international operations and increase their
domestic market presence.
The emergence and growth 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. In many cases, such low cost
carriers have initiated or triggered price
<PAGE> 40
discounting. In part as a result of the industry consolidation referred to
above, aircraft, skilled labor and gates at most airports continue to be readily
available to start-up carriers. To the extent new carriers or other lower cost
competitors enter markets in which the Company operates, such competition could
have a material adverse effect on the Company. 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 (and in certain cases, a
higher cost structure) 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 has historically 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 in the period following such recession, industry capacity
leveled off, such capacity has again begun to expand. 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 15.6% in 1996), 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. During 1996, the Company's
average per gallon cost of fuel increased approximately 22.3% over 1995, from
approximately $0.57 per gallon to approximately $0.70 per gallon. During the
first quarter of 1997, the Company's average per gallon cost of fuel increased
approximately 11.2%, from approximately $0.67 per gallon to approximately $0.74
per gallon, over the same period in the prior year. A one cent change in the
cost per gallon of fuel (based on 1996 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 4.3(cent) per gallon. Although airlines were exempted
from this tax increase until October 1995, the Company continued to collect the
tax. The expiration of the exemption in October 1995 increased the Company's
operating expenses by approximately $13.6 million in 1996 over 1995.
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 "--Risk Factors Related to the
Company--Substantial Indebtedness; Capital Expenditure
<PAGE> 41
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.
Management believes that the Company benefitted from the expiration on
December 31, 1995 of the aviation trust fund tax (the "Ticket Tax"), which
imposed certain taxes including a 10% air passenger tax on tickets for domestic
flights, a 6.25% air cargo tax and a $6 per person international departure tax.
The Ticket Tax was reinstated on August 27, 1996 and expired again on December
31, 1996. At the end of February 1997, the Ticket Tax was reinstated effective
March 7, 1997 through September 30, 1997. The amount of the negative impact
directly resulting from the reimposition of the Ticket Tax cannot be precisely
determined. However, management believes that reinstatement of the Ticket Tax
will result in higher costs to the Company and/or, if passed on to consumers in
the form of increased ticket prices, might have an adverse effect on passenger
traffic, revenue and/or margins.
<PAGE> 42
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Company hereby incorporates by reference in this Registration Statement
its Prospectus and the following documents:
(a) The Company's Annual Report on Form 10-K for the year ended December
31, 1996, filed with the Securities and Exchange Commission (the "Commission")
pursuant to Section 13 of the Securities Exchange Act of 1934 (the "Exchange
Act");
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997.
(c) The description of the Company's Common Stock contained in the Form 8-A
Registration Statement filed with the Commission on August 1, 1995, including
any amendment or reports filed for the purpose of updating such description;
(d) When filed, the Company's latest employee plan annual report, whether
filed on Form 11-K or Form 10-K; and
(e) All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all securities offered hereunder have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference into this Registration Statement 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 Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall be deemed, except
as so modified and superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
The class of securities offered (exclusive of plan interests) is registered
under Section 12 of the Exchange Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
None.
3
<PAGE> 43
ITEM 6. 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 Third 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 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 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, executor and administrators of such person. Each director
of the Company has entered into an agreement that reflects the above described
indemnification provisions.
The Company shall have the 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
4
<PAGE> 44
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.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
5 Opinion of Smith, Gambrell & Russell, LLP
23.1 Consent of Smith, Gambrell & Russell, LLP, included
in Exhibit 5
23.2 Consent of KPMG Peat Marwick LLP
24 Powers of Attorney (see signature pages)
99.1 Retirement Savings Plan for Flight Attendants of TWA,
including amendments and trust agreement
</TABLE>
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to
include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective 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; and
(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.
5
<PAGE> 45
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Company's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange 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 this 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.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus
is sent or given, the latest annual report to security holders that is
incorporated by reference in the Prospectus and furnished pursuant to
and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Exchange Act; and, where interim financial information required to be
presented by Article 3 of Regulation S-X is not set forth in the
Prospectus, to deliver, or cause to be delivered to each person to
whom the Prospectus is sent or given, the latest quarterly report that
is specifically incorporated by reference in the Prospectus to provide
such interim financial information.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the provisions of the Company's
By-Laws, or otherwise, the Company has been advised that in the
opinion of the 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
Company 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 Company 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 of whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
6
<PAGE> 46
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-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the County of St. Louis, State of Missouri, on this 30th day of
July, 1997.
TRANS WORLD AIRLINES, INC.
/s/ Michael J. Palumbo
---------------------------
Michael J. Palumbo
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Gerald L. Gitner Chairman, Chief July 30, 1997
- ---------------------- Executive Officer
Gerald L. Gitner and Director
(Principal Executive Officer)
/s/ Michael J. Palumbo Senior Vice President July 30, 1997
- ---------------------- and Chief Financial Officer
Michael J. Palumbo (Principal Financial Officer and
Principal Accounting Officer)
</TABLE>
7
<PAGE> 47
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
* Director July 30, 1997
- ----------------------------
John W. Bachmann
* Director July 30, 1997
- ----------------------------
William F. Compton
* Director July 30, 1997
- ----------------------------
Eugene P. Conese
* Director July 30, 1997
- ----------------------------
William M. Hoffman
* Director July 30, 1997
- ----------------------------
Thomas H. Jacobson
* Director July 30, 1997
- ----------------------------
Myron Kaplan
* Director July 30, 1997
- ----------------------------
David M. Kennedy
* Director July 30, 1997
- ----------------------------
Merrill A. McPeak
* Director July 30, 1997
- ----------------------------
Thomas F. Meagher
* Director July 30, 1997
- ----------------------------
William O'Driscoll
</TABLE>
8
<PAGE> 48
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
* Director July 30, 1997
- ----------------------------
G. Joseph Reddington
* Director July 30, 1997
- ----------------------------
Blanche M. Touhill
* Director July 30, 1997
- ----------------------------
Stephen M. Tumblin
* Director July 30, 1997
- ----------------------------
William W. Winpisinger
* signed pursuant to powers of attorney
/s/Richard P. Magurno
- ----------------------------
Richard P. Magurno
as Attorney in Fact
</TABLE>
9
<PAGE> 49
Pursuant to the requirements of the Securities Act of 1933, the trustees (or
other persons who administer the employee benefit plan) have duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of St. Louis, Missouri, on July 30, 1997.
RETIREMENT SAVINGS PLAN FOR FLIGHT
ATTENDANTS OF TWA
By: /s/ Charles J. Thibaudeau
----------------------------------------
Charles J. Thibaudeau,
Senior Vice President-Employee Relations
10
<PAGE> 50
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
5 Opinion of Smith, Gambrell & Russell, LLP
23.1 Consent of Smith, Gambrell & Russell, LLP,
included in Exhibit 5
23.2 Consent of KPMG Peat Marwick LLP
24 Powers of Attorney (see signature page)
99.1 Retirement Savings Plan for Flight Attendants
of TWA, including amendments and trust agreement
</TABLE>
<PAGE> 1
EXHIBIT 5
SMITH, GAMBRELL & RUSSELL, LLP
Suite 3100, Promenade II
1230 Peachtree Street, N. E.
Atlanta, Georgia 30309-3592
July 30, 1997
Board of Directors
Trans World Airlines, Inc.
One City Centre
515 N. Sixth Street
St. Louis, Missouri 63101
Re: Trans World Airlines, Inc. Registration Statement on Form S-8 for the
Retirement Savings Plan for Flight Attendants of TWA, No. 33-_________
Ladies and Gentlemen:
In connection with the registration of 800,000 shares of the Common Stock,
par value $.01 (the "Securities") of Trans World Airlines, Inc. (the "Company")
issuable under the Company's Retirement Savings Plan for Flight Attendants of
TWA and participation interests with respect thereto, we have examined the
following:
1. A copy of Registration Statement No. 33-____________ to be filed with
the Securities and Exchange Commission on or about July 29, 1997, and
the Exhibits to be filed with and as a part of said Registration
Statement;
2. A copy of the Third Amended and Restated Certificate of Incorporation
of the Company and an amendment thereto as referred to in said
Registration Statement;
3. A copy of the Third Amended and Restated By-Laws of the Company as
referred to in said Registration Statement;
4. Copies of the minutes of meetings of the Board of Directors of the
Company or committees thereof, deemed by us to be relevant to this
opinion.
Further in connection with this matter, we have reviewed certain of the
Company's proceedings with respect to the authorization of the issuance of such
Securities and with respect to the filing of said Registration Statement.
<PAGE> 2
Board of Directors
July 29, 1997
Page 2
Based on the foregoing, it is our opinion that:
(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 has been duly and
validly authorized; and
(iv) the shares of Common Stock of the Company when issued will
be fully paid, non-assessable and free of preemptive rights.
We consent to the filing of this opinion as an Exhibit to the
aforementioned Registration Statement on Form S-8. 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, GAMBRELL & RUSSELL, L.L.P.
/s/ Howard E. Turner
Howard E. Turner
THE/apm
<PAGE> 1
EXHIBIT 23.2
ACCOUNTANTS' CONSENT
The Board of Directors
Trans World Airlines, Inc.:
We consent to the incorporation by reference in this Registration Statement on
Form S-8 of Trans World Airlines, Inc. of our report dated March 24, 1997
relating to the consolidated balance sheets of Trans World Airlines, Inc. and
subsidiaries as of December 31, 1996 and 1995 and the related statements of
consolidated operations and cash flows for the year ended December 31, 1996, the
four months ended December 31, 1995, the eight months ended August 31, 1995 and
the year ended December 31, 1994 and the related financial statement schedule,
which report appears in the December 31, 1996 annual report on Form 10-K of
Trans World Airlines, Inc. Our report contains an explanatory paragraph that
states that the Company's recurring losses from operations and limited sources
of additional liquidity raise substantial doubt about the Company's ability to
continue as a going concern. In addition, our report refers to the application
of fresh start reporting as of September 1, 1995.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
Kansas City, Missouri
July 28, 1997
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, John W. Bachman, a Director of
TRANS WORD AIRLINES, INC. (the "Company"), a Delaware corporation, do constitute
and appoint Michael J. Palumbo, Richard P. Magurno and Kathleen A. Soled,
jointly and severally, my true and lawful attorneys-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-8 for TRANS WORLD AIRLINES, INC. in connection with the Company's registration
of participation interests issuable pursuant to the Company's Retirement Savings
Plan for Flight Attendants of Trans World Airlines, Inc., 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, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed public
offering by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that each of said
attorneys-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 14th day
of July, 1997.
/s/ John W. Bachman
-----------------------------
John W. Bachman
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, William F. Compton, a Director
of TRANS WORD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Michael J. Palumbo, Richard P. Magurno and Kathleen A.
Soled, jointly and severally, my true and lawful attorneys-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-8 for TRANS WORLD AIRLINES, INC. in connection with the Company's registration
of participation interests issuable pursuant to the Company's Retirement Savings
Plan for Flight Attendants of Trans World Airlines, Inc., 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, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed public
offering by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that each of said
attorneys-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 30th day
of June, 1997.
/s/ William F. Compton
--------------------------------
William F. Compton
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Eugene P. Conese, a Director of
TRANS WORD AIRLINES, INC. (the "Company"), a Delaware corporation, do constitute
and appoint Michael J. Palumbo, Richard P. Magurno and Kathleen A. Soled,
jointly and severally, my true and lawful attorneys-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-8 for TRANS WORLD AIRLINES, INC. in connection with the Company's registration
of participation interests issuable pursuant to the Company's Retirement Savings
Plan for Flight Attendants of Trans World Airlines, Inc., 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, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed public
offering by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that each of said
attorneys-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 30th day
of June, 1997.
/s/ Eugene P. Conese
--------------------------------
Eugene P. Conese
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, William M. Hoffman, a Director
of TRANS WORD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Michael J. Palumbo, Richard P. Magurno and Kathleen A.
Soled, jointly and severally, my true and lawful attorneys-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-8 for TRANS WORLD AIRLINES, INC. in connection with the Company's registration
of participation interests issuable pursuant to the Company's Retirement Savings
Plan for Flight Attendants of Trans World Airlines, Inc., 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, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed public
offering by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that each of said
attorneys-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 7th day of
July, 1997.
/s/ William M. Hoffman
-------------------------------
William M. Hoffman
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Thomas H. Jacobsen, a Director
of TRANS WORD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Michael J. Palumbo, Richard P. Magurno and Kathleen A.
Soled, jointly and severally, my true and lawful attorneys-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-8 for TRANS WORLD AIRLINES, INC. in connection with the Company's registration
of participation interests issuable pursuant to the Company's Retirement Savings
Plan for Flight Attendants of Trans World Airlines, Inc., 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, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed public
offering by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that each of said
attorneys-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 30th day
of June, 1997.
/s/ Thomas H. Jacobsen
----------------------
Thomas H. Jacobsen
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Myron Kaplan, a Director of
TRANS WORD AIRLINES, INC. (the "Company"), a Delaware corporation, do constitute
and appoint Michael J. Palumbo, Richard P. Magurno and Kathleen A. Soled,
jointly and severally, my true and lawful attorneys-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-8 for TRANS WORLD AIRLINES, INC. in connection with the Company's registration
of participation interests issuable pursuant to the Company's Retirement Savings
Plan for Flight Attendants of Trans World Airlines, Inc., 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, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed public
offering by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that each of said
attorneys-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 10th day
of July, 1997.
/s/ Myron Kaplan
-----------------------
Myron Kaplan
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, David M. Kennedy, a Director of
TRANS WORD AIRLINES, INC. (the "Company"), a Delaware corporation, do constitute
and appoint Michael J. Palumbo, Richard P. Magurno and Kathleen A. Soled,
jointly and severally, my true and lawful attorneys-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-8 for TRANS WORLD AIRLINES, INC. in connection with the Company's registration
of participation interests issuable pursuant to the Company's Retirement Savings
Plan for Flight Attendants of Trans World Airlines, Inc., 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, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed public
offering by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that each of said
attorneys-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 9th day of
July, 1997.
/s/ David M. Kennedy
---------------------------
David M. Kennedy
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Merrill A. McPeak, a Director of
TRANS WORD AIRLINES, INC. (the "Company"), a Delaware corporation, do constitute
and appoint Michael J. Palumbo, Richard P. Magurno and Kathleen A. Soled,
jointly and severally, my true and lawful attorneys-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-8 for TRANS WORLD AIRLINES, INC. in connection with the Company's registration
of participation interests issuable pursuant to the Company's Retirement Savings
Plan for Flight Attendants of Trans World Airlines, Inc., 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, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed public
offering by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that each of said
attorneys-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 June, 1997.
/s/ Merrill A. McPeak
------------------------------
Merrill A. McPeak
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Thomas F. Meagher, a Director of
TRANS WORD AIRLINES, INC. (the "Company"), a Delaware corporation, do constitute
and appoint Michael J. Palumbo, Richard P. Magurno and Kathleen A. Soled,
jointly and severally, my true and lawful attorneys-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-8 for TRANS WORLD AIRLINES, INC. in connection with the Company's registration
of participation interests issuable pursuant to the Company's Retirement Savings
Plan for Flight Attendants of Trans World Airlines, Inc., 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, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed public
offering by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that each of said
attorneys-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 30th day
of June, 1997.
/s/ Thomas F. Meagher
---------------------------
Thomas F. Meagher
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, William O'Driscoll, a Director
of TRANS WORD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Michael J. Palumbo, Richard P. Magurno and Kathleen A.
Soled, jointly and severally, my true and lawful attorneys-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-8 for TRANS WORLD AIRLINES, INC. in connection with the Company's registration
of participation interests issuable pursuant to the Company's Retirement Savings
Plan for Flight Attendants of Trans World Airlines, Inc., 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, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed public
offering by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that each of said
attorneys-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 30th day
of June, 1997.
/s/ William O'Driscoll
----------------------------
William O'Driscoll
<PAGE> 11
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, G. Joseph Reddington, a Director
of TRANS WORD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Michael J. Palumbo, Richard P. Magurno and Kathleen A.
Soled, jointly and severally, my true and lawful attorneys-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-8 for TRANS WORLD AIRLINES, INC. in connection with the Company's registration
of participation interests issuable pursuant to the Company's Retirement Savings
Plan for Flight Attendants of Trans World Airlines, Inc., 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, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed public
offering by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that each of said
attorneys-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 30th day
of June, 1997.
/s/ G. Joseph Reddington
----------------------------
G. Joseph Reddington
<PAGE> 12
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Blanche M. Touhill, a Director
of TRANS WORD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Michael J. Palumbo, Richard P. Magurno and Kathleen A.
Soled, jointly and severally, my true and lawful attorneys-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-8 for TRANS WORLD AIRLINES, INC. in connection with the Company's registration
of participation interests issuable pursuant to the Company's Retirement Savings
Plan for Flight Attendants of Trans World Airlines, Inc., 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, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed public
offering by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that each of said
attorneys-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 27th day
of June, 1997.
/s/ Blanche M. Touhill
--------------------------
Blanche M. Touhill
<PAGE> 13
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Stephen M. Tumblin, a Director
of TRANS WORD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Michael J. Palumbo, Richard P. Magurno and Kathleen A.
Soled, jointly and severally, my true and lawful attorneys-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-8 for TRANS WORLD AIRLINES, INC. in connection with the Company's registration
of participation interests issuable pursuant to the Company's Retirement Savings
Plan for Flight Attendants of Trans World Airlines, Inc., 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, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed public
offering by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that each of said
attorneys-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 30th day
of June, 1997.
/s/ Stephen M. Tumblin
------------------------------
Stephen M. Tumblin
<PAGE> 14
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, William W. Winpisinger, a
Director of TRANS WORD AIRLINES, INC. (the "Company"), a Delaware corporation,
do constitute and appoint Michael J. Palumbo, Richard P. Magurno and Kathleen A.
Soled, jointly and severally, my true and lawful attorneys-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-8 for TRANS WORLD AIRLINES, INC. in connection with the Company's registration
of participation interests issuable pursuant to the Company's Retirement Savings
Plan for Flight Attendants of Trans World Airlines, Inc., 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, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed public
offering by the Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that each of said
attorneys-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 30th day
of June, 1997.
/s/ William W. Winpisinger
-------------------------------
William W. Winpisinger
<PAGE> 1
EXHIBIT 99.1
RESTATEMENT
OF
MASTER TRUST AGREEMENT
FOR:
TRANS WORLD AIRLINES, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
- ------- ----
<S> <C> <C>
FIRST: Acceptance of Property....................................................................................2
SECOND: Separate Accounts........................................................................................2
THIRD: Investment Powers.........................................................................................3
FOURTH: Payments.................................................................................................6
FIFTH: Administrative Powers.....................................................................................6
SIXTH: Guaranteed Income Contracts..............................................................................11
SEVENTH: Fiduciary Standards....................................................................................13
EIGHTH: Prohibition of Diversion................................................................................14
NINTH: Hold Harmless............................................................................................14
TENTH: Accounts.................................................................................................15
ELEVENTH: Authorized Persons....................................................................................16
TWELFTH: Compensation and Expenses..............................................................................16
THIRTEENTH: Resignation of Trustee..............................................................................16
FOURTEENTH: Amendment...........................................................................................17
FIFTEENTH: Termination..........................................................................................18
SIXTEENTH: Plan-to-Plan Transfers; Rollovers....................................................................18
SEVENTEENTH: Adopting Employers.................................................................................19
EIGHTEENTH: Alienation..........................................................................................20
NINETEENTH: Bond................................................................................................20
TWENTIETH: Successors...........................................................................................20
TWENTY-FIRST: Communications....................................................................................20
TWENTY-SECOND: Governing Law....................................................................................21
</TABLE>
(i)
<PAGE> 3
RESTATEMENT
OF
MASTER TRUST AGREEMENT
WHEREAS, the Company and certain of its affiliated and subsidiary
corporations enumerated in Appendix A hereto (which affiliated and subsidiary
corporations shall hereinafter be referred to as the "Corporation"), have
established certain pension and retirement plans for the exclusive benefit of
their respective eligible employees and the beneficiaries thereof (which plans
shall hereinafter be referred to as the "Separate Plans"), each of which
Separate Plan is enumerated in Appendix B hereto and constitutes a qualified
pension plan within the meaning of Section 401(a) of the Internal Revenue Code,
as amended; and
WHEREAS, the Company as the "named fiduciary" as defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), has
general responsibility for administration of the Separate Plans; and
WHEREAS, the Separate Plans call for the establishment of a trust to
which contributions are to be made by the Company to be held by the Trustee and
to be managed, invested and reinvested for the exclusive benefit of participants
of the Separate Plans and their beneficiaries; and
WHEREAS, the Separate Plans and trust are intended to qualify as
separate plans and trust which meet the applicable requirements of Section
401(a) and 501(a) of the Internal Revenue Code of 1986, as amended hereinafter
referred to as the "Code"; and
<PAGE> 4
WHEREAS, the Company entered into a Trust Agreement, hereinafter
referred to as the "Trust," with Boston Safe Deposit and Trust Company, a
corporation organized and existing under the laws of the State of Massachusetts,
having its principal place of business at Boston, Massachusetts; and
WHEREAS, the Company retained the right in the Trust to terminate the
same and appoint a Successor Trustee; and
WHEREAS, the Company hereby appoints United States Trust Company of New
York, as Successor Trustee, a corporation organized and existing under the laws
of the State of New York, having its principal place of business at 114 West
47th Street, New York, New York 10036-1532; hereinafter referred to as the
"Trustee";
NOW THEREFORE, the Company, with the consent of the Trustee, enters
into this Master Trust Agreement effective February 1, 1994.
FIRST: Acceptance of Property. The Trustee shall accept such cash and
other property as is tendered to it as contributions hereunder, and as is
acceptable to it, hereunder referred to as the "Trust Fund," but shall not be
under any duty to require the Company or any other adopting employer to
contribute to the Trust Fund or to determine whether the amount of any
contribution has been correctly computed under the terms of the Separate Plans.
In no event shall the Trustee be considered a party to any of the Separate
Plans. The Trustee shall have only such duties with respect to the Separate
Plans as are set forth in this Agreement.
SECOND: Separate Accounts. The Trustee shall invest, reinvest and
administer the Trust Fund as a single fund. Notwithstanding the foregoing, the
Trustee shall, on the basis of information furnished to it from time-to-time by
the Company, maintain separate accounts within
2
<PAGE> 5
the Trust Fund showing the beneficial interest of each Plan in the Trust Fund.
The Trust Fund shall be valued at cost and market values as often as may be
requested by the Company, such dates to be hereinafter referred to as the
"Valuation Dates." All charges and credits shall be accounted for on the day
they occur in the Valuation Period. The beneficial interest in the Trust Fund of
each Plan shall be adjusted to reflect the effect of income, realized and
unrealized gains and losses, expenses, and all other transactions during each
such period. Such valuations and such adjustments shall be made so as to
preserve for each Plan and beneficial interest in the Trust Fund properly
allocable to each Plan.
THIRD: Investment Powers. The Trustee shall invest and reinvest the
principal and income of the Trust Fund, without distinction between principal
and income, in such savings accounts, securities or other property, real or
personal, within or without the United States, as it in its sole discretion
shall deem proper including, without limitations, interests and part interests
in any bond and mortgage or note and mortgage and interests and part interests
in certificates of deposit, commercial paper and other short term or demand
obligations, secured or unsecured, whether issued by governmental or
quasi-governmental agencies or corporations or by any firm or corporation,
capital, common and preferred, voting and non-voting stock (regardless of
dividend or earnings record), warrants, options (including options written by
the Company), puts, calls, straddles, spreads, voting trust certificates,
equipment trust and receivers' certificates, fractional oil and gas and mineral
interests, timber rights, and all other forms of private and governmental
securities (both foreign and domestic) including an employer security, as such
term is defined in Section 407(d) of ERISA, or in any fund created and
administered by it as the trustee thereof for the collective investment of the
assets of employee benefit trusts, as long as such
3
<PAGE> 6
collective investment fund is a qualified trust under the applicable provisions
of the Code (and while any portion of the Trust Fund is so invested, such
collective investment fund shall constitute part of the Separate Plans, and the
instrument creating such fund shall constitute part of this Agreement). The sole
discretion to keep such portion of the Trust Fund in cash and cash balances or
hold all or any portion of the Trust Fund in savings accounts, certificates of
deposit, and other types of time or demand deposits with any financial
institution or quasi-financial institution, either domestic or foreign
(including any such institution operated or maintained by the Trustee in its
corporate capacity) as the Trustee may from time-to-time determine to be in the
best interests of the Trust Fund. Notwithstanding the foregoing, unless
otherwise authorized by ERISA or by regulations promulgated by the Secretary of
the Department of Labor, the Trustee shall maintain the indicia of ownership for
all securities or other investments within the jurisdiction of the District
Courts of the United States.
To the maximum extent permitted by law, the Trustee shall not be liable
for the acquisition, retention or disposition of any assets of the Trust Fund or
for any loss to or diminution of such assets unless due to the Trustee's own
willful misconduct or failure to act in good faith.
The Company may appoint an "investment manager," as defined in Section
3(38) of ERISA. Any investment manager so appointed shall be (i) an investment
adviser registered as such under the Investment Advisers Act of 1940, (ii) a
bank, or (iii) an insurance company qualified to perform investment management
services under the laws of more than one state of the United States. The Company
shall notify the Trustee of any such appointment by delivering to the Trustee an
executed copy of the instrument under which the investment manager is appointed
and evidencing the investment manager's acceptance of such appointment, an
acknowledgment by
4
<PAGE> 7
the investment manager that it is a fiduciary of the Plan, and a certificate
evidencing the investment manager's current registration under the Investment
Advisers Act of 1940 or other appropriate qualification. The Company shall
specify to the Trustee the portion of the Trust Fund which shall be subject to
such investment management. The Trustee shall invest and reinvest the portion of
the Trust Fund subject to such investment management only to the extent and in
the manner directed by the investment manager in writing. During the term of
such appointment, the Trustee shall have no liability for the acts or omissions
of such investment manager, and except as provided in the preceding sentence,
shall be under no obligation to invest or otherwise manage the portion of the
Trust Fund subject to such investment management. The Trustee may maintain
separate accounts within the Trust Fund for the assets of the Trust Fund subject
to such investment management. The Company may terminate its appointment of an
investment manager at any time and shall notify the Trustee in writing of such
termination. To the maximum extent permitted by ERISA the Trustee shall be
protected in assuming that the appointment of an investment manager remains in
effect until it is otherwise notified in writing by the Company.
In the event that the investment manager appointed hereunder is a bank
or a trust company, or an affiliate of a bank or a trust company, the Trustee
shall, upon the direction of the Company, transfer funds to such bank, trust
company, or affiliate for investment through the medium of any fund created and
administered by such bank, trust company, or affiliate, acting as trustee
therefor, for the collective investment of the assets of employee benefit
trusts, provided that such fund is qualified under the applicable provisions of
the Code and while any portion of the assets are so invested, such fund shall
constitute part of the applicable plan or plans, and the instrument creating
such fund shall constitute part of this Trust. In order to implement the
provisions of this
5
<PAGE> 8
paragraph, the Trustee is authorized to enter into any required auxiliary trust,
agency or other type of agreement with an investment manager, or its affiliate,
as described in the preceding sentence.
In the event the Company or its designee has directed the Trustee to
transfer funds to a mutual fund as an alternative investment vehicle, the
Trustee or its agent shall invest that portion of the Trust Fund in said mutual
fund. During the term of such direction, the Trustee or its agent shall have no
liability for the acts or omissions of such Trust Fund, and except as provided
in the preceding sentence, shall be under no obligation to invest or otherwise
manage the portion of the Trust Fund subject to investment in such fund.
FOURTH: Payments. Subject to the provisions of Article FIFTEENTH
hereof, the Trustee shall from time-to-time transfer cash or other property from
the Trust Fund to such persons, including an insurance company or companies or a
paying agent designated by the Company or its designee, at such addresses, in
such amounts, for such purposes and in such manner as the Company or its
designee may direct, provided that such transfer is administratively feasible,
and the Trustee shall incur no liability for any such payment made at the
direction of the Company or its designee. The Company or its designee shall be
solely responsible to ensure that any payment made at its direction conforms
with the provisions of the Separate Plans, the provisions of this agreement, and
ERISA, and the Trustee shall have no duty to determine the rights or benefits of
any person in the Trust Fund or under the Separate Plans or to inquire into the
right or power of the Company or its designee to direct any such payment.
FIFTH: Administrative Powers. The Trustee is authorized to exercise
from time-to-time in its sole discretion the following powers in respect of any
property, real or personal, of the Trust Fund, it being intended that these
powers be construed in the broadest possible manner:
6
<PAGE> 9
(1) power to sell at public or private sale for cash or upon
credit or partly for cash and partly upon credit and upon such terms and
conditions as it shall deem proper. No purchaser shall be bound to see to or be
liable for the application of the proceeds of any such sale;
(2) power to exchange securities or property held by it for
other securities or property, or partly for such securities or property and
partly for cash, and to exercise conversion, subscription, option and similar
rights with respect to securities held by it, and to make payments in connection
therewith;
(3) power to write put options upon any kind of evidences of
ownership or indebtedness, or contracts for the future delivery of evidences of
ownership or indebtedness, and to enter into closing transactions for the
purpose of terminating the same; provided that each such option shall be of a
kind traded on a national securities exchange subject to regulation by the
Securities and Exchange Commission; and further provided that the Trustee has
set aside cash or cash equivalents in an amount equal to the exercise price of
such options or has established put or futures contract positions offsetting
such options;
(4) power to write call options upon any kind of evidences of
ownership or indebtedness or contracts for the future delivery of evidences of
ownership or indebtedness, or to write such call options against offsetting call
options or futures contracts held in the Trust Fund, or cash, cash equivalents,
or other readily marketable assets equal in value, determined on a daily basis,
to the evidences of ownership or indebtedness subject thereto, and to enter into
closing transactions for the purpose of terminating the same; provided that each
such option shall be of a kind traded on a national securities exchange subject
to regulation by the Securities and Exchange Commission;
7
<PAGE> 10
(5) power to invest in contracts for the future delivery of
United States Treasury Bills, other financial instruments or securities of any
kind, or indexes based on any group of securities, provided that each such
future contract shall be of a kind traded on a national securities exchange
subject to regulation by the Securities and Exchange Commission;
(6) power to vote in person or by proxy at corporate or other
meetings and to participate in or consent to any voting trust, reorganization,
dissolution, merger or other action affecting securities in its possession or
the issuers thereof;
(7) power to own or to manage, administer, operate, lease for
any number of years, regardless of any restrictions on leases made by
fiduciaries except restrictions imposed by ERISA, develop, improve, repair,
alter, demolish, mortgage, pledge, grant options with respect to, or otherwise
deal with any real property or interest therein at any time held in the Trust
Fund, to hold any such real property in its own name, or in the name of its
nominee, with or without the addition of words indicating that such property is
held in a fiduciary capacity, and to cause to be formed a corporation,
partnership, trust or other entity to hold title to any such real property with
the aforesaid powers, all upon such terms and conditions as may be deemed
advisable; to renew or extend or participate in the renewal or extension of any
mortgage, and to agree to a reduction in the rate of interest on any mortgage or
to any other modifications or changes in the terms of any mortgage or of any
guarantee pertaining thereto, in any manner and to any extent that may be deemed
advisable for the protection of the Trust Fund or the preservation of any
covenant or condition of any mortgage or in the performance of any guarantee, or
to enforce any default in such manner and to such extent as may be deemed
advisable; and to exercise and enforce any and all rights of foreclosure, to bid
on any property in foreclosure, to take a deed in lieu of foreclosure
8
<PAGE> 11
with or without paying a consideration therefor and in connection therewith to
release the obligation on the bond secured by such mortgage, and to exercise and
enforce in any action, suit or proceeding at law or in equity any rights or
remedies in respect of any such mortgage or guarantee;
(8) power to acquire, hold or dispose of property in
unregistered form, or in its name without designation of fiduciary capacity, or
in the name of its nominee or any custodian, and to the extent permitted by
ERISA, to combine certificates representing investments with certificates
representing investments of the same issue held by the Trustee in other
fiduciary capacities, and to deposit property in a depository or clearing
corporation or with the Federal Reserve Bank in its district;
(9) power to compromise and adjust all debts or claims due to
or made against it, to participate in any plan of reorganization, consolidation,
merger, combination, liquidation or other similar plan or any action thereunder,
or any contract, lease, mortgage, purchase, sale or other action by any
corporation or other entity;
(10) power to borrow money from any lender, in accordance with
ERISA, in any amount and upon any reasonable terms and conditions, for purpose
of this Agreement, and to pledge or mortgage any property held in the Trust Fund
to secure the repayment of any such loan;
(11) power to deposit any such property with any protective,
reorganization or similar committee; to delegate discretionary power to any such
committee; and to pay part of the expenses and compensation of any such
committee; and any assessments levied with respect to any property so deposited;
9
<PAGE> 12
(12) power to exercise any conversion privilege or
subscription right available in connection with any such property; to oppose or
to consent to the reorganization, consolidation, merger or readjustment of the
finances of any corporation, company or association, or to the sale, mortgage,
pledge or lease of the property of any corporation, company or association any
of the securities of which may at any time be held in the Trust Fund and to do
any act with reference thereto, including the exercise of options, the making of
agreements or subscriptions and the payment of expenses, assessments or
subscriptions, which may be deemed necessary or advisable in connection
therewith and to hold and retain any securities or other property which it may
so acquire;
(13) power to make distributions in cash or in specific
property, real or personal, or an undivided interest therein, or partly in cash
and partly in such property;
(14) power to engage legal counsel, including counsel to the
Company or the Trustee in its individual capacity, and any other suitable
agents, and to consult with such counsel or agents with respect to the
construction of this Agreement, the administration of the Trust Fund, and the
duties of the Trustee hereunder;
(15) power to commence or defend suits or legal proceedings
and to represent the Trust in all suits or legal proceedings; to settle,
compromise or submit to arbitration any claims, debts or damages due or owing to
or from the Trust, provided that the Trustee shall notify the Company of all
such suits, legal proceedings and claims, and, except in the case of a suit,
legal proceeding or claim involving solely the Trustee's action or omissions to
act, shall obtain the written consent of the Company before settling,
compromising or submitting to binding arbitration any claim, suit or legal
proceeding or any nature whatsoever;
10
<PAGE> 13
(16) power, upon the written direction or the Company, to
enter into any contract or policy with an insurance company or companies, for
the purpose of insurance coverage or otherwise, provided that, except as
provided in Article THIRD, the Trustee shall be the sole owner of all such
contracts or policies and all such contracts or policies shall be held as assets
of the Trust Fund;
(17) power to make, execute and deliver, as Trustee, any and
all deeds, leases, notes, bond guarantees, mortgages, conveyances, contracts,
waivers, releases or other instruments in writing necessary or proper for the
accomplishment of any of the foregoing powers;
(18) power to enter into an agency, trust, custodial,
administrative or other arrangement with any bank or other financial institution
for the deposit of safekeeping of the assets of the Trust Fund;
(19) power to transfer assets of the Trust Fund to a successor
trustee as provided in Article THIRTEENTH; and
(20) power to exercise, generally, any of the powers which an
individual owner might exercise in connection with property either real,
personal or mixed held by the Trust Fund, and to do all other acts that the
Trustee may deem necessary or proper to carry out any of the powers set forth in
this Article FIFTH or otherwise in the best interests of the Trust Fund.
(21) upon specific written instructions of the Company to
transfer funds to a mutual fund as an alternate investment vehicle.
Notwithstanding the foregoing, in the event that an investment manager
is appointed pursuant to Article THIRD hereof, such investment manager shall
exercise such of the powers enumerated in this Article FIFTH and otherwise
contained in this Agreement with respect to the
11
<PAGE> 14
portion of the Trust Fund subject to its control as may be specified in the
instrument under which the investment manager was appointed.
SIXTH: Guaranteed Income Contracts. The Trustee may, at the direction
of the Company, (i) enter into one or more contracts with legal reserve life
insurance companies, the rate of return from which is fixed by the terms of such
contracts, (ii) transfer to any such insurance companies a portion of the Trust
Fund in accordance with any such contracts, and (iii) hold any such contracts as
a part of the Trust Fund until directed otherwise by the Company. The Company
shall give such direction to the Trustee by delivering to the Trustee a copy of
the action of the Company, which shall specifically refer to this Article SIXTH
and direct the Trustee to so act. The Company may direct the Trustee to (i)
request any information from any such insurance companies necessary or
appropriate to make an investment decision, (ii) demand or accept withdrawals or
other distributions under any such contracts, (iii) exercise or not to exercise
any rights, powers, privileges and options under any such contracts and (iv)
assign, amend, modify or terminate any such contracts. The Trustee shall take no
action with respect to any such contracts except at the direction of the
Company, unless an investment manager is appointed, pursuant to Article THIRD,
upon which the Trustee will take direction from said manager. The Trustee shall
incur no liability for complying with or failing to comply with any direction of
the Company or said manager unless the Trustee's action is prima facie contrary
to ERISA or contrary to the Trustee's duties and responsibilities under this
agreement. Any insurance companies issuing any contracts as hereinabove
described may deal with the Trustee as the absolute owner of any such contracts
and need not inquire as to the authority of the Trustee to act with regard to
such contracts. Any such insurance company may accept and rely upon any
communication from the
12
<PAGE> 15
Trustee which is signed by an officer of the Trustee. For purposes of this
agreement, any such insurance company shall be considered to be an investment
manager with regard to the assets of the Plan subject to its control. In no
event shall the underlying assets of such insurance company in which such
contracts are invested be considered assets of the plan or part of the Trust
Fund.
SEVENTH: Fiduciary Standards. The Trustee (or any investment manager
appointed pursuant to Article THIRD hereof) shall (i) discharge its duties
hereunder with the care, skill, prudence and diligence under the circumstances
then prevailing that a prudent man acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of a like character and
with like aims; (ii) subject to the investment funds specified in the separate
plans, if any, to the extent required by ERISA diversify the investments of the
Trust so as to minimize the risk of large losses, unless under circumstances it
is clearly prudent not to do so; and (iii) discharge its duties in accordance
with the provisions of the Separate Plans and this agreement insofar as such
provisions are consistent with ERISA.
The Trustee (or any investment manager appointed pursuant to Article
THIRD hereof) shall not engage in any transaction which it knows or should know
violates Section 406 of ERISA. Notwithstanding the foregoing, the Trustee (or
any investment manager appointed pursuant to Article THIRD hereof) may, in
accordance with any appropriate exemption provided under ERISA or upon the
approval of the Secretary of the Department of Labor, enter into any action
otherwise prohibited under Section 406 of ERISA.
The Trustee shall not be responsible for the administration of the
Separate Plans, for determining the funding policy of the Separate Plans or the
adequacy of the Trust Fund to meet and discharge liabilities under the Separate
Plans.
13
<PAGE> 16
The Trustee shall not be responsible for any failure of the Company to
discharge any of their respective responsibilities with respect to the Separate
Plans nor be required to enforce payment of any contributions to the Trust Fund.
EIGHTH: Prohibition of Diversion. (a) At no time prior to the
satisfaction of all liabilities with respect to participants in the Separate
Plans and their beneficiaries shall any part of the corpus or income of the
Trust Fund be used for, or diverted to, purposes other than for the exclusive
benefit of such participants and their beneficiaries. Except as provided in
paragraphs (b), (c) and (d) below, and Article FOURTEENTH, the assets of the
Trust Fund shall never inure to the benefit of the Company and shall be held for
the exclusive purpose of providing benefits to participants in the Separate
Plans and their beneficiaries and defraying the reasonable expenses of
administering the Separate Plans.
(b) In the case of a contribution that is made by the company by a
mistake of fact, paragraph (a) above shall not prohibit the return to the
Company of such contribution at the direction of the Company within one year
after the payment of the contribution.
(c) If a contribution by the Company is expressly conditioned on
qualification of one of the Separate Plans under Section 401 of the Code, and if
said Separate Plan does not so qualify, then paragraph (a) above shall not
prohibit the return to the Company of such contribution at the direction of the
Company within one year after the date of denial of qualification of the
Separate Plan, to the extent permitted by ERISA and the Code.
(d) If a contribution by the Company is expressly conditioned upon the
deductibility of the contribution under Section 404 of the Code, then to the
extent such deduction is disallowed,
14
<PAGE> 17
paragraph (a) above shall not prohibit the return to the Company of such
contribution at the direction of the Company, to the extent disallowed, within
one year after the date of such disallowance.
NINTH: Hold Harmless. To the maximum extent permitted by ERISA and
other applicable law, the Trustee shall not be liable for acting in accordance
with, or not acting in the absence of, any written direction of the Company, its
designee or an investment manager appointed pursuant to Article THIRD including,
without limitation, any claim or liability that may be asserted against the
Trustee on account of failure to receive securities purchased, or failure to
deliver securities sold pursuant to orders issued by an investment manager, and
the Company shall indemnify the Trustee against and agrees to hold the Trustee
harmless from, all such liabilities and claims (including attorney's fees and
expenses in defending against such liabilities and claims). The foregoing
indemnifications shall also apply to liabilities and claims against the Trustee
arising from any breach of fiduciary responsibility by a fiduciary other than
the Trustee, unless the Trustee (i) participates knowingly in or knowingly
undertakes to conceal such breach, (ii) has enabled such fiduciary to commit
such breach by its failure to exercise its fiduciary duties under ERISA or (iii)
has actual knowledge of such breach and fails to take reasonable remedial action
to remedy such breach.
TENTH: Accounts. The Trustee shall keep records of all transactions
relating to the Trust Fund, which shall be made available at all reasonable
times to persons designated by the Company or as may be required by law. The
Trustee shall render an accounting to the Company at least annually. The Company
may approve such account on behalf of itself by an instrument in writing
delivered to the Trustee. If the Company does not file with the Trustee
objections to any such
15
<PAGE> 18
account within sixty (60) days after its receipt, the Company shall be deemed to
have approved such account. In such case, or upon the written approval of the
Company of any such account, the Trustee shall, to the extent permitted by law,
be discharged from all liability to the Company for its acts or failures to act
described in such account. Except to the extent otherwise provided in ERISA, no
person, other than the Company, may require an accounting or bring any action
against the Trustee with respect to the Trust Fund. The Trustee shall render to
the Company at least quarterly, a statement of the Trust Fund assets and their
values and, whenever a contribution is made to the Trust Fund other than in
cash, a statement of the value of such property on the date it is received by
the Trustee.
Nothing contained in this agreement or in the Separate Plans shall
deprive the Trustee of the right to have a judicial settlement of its accounts.
In any proceeding for a judicial settlement of the Trustee's accounts, or for
instructions with regard to the Trust, the only necessary parties thereto in
addition to the Trustee shall be the Company. If the Trustee so elects, it may
join as a party or parties defendant any other person or persons.
ELEVENTH: Authorized Persons. The Company shall certify to the Trustee
the names of the persons authorized to act from time-to-time on behalf of the
Company in connection with this Agreement. All directions to the Trustee by the
Authorized Persons shall be in writing, and the Trustee shall be entitled to
rely without further inquiry upon all such written directions received from the
Authorized Persons.
TWELFTH: Compensation and Expenses. The Trustee shall be entitled to
receive such reasonable compensation for its services as may be agreed upon from
time-to-time by the Company and the Trustee. Unless paid by the Company, such
compensation, attorneys' fees
16
<PAGE> 19
incurred in the administration of the Trust Fund, all taxes levied or assessed
against the Trust Fund, and such other expenses as are incurred in the
administration of the Trust Fund shall be paid from the Trust Fund.
THIRTEENTH: Resignation of Trustee. The Trustee may resign at any time
by giving one hundred twenty (120) days written notice to the Company. The
Company may remove the Trustee at any time by giving one hundred twenty (120)
days written notice to the Trustee. In the case of the resignation or removal of
the Trustee, the Company shall appoint a successor trustee who shall have the
same powers and duties as those conferred upon the Trustee. Upon the resignation
or removal of the Trustee and the appointment of a successor trustee, the
Trustee shall account for the administration of the Trust Fund up to the date of
its resignation or removal in the manner provided in Article TENTH hereof and,
upon the approval or deemed approval of such account, the Trustee shall transfer
to the successor trustee all of the assets then constituting the Trust Fund and
the Trustee shall to the maximum extent permitted by ERISA be forever released
and discharged from all liability and accountability with respect to the
propriety of its acts and transactions; provided, however, that the Trustee may,
in its sole discretion, transfer such assets prior to the completion of such
accounting if the Company agrees thereto in writing, such writing to include
such limitations on the Trustee's liability therefor as the Trustee may deem
appropriate. The term "Trustee" as used in this agreement shall be deemed to
apply to any successor trustee acting hereunder.
FOURTEENTH: Amendment. The Company may amend all or any part of this
agreement at any time provided, however, that any amendment shall not be
effective until the instrument of amendment has been agreed to and executed by
the Trustee. Any such amendment
17
<PAGE> 20
or modification of this agreement may be retroactive if necessary or appropriate
to qualify or maintain the Trust as a part of a separate plan and trust exempt
from Federal income taxation under Sections 401 (a) and 501(a) of the Code, the
provisions of ERISA, or any other applicable provisions of Federal or state law,
as now in effect or hereafter amended or adopted, and any regulations issued
thereunder, including, without limitation, any regulations issued by the United
States Treasury Department, or the United States Department of Labor.
Notwithstanding anything contained in this Article FOURTEENTH to the
contrary, no amendment shall divert any part of the Trust Fund to, and no part
of the Trust Fund shall be used for, any purpose other than for the exclusive
purpose of providing benefits to participants and their beneficiaries; provided,
however, that nothing in this Article FOURTEENTH shall be deemed to limit or
otherwise prevent the payment from the Trust Fund of expenses and other charges
as provided in Article TWELFTH.
FIFTEENTH: Termination. This agreement and the trust hereby created may
be terminated at any time by the Company by written notice, executed and
acknowledged so as to authorize it to be recorded in the State of New York and
delivered to the Trustee. Upon receipt of such notice of termination, the
Trustee shall, after payment of all expenses incurred in the administration of
the Trust Fund and such compensation as the Trustee may be entitled to, and upon
approval of the appropriate governmental or quasi-governmental authorities (if
such approval shall be required under applicable law or desired by the Trustee),
then distribute the Trust Fund in cash or in kind to such persons or entities,
including the Company, at such time and in such amounts as the Company shall
direct, which direction shall be in conformity with the provisions of the
Separate Plans and ERISA.
18
<PAGE> 21
SIXTEENTH: Plan-to-Plan Transfers; Rollovers. The Trustee may transfer
all of the property representing a participant's vested interest in a Separate
Plan to the trustees of any trust qualified under Section 401(a) of the Code.
The Trustee may make such a transfer only at the direction of the Company.
The Trustee may accept as part of the Trust Fund such property as is
acceptable to the Trustee which represents a participant's retirement benefits
transferred from a trust qualified under Section 401 (a) of the Code or
transferred from the participant or an individual retirement account as a
permissible rollover under Section 401(a)(5) or 408(d)(3) of the Code. The
Trustee may accept such a transfer only at the direction of the Company. The
amount of such benefits shall at all times be separately accounted for by the
Company. A participant shall at all times be fully vested in any property so
transferred as a rollover to the Trust Fund. Such property shall be distributed
to the participant or his beneficiary at the direction of the Company within the
time required for distribution of his retirement benefits under the applicable
provisions of the Plan.
SEVENTEENTH: Adopting Employers. Upon the written consent of the
Company delivered to the Trustee, any other affiliated or subsidiary corporation
of the Company sponsoring a Plan which is qualified under Section 401(a) of the
Internal Revenue Code as amended may become a party to this Master Trust
Agreement by delivering to the Trustee a certified copy of a resolution of its
board of directors to the same effect as discussed immediately above. For
purposes of this Master Trust Agreement, the qualified plan sponsored by such
affiliated or subsidiary corporation shall be deemed to be a separate plan
hereunder, and the affiliated or subsidiary corporation shall be deemed to be a
Corporation hereunder. Irrespective of the number of Corporations which may from
time-to-time be parties to this Master Trust Agreement, the
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<PAGE> 22
company shall have the sole authority to enforce this Master Trust Agreement on
its own behalf and on behalf of each and every such Corporation, and the Trustee
shall in no event be required to deal with any such Corporation, except by
dealing with the Company and agent of such Corporation.
Any Corporation which has become a party to this Master Trust Agreement
may, with the written consent of the Company delivered to the Trustee, cease to
be a party to this Master Trust Agreement upon delivering to the Trustee a
certified copy of a resolution of its board of directors to the effect that it
elects to cease to be a party hereto. In such event, the Trustee, shall until
directed otherwise by the company, continue to hold, that portion of the Trust
Fund, pursuant to Article SECOND herein in accordance with the provision of this
Master Trust Agreement, and ERISA, which is attributable to the Separate Plan
sponsored by such corporation.
EIGHTEENTH: Alienation. No interest in the Trust Fund shall be
assignable or subject to anticipation, sale, transfer, mortgage, pledge, charge,
garnishment, attachment, bankruptcy or encumbrance or levy or any kind, and the
Trustee shall not recognize any attempt to assign, sell, transfer, mortgage,
pledge, charge, garnish, attach or otherwise encumber the same except to the
extent that such attempt is made pursuant to a court order determined by the
plan administrator to be a qualified domestic relations order, as defined in
Section 414 of the Code and Section 206 of ERISA.
NINETEENTH. Bond. The Trustee shall not be required to give any bond or
any other security for the faithful performance of its duties under this
agreement except as required by law.
TWENTIETH: Successors. This Agreement shall be binding upon the
respective successors and assigns of the Company and the Trustee. Any
corporation which shall, by merger,
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<PAGE> 23
consolidation, purchase or otherwise, succeed to substantially all the Trust
business of the Trustee shall, upon such succession, and without any appointment
or other action by any person, be and become successor Trustee hereunder.
TWENTY-FIRST: Communications. Communications to the Company shall
addressed to the Company, at 11500 Ambassador Drive, c/o Gary Dilly, Director
Pension Finance, Kansas City, MO, 64195; provided, however, that upon the
Company's written request such communications shall be sent to such other
address as the Company may specify.
Communications to the Trustee shall be addressed to:
United States Trust Company of New York
770 Broadway
New York, NY 10003-9598
Attention: Ms. Judith M. Trepanowski, Senior Vice President
provided; however, that upon the Trustee's written request, such communications
shall be sent to such other address as the Trustee may specify. No communication
shall be binding on the Trustee until it is received by the Trustee.
TWENTY-SECOND: Governing Law. This agreement shall be construed in
accordance with ERISA and, to the extent not preempted by ERISA, the laws of the
State of New York; provided that, the GIC assets could be governed by the laws
of the States of New York, California, Florida, New Jersey, Connecticut, Texas
and Oregon.
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<PAGE> 24
IN WITNESS WHEREOF the Company and the Trustee have executed this
instrument this first day of February, 1994.
ATTEST:
By:
- ------------------------------ -----------------------------
Title: Title:
(Corporate Seal)
United States Trust Company of New York
ATTEST:
By:
- ------------------------------ -----------------------------
Title: Title:
(Corporate Seal)
22
<PAGE> 25
STATE OF NEW YORK
:SS.:
COUNTY OF NEW YORK
On the day of February 18, 1994, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that he/she resides at _________________________; that he/she is
______________________________, the corporation described in and which executed
the foregoing instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so affixed
by order of the Board of Directors of said corporation, and that he signed his
name hereto by like order.
--------------------------------
Notary Public
(Notarial Seal)
23
<PAGE> 26
APPENDIX A
Retirement Savings Plan for Flight Attendants of Trans World Airlines, Inc.
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<PAGE> 27
RETIREMENT SAVINGS PLAN FOR
FLIGHT ATTENDANTS OF
TRANS WORLD AIRLINES, INC.
AS AMENDED AND RESTATED EFFECTIVE
DECEMBER 1, 1988
<PAGE> 28
ARTICLE I
NAME AND PURPOSE
1.1 NAME. The Plan shall be known as the "Retirement Savings Plan for
Flight Attendants of Trans World Airlines, Inc."
1.2 PURPOSE.
(A) Provision for Members' Economic Security. The purpose of the
Plan is to allow Members to make contributions in order to
enable them to provide for their future economic security.
(B) Exclusive Benefit of Members. The Plan and the Trust shall be
administered for the exclusive benefit of the Members and
their Beneficiaries and shall not be used for, or diverted to,
any other purposes.
(C) Allow for Participation of All flight Attendants. The Trust
Plan for Pursers of Trans World Airlines, Inc. has been
amended and restated to allow for participation by all Flight
Attendants in addition to the International Flight Service
Managers (formerly, the Pursers).
1.3 EFFECTIVE DATE. December 1, 1988.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, unless the context requires otherwise,
the following words and phrases, when used herein shall have the meanings
indicated.
2.1 ACCOUNT. With respect to any Member, the aggregate of all of the
accounts established and maintained on his behalf under the Plan.
2.2 ACCOUNT BALANCE. The value of an Account determined as of any Valuation
Date.
2.3 ALTERNATE PAYEE. Any spouse, former spouse, child or other dependent of
a Member who is recognized by a Domestic Relations Order as having a
right to receive all, or a portion of, the benefits payable under the
Plan with respect to such member.
2.4 ANNUAL ADDITIONS. The sum, for any calendar year, of:
(A) salary deferral contributions;
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(B) forfeitures (if any);
(C) amounts described in Sections 415(1)(1) and 419(A)(d)(2) of
the Code;
(D) the Member's after-tax contributions.
2.5 BENEFICIARY. Any individual, partnership, corporation, trust or other
entity designated or deemed designated by a Member in accordance with
Article VIII, to receive any sums payable hereunder if such individual,
partnership, corporation, trust or other entity survives the Member.
2.6 BOARD OF DIRECTORS. The Board of Directors of the Company.
2.7 CODE. The Internal Revenue Code of 1986, as amended, and all rules,
rulings and regulations thereunder.
2.8 COMPANY. Trans World Airlines, Inc.
2.9 COMPANY CONTRIBUTIONS ACCOUNT. The Account under the Plan established
for a Member pursuant to Article V, Section 5.3.
2.10 COMPENSATION. The total amount of compensation and any expenses paid to
a Member by the Company during a Plan Year as reflected on the Form W-2
filed by the Company with respect to such Member for the Plan Year plus
his salary deferrals which are not included in Compensation reportable
on Form W-2.
Effective for Plan Years beginning after December 31, 1988, the annual
Compensation of each Member taken into account under the Plan for any Plan Year
shall not exceed $200,000 as adjusted by the Secretary at the same time and in
the same manner as under section 415(d) of the Code ("Compensation Limit"),
except that the dollar increase in effect on January 1 of any calendar year is
effective for years beginning in such calendar year and the first adjustment to
the $200,000 limitation is effected on January 1, 1990. The Compensation Limit
for a Plan Year shall be the Compensation Limit in effect on the January 1
coinciding with or preceding such Plan Year. If Compensation is determined on
the basis of a 12-consecutive month period ending within the Plan Year, then the
applicable Compensation Limit is the Compensation Limit in effect for the
calendar year in which such 12-month period begins. If Compensation is
determined on the basis of a period of less than 12 calendar months, then the
Compensation Limit is the Compensation Limit in effect for the calendar year in
which the period begins multiplied by the ratio obtained by dividing the number
of full months in the period by 12. In determining the compensation of a Member
for purposes of the $200,000 limitation, the rules of section 414(q)(6) of the
Code shall apply, except in applying such rules, the term "family" shall include
only the spouse of the Member and any lineal descendants of the Member who have
not attained age 19 before the close of the Plan Year. If as a
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<PAGE> 30
result of the application of such rules the adjusted $200,000 limitation is
exceeded, then (except for purposes of determining the portion of Compensation
up to the integration level), the limitation shall be prorated among the
affected individuals in proportion to each such individual's Compensation as
determined prior to the application of this limitation.
If Compensation for any prior Plan Year is taken into account in
determining an Employee's contributions or benefits for the current year, the
Compensation for such prior year is subject to the applicable annual
Compensation limit in effect for that prior year. For this purpose, for years
beginning before January 1, 1990, the applicable annual Compensation limit is
$200,000.
2.11 DEFERRED RETIREMENT DATE. The date a Member actually retires from
active employment with the Company if such date is beyond his Normal
Retirement Date.
2.12 DOMESTIC RELATIONS ORDER. Any judgment, decree or order (including
approval of a property settlement agreement) which (i) relates to the
provision of child support, alimony payments, or marital property
rights to a spouse, former spouse, child or other dependent of a
Member, and (ii) is made pursuant to a state domestic relations law
(including a community property law).
2.13 EARLY RETIREMENT DATE. The date on which a Member actually retires
prior to his Normal Retirement Date after having attained age fifty
(50). A Member's separation from service with the Company subsequent to
having satisfied the above requirement but prior to his Normal
Retirement Date, shall be deemed, for purposes of this Plan, an early
retirement and his separation date shall be considered his Early
Retirement Date.
2.14 ELECT/ELECTION. A properly completed written notice as specified and
verified by the Plan Administrator, on a form prescribed by the Plan
Administrator, delivered to and received by the office prescribed by
the Plan Administrator.
2.15 EMPLOYEE. Any person employed by the Employer as an International or
Domestic Flight Attendant of the Company or an Affiliate. Employee
shall also include Leased Employees. The term "Leased Employees" means
any person (other than an Employee of the recipient) who pursuant to an
agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the
recipient and related persons determined in accordance with section
414(n)(6) of the Code, on a substantially full time basis for a period
of at least one year, and such services are of a type historically
performed by Employees in the business field of the recipient Employer.
Contributions or benefits provided to a leased Employee by the leasing
organization which are attributable to services performed for the
recipient Employer shall be treated as provided by the recipient
Employer.
A leased Employee shall not be considered an Employee of the recipient
if (i) such Employee is covered by a money purchase pension Plan
provided: (a) a non-integrated employer
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contribution rate of at least 10 percent of Compensation, as defined in
section 415(c)(3) of the Code, but including amounts contributed
pursuant to a salary reduction agreement which are excludable from the
Employee's gross income under sections 125, 402(a)(8), 402(h) or 403(b)
of the Code, (b) immediate participation, and (c) full and immediate
vesting; and (ii) leased Employees do not constitute more than 20
percent of the recipient Employer's highly compensated workforce.
2.16 EMPLOYER. The Company and any corporation, trade or business which,
together with the Company, are members of a controlled group of
corporations, or under common control, or are members of an affiliated
service group, within the meaning of Code Sections 414(b), 414(c),
414(m) or 414(o) respectively.
2.17 ERISA. The Employee Retirement Income Security Act of 1974, as amended,
and all rules, rulings and regulations thereunder.
2.18 HIGHLY COMPENSATED EMPLOYEE. The term "Highly Compensated Employee"
includes highly compensated active Employees and highly compensated
former Employees. For purposes of this definition, Employer includes
any Affiliate.
A highly compensated active Employee includes any Employee who
performed service for the Employer during the determination year and who, during
the look-back year: (1) received Compensation from the Employer in excess of
$75,000 (as adjusted pursuant to section 415(d) of the Code); (2) received
Compensation from the Employer in excess of $50,000 (as adjusted pursuant to
section 415(d) of the Code) and was a member of the top-paid group for such
year; or (3) was an officer of the Employer and received Compensation during
such year that is greater than 50 percent of the dollar limitation in effect
under section 415(b)(1)(A) of the Code. The term Highly Compensated Employee
also includes: (1) Employees who are both described in the preceding sentence if
the term "determination year" is substituted for the term "look-back year" and
the Employee is one of the 100 Employees who received the most Compensation from
the Employer during the determination year; and (2) Employees who are
more-than-5 percent owners at any time during the look-back year or
determination year.
If no officer has satisfied the Compensation requirement of (3) above
during either a determination year or look-back year, the highest paid officer
for such year shall be treated as Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the twelve-month period immediately preceding the
determination year.
A highly compensated former Employee includes any Employee who
separated from service (or was deemed to have separated) prior to the
determination year, performs no service for the Employer during the
determination year, and was a highly compensated active Employee for either the
separation year or any determination year ending on or after the Employee's 55th
birthday.
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<PAGE> 32
If any Employee is, during a determination year or look-back year, a
family member of either a more-than-5-percent owner who is an active or former
Employee or a Highly Compensated Employee who is one of the 10 most Highly
Compensated Employees ranked on the basis of Compensation paid by the Employer
during such year, then the family member and the more-than-5-percent owner or
top-ten Highly Compensated Employee shall be aggregated. In such case, the
family member and more-than-5-percent owner or top-ten Highly Compensated
Employee shall be treated as a single Employee receiving Compensation and Plan
contributions or benefits equal to the sum of such Compensation and
contributions or benefits of the family member and more-than-5-percent owner or
top-ten Highly Compensated Employee. For purposes of this Section, family member
includes the spouse, lineal ascendants and descendants of the Employee or former
Employee and the spouses of such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee, including
the determination of the number and identity of Employees in the top-paid group,
the top 100 Employees, the number of Employees treated as officers and the
Compensation that is considered, will be made in accordance with section 414(q)
of the Code and the Regulations thereunder.
2.19 HOUR OF SERVICE.
Each Hour:
(A) for which an Employee is directly or indirectly entitled to
payment by the Company, including actual paid working time or
paid vacation, holiday, sickness or disability time or any
other paid time.
(B) for which back-pay irrespective of mitigation of damages is
either awarded an Employee or agreed to by the Company.
(C) as to which an Employee is absent during service with the
Armed Forces of the United Sates, (i) in the operation of a
compulsory military service law or (ii) during a period of
declared national emergency or (iii) pursuant to leave of
absence granted by the Company provided the Employee returns
to the service of the Company within 90 days (or such longer
period as may be provided by law for protection of
reemployment rights) after his discharge or release from
active duty in the Armed Forces of the United States or within
the period for which leave of absence was granted, as the case
may be.
An Employee shall be credited with 45 hours of service for
each calendar week as to which he would be credited with at
least one hour of service as provided in (a), (b) or (c)
preceding. Hours of service shall be credited to the
computation period or periods determined in accordance with
Department of Labor regulations Sections 2530.200b-2(b) and
(c).
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As used in this definition, the term "Company" includes any
subsidiary or affiliate as defined under Section 414 of the
Code.
2.20 INVESTMENT ADVISER. The individuals or firms or corporations as may
from time to time be designated by the Company, the Investment
Committee and the Union as provided in Section 17.3. Wherever the term
"Investment Adviser" is used in the Plan, it may be construed to be
either singular or plural.
2.21 INVESTMENT COMMITTEE. The body established pursuant to Section 17.4
2.22 INVESTMENT OPTION. The investment of alternatives created pursuant to
Section 6.2 of the Plan.
2.23 IRS. The United States Internal Revenue Service.
2.24 LEAVE OF ABSENCE. Any leave of absence by an Employee, determined to be
authorized under the collective bargaining agreement between the
Company and the Union in effect at the time any such leave commences.
2.25 LIMITATION YEAR. The Plan Year.
2.26 MARRIED MEMBER. A Member who is married on the earlier of commencement
of benefits or the date of the Member's death. The determination
whether a Member is married shall be made in accordance with the law of
the state in which the Member resides.
2.27 MEMBER. Any Employee who becomes eligible to participate in the Plan
pursuant to Article III.
2.28 NORMAL RETIREMENT AGE AND NORMAL RETIREMENT DATE. Normal Retirement Age
is the Member's sixtieth (60th) birthday. Normal Retirement Date is the
first day of the month coinciding with or next following his 60th
birthday.
2.29 OLD AFTER-TAX CONTRIBUTIONS. Voluntary Employee contributions made
prior to December 1, 1988 to the Trust Plan for Pursers of Trans World
Airlines, Inc.
2.30 PLAN. The Retirement Savings Plan for Flight Attendants of Trans World
Airlines, Inc., as amended and restated, and any amendments thereto.
2.31 PLAN ADMINISTRATOR. The Company.
2.32 PLAN YEAR. The twelve (12) month period ending on December 31; however,
the first Plan Year shall be December 1, 1988 through December 31,
1988.
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2.33 PURSERS PLAN. Trust Plan for Pursers of Trans World Airlines, Inc., the
predecessor to this Plan.
2.34 QUALIFIED DOMESTIC RELATIONS ORDER. A judgment decree or order
(including approval of a property settlement agreement) which relates
to the provision of child support, alimony payments, marital property
rights to a spouse, former spouse, child, or other dependent of a
Member which creates or recognizes the existence of an Alternate
Payee's right to or assigns to an Alternate Payee the right to, receive
all, or a portion of, the benefits payable with respect to a Member
under the Plan, and which meets the requirements of ERISA.
2.35 RECOGNIZED SERVICE. Service as an International Flight Service Manager
under the terms of the effective basic agreements between the Company
and the Union, including such service after March 6, 1986, and service
as a Domestic Flight Service Manager on or after September 30, 1992,
under the terms of the effective Basic Agreements between the Company
and the Union.
2.36 RETIREMENT BOARD. The body established pursuant to Section 17.2.
2.37 SALARY DEFERRAL AND SALARY DEFERRAL CONTRIBUTION. Such portion of a
Member's Compensation which is contributed by the Employer to the
Member's 401(k) Contributions Account on behalf of such Member pursuant
to a Salary Deferral Election.
2.38 STATUTORY COMPENSATION. The definition of Statutory Compensation is
contained in Section 7.1(d)(2) of this Plan under the heading Section
415 Compensation.
2.39 STOCK PURCHASE PLAN. Trans World Airlines, Inc. Employee Stock Purchase
Plan, which terminated on 9-26-88.
2.40 TERMINATION OF EMPLOYMENT. A Member's separation from service with the
Company prior to his early retirement.
2.41 TRUST. The legal entity resulting from this Plan and the Trust
Agreement executed incident hereto which provides for the receipt,
holding and investment of the contributions made pursuant to this Plan,
and disbursements to, or for the benefit of, Members and their
Beneficiaries.
2.42 TRUST AGREEMENT. The agreement between the Company and the Trustee
executed pursuant to Article XVIII.
2.43 TRUST FUND. The total of contributions to the Trust made pursuant to
this Plan, increased by income, gains, appreciation, and recoveries
received, and decreased by losses, expenses
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<PAGE> 35
authorized to be paid by the Plan, depreciation and benefits paid. The
Trust Fund includes all assets acquired by investment and reinvestment
which are held in the Trust Fund.
2.44 TRUSTEE. The party or parties appointed pursuant to Section 18.2, and
any duly appointed additional and successor Trustee(s) acting
thereunder.
2.45 UNION. The Independent Federation of Flight Attendants.
2.46 UNIT. Accumulation of units of participation in the Pursers Plan will,
as of the effective date, be converted to and treated as a portion of
the "Account Balance."
2.47 VALUATION DATE. The last business date of each calendar month, or such
more frequent time as may be determined by the Company.
2.48 YEAR OF CONTINUOUS SERVICE. A twelve (12) consecutive month period
measured from an Employee's date of hire and anniversaries thereof
during which a person is employed by the Company or any subsidiary or
affiliate (as defined under Section 414 of the Code), and has completed
1,000 Hours of Service.
ARTICLE III
PARTICIPATION
3.1 MINIMUM SERVICE REQUIREMENT. Each Employee shall be eligible to
participate in the Plan as of the Effective Date. Any Employee hired
after the Effective Date shall be eligible to participate in the Plan
as of the first day of the next month. Notwithstanding the foregoing,
for purposes of Company contributions described in Section 4.2, only
International Flight Service Managers who have attained age 21 and have
completed one Year of Continuous Service shall be eligible for
membership on the first day of the month next following the
satisfaction of the above two conditions.
3.2 DELAYED PARTICIPATION FOR CERTAIN EMPLOYEE. In the event a person who
is employed by the Employer in a capacity other than as an Employee,
(including "leased employees" within the meaning of Section 414(n) of
the Code), subsequently becomes an Employee, he shall be eligible to
Elect to commence participation on the first day of the month
subsequent to his commencement of service as an Employee, or, with
respect to Company contributions described in Section 4.2, upon
attaining age 21 and completing one Year of Recognized Service.
3.3 CONTINUED PARTICIPATION. An Employee shall be entitled to continue to
participate in the Plan as long as such person remains an Employee,
subject to Section 9.2.
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3.4 SUSPENSION OF PARTICIPATION. In the event that any Member shall cease
to perform Recognized Service or cease to receive Compensation from the
Company for Recognized Service, no further contributions shall be made
on his behalf to this Plan until he resumes performing Recognized
Service. Such Member shall retain whatever amounts he has accrued under
this Plan.
ARTICLE IV
CONTRIBUTIONS
4.1 SALARY DEFERRAL CONTRIBUTIONS.
(A) Election and Amount. Subject to Section 4.9, a Member may
Elect to reduce his monthly Compensation by a designated
amount (in whole multiples of one-tenth of one percent (.1%)
of such monthly Compensation, but not less than one percent
(1%) or greater than twenty percent (20%) of such monthly
Compensation), provided, however, that the sum of the
percentage elected under this Section 4.1 and the percentage
elected under Section 4.3 shall not exceed twenty percent
(20%) and to have such amount contributed on his behalf by the
Company, in cash or cash equivalent, to his Member 401(k)
Contributions Account subject to the limitations provided in
Article VII of the Plan.
(B) Time for Payment. Salary Deferral Contributions shall be
transmitted to the Trust by the Company, by wire transfer, as
soon as practicable after the end of the accounting month
during which such amounts would have been payable to the
Member in the absence of a Salary Deferral, but in no event
later than ninety (90) days following such date.
(C) Actual Deferral Percentage Test. This subsection describes the
nondiscrimination referred to as the Actual Deferral
Percentage (ADP) test for Employee Salary Deferrals.
(1) The ADP for Members who are Highly Compensated
Employees for each Plan Year and the ADP for Members
who are Non-Highly Compensated Employees for the same
Plan Year must satisfy one of the following tests:
(a) The ADP for Members who are Highly
Compensated Employees for the Plan Year
shall not exceed the ADP for Members who are
Non-Highly Compensated Employees for the
same Plan Year multiplied by 1.25 or;
(b) The ADP for Members who are Highly
Compensated Employees for the Plan Year
shall not exceed the ADP for Members who are
Non-
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Highly Compensated Employees for the same
Plan Year multiplied by 2.0, provided that
the ADP for Members who are Highly
Compensated Employees does not exceed the
ADP for Members who are Non-Highly
Compensated Employees by more than two (2)
percentage points.
Actual Deferral Percentage means, for a
specified group of Members for a Plan Year,
the average of the ratios (calculated
separately for each Member in such group) of
(1) the amount of Employer contributions
actually paid over to the Trust on behalf of
such member for the Plan Year to (2) the
Member's Compensation for such Plan Year
(whether or not the Employee was a Member
for the entire Plan Year). Employer
contributions on behalf of any Member shall
include: (1) any Employee Salary Deferrals
made pursuant to the Member's deferral
election, including excess Employee Salary
Deferrals of Highly Compensated Employees,
but excluding Employee Salary Deferrals that
are taken into account in the Contribution
Percentage test (provided the ADP test is
satisfied both with and without exclusion of
these Employee Salary Deferrals); and (2) at
the election of the Employer, qualified
non-elective contributions and qualified
matching contributions made either to the
Plan or another Plan of the Employer
qualified under section 401(a). For purposes
of computing Actual Deferral Percentages,
any Employee who would be a Member but for
the failure to make Employee Salary
Deferrals shall be treated as a Member on
whose behalf no Employee Salary Deferrals
are made. Compensation may be limited to
that received for the period the Employee is
a Member.
(2) The ADP for any Member who is a Highly Compensated
Employee for the Plan Year shall be determined by
aggregating his Employee Salary Deferrals in all
Plans maintained by the Employer. If a Highly
Compensated Employee participates in two or more cash
or deferred arrangements that have different Plan
Years, all cash or deferred arrangements ending with
or within the same calendar year shall be treated as
a single arrangement.
(3) In the event that this Plan satisfies the
requirements of sections 401(k), 401(a)(4), or 410(b)
of the Code only if aggregated with one or more other
Plans, or if one or more other Plans satisfy the
requirements of such sections of the Code only if
aggregated with this Plan, then this Section shall be
applied by determining the ADP of Employees as if all
such Plans were a single Plan. For Plan Years
beginning after December 31, 1989, Plans may be
aggregated in order to satisfy section 401(k) of the
Code only if they have the same Plan Year.
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(4) For purposes of determining the ADP of a Member who
is a 5-percent owner or one of the ten most
highly-paid Highly Compensated Employees, the
Employee Salary Deferrals (and qualified non-elective
contributions or qualified matching contributions, or
both, if treated as Employee Salary Deferrals for
purposes of the ADP test) and Compensation of such
Member shall include the Employee Salary Deferrals
(and, if applicable, qualified non-elective
contributions and qualified matching contributions,
or both) and Compensation for the Plan Year of family
members (as defined in section 414(q)(6) of the
Code). Family members, with respect to such Highly
Compensated Employees, shall be disregarded as
separate Employees in determining the ADP both for
Members who are Non-Highly Compensated Employees and
for Members who are Highly Compensated Employees.
(5) For purposes of determining the ADP test, Employee
Salary Deferrals, qualified non-elective
contributions and qualified matching contributions
must be made before the last day of the twelve-month
period immediately following the Plan year to which
contributions relate.
(6) The Employer shall maintain records sufficient to
demonstrate satisfaction of the ADP test and the
amount of qualified non-elective contributions or
qualified matching contributions, or both, used in
such test.
(7) The determination and treatment of the ADP amounts of
a Member shall satisfy such other requirements as may
be prescribed by the IRS.
(D) Distribution of Excess Contributions. This subsection
describes the rules for distributing discriminatory Employee
Salary Deferrals referred to as "Excess Contributions." Excess
Contributions are, with respect to any Plan Year, the excess
of:
(1) The aggregate amount of Employer contributions
actually taken into account in computing the ADP of
Highly Compensated Employees for such Plan Year, over
(2) The maximum amount of such contributions permitted by
the ADP test (determined by reducing contributions
made on behalf of Highly Compensated Employees in
order of the ADPs, beginning with the highest of such
percentages).
(a) Notwithstanding any other provision of this
Plan, Excess Contributions, plus any income
and minus any loss allocable thereto, shall
be distributed no later than the last day of
each Plan Year to
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<PAGE> 39
Members to whose Accounts such Excess
Contributions were allocated for the
preceding Plan Year. Such distributions
shall be made to Highly Compensated
Employees on the basis on the respective
portions of the Excess Contributions
attributable to each of such Employees.
Excess Contributions shall be allocated to
Members who are subject to the family member
aggregation rules of section 414(q)(6) of
the Code in the manner prescribed by the
Regulations. Excess Contributions (including
the amounts recharacterized) shall be
treated as Annual Additions under the Plan.
(b) Excess Contributions shall be adjusted for
any income or loss up to the date of
distribution. The income or loss allocable
to Excess Contributions is the sum of: (1)
income or loss allocable to the Member's
401(k) Contributions (and, if applicable,
the qualified non-elective contribution
account or the Qualified Matching
Contributions Account, or both) for the Plan
Year multiplied by a fraction, the numerator
of which is such Member's Excess
Contributions for the year and the
denominator is the Member's Account balance
attributable to Employee Salary Deferrals
(and qualified non-elective contributions or
qualified matching contributions, or both,
if any of such contributions are included in
the ADP test) without regard to any income
or loss occurring during such Plan Year; and
(2) ten percent of the amount determined
under (1) multiplied by the number of whole
calendar months between the end of the Plan
Year and the date of distribution, counting
the month of distribution if distribution
occurs after the 15th of such month.
(c) Excess Contributions shall be distributed
from the Member's 401(k) Contributions
Account and Qualified Matching Contributions
Account (if applicable) in proportion to the
Member's Employee Salary Deferrals and
qualified matching contributions (to the
extent used in the ADP test) for the Plan
Year.
4.2 COMPANY CONTRIBUTIONS. For each Member who is an International
Flight Service Manager, and effective September 30, 1992, with
respect to each Member who is also a Domestic Flight Service
Manager, the Company shall contribute monthly to such Member's
Company Contribution Account an amount equal to 5% of the
Member's Compensation from the Company for his Recognized
Service in each month, including any amount thereof computed
retroactively. There shall be no offset, deduction, credit or
diminution of the Company's Contribution for any reason.
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<PAGE> 40
4.3 AFTER-TAX CONTRIBUTIONS.
(A) Each Member shall be entitled to make optional after-tax
contributions to his Member After-Tax Contributions Account in
an amount equal to at least one percent (1%) or such higher
percent, up to twenty percent (20%) of Compensation (in
increments of one-tenth of one percent (.1%) of such monthly
compensation as he may elect) in the manner provided in
Section (b) below, provided, however, that the sum of the
percentage elected under this Section 4.3 and the percentage
elected under Section 4.1 shall not exceed twenty percent
(20%).
(B) A Member who, although eligible to do so, has not theretofore
Elected to make after-tax contributions, may so Elect by
filing a written Election with the Company. All such Elections
shall state the percentage of each payment of Compensation
which the Member wishes the Company to withhold as an
after-tax contribution under Section (A) of this Article and
shall take effect on the first day of the payroll period next
following the effective date of such Election.
(C) After-tax contributions shall be transmitted to the Trust by
the Company, by wire transfer, as soon as practicable after
the end of the accounting month during which such amounts
would have been payable to the Member in the absence of a
salary deferral, but in no event later than ninety (90) days
following such date.
4.4 ROLLOVER CONTRIBUTIONS. Each Member who was a member of the Stock
Purchase Plan which made final distributions on October 17, 1988 may
elect, in accordance with Code Sections 402(a)(5) or 408(d)(3), to
transfer his distribution which is in excess of his Employee
contributions to the Stock Purchase Plan into a Rollover Account. No
other rollover contributions into this Plan shall be permitted, except
to the extend required by law.
4.5 RETURN OF CONTRIBUTIONS. Notwithstanding any other provisions of this
Plan, any contributions made pursuant to this Plan are conditioned upon
the initial qualification of this Plan under Code Section 401(a);
Salary Deferral Contributions under this Plan shall be returned to the
members, without interest, respectively, within one (1) year after the
date on which the Secretary (or his delegate) issues notice to the
Company that the Plan does not satisfy the requirements of Section
401(a) of the Code. A contribution may also be returned within one (1)
year in accordance with this Section 4.5 if the contribution was made
by reason of a mistake of fact, or was conditioned upon the
deductibility of such contribution.
Notwithstanding the other provisions contained in Section
7.1(a)(3) herein, to the extent an Employee's Salary Deferral,
after-tax contributions, Company Contributions or a combination of any
one, shall cause the Annual Addition on behalf of a Member to exceed
the limits imposed under this Plan, then the Company may take such
measures to correct the failure, including but not limited to,
refunding Salary Deferral or after-tax contributions to Employees,
including any earnings thereon, according to Section 1.415-6 of
regulations prescribed by the IRS.
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<PAGE> 41
4.6 INDIVIDUAL LIMITATIONS ON CONTRIBUTIONS. The total amount of
contributions under this Article for any Plan Year may not exceed the
limitations set forth in Article VII.
4.7 ADJUSTMENTS TO CONTRIBUTION PERCENTAGE. A Member may Elect to increase,
decrease, suspend or restart his Salary Deferral and after-tax
contributions not more than four (4) times each in any Plan Year.
4.8 ACTUAL CONTRIBUTION PERCENTAGE TEST. This Section describes the
nondiscrimination rules for Matching Contributions, if any, and
after-tax employee contributions (the Actual Contribution Percentage
(ACP) test). It also describes the nondiscrimination rules which apply
when Members make Employee Salary Deferrals in addition to Matching
Contributions or After-Tax Employee Contributions.
The ACP for Members who are Highly Compensated Employees for
each Plan Year and the ACP for Members who are Non-Highly Compensated
Employees for the same Plan Year must satisfy one of the following
tests:
(a) The ACP for Members who are Highly Compensated for the Plan
Year shall not exceed the ACP for Members who are Non-Highly
Compensated Employees for the same Plan Year multiplied by
1.25; or
(b) The ACP for Members who are Highly Compensated Employees for
the Plan Year shall not exceed the ACP for Members who are
Non-Highly Compensated Employees for the same Plan Year
multiplied by two, and the ACP for Highly Compensated
Employees does not exceed the ACP for Members who are Non-
Highly Compensated Employees by more than two percentage
points.
If one or more Highly Compensated Employees make both Employee Salary
Deferrals and have Matching Contributions or after-tax employee
contributions in Plans maintained by the Employer, and the sum of the
ADP and ACP of those Highly Compensated Employees subject to either or
both tests exceeds the Aggregate Limit, then the ACP of those Highly
Compensated Employees will be reduced (beginning with such highly
Compensated Employee whose ACP is the highest) so that the limit is not
exceeded. The amount by which each Highly Compensated Employee's
Contribution Percentage Amount is reduced shall be treated as an Excess
Aggregate Contribution. The ADP and ACP of the Highly Compensated
Employees are determined after any corrections required to meet the ADP
and ACP tests. Multiple use does not occur if either the ADP or ACP of
the Highly Compensated Employees does not exceed 1.25 multiplied by the
ADP and ACP of the Non-Highly Compensated Employees.
For purposes of this Section, the Contribution Percentage for
any Member who is a Highly Compensated Employee and who is eligible to
have Contribution Percentage Amounts allocated to his or her Account
under two or more Plans described in section 401(a)
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<PAGE> 42
of the Code, or arrangements described in section 401(k) of the Code
that are maintained by the Employer, shall be determined as if the
total of such Contribution Percentage Amounts was made under each Plan.
If a Highly Compensated Employee participates in two or more cash or
deferred arrangements that have different Plan Years, all cash or
deferred arrangements ending with or within the same calendar year
shall be treated as a single arrangement.
In the event that this Plan satisfies the requirements of
sections 401(m), 401(a)(4) or 410(b) of the Code only if aggregated
with one or more other Plans, or if one or more other Plans satisfy the
requirements of such sections of the Code only if aggregated with this
Plan, then this Section shall be applied by determining the
Contribution Percentage of Employees as if all such Plans were a single
Plan. For Plan years beginning after December 31, 1989, Plans may be
aggregated in order to satisfy section 410(m) of the Code only if they
have the same Plan Year.
For purposes of determining the Contribution Percentage of a
Member who is a five-percent owner or one of the ten most highly paid
Highly Compensated Employees, the Contribution Percentage Amounts and
Compensation of such Member shall include the Contribution Percentage
Amounts and Compensation for the Plan Year of family members as defined
in section 414(q)(6) of the code. Family member, with respect to Highly
Compensated Employees, shall be disregarded as separate Employees in
determining the Contribution Percentage both for Members who are
Non-Highly Compensated Employees and for Members who are Highly
Compensated Employees.
For purposes of determining the Contribution Percentage test,
Employee Contributions are considered to have been made in the Plan
Year in which contributions were made to the Trust. Matching
Contributions and qualified non-elective contributions will be
considered made for a Plan Year if made no later than the end of the
twelve-month period beginning on the day after the close of the Plan
Year.
The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of qualified non-elective
contributions or qualified matching contributions, or both, used in
such test.
The determination and treatment of the Contribution Percentage
of any Member shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
Definitions:
"Average Contribution Percentage" means, for a specified group
of Members for a Plan Year, the average of the rations (calculated
separately for each Member in such group) of the Member's Contribution
Percentage Amounts to the Member's Compensation for the Plan Year
(whether or not the Employee was a Member for the entire Plan Year).
15
<PAGE> 43
"Aggregate Limit" - In general, for purposes of this Section,
the Aggregate Limit is the greater of:
(A) The sum of:
(1) 1.25 times the greater of the Relevant Actual
Deferral Percentage or the Relevant Actual
Contribution Percentage, and
(2) Two percentage points plus the lesser of the Relevant
Actual Deferral Percentage or the Relevant Actual
Contribution Percentage. In no event, however, shall
this amount exceed twice the lesser of the Relevant
Actual Deferral Percentage or the Relevant Actual
Contribution Percentage; or
(B) The sum of:
(1) 1.25 times the lesser of the Relevant Actual Deferral
Percentage or the Relevant Actual Contribution
Percentage, and
(2) Two percentage points plus the greater of the
Relevant Actual Deferral Percentage or the Relevant
Actual Contribution Percentage. In no event, however,
shall this amount exceed twice the greater of the
Relevant Actual Deferral Percentage or the Relevant
Actual Contribution Percentage.
"Relevant Actual Deferral Percentage" means the Actual
Deferral Percentage of the group of Non-Highly Compensated Employees
eligible under the arrangement subject to section 401(k) for the Plan
Year, and the term "Relevant Actual Contribution Percentage" means the
Actual Contribution Percentage of the group of Non-Highly Compensated
Employees eligible under the Plan subject to section 401(m) for the
Plan Year beginning with or within the Plan Year of the arrangement
subject to section 401(k).
"Contribution Percentage" means the ratio (expressed as a
percentage) of the Member's Contribution Percentage Amounts to the
Member's Compensation for the Plan Year (whether or not the Employee
was a Member for the entire Plan Year).
"Contribution Percentage Amounts" means the sum of the
Employee Contributions, Matching Contributions, and qualified matching
contributions (to the extent not taken into account for purposes of the
ADP test) made under the Plan on behalf of the Member for the Plan
Year. Such Contribution Percentage Amounts shall include Forfeitures of
Excess Aggregate Contributions or Matching Contributions allocated to
the Member's Account which shall be taken into account in the year in
which such forfeiture is allocated. The Employer may include qualified
non-elective contributions in the Contribution Percentage Amounts. The
Employer also may elect to use Employee Salary Deferrals in the
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<PAGE> 44
Contribution Percentage Amounts so long as the ADP test is met before
the Employee Salary Deferrals are used in the ACP test and continues to
be met following the exclusion of those Employee Salary Deferrals that
are used to meet the ACP test.
"Eligible Member" means any Employee who is eligible to make
an after-tax employee contribution, or an Employee Salary Deferral (if
the Employer takes such contributions into account in the calculation
of the Contribution Percentage), or to receive a Matching Contribution
(including Forfeitures) or a Qualified Matching Contribution.
"After-tax employee contribution" means any contribution made
to the Plan by or on behalf of a Member that is included in the
Member's gross income in the year in which made and that is maintained
under a separate Account to which earnings and losses are allocated.
"Matching Contribution" means an Employer contribution made to
this or any other defined contribution plan on behalf of a Member on
account of an Employee Contribution made by such member, or an account
of a Member's Employee Salary Deferral, under a Plan maintained by the
Employer.
4.8A Distribution of Excess Aggregate Contributions. This Section describes
the rules for distributing discriminatory Matching Contributions or
after-tax employee contributions (Excess Aggregate Contributions).
"Excess Aggregate Contributions" means, with respect to any
Plan Year, the excess of:
(1) The aggregate Contribution Percentage Amounts taken
into account in computing the numerator of the
Contribution Percentage actually made on behalf of
Highly Compensated Employees for such Plan Year, over
(2) The maximum Contribution Percentage Amounts permitted
by the ACP test (determined by reducing contributions
made on behalf of Highly Compensated Employees in
order of their Contribution Percentage beginning with
the highest of such percentages).
(a) Notwithstanding any other provision of this
Plan, Excess Aggregate Contributions, plus
any income and minus any loss thereto shall
be forfeited if forfeitable, or if not
forfeitable, distributed no later than the
last day of each Plan Year to Members to
whose Accounts such Excess Aggregate
Contributions were allocated for the
preceding Plan Year. Excess Aggregate
Contributions shall be allocated to Members
who are subject to the family member
aggregation rules of section 414(q)(6) of
the Code in the manner prescribed by the
Regulations.
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<PAGE> 45
Excess Aggregate Contributions shall be
treated as Annual Additions under the Plan.
(b) Excess Aggregate Contributions shall be
adjusted for any income or loss up to the
date of distribution. The income or loss
allocable to Excess Aggregate Contributions
is the sum of : (1) income or loss allocable
to the Member's After-Tax Contribution
Account, matching contribution account (if
any, and if all amounts therein are not used
in the ADP test) and, if applicable,
qualified non-elective contribution account
and Employee 401(k) Contributions Account
for the Plan Year multiplied by a fraction,
the numerator of which is such Member's
Excess Aggregate Contributions for the year
and the denominator is the Member's Account
balance(s) attributable to Contribution
Percentage Amounts without regard to any
income or loss occurring during such Plan
Year; and (2) ten percent of the amount
determined under (1) multiplied by the
number of whole calendar months between the
end of the Plan Year and the date of
distribution, counting the month of
distribution if distribution occurs after
the 15th of such month.
(c) Forfeitures of Excess Aggregate
Contributions: Forfeitures of Excess
Aggregate Contributions may either be
reallocated to the Accounts of Non-Highly
Compensated Employees or applied to reduce
Employer contributions.
(d) Accounting for Excess Aggregate
Contributions: Excess Aggregate
Contributions shall be forfeited, if
forfeitable or distributed on a pro-rata
basis from the Member's After-Tax
Contribution Account, Matching Contribution
Account, and qualified matching contribution
account (and, if applicable, the Member's
qualified non-elective contribution account
or Employee Deferral Account, or both).
4.8B Recharacterization. The company may recharacterize Salary Deferrals as
after-tax employee contributions. These amounts, when recharacterized,
will be treated for purposes of the nondiscrimination test of Section
4.8 as an after-tax employee contribution. However, such amounts will
remain in a Member's Salary Deferral Account. Any recharacterization
under this section must be performed within two and one-half (2 1/2 )
months following the end of the Plan Year.
4.9 LIMITATIONS ON SALARY DEFERRAL CONTRIBUTIONS. The amount of the Salary
Deferral contributions shall not exceed $7,000, as adjusted at the same
time and in the same manner as under Code Section 415(d).
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<PAGE> 46
4.10 DISTRIBUTION OF EXCESS EMPLOYEE SALARY DEFERRALS. This Section
describes the rules for distributing contributions made to the Plan in
excess of the dollar limit (originally $7,000) set forth in section
402(g) of the Code.
Excess Employee Salary Deferrals are those elective deferrals
that are includible in a Member's gross income because they exceed the
dollar limitation under Code section 402(g). Excess Employee Salary
Deferrals shall be treated as Annual Additions under the Plan.
A Member may assign to this Plan any excess Employee Salary
Deferrals made during a taxable year of the member by notifying the
Plan Administrator on or before March 1 following the calendar year
when the Excess Employee Salary Deferrals are made of the amount of the
Excess Employee Salary Deferrals to be assigned to the Plan.
Notwithstanding any other provision of the Plan, excess
Employee Salary Deferrals, plus any income and minus any loss allocable
thereto, shall be distributed no later than April 15 to any Member to
whose Account excess Employee Salary Deferrals were assigned for the
preceding year and who claims excess Employee Salary Deferrals for such
taxable year. With respect to any taxable year, a Member's Employee
Salary Deferrals are the sum of all Employer contributions made on
behalf of such Member pursuant to an election to defer under any
qualified CODA as described in section 401(k) of the Code, any
simplified employee pension cash or deferred arrangement as described
in section 402(h)(1)(B), an eligible deferred compensation Plan under
section 457, any Plan as described under section 501(c)(18), and any
Employer contributions made on the behalf of a Member for the purchase
of an annuity contract under section 403(b) pursuant to a salary
reduction agreement.
Excess Employee Salary Deferrals shall be adjusted for any
income or loss up to the date of distribution. The income or loss
allocable to excess Employee Salary Deferrals is the sum of: (1) income
or loss allocable to the Member's Employee Deferral Account for the
taxable year multiplied by a fraction, the numerator of which is such
Member's excess Employee Salary Deferrals for the year and the
denominator is the Member's Account balance attributable to Employee
Salary Deferrals without regard to any income or loss occurring during
such taxable year; and (2) ten percent of the amount determined under
(1) multiplied by the number of whole calendar months between the end
of the Member's taxable year and the date of distribution, counting the
month of distribution if distribution occurs after the 15th of such
month.
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<PAGE> 47
ARTICLE V
ALLOCATIONS TO MEMBERS' ACCOUNTS
5.1 SEPARATE ACCOUNTS. The Plan Administrator shall establish and maintain
separate accounts in the name of each Member, pursuant to Sections 5.2,
5.3, 5.4 and 5.5.
5.2 MEMBER 401(K) CONTRIBUTIONS. The Plan Administrator shall allocate
Salary Deferral Contributions to Members' 401(k) Contributions Account
in accordance with the applicable Salary Deferral Elections and
concurrent with the Company's deposit of such contributions in the
Trust pursuant to Section 4.1.
5.3 COMPANY CONTRIBUTIONS. The Plan Administrator shall allocate Company
Contributions to International and Domestic Flight Service Managers'
Company Contributions Accounts concurrent with the Company's deposit of
such contributions in the Trust pursuant to Section 4.2.
5.4 MEMBER AFTER-TAX CONTRIBUTIONS. The Plan Administrator shall allocate
Member After-Tax Contributions to the Member's After-Tax Contributions
Accounts in accordance with the applicable Members' Elections and
concurrent with the Company's deposit of such contributions in the
Trust pursuant to Section 4.3.
5.5 ROLLOVER CONTRIBUTIONS. The Plan Administrator shall allocate Member
Rollover Contributions in accordance with the applicable Members'
Elections and concurrent with the deposit of such contributions in the
Trust pursuant to Section 4.4. Effective December 31, 1989, the
Rollover Contributions Account under the Plan will cease to hold assets
in kind, and such assets held therein will be liquidated and reinvested
in accordance with timely directions in other Investment Options, or,
in the absence of such directions, to the Interest Fund (or if, on
December 31, 1989, the Interest Fund is no longer an Investment Option
under the Plan, then to the most conservative Investment Option then
available).
5.6 NOTICE OF ALLOCATION. The Plan Administrator shall notify the Trustee
in writing of its allocations made pursuant to Sections 5.2, 5.3, 5.4
and 5.5.
ARTICLE VI
INVESTMENT OF ACCOUNTS
6.1 MEMBER-DIRECTED INVESTMENT. All contributions to the Trust shall be
invested by the Trustee as directed by the Members pursuant to this
Article VI, or in accordance with Section 6.4.
6.2 INVESTMENT OPTIONS. Each Member shall Elect any combination of the
following Investment Options with respect to the funds in his Account:
(A) a cash management fund determined by the Investment Committee
from time to time; and
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<PAGE> 48
(B) such other Investment Options which the Investment Committee
shall determine to make available from time to time.
The Investment Options offered herein shall comply with
applicable law and/or regulations. Each Member shall be solely
responsible for the selection of his Investment Options provided for
hereunder. The fact that an Investment Option is made available to a
Member for investment under the Plan shall not constitute, or be
construed as constituting, a recommendation for investment in that
Investment Option.
(C) The Investment Committee is empowered with the authority and
discretion to review or change any of the investment options
enumerated above. The Trustee and the Company shall not be
liable or responsible for any loss resulting to the Member's
Accounts because of any sale or investment directed by the
Member under this Section 6.2 or because of the failure to
take any action regarding an investment acquired pursuant to
such elective investment. The Trustee and the Company shall be
indemnified by the Member from and against any personal
liability to which the Trustee and the Company may be
subjected due to carrying out an elective investment directed
by the Member or for failure to act in the absence of
instructions from the Member.
6.3 FREQUENCY OF CHANGING INVESTMENT OPTIONS. Up to four times each Plan
Year, a Member shall be permitted to change his election of any
Investment Option(s) and/or the percentage of funds in his Account to
be invested in each Investment Option, with respect to prior
contributions, future contributions, other allocations, and all
earnings thereon. Any such change shall be effective on the last
business day of each calendar month as designated by the Member,
provided the Plan Administrator receives the changed Election from the
Member at least seven (7) calendar days prior to these dates.
6.4 INVESTMENT INCOME AND LOSSES. The amount of net income, loss,
appreciation or depreciation from each Investment Option shall be
credited or charged against, as the case may be, each Account of each
Member selecting such option on a pro rata basis as of the Valuation
Date.
ARTICLE VII
LIMITATIONS ON CONTRIBUTIONS
7.1 ALLOCATION LIMITATIONS. The following provides rules for the maximum
allocation a Member may receive in a given year which will generally be
the lesser of $30,000 (as indexed) or 25 percent of his compensation
(as defined in this Section).
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<PAGE> 49
(a) This subsection applies if the member does not participate in,
and has never participated in another qualified Plan
maintained by the Employer, or a welfare benefit fund, as
defined in section 419(e) of the Code maintained by the
Employer, or an individual medical account, as defined in
section 415(1)(2) of the Code, maintained by the Employer,
which provides an Annual Addition as defined in subsection
(d)(1).
(1) The amount of Annual Additions which may be credited
to the Member's Account for any Limitation Year will
not exceed the lesser of the Maximum Permissible
Amount, as defined in subsection (d)(10), or any
other limitation contained in this Plan. If the
contributions that would otherwise be contributed or
allocated to the Member's Account would cause the
Annual Additions for the Limitation Year to exceed
the Maximum Permissible Amount, the amount
contributed or allocated will be reduced, so that the
Annual Additions for the Limitation Year will equal
the Maximum Permissible Amount.
(2) As soon as administratively feasible after the end of
the Limitation Year, the Maximum Permissible Amount
for the Limitation Year will be determined on the
basis of the Member's actual Section 415 Compensation
for the Limitation Year.
(3) If there is an excess Annual Addition due to a
calculation error, Employee contributions, the
allocation of Forfeitures (if any), or other facts
and circumstances as determined by the Plan
Administrator, the excess will be corrected as
follows:
(A) Any after-tax employee contributions, to the
extent they would reduce the Excess Amount,
will be returned to the Member;
(B) If after the application of paragraph (a) an
Excess Amount still exists, and the Member
is covered by the Plan at the end of the
Limitation Year, the Excess Amount in the
Member's Account will be used to reduce
contributions beginning with Employee Salary
Deferrals, if any (including any allocation
of Forfeitures for such Member) in the next
Limitation Year, and each succeeding
Limitation Year if necessary;
(C) If after the application of paragraph (a) an
Excess Amount still exists, and the Member
is not covered by the Plan at the end of a
Limitation Year, the Excess Amount will be
held unallocated in a suspense account. The
suspense account will be applied to reduce
future contributions beginning with Employee
Salary Deferrals, if any, for
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<PAGE> 50
all remaining Members in the next Limitation
Year, and each succeeding Limitation Year if
necessary;
(D) If a suspense account is in existence at any
time during a Limitation Year pursuant to
this Section, it will not participate in the
allocation of the Trust's investment gains
and losses. If a suspense account is in
existence at any time during a particular
Limitation Year, all amounts in the suspense
account must be allocated and reallocated to
Members' Accounts before any Employer or any
after-tax employee contribution may be made
to the Plan for that Limitation Year. Excess
Amounts may not be distributed to Members or
former Members.
(b) This subsection applies if, in addition to this Plan, the
Member is covered under another qualified defined contribution
plan maintained by the Employer, a welfare benefit fund, as
defined in section 419(e) of the Code maintained by the
Employer, or an individual medical account, as defined in
section 415(l)(2) of the Code, maintained by the Employer,
which provides an Annual Addition as defined in subsection
(d)(1), during any Limitation Year.
(1) The Annual Additions which may be credited to a
Member's Account under this Plan for any such
Limitation Year will not exceed the Maximum
Permissible Amount reduced by the Annual Additions
credited to a Member's Account under the other Plans
and welfare benefit funds for the same Limitation
Year. If the Annual Additions with respect to the
Member under other defined contribution plans and
welfare benefit funds maintained by the Employer are
less than the Maximum Permissible Amount and the
Employer contribution that would otherwise be
contributed or allocated to the Member's Account
under this Plan would cause the Annual Additions for
the Limitation Year to exceed this limitation, the
amount contributed or allocated will be reduced so
that the Annual Additions under all such Plans and
funds for the Limitation Year will equal the Maximum
Permissible Amount. If the Annual Additions with
respect to the Member under such other defined
contribution plans and welfare benefit funds in the
aggregate are equal to or greater than the Maximum
Permissible Amount, no amount will be contributed or
allocated to the Member's Account under this Plan for
the Limitation Year.
(2) As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible
Amount for the Limitation Year will be determined on
the basis of the Member's actual Section 415
Compensation for the Limitation Year.
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<PAGE> 51
(3) If, pursuant to subsection (b)(2) or as a result of a
calculation error, Employee contributions, the
allocation of Forfeitures or other facts and
circumstances as determined by the Plan
Administrator, a Member's Annual Additions under this
Plan and such other Plans would result in an Excess
Amount for a Limitation Year, the Excess Amount will
be deemed to consist of the Annual Additions last
allocated, except that the Annual Additions
attributable to a welfare fund or individual medical
account will be deemed to have been allocated first
regardless of the actual allocation date.
(4) If an Excess Amount was allocated to a Member on an
allocation date of this Plan which coincides with an
allocation date of another Plan, the Excess Amount
attributed to this Plan will be the product of,
(a) the total Excess Amount allocated as of such
date, times
(b) the ratio of (i) the Annual Additions
allocated to the Member for the Limitation
Year as of such date under this Plan to (ii)
the total Annual Additions allocated to the
Member for the Limitation year as of such
date under this and all other qualified
defined contribution plans.
(5) Any Excess Amount attributed to this Plan will be
disposed in the manner described in subsection
(a)(3).
(c) If the Employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Member in this
Plan, the sum of the Member's Defined Benefit Fraction and
Defined Contribution Fraction will not exceed 1.0 in any
Limitation Year. If the sum of the fractions exceeds 1.0, the
annual benefit provided under the defined benefit plan will be
reduced until the sum of the fractions equals 1.0.
(d) Definitions:
(1) Annual Additions: Annual Additions means Annual
Additions as defined in ARTICLE II of the Plan.
(2) Section 415 Compensation: For purposes of this
Section, Section 415 Compensation shall mean a
Member's earned income, wages, salaries, and fees for
professional services and other amounts received for
personal services actually rendered in the course of
employment with the Employer maintaining the Plan
(including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits,
reimbursements, and expense allowances), and
excluding the following:
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<PAGE> 52
(A) Employer contributions to a Plan of deferred
compensation which are not includible in the
Employee's gross income for the taxable year
in which contributed, or Employer
contributions under a simplified employee
pension Plan to the extent such
contributions are deductible by the
Employee, or any distributions from a Plan
of deferred compensation;
(B) Amounts realized from the exercise of a
nonqualified stock option, or when
restricted stock (or property) held by the
Employee either becomes freely transferable
or is no longer subject to a substantial
risk of forfeiture;
(C) Amounts realized from the sale, exchange or
other disposition of stock acquired under a
qualified stock option; and
(D) Other amounts which receive special tax
benefits, or contributions made by the
Employer (whether or not under a salary
reduction agreement) toward the purchase of
an annuity described in section 403(b) of
the Code (whether or not the amounts are
actually excludable from the gross income of
the Employee).
For Limitation Years beginning after December 31,
1991, for purposes of applying the limitations of this
Article, Section 415 Compensation for a Limitation Year is the
compensation actually paid or includible in gross income
during such Limitation Year. Section 415 Compensation does not
include accrued compensation unless it is uniform and
consistent and paid within two weeks.
Notwithstanding the preceding sentence, Section 415
Compensation for a Member in a defined contribution plan who
is permanently and totally disabled (as defined in section
22(e)(3) of the Code) is the compensation such Member would
have received for the Limitation Year if the Member had been
paid at the rate of compensation paid immediately before
becoming permanently and totally disabled; such inputed
compensation for the disabled Member may be taken into account
only if the Member is not a Highly Compensated Employee (as
defined in section 414(q) of the Code) and contributions made
on behalf of such Members are nonforfeitable when made.
(3) Defined Benefit Fraction: A fraction, the numerator
of which is the sum of the Member's Projected Annual
Benefits under all the defined benefit plans (whether
or not terminated) maintained by the Employer, and
the denominator of which is the lesser of 125 percent
of the dollar limitation determined for the
Limitation Year under sections 415(b) and (d) of the
Code
25
<PAGE> 53
or 140 percent of the highest average Section 415
Compensation, including any adjustments under section
415(b) of the Code.
Notwithstanding the above, if the Member was
a Member as of the first day of the first Limitation
Year beginning after December 31, 1986, in one or
more defined benefit plans maintained by the Employer
which were in existence on May 6, 1986, the
denominator of this fraction will not be less than
125 percent of the sum of the annual benefits under
such Plans which the Member had accrued as of the
close of the last Limitation Year beginning before
January 1, 1987, disregarding any changes in the
terms and conditions of the Plan after May 5, 1986.
The preceding sentence applies only if the defined
benefit plans individually and in the aggregate
satisfied the requirements of section 415 of the code
for all Limitation Years beginning before January 1,
1987.
(4) Defined Contribution Dollar Limitation: $30,000 or if
greater, one-fourth of the defined benefit dollar
limitation set forth in section 415(b)(1) of the Code
as indexed as in effect for the Limitation Year.
(5) Defined Contribution Fraction: A fraction, the
numerator or which is the sum of the Annual Additions
to the Member's Account under all the defined
contribution plans (whether or not terminated)
maintained by the Employer for the current and all
prior Limitation Years (including the Annual
Additions attributable to the Member's nondeductible
Employee contributions to all defined benefit plans,
whether or not terminated, maintained by the
Employer, and the Annual Additions attributable to
all welfare benefit funds, as defined in section
419(e) of the Code, and individual medical accounts,
as defined in section 415(1)(2) of the Code,
maintained by the Employer), and the denominator of
which is the sum of the maximum aggregate amounts for
the current and all prior Limitation Years of service
with the Employer (regardless of whether a defined
contribution plan was maintained by the Employer).
The maximum aggregate amount in any Limitation Year
is the lesser of 125 percent of the dollar limitation
determined under sections 415(b) and (d) of the Code
in effect under section 415(c)(1)(A) of the Code or
35 percent of the Member's Section 415 Compensation
for such year.
If the Employee was a Member as of the end
of the first day of the first Limitation Year
beginning after December 31, 1986, in one or more
defined contribution plans maintained by the Employer
which were in existence on May 6, 1986, the numerator
of this fraction will be adjusted if the sum of this
fraction and Defined Benefit Fraction would otherwise
exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (1) the
excess of the sum of the fractions over 1.0, times
(2) the
26
<PAGE> 54
denominator of this fraction, will be permanently
subtracted from the numerator of this fraction. The
adjustment is calculated using the fractions as they
would be computed as of the end of the last
Limitation Year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions
of the Plan made after May 5, 1986, but using the
section 415 limitation applicable to the first
Limitation Year beginning on or after January 1,
1987.
The Annual Addition for any Limitation Year
beginning before January 1, 1987, shall not be
recomputed to treat all Employee contributions as
Annual Additions.
(6) Employer: For purposes of this Article, Employer
means the Company, and all members of a controlled
group of corporations (as defined in section 414(b)
of the Code as modified by section 415(h)), all
commonly controlled trades or businesses (as defined
in section 414(c) as modified by section 415(h)) or
affiliated service groups (as defined in section
415(m)) of which the adopting Employer is part, and
any other entity required to be aggregated with the
Employer pursuant to the Regulations under section
414(o) of the Code.
(7) Excess Amount: The excess of the Member's Annual
Additions for the Limitation Year over the Maximum
Permissible Amount.
(8) Highest Average Compensation: The average Section 415
Compensation for the three consecutive Years of
Service with the Employer that produces the highest
average. A Year of Service with the Employer is the
12 consecutive month period defined in ARTICLE II of
the Plan.
(9) Limitation Year: The Limitation Year will be the Plan
Year. All qualified Plans maintained by the Employer
must use the same Limitation Year. If the Limitation
Year is amended to a different 12 consecutive month
period, the new Limitation year must begin on a date
within the Limitation Year in which the amendment is
made.
(10) Maximum Permissible Amount: The maximum Annual
Addition that may be contributed or allocated to a
Member's Account under the Plan for any Limitation
year shall not exceed the lesser of:
(A) the Defined Contribution Dollar Limitation
(i.e., $30,000, or if greater, 25 percent of
the section 415(b)(1)(A) amount, or
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<PAGE> 55
(B) 25 percent of the Member's Section 415
Compensation for the Limitation Year.
The Section 415 Compensation limitation
referred to in (B) shall not apply to any
contribution for medical benefits (within the meaning
of section 401(h) or section 419(A)(f)(2) of the
Code) which is otherwise treated as an Annual
Addition under sections 415(l)(1) or 419A(d)(2) of
the Code.
If a short Limitation Year is created
because of an amendment changing the Limitation year
to a different 12-consecutive month period, the
Maximum Permissible Amount will not exceed the
Defined Contribution Dollar Limitation multiplied by
the following fraction:
Number of months in the short Limitation Year
12
(11) Projected Annual Benefit: The annual retirement
benefit (adjusted to an actuarially equivalent
straight life annuity if such benefit is expressed in
a form other than a straight life annuity or
qualified joint and survivor annuity) to which the
Member would be entitled under the terms of the Plan
assuming:
(A) The Member will continue employment until
Normal Retirement Age under the Plan (or
current age, if later), and
(B) The Member's Section 415 Compensation for
the current Limitation Year and all other
relevant factors used to determine benefits
under the Plan will remain constant for all
future Limitation Years.
ARTICLE VIII
BENEFICIARIES
8.1 DESIGNATION. Each Member may designate by Election one or more
Beneficiaries by delivering a written designation thereof to the Plan
Administrator. Upon the death of a Member, his Beneficiary shall be
entitled to payment of the benefits due the Member in an amount and in
the manner provided for in this Plan. A Member may designate different
Beneficiaries at any time by delivering a new written designation to
the Plan Administrator. Any such designation shall become effective
only upon its receipt by the Plan Administrator. The last effective
designation received by the Plan Administrator shall supersede all
prior designations. A designation of a Beneficiary shall be effective
only if the designated Beneficiary survives the Member. In the case of
a Married Member, the Beneficiary of the death benefit provided in this
Article shall be the Married Member's spouse, provided,
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<PAGE> 56
however, that a Married Member may designate a Beneficiary or change a
Beneficiary other than the spouse if:
(A) the spouse has waived in writing his or her right to be the
Member's Beneficiary and such written waiver has been
witnessed by a notary public, or
(B) it is established to the satisfaction of the Plan
Administrator that the spouse cannot be located.
8.2 FAILURE TO DESIGNATE. If a Member fails to designate a Beneficiary, or
if no designated Beneficiary survives the Member, the Member shall be
deemed to have designed as the Beneficiary, in order of priority: (a)
surviving spouse, (b) surviving children (including adopted children),
in equal shares, (c) surviving parents, in equal shares, (d) surviving
brothers and sisters in equal shares, or (e) the Member's estate.
8.3 BENEFICIARIES BOUND BY PLAN. Whenever the rights of a Member are stated
or limited in the Plan and Trust Agreement, his Beneficiaries shall be
bound thereby.
ARTICLE IX
RETIREMENT BENEFITS
9.1 AMOUNT OF BENEFITS. A Member shall be 100% vested in the Account
Balance of all his Accounts at all times. The Plan Administrator shall
direct the Trustee to distribute to such Member his Account, in the
form and manner required by Article XIII.
9.2 TIME OF DISTRIBUTION.
(A) Unless a Member elects to defer commencement of benefits
pursuant to paragraph 9.2(b), below, the benefits under
Section 9.1 shall be distributed no later than sixty (60) days
after the end of the calendar month within which the Member
actually retires at his Early Retirement Date, Normal
Retirement Date or Deferred Retirement Date and Elects his
benefits in accordance with Article XIII; provided, however,
that if the total vested amount in a Member's Account exceeds
$3,500, such amount may not be distributed to a Member prior
to age 62 without the consent and Election of the Member.
(When the Member whose Account Balance exceeds $3,500 attains
age 62, his benefit will be distributed provided such Member
has not consented to an earlier distribution.)
(B) A member who actually retires at his Early Retirement Date,
Normal Retirement Date or Deferred Retirement Date shall have
the option upon such retirement to defer distribution of his
benefits until a date not later than April 1 of the calendar
year
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<PAGE> 57
following the calendar year in which the Member attains age 70
1/2. Upon a Member's Election to receive his benefits, such
benefits shall be distributed no later than sixty (60) days
after the end of the calendar month within which the Member
actually makes such Election.
(C) Anything contained herein to the contrary notwithstanding,
distributions from the Member's Account Balance shall commence
no later than the 60th day after the close of the Plan Year in
which the following occurs:
(1) the date on which the Member attains Normal
Retirement Age;
(2) the tenth (10th) anniversary of the year in which the
Member commenced participation in the Plan; or
(3) the date the Member terminates his service with the
Company;
provided, however, that if the value of the Member's Account
Balance is more than $3,5000, a distribution may not be made
prior to the date on which the Member attains age 62, without
his consent, and, with respect to his Company Contribution
Account and his contributions to the Old After-Tax account, if
he is married the consent of his spouse acknowledged by a
notary public within 90 days before the date of distribution,
when the form of payment is other than a Qualified Joint and
Survivor Annuity.
(D) Required Distributions. The requirements of this Section shall
apply to any distribution of a Member's interest and will take
precedence over any inconsistent provisions of this Plan.
Unless otherwise specified, the provisions of this Article
apply to calendar years beginning after December 31, 1984. All
distributions shall be determined and made in accordance with
the proposed Regulations under section 401(a)(9) of the Code,
including a minimum distribution incidental benefit
requirement of section 1.401(a)(9)-2 of the proposed
regulations as proscribed by the IRS.
The entire interest of a Member must be distributed or must
begin to the distributed no later than the Member's Required
Beginning Date (defined below) which is generally the April
1st following his attainment of age 70 1/2.
Distributions, if not made in a single sum, may only be made
over a period equal to or less than the following (or a
combination thereof):
(1) the life of the Member,
(2) the life of the Member and a Designated Beneficiary,
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(3) a period certain not extending beyond the Life
Expectancy of the Member, or
(4) a period certain not extending beyond the joint life
and last survivor expectancy of the Member and a
Designated Beneficiary.
If a Member's interest is to be distributed in other than a single sum,
the following minimum distribution rules shall apply on or after the Required
Beginning Date:
Distribution During the Member's Life: If a Member's benefit is to be
distributed over (1) a period not extending beyond the Life Expectancy of the
Member or the joint life and last survivor expectance of the Member and the
Member's Designated Beneficiary or (2) a period not extending beyond the Life
Expectancy of the Designated Beneficiary, then the amount required to be
distributed for each calendar year, beginning with distribution for the first
Distribution Calendar Year, must be least equal the quotient obtained by
dividing the Member's benefit by the Applicable Life Expectancy.
For calendar years beginning before January 1, 1989, if the Member's
spouse is not the Designated Beneficiary, the method of distribution selected
must assure that at least 50 percent of the present value of the amount
available for distribution is paid within the Life Expectancy of the Member.
For calendar years beginning after December 31, 1988, the amount to be
distributed each year, beginning with distributions for the first Distribution
Calendar Year shall not be less than the quotient obtained by dividing the
Member's benefit by the lessor of (1) the Applicable Life Expectancy or (2) if
the Member's spouse is not the Designated Beneficiary, the applicable divisor
determined from the table set forth is Q&A-4 of section 1.401(a)(9)-2 of the
proposed regulations as proscribed by the IRS. Distributions after the death of
the Member shall be made using the Applicable Life Expectancy above as the
relevant advisor without regard to proposed Regulations section 1.401(a)(9)-2.
The minimum distribution required for the Member's first Distribution
Calendar Year must be made on or before the Member's Required Beginning Date.
The minimum distribution for other calendar years, including the minimum
distribution for the Distribution Calendar Year in which the Employee's Required
Beginning Date occurs, must be made on or before December 31 of that
Distribution Calendar Year.
If the Member's benefit is distributed in the form of an annuity
purchased from an insurance company, distributions thereunder shall be made in
accordance with the requirements of section 401(a)(9) of the Code and the
proposed regulations thereunder.
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<PAGE> 59
Distributions After the Member's Death: If the Member dies after
distribution of his or her interest has begun and he has attained age 70 1/2,
the remaining portion of such interest, if any, will continue to be distributed
at least as rapidly as under the method of distribution being used prior to the
Member's death.
If the Member dies before distribution of his or her interest begins or
if he is not yet 70 1/2, distribution of the Member's entire interest shall be
completed by the later of December 31 of the calendar year containing the fifth
anniversary of the Member's death or if any portion of the Member's interest is
payable to a Designated Beneficiary, distributions may be made over the life or
over a period certain not greater than the Life Expectancy of the Designated
Beneficiary commencing on or before December 31 of the calendar year immediately
following the calendar year in which the Member died, but if the Designated
Beneficiary is the Member's surviving spouse, the date distributions are
required to begin shall not be earlier than the later of (1) December 31 of the
calendar year in which the Member died, or (2) December 31 of the calendar year
in which the Member would have attained age 70 1/2 ("spousal exception rule").
If the Member has not made an election pursuant to this Section by the
time of his or her death, the Member's Designated Beneficiary must elect the
method of distribution no later than the earlier of (1) December 31 of the
calendar year in which distributions would be required to begin under this
Section, or (2) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Member. If the Member has no Designated
Beneficiary, or if the Designated Beneficiary does not elect a method of
distribution, distribution of the Member's entire interest must be completed by
December 31 of the calendar year containing the fifth anniversary of the
Member's death.
For purposes of the above paragraphs, if the surviving spouse dies
after the Member, but before payments to such spouse, begin the provisions
above, except for the spousal exception rule, shall be applied as if the
surviving spouse were the Member.
Any amount paid to a child of the Member will be treated as if it has
been paid to the surviving spouse if the amount becomes payable to the surviving
spouse when the child reaches the age of majority.
Distribution of a Member's interest is considered to begin on the
Member's Required Beginning Date (or, if applicable, the date distribution is
required to begin to the surviving spouse pursuant to the above). If
distribution in the form of an annuity irrevocably commences to the Member
before the Required Beginning Date, the date distribution is considered to begin
is the date distribution actually commences.
Definitions:
(1) Applicable Life Expectancy. The Life Expectancy (or
joint life and last survivor expectancy) calculated
using the attained age of the Member (or
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<PAGE> 60
Designated Beneficiary) as of other Member's (or
Designated Beneficiary's) birthday in the applicable
calendar year reduced by one (1) for each calendar
year which has elapsed since the date the Life
Expectancy was first calculated. If Life Expectancy
is being recalculated, the Applicable Life Expectancy
shall be the Life Expectancy as so recalculated. The
applicable calendar year shall be the first
Distribution Calendar Year and if Life Expectancy is
being recalculated, such succeeding calendar year.
(2) Designated Beneficiary. An individual affirmatively
elected by the Member or the Member's surviving
spouse. If no Beneficiary is elected, the Designated
Beneficiary shall be the spouse of the Beneficiary
under the Plan in accordance with section 401(a)(9)
of the Code and the proposed Regulations thereunder.
(3) Distribution Calendar Year. A calendar year for which
a minimum distribution is required. For distributions
beginning before the Member's death, the first
Distribution Calendar Year is the calendar year
immediately preceding the calendar year which
contains the Member's Required Beginning Date. For
distributions beginning after the Member's death, the
first Distribution calendar year is the calendar year
in which distributions are required to begin pursuant
to the above.
(4) Life Expectancy. Life Expectancy and joint life and
last survivor expectancy are computed by use of the
expected return multiples in Tables V and VI of
section 1.72-9 of the Regulations.
Unless the Member or the surviving spouse
elect otherwise by the time distributions are
required to begin, life expectancies shall be
recalculated annually. Such election shall be
irrevocable as to the Member or surviving spouse and
shall apply to all subsequent years. The Life
Expectancy of a non-spouse Beneficiary may not be
recalculated.
(5) Member's Benefits.
(a) The Account balance as of the last Valuation
Date in the calendar year immediately
preceding the Distribution Calendar Year
(valuation calendar year) increased by the
amount of any contributions or Forfeitures
allocated to the Account balance as of dates
in the valuation calendar year after the
Valuation Date and decreased by
distributions made in the valuation calendar
year after the Valuation Date.
(b) Exception for second Distribution Calendar
Year. For purposes of paragraph (a) above,
if any portion of the minimum Distribution
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<PAGE> 61
Calendar Year is made in the second Distribution
Calendar Year on or before the Required Beginning
Date, the amount of the minimum distribution made in
the second Distribution Calendar Year shall be
treated as if it had been made in the immediately
preceding Distribution Calendar Year.
(6) Required Beginning Date.
(a) General Rule. The Required Beginning Date of a Member
is the first day of April of the calendar year
following the calendar year in which the Member
attains age 70 1/2 subject to the transition rules
below.
(b) Transitional Rules. The Required Beginning Date of a
Member who attains age 70 1/2 before January 1, 1988,
shall be determined in accordance with (1) or (2)
below:
(1) Non-5-percent owners: The Required Beginning
Date of a member who is not a 5-percent
owner is the first day of April of the
calendar year following the calendar year in
which the later of retirement or attainment
of age 70 1/2 occurs.
(2) 5-percent owners. The Required Beginning
Date of a Member who is 5-percent owner
during any year beginning after December 31,
1979, is the first day of April following
the later of:
(A) the calendar year in which the
Member attains age 70 1/2, or
(B) the earlier of the calendar year
with or within which ends the Plan
Year in which the Member becomes a
5-percent owner, or the calendar
year in which the Member retires.
The Required Beginning Date
of a Member who is not a 5-percent
owner who attains age 70 1/2 during
1988 and who has not retired as of
January 1, 1989, is April 1, 1990.
(c) 5-percent owner. A Member is treated as a
5-percent owner for purposes of this Section
if such Member is a 5-percent owner as
defined in section 416(i) of the Code
(determined in accordance with section 416
but without regard to whether the Plan is
Top-Heavy) at
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<PAGE> 62
any time during the Plan Year ending with or
within the calendar year in which such owner
attains age 66 1/2 or any subsequent Plan
Year.
(d) Once distributions have begun to a 5-percent
owner under this Section, they must continue
to be distributed even if the Member ceases
to be a 5-percent owner in a subsequent
year.
Transitional Rules for TEFRA Elections:
Notwithstanding the other requirements of this subsection and
subject to the joint and survivor annuity requirements,
distribution on behalf of any Employee, including a 5-percent
owner, may be made in accordance with all of the following
requirements (regardless of when such distribution commences):
(1) The distribution by the Trust is one which would not
have disqualified such Trust under section 401(a)(9)
of the Code as in effect prior to amendment by the
Deficit Reduction Act of 1984.
(2) The distribution is in accordance with a method of
distribution designated by the Employee whose
interest in the Trust is being distributed or, if the
Employee is deceased, by a Beneficiary of such
Employee.
(3) Such designation was in writing, was signed by the
Employee or the Beneficiary, and was made before
January 1, 1984.
(4) The Employee has accrued a benefit under the Plan as
of December 31, 1983.
(5) The method of distribution designated by the Employee
or the Beneficiary specifies the time at which
distribution will commence, the period over which
distributions will be made, and in the case of any
distribution upon the Employee's death, the
Beneficiaries of the Employee listed in order of
priority.
A distribution upon death will not be covered by this
transitional rule unless the information in the designation
contains the required information described above with respect
to the distributions to be made upon the death of the
Employee.
For any distribution which commences before January
1, 1984, but continues after December 31, 1983, the Employee
or the Beneficiary to whom such distribution is being made,
will be presumed to have designated the method of distribution
under which the distribution is being made if the method of
distribution was specified in writing and the distribution
satisfied the requirements of (1) and (5) above.
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<PAGE> 63
If a designation is revoked, any subsequent
distribution must satisfy the requirements of section
401(a)(9) of the Code and the proposed Regulations thereunder.
If a designation is revoked subsequent to the date
distributions are required to begin, the Trust must distribute
by the end of the calendar year following the calendar year in
which the revocation occurs the total amount not yet
distributed which would have been required to have been
distributed to satisfy section 401(a)(9) of the Code and the
proposed regulations as proscribed by the IRS thereunder, but
for the section 242(b)(2) election. For calendar years
beginning after December 31, 1988, such distributions must
meet the minimum distributions incidental benefit requirements
in section 1.401(a)(9)-2 of the proposed regulations as
proscribed by the IRS. Any changes in the designation will be
considered to be a revocation of the designation. However, the
mere substitution or addition of another Beneficiary (one not
named in the designation) under the designation will not be
considered to be a revocation of the designation, so long as
such substitution or addition does not alter the period over
which distributions are to be made under the designation,
directly or indirectly (for example, by altering the relevant
measuring life). In the case in which an amount is transferred
or rolled over from the Plan or another Plan, the rules in Q&A
J-2 and Q&A J-3 of the proposed regulations shall apply.
ARTICLE X
DEATH BENEFITS
10.1 AMOUNT OF BENEFITS. The Plan Administrator shall direct the Trustee to
distribute to such Member's Beneficiary the Member's Account Balance,
in the form and manner required by Article XIII.
10.2 TIME OF DISTRIBUTION. The benefits under Section 10.1 shall be
distributed no later than sixty (60) days after the end of the calendar
month within which the Plan Administrator receives written notice of
such Member's death.
10.3 DISTRIBUTION OF COMPANY CONTRIBUTIONS ACCOUNT AND OLD AFTER-TAX
CONTRIBUTIONS ACCOUNT.
Notwithstanding anything herein to the contrary, payment to the
Beneficiary of a Member who has balances in either the Company
Contributions account or Old After-Tax Contributions Account shall be
in accordance with the following options as selected by the Member if
there is a valid Election in effect, or in the absence of such
Election, as selected by the designated Beneficiary subject to the
approval of the Retirement Board.
(A) A lump sum payment.
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<PAGE> 64
(B) Monthly payments to a primary Beneficiary over a specified
period of years and, if such Beneficiary dies prior to the end
of such period, any unpaid balance will be paid to the
contingent Beneficiary or (if there is none) to the primary
Beneficiary's estate; provided that if such balance is less
than $3,500, it shall be paid in a lump sum payment. A primary
Beneficiary shall have the right to commute such monthly
payments, unless otherwise specified by the Member. In the
event there is no valid designation of Beneficiary in effect
upon the death of a Member, the death benefit shall be paid in
a lump sum pursuant to Section 8.2.
10.4 PROOFS. The Plan Administrator may require such proof of death and such
evidence of the right of any Beneficiary to receive payment of the
benefits of the deceased Member as it may deem advisable. The Plan
Administrator's determination of death and the right of any Beneficiary
to receive payment shall be conclusive.
ARTICLE XI
EMPLOYMENT TERMINATION BENEFITS
11.1 PARTICIPATION CEASES UPON TERMINATION OF EMPLOYMENT. Upon Termination
of Employment, a Member shall cease to be a Member in the Plan, except
for purposes of receiving a distribution of his Account, as hereinafter
provided in this Article.
11.2 TIME OF DISTRIBUTION. The benefit provided for hereunder shall be
distributed no later than sixty (60) days after the end of the calendar
month during which a Member incurs a Termination of Employment,
provided, however, that if the total vested amount in a Member's total
Account Balance exceeds $3,500, such amount may not be distributed to a
Member prior to age 62 without the consent and Election of the Member.
When the Member whose Account Balance exceeds $3,500 attains age 62 his
benefit will be distributed provided such Member has not consented to
an earlier distribution.
11.3 DISTRIBUTION OF COMPANY CONTRIBUTIONS ACCOUNT AND OLD AFTER-TAX
EMPLOYEE CONTRIBUTIONS ACCOUNT. In the event that a Member's employment
with the Company is terminated prior to Retirement Date (Normal or
Early) the total of his Company Contributions shall remain in the
Account until the Member attains age 45. However, the total of his Old
After-Tax Employee Contributions Account (if any) may be distributed
prior to age 45. If termination occurs between ages 45 and 50, a Member
may Elect only a single sum distribution of these Accounts pursuant to
this Section 11.3. If the value of these Accounts (Company
Contributions and Old After-Tax Employee Contributions) is greater than
$3,500 and he is married, the Member's spouse must consent to such
election within 90 days before the date of distribution. Such spousal
consent must be in writing and acknowledged by a notary public.
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<PAGE> 65
(A) Such Member may Elect an optional retirement benefit the first
day of any month which is subsequent to his 50th birthday.
(B) Such Member may also Elect to receive his Company
Contributions Account at his retirement date in any optional
form of retirement benefit provided in Article XIII. This
Election is subject to the applicable spousal consent
requirements provided in Section 13.2(B)(2).
(C) The above Elections made may be changed at any time prior to
retirement upon written notice. A change in Elections made is
subject to the applicable spousal consent requirements
provided in Section 13.2(B)(2).
(D) A failure to make either of the above Elections will result in
payment of the normal retirement benefit at such Member's
Normal Retirement Date. A failure to make either of the above
Elections will result in payment of the normal retirement
benefit under Section 13.2(A).
ARTICLE XII
IN-SERVICE WITHDRAWALS
12.1 WITHDRAWAL FROM MEMBER'S 401(K) ACCOUNT. Any active Member who has
attained age fifty-nine and one-half (59 1/2) years may Elect to
withdraw all or a portion of the amount in his Member 401(k)
Contributions Account except for that portion of his account which is
in a suspense account pursuant to Section 7.3 of the Plan and that
portion segregated under Section 16.3 of the Plan. The Plan
Administrator shall direct the Trustee to distribute to such member the
amount elected, in the form and manner required by Article XIII. Only
two such withdrawals shall be made in any Plan Year. Any such
distribution shall be made no later than sixty (60) days after the end
of the calendar month within which the Plan Administrator receives the
Member's Election to receive such benefits following his having
attached the age of fifty-nine and one-half (59 1/2) years.
12.2 HARDSHIP WITHDRAWALS FROM MEMBER'S 401(K) ACCOUNT. In-service
distributions shall be permitted upon a showing of hardship to the Plan
Administrator. A hardship withdrawal shall be authorized only upon a
showing of an immediate and heavy financial need.
(1) The following are the only financial needs considered
immediate and heavy:
(a) Medical expenses described in Code section 213(d)
previously incurred by the Member, spouse, or any of
his dependents (as defined in Code Section 152); or
expenses necessary for those persons to obtain such
medical care;
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(b) Costs directly related to the purchase (excluding
mortgage payments) of a principal residence for the
Member;
(c) Payment of tuition for the next twelve months of
post-secondary education for the Member, his spouse,
children or dependents; or
(d) Payments necessary to prevent the eviction of the
Member from his principal residence or foreclosure on
the mortgage of the Member's principal residence.
(2) A distribution will be considered as necessary to satisfy an
immediate and heavy financial need of the Employee only if:
(a) The Employee has obtained all distributions, other
than hardship distributions, and all nontaxable loans
under all Plans maintained by the Employer;
(b) All Plans maintained by the Employer provide that the
Employee's Salary Deferrals (and Employee
Contributions) will be suspended for twelve months
after the receipt of the hardship distribution;
(c) The distribution is not in excess of the amount of an
immediate and heavy financial need; and
(d) All Plans maintained by the Employer provide that the
Employee may not make Employee Salary Deferrals for
the Employee's taxable year immediately following the
taxable year of the hardship distribution in excess
of the applicable limit under section 402(g) of the
Code for such taxable year less the amount of such
Employee's Salary Deferrals for the taxable year of
the hardship distribution.
(3) For purposes of determining the amount of the immediate and
heavy need, the amount may include additional amounts
necessary to pay any federal, state or local income taxes or
penalties reasonably anticipated to result from the
distribution.
12.3 WITHDRAWAL FROM MEMBER'S OLD AFTER-TAX CONTRIBUTIONS ACCOUNT.
Upon written notice, a Member may elect at any time prior to
retirement to withdraw all or a portion of his Old After-Tax
Employee Contributions; provided, however, if he is a Married
Member, any such election can be made only with the written
consent of the Member's spouse, acknowledged by a notary
public, unless circumstances exist which are prescribed by
regulations under the Code to excuse such consent. The spousal
consent referred to in the preceding sentence must be dated
within 90 days before the date of the election to withdraw.
Only one such withdrawal may be made within any Plan Year.
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12.4 WITHDRAWAL FROM MEMBER'S AFTER-TAX CONTRIBUTIONS ACCOUNT. Upon written
notice, a Member may withdraw all or a portion of his after-Tax
Contributions not more than once each Plan Year. Such request shall be
made on a form prescribed by and filed with Employee Benefits.
12.5 WITHDRAWAL FROM MEMBER'S ROLLOVER ACCOUNT. Upon written notice, a
Member may withdraw all or a portion of his Rollover Account but not
more than once within any Plan Year. Such request shall be made on a
form prescribed by and filed with Employee Benefits.
12.6 WITHDRAWAL FROM MEMBER'S PRIOR PLAN ACCOUNTS. Upon written notice, a
Member may withdraw all or a portion of his Prior Plan Accounts
(Employee Contributions and/or Employer Contributions) but not more
than once within any Plan Year. Such request shall be made on a form
prescribed by and filed with Employee Benefits.
12.7 COMPANY CONTRIBUTIONS ACCOUNT. No withdrawals may be made from a
Member's Company Contributions Account.
ARTICLE XIII
DISTRIBUTIONS TO MEMBERS AND BENEFICIARIES
13.1 FORM OF DISTRIBUTION. The Trustee shall distribute benefits pursuant to
Articles IX through XII in the form of a lump sum for all Accounts
except Members' Company Contributions Account and Members' Old
After-Tax Contributions Account.
13.2 COMPANY CONTRIBUTIONS ACCOUNT AND MEMBERS' OLD AFTER- TAX CONTRIBUTIONS
ACCOUNT. Notwithstanding anything herein to the contrary,
(A) (1) Unless a valid Election to receive an optional
retirement benefit from a Member's Company
Contributions Account and Old After-Tax Contributions
Account is made as provided in this Article, each
unmarried Member shall receive a retirement benefit
in the form of an annuity, guaranteed for ten years,
and life thereafter which is purchased with the
current value of his Company Contributions Account
and Old After-Tax Contributions Account. If such
Member dies before the end of the ten-year period,
there will be paid to his Beneficiary continued
payments for the remainder of the ten-year period.
(2) Each Married Member shall receive a Qualified Joint
and Survivor Annuity purchased pursuant to Paragraph
(B)(1) below, unless he Elects an optional retirement
benefit as provided in Paragraph (b)(2) below.
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(B) (1) In the case of a Member who is married as of
his retirement date, the current value of his
Company Contributions Account and his Old
After-Tax Contributions Account shall be used
by the Trustee to purchase for him an annuity
contract in the form of a Qualified Joint and
Survivor Annuity as described in (2) below
with payments guaranteed for ten years,
unless he Elects otherwise in accordance with
(2) below.
(2) An Election out of the Qualified Joint and
Survivor Annuity by a Married Member will be
effective only if it is consented to in
writing by the Member's spouse, acknowledged
by a notary public unless circumstances exist
which are prescribed by regulations under the
Code to excuse such consent. Such Election
and spousal consent must be dated within the
90-day period prior to commencement of the
retirement benefit. Any such Election may be
revoked by the Member; however, any new
election out of the Qualified Joint and
Survivor Annuity is subject to notarized
spousal consent. No such Election out of a
Qualified Joint and Survivor Annuity shall be
effective unless the Member has received from
the Company, prior to the filing of such
Election, a written explanation of the terms
and conditions of the Qualified Joint and
Survivor Annuity and of the effect, under
this Plan, of his Election not to take such
annuity.
(3) For the purposes of this Plan, a Qualified
Joint and Survivor Annuity shall mean a
benefit payable monthly from a Member's
retirement date to the first day of the month
in which the Member dies, or ten years,
whichever is later, and payable thereafter in
monthly installments of 50% of the monthly
amount payable to the Member during his
lifetime, to the surviving spouse, if any,
for the remainder of his/her lifetime (where
the surviving spouse is the person to whom
the Member was married on the Member's
retirement date). No benefits shall be
payable under a Qualified Joint and Survivor
Annuity to a surviving spouse who was not the
Member's spouse as of the Member's retirement
date.
(C) A Married Member's Election to receive one of these
optional forms of retirement benefits is subject to
the written, notarized consent of the Member's spouse
to (i) the Member's rejection of the Qualified Joint
and Survivor Annuity form of payment and (ii) if
applicable, the Member's designation of a Beneficiary
other than his spouse, unless circumstances exist
which are prescribed by regulations under the Code to
exclude such consent.
(1) Installment Option: Under this
Option, a Member may Elect to
receive monthly installments over a
shorter period of time than ten
years. The following conditions
shall be applicable to the Election
of an installment option: (a) in no
event may a Member elect to receive
payments over a period
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of less than 24 months nor more than
120 months; (b) if at the date
payments are to commence the value
of a Member's Company Contributions
Account and Old After-Tax
Contributions Account is then equal
to or less than $3,500, such amount
shall be paid to the Member in one
lump sum, notwithstanding the
provisions of Paragraph (F) below.
(2) Alternative Installment Option:
Subject to the terms and conditions
of the installment option described
in Paragraph (c)(1) above, a Member
who Elects an installment option may
Elect to have the value of his
Company Contributions Account and
Old After-Tax Contributions Account
determined as of the date payments
are to commence, paid or transferred
over into a segregated portion of
the Trust Fund, distinct from that
portion of the Trust Fund against
which Company Contributions Account
and Old After-Tax Contributions
Account are credited and any other
such segregated fund. Such
segregated fund shall be payable to
the Member in the same manner and
subject to the provisions of Section
F below, provided, however, that the
Member for whom such segregated fund
is created shall direct the Trustee
to invest all of such segregated
fund in any one of the following
categories of investment: (a) a
savings account in a bank selected
by the Retirement Board, including
the Trustee; and (b) any other
category of investment permitted by
the Trustee.
(3) Single Sum Payment Option: Under
this option, a Member may Elect to
receive, in a single sum, the
current value of his Company
Contributions Account and Old
After-Tax Contributions Account as
of his Normal, Early or actual
Retirement Date under Article IX or
if termination occurs at or after
age 45.
(4) Annuity Option: Under this option, a
Member may elect to have the current
value of his Company Contributions
Account and Old After-Tax
Contributions Account as of his
Normal, Early or actual Retirement
Date under Article IX used by the
Trustee to purchase for him (and/or
his Beneficiary/ies), an annuity
contract, in such form and issued by
such Company as he may select,
subject to the approval of the
Retirement Board.
(5) Monthly Payments Over Ten Years:
Under this option, a Member may
Elect to receive a retirement
benefit payable out of the Trust
Fund of monthly installments of his
Company Contributions Account and
Old After-Tax Contributions Account
over a period of ten years.
(D) Prior to his Retirement Date, a Member may revoke in
writing any option previously Elected pursuant to
this Article without the approval of the Retirement
Board. All
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such Elections shall also be revoked by the death of
a Member prior to actual retirement.
(E) A Member who has retired and had Elected to receive
his benefits pursuant to Paragraphs (C)(1), (2) or
(5) may revoke such Election and Elect instead to
take the value of the balance of his Company
Contributions Account and Old After-Tax Contributions
Account or the value of the segregated fund under
Paragraph (c)(2) then remaining to such Member's
credit in a single sum. If at the time such Election
is made the retired Member is married to the same
spouse who consented to the waiver of the Qualified
Joint and Survivor Annuity pursuant to Paragraph
(B)(2) of this Section 13.2, the notarized consent of
such spouse will be required, unless circumstances
exist which are prescribed by regulations under the
Code to excuse such consent.
(F) If the value of a Member's Company Contributions
Account and Old After-Tax Contributions Account is
$3,500 or less at time of retirement, a lump sum
payment will be made to the member and no other forms
of payment will be available. No distribution shall
be made pursuant to the preceding sentence after the
first period for which an amount is received as an
annuity.
(G) If the Member's entire interest is to be distributed
in other than a lump sum according to the applicable
Sections of this Article XIII, then the amount to be
distributed each year must be at least an amount
equal to the quotient obtained by dividing the
Member's entire interest by the life expectancy of
the Member or joint and last survivor expectancy of
the Member and designated Beneficiary. Life
expectancy and joint and last survivor expectancy are
computed by the use of the return multiples contained
in Treasury Regulations, Section 1.72-9. If the
Member's spouse is not the designated Beneficiary,
the method of distribution selected must assure that
at least 50% of the present value of the amount
available for distribution is paid within the life
expectancy of the Member.
13.3 ALL PAYMENTS FROM TRUST FUND. In no event shall any payments or
benefits under this Plan be the liability of the Plan Administrator,
the Employer, the Union, the Retirement Board, the Investment
Committee, or the Trustee, and all payments required shall be
exclusively out of the Trust Fund.
ARTICLE XIV
LOANS
14.1 AMOUNTS. Each Member who is on active pay status or on a medical
leave of absence may borrow an amount not to exceed the lesser of:
(1) $50,000 reduced by the greater (if any) of (a) the highest
outstanding balance of loans to the Member from the Plan during the
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one-year period ending on the day before the date on which the loan is
to be made, or (b) the outstanding balance of any loan to the Member
from the Plan on the date on which such loan is to be made or (ii)
one-half (1/2) of the Member's vested interest in his 401(k)
Contributions Account (determined as of the last day of the preceding
calendar month). No loan may be for an amount less than $1,000 and no
Member may have more than one loan outstanding at any time. The
amount the Member may borrow shall be reduced by the amount of any
loan from any other tax-qualified plan maintained by the Employer. In
no event shall a loan be made from any other account except a Member's
401(k) Contributions Account.
14.2 LOAN TERMS. An election for a loan shall be made in writing to the
Plan Administrator. The terms and conditions of such loan shall be as
follows:
(A) An annual rate of interest equal to the base rate on corporate
loans at large United States money center commercial banks as
reported in the Wall Street Journal (prime rate) in effect on
the first business day of the calendar quarter in which such
loan is requested.
(B) A fixed maturity date of no longer than five (5) years.
(C) Adequate security which will be the borrower's interest in his
Before-Tax Accounts, although the Plan Administrator may
require additional security.
(D) Repayment
Active Employees: a level schedule of payroll deductions, to
be made each payroll period for repayment of loan principal
and interest. Repayment will commence on the first available
pay period after receipt of the loan check.
Inactive Employees: repayment will be monthly on an amortized
loan repayment schedule. Repayments are invested according to
current investment elections at the time of repayment. If
there is not a current investment election at the time of
repayment, the last investment election will be used for
investment of repayment.
(E) the Member may repay the loan in full at any time without
penalty;
(F) upon termination of employment the Employee can,
(1) repay the loan from the participant's current account
balance before distribution;
(2) continue the same repayment schedule via payment to
TWA Employee Benefits with the same loan terms in
effect at the time of termination.
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(G) Loans shall be made available to all Members and Beneficiaries
on a reasonably equivalent basis.
(H) Loans shall not be made available to Highly Compensated
Employees (as defined in section 414(q) of the Code) in an
amount greater than the amount made available to other
employees.
(I) In the event of default, foreclosure on the note and
attachment of security will not occur until a distributable
event occurs in the Plan.
(J) Loans granted or renewed or on after the last day of the first
Plan Year beginning after December shall be made pursuant to a
written Member loan program incorporated herein by reference
which will include the following:
(1) the basis on which loans will be approved or denied;
(2) procedures for applying for the loans;
(3) person or positions authorized to administer the
Member loan program;
(4) limitations, if any, on the types and amounts of
loans offered;
(5) procedures under the program for determining the
rates of interest;
(6) the types of collateral which may secure a Member
loan; and
(7) the events constituting default and the steps that
will be taken to preserve Plan assets.
14.3 LOAN APPLICATION PROCEDURE:
(A) A loan application can be obtained by contacting:
Director/TWA Employee Benefits
P.O. Box 20007
Kansas City, MO 64195
(B) The completed application is returned to TWA Employee
Benefits. Terms will be described on the loan application.
The completed and signed loan application will serve as the
promissory note.
(C) There will be a one time directed loan fee of $100.00 for
obtaining a loan. Former Employees/Beneficiaries will be
eligible for Plan loans only to the extent required
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by regulations. Former Employees/Beneficiaries will be
charged a loan handling fee based upon the number of years of
loan repayment and payable when the loan proceeds are sent to
the borrower. All fees are charged to the loan applicant's
account.
(D) The Trustee will liquidate assets in the specific investment
account indicated on the loan application.
14.4 LOAN DEFAULT - FORECLOSURE:
(A) Actively employed participants will make repayment via
non-revocable continuing payroll deductions from each
paycheck. If pay should become insufficient to cover the
repayment or if the borrower is not actively receiving a
paycheck to cover the repayment, monthly repayment checks must
be submitted for scheduled payments. In the event that timely
repayment is not received within 15 days, the participant will
be notified of potential loan default and possible foreclosure
upon the account balance. If the loan is not made current
within 30 days of notice, action will be commenced to collect
the delinquent loan from the participant's account in a manner
permitted by law.
ARTICLE XV
INALIENABILITY OF BENEFITS
15.1 INALIENABILITY. A Member's interest in the Plan, or that of his
Beneficiary, may not be assigned or alienated by voluntary or
involuntary assignment. Any attempt by a Member or Beneficiary to
assign or alienate his interest under the Plan, or any attempt to
subject his interest to attachment, execution, garnishment or other
legal or equitable process, shall be void. This does not preclude the
Trustee from complying with any Qualified Domestic Relations Order.
ARTICLE XVI
QUALIFIED DOMESTIC RELATIONS ORDERS
16.1 QUALIFIED DOMESTIC RELATIONS ORDERS. The Plan Administrator shall
comply with all Qualified Domestic Relations Orders received by them
and shall pay benefits in accordance with the terms of the Plan.
16.2 NOTICE AND DETERMINATION. The Plan Administrator shall promptly
notify the Member and each Alternate Payee of the receipt of a
Domestic Relations Order and of the Plan's procedures (as described in
Section 16.3) for determining whether a Domestic Relations Order is a
Qualified Domestic Relations Order. The Plan Administrator shall,
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within a reasonable period of time after receipt of a Domestic
Relations Order, determine whether the Domestic Relations Order is a
Qualified Domestic Relations Order and notify the Member and each
Alternate payee of its determination. The notices provided for in
this Section shall be mailed by certified mail, return receipt
requested, to the address specified in the Domestic Relations Order,
or, if the Domestic Relations Order fails to specify an address, to
the last address of the Member or Alternate Payee known to the Plan
Administrator.
16.3 PROCEDURES FOR DETERMINATION. Upon the receipt of a Domestic
Relations Order, the Plan Administrator shall review such Domestic
Relations Order, or cause such Domestic Relations Order to be
reviewed, or determine whether it is a Qualified Domestic Relations
Order. In the event the Domestic Relations Order satisfies each and
every requirement of ERISA, then such order shall be deemed qualified
and the Plan Administrator shall provide notice of such determination
in accordance with the notice requirements set forth in Section 16.2.
In the event the order is not deemed qualified, then the Plan
Administrator shall notify the Member and any Alternate Payee of the
reasons such Domestic Relations Order is not a Qualified Domestic
Relations Order. The Alternate Payee shall have 18 months from the
date the Plan Administrator first received the Domestic Relations
Order to obtain a modified Domestic Relations Order which satisfies
all of the requirements of ERISA. There shall be no limit to the
number of modified Domestic Relations Orders which may be submitted to
the Plan Administrator within that 18-month period. Absent a court
order which specifies otherwise, the Alternate Payee shall be
responsible for all costs and expenses incurred by the Plan
Administrator in determining whether a Domestic Relations Order is a
Qualified Domestic Relations Order. If the Alternate Payee fails to
present a modified Domestic Relations Order which satisfies the
requirements of ERISA during the 18-month period, then the Plan
Administrators shall make a determination that the Domestic Relations
Order is not a Qualified Domestic Relations Order. If the Domestic
Relations Order is not a Qualified Domestic Relations Order, the Plan
Administrator shall provide notice of such determination, and the
reasons for such determination, in accordance with the requirements
for notice provided in this Article. If the modified order is a
Qualified Domestic Relations Order, and the Plan Administrator shall
provide notice of such determination in accordance with the
requirements of notice provided in Section 16.2. Each Alternate Payee
shall be permitted to designate a representative for receipt of copies
of notices which are sent to the Alternate Payee with respect to a
Domestic Relations Order received by the Plan Administrator and
pertaining to the Alternate Payee.
16.4 PROCEDURES FOR PERIOD DURING WHICH DETERMINATION IS BEING MADE.
(A) During any period in which the issue of whether a Domestic
Relations Order is a Qualified Domestic Relations Order is
being determined (by the Plan Administrator, the Retirement
Board, a court of competent jurisdiction, or otherwise), the
Plan Administrator shall direct the Trustee to segregate in a
separate account(s) in the Plan the amounts which would have
been payable to the Alternate Payee during such
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period if the Domestic Relations Order had been determined to
be a Qualified Domestic Relations Order.
(B) If within 18 months the Domestic Relations Order (or
modification thereof) is determined to be a Qualified Domestic
Relations Order, the Plan Administrator shall notify the
Trustee to pay the segregated amounts (plus any interest
thereon) to the Alternate Payee entitled thereto.
(C) If within 18 months:
(1) it is determined that the Domestic Relations Order is
not a Qualified Domestic Relations Order, or
(2) the issue as to whether such Domestic Relations Order
is a Qualified Domestic Relations Order is not
resolved, then the Plan Administrator shall notify
the Trustee to pay the segregated amounts (plus any
interest thereon) to the person or persons who would
have been entitled to such amounts if there had been
no Domestic Relations Order.
(D) Any determination that a Domestic Relations Order is a
Qualified Domestic Relations Order which is made after the
close of the 18-month period shall be applied prospectively
only.
16.5 TREATMENT OF FORMER SPOUSE AS SURVIVING SPOUSE. To the extent
provided in any Qualified Domestic Relations Order, the former spouse
of Member shall be treated as a surviving spouse of such Member. The
Alternate Payee shall not be entitled to survivor benefits unless
stated in the Qualified Domestic Relations Order.
ARTICLE XVII
ADMINISTRATION OF THE PLAN
17.1 PLAN ADMINISTRATOR.
(A) The Company shall have authority to control and manage the
operation and administration of the Plan (subject to the
assignments stated in the Plan of certain specific
responsibilities to the Retirement Board and any other persons
or groups named in the Plan) and the Company and such other
persons or groups may, in a writing acknowledged by the
designee, designate pursuant to Section 405(c)(1)(B) of ERISA
other persons or groups to carry out any or all of their
responsibilities in the operation and administration of the
Plan.
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(B) The Company and the Union shall have control and management of
the assets of the Plan, including for the purpose of
appointing a Trustee and Investment Advisor to manage
(including the power to acquire and dispose of) any assets of
the Plan.
(C) Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan.
17.2 RETIREMENT BOARD. A Retirement Board shall be established by
agreement between the Company and the Union to settle all disputes
under the Plan. The Plan Administrator shall give adequate notice in
writing to any Member or Beneficiary whose claim for benefits under
the Plan had been denied, setting forth the specific reasons for such
denial. A Member whose claim for benefits has been denied or a Member
who has any other dispute under the Plan may submit a dispute for
settlement and full and fair review by the Retirement Board by written
request setting forth a statement of the facts out of which such
dispute arose, addressed to:
TWA Flight Attendants' Retirement Board
c/o Manager-Employee Benefits
Trans World Airlines, Inc.
11500 Ambassador Drive
Kansas City, MO 64153
or
TWA Flight Attendants' Retirement Board
Independent Federation of Flight Attendants
630 Third Avenue
New York, New York 10017
The Retirement Board shall give notice in writing to any Member or
Beneficiary as to the Disposition of any matter so brought before the
Retirement Board. The Retirement Board shall give such notice within
sixty (60) days from the date of receipt of the Member's or
Beneficiary's request for review (unless special circumstances exist
which require a longer period, but in no event later than one hundred
twenty (120) days from receipt of such request).
(A) The Retirement Board shall consist of four members, two of
whom shall be selected by the Company ("Company members") and
two of whom shall be selected by the Union ("Union members").
The Company shall establish its own rules for the selection of
members of the Retirement Board to be selected by it. The
Company shall also select one alternate member who may act for
either of the two members of the Retirement Board appointed by
the Company in the event of absence or inability to act of one
of such members, and the Union shall likewise select one
alternate
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member who may act for either of the two members of the
Retirement Board appointed by the Union in the event of the
absence or inability to act of any one of such members.
Either the Company or the Union at any time may remove a
member appointed by it and may select a member to fill any
vacancy among the members selected by it. Both the Company
and the Union shall, in writing, notify each other
respectively concerning such selections, which shall continue
until further written notice.
(B) Three members of the Retirement Board shall constitute a
quorum for the transaction of business. At all Retirement
Board meetings, Company members present shall be entitled to
one vote each and Union members present shall be entitled to
one vote each. If at any such meeting two Company members are
not present, the Company member present may cast two votes and
if two Union members are not present the Union member present
may cast two votes.
(C) The Retirement Board shall have the authority to appoint
subcommittees from among the members of the Retirement Board
to handle any problems within the jurisdiction of the
Retirement Board. Such subcommittees shall report exclusively
to the Retirement Board.
(D) The compensation, travel and other reasonable living expenses,
if any, of members of the Retirement Board selected by the
Company which are incidental to the holding of such meetings
and performing functions of the Retirement Board, shall be
paid by the Company. The compensation, travel and other
reasonable living expenses, if any, of members of the
Retirement Board selected by the Union which are incidental to
the holding of such meetings and performing functions of the
Retirement Board, shall be paid by the Union.
(E) All decisions and actions taken by the Retirement Board shall
be by the affirmative vote or agreement of not less than three
members. Such affirmative vote or agreement shall be in
writing if given other than during a meeting of the Retirement
Board. All decisions of the Retirement Board on any matter
within the jurisdiction of the Retirement Board shall be final
and binding upon the Company, the Union and any other person
having an interest in, under or derived from the Plan.
(F) If the Retirement Board shall fail to agree on any matter or
dispute coming before it, it shall, within ten days from the
date of such failure to agree, designate an impartial referee.
If the Retirement Board does not agree upon the selection of
an impartial referee within such ten-day period, then either
the Company or the Union may apply to the National Mediation
Board for the designation by such National Mediation Board of
an impartial referee. The matter or dispute shall be
submitted to the Retirement Board sitting together with the
impartial referee who shall act as Chairman during the
proceedings pertaining to such matter. Such impartial referee
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shall have one vote. Three affirmative votes shall be
required to render a decision or determination on matters
coming before the Retirement Board sitting together with the
impartial referee.
(G) The compensation and expenses of the impartial referee and
expenses incident to the conduct of proceedings coming before
the Retirement Board shall be shared equally between the
Company and Union.
(H) Meetings of the Retirement Board may be called by mutual
agreement of the members at any time without notice or by any
two members of the Retirement Board upon thirty days' notice
to the other members of the Retirement Board. Such meetings
shall be conducted at the Company's offices unless otherwise
agreed to by the members of the Retirement Board.
(I) The Retirement Board shall determine all disputes which may
arise out of the application, interpretation or administration
of the Plan or concerning participation in or benefits under
the Plan, and such jurisdiction shall be exclusive. The
Retirement Board shall have full power to affirm, reverse or
otherwise modify any decision or administrative action or
proposed action which gave rise to any dispute.
(J) The Retirement Board shall have no power to add or to subtract
from or modify any of the terms of the Plan.
(K) The Retirement Board shall have the power to establish rules
of procedure for the conduct of its business and of hearings
before it, which rules shall not be inconsistent with the
provisions of the Plan.
(L) The Retirement Board shall have the following rights and
review functions: to examine all books, records, reports,
regulations and procedures relative to the Plan, including
Trust Agreements, Trust instruments, amendments, annual
reports, Trustee's reports for the Plan, Trust Fund
accountings and related data.
(M) The Company or the Trustee, as the case may be, shall furnish
to the Union members of the Retirement Board and the Union all
records and material set forth in Paragraph (L) above within
thirty days from the date in which such material may have been
prepared or compiled; and in any case, annual reports,
Trustees' reports for the Plan shall be furnished to the Union
members of the Retirement Board and the Union not less
frequently than one each year. The Union members of the
Retirement Board and the Union may request and shall be
entitled to receive additional material and data relating to
the foregoing.
(N) The Retirement Board shall have the right to review the status
and administration of the Plan, and in the appropriate case
make recommendations to the Company, the
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Union, and the members thereon. The Retirement Board shall
prepare periodic reports with respect to its function, actions
and decisions and supply the same to the Company and the
Union.
(O) The Retirement Board and any members thereof shall be entitled
to rely upon the correctness of any information furnished by
the Company and the Union. Neither the Retirement Board nor
any of its members, nor the Union, nor the Company, nor any
officers or other representatives of the Company, shall be
liable because of any act or failure to act on the part of the
Retirement Board, or any of its members, except as may be
required by ERISA.
17.3 INVESTMENT ADVISER. The Company and the Union shall have control and
management of the assets of the Plan for purposes of appointing an
investment Adviser or Advisers to manage (including the power to
acquire and dispose of) any assets of the Plan.
17.4 INVESTMENT COMMITTEE.
(A) An Investment Committee shall be established to perform the
following functions: to select, monitor and replace the
Trustee and Investment Advisers; to formulate the investment
objectives of the Trustee and Investment Advisers; to
establish the Investment Options among which the members may
choose to self direct their investments; to determine the
allocation of assets within particular Investment Options; and
to retain, on a project-by-project basis, Investment and
benefit consultants for individual Investment Options, with
payment for such consultant's fees from the Plan assets
invested in such Investment Option or, where appropriate, by
directed brokerage commissions, as determined by the
Investment Committee and as may be permitted under ERISA.
(B) The Investment Committee shall consist of four members, two of
whom shall be selected by the Company ("Company members") and
two of whom shall be selected by the Union ("Union members").
The Company shall establish its own rules for the selection of
the members of the Investment Committee to be selected by it
and the Union shall likewise establish its own rules for the
selection of members of the Investment Committee to be
selected by it. The Company shall also select one alternate
member who may act for either of the two members of the
Investment Committee appointed by the Company in the event of
absence or inability to act of one of such members, and the
Union shall likewise select one alternate member who may act
for either of the two members of the Investment Committee
appointed by the Union in the event of the absence or
inability to act of any one of such members. Either the
Company or the Union at any time may remove a member appointed
by it and may select a member to fill any vacancy among the
members selected by it. Both the Company and the Union shall,
in writing, notify each other respectively concerning such
selections, which shall continue until further written notice.
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<PAGE> 80
(C) Three members of the Investment Committee shall constitute a
quorum for the transaction of business. At all Investment
Committee meetings, Company members present shall be entitled
to one vote each and Union members present shall be entitled
to one vote each. If at any such meeting two Company members
are not present, the Company member present may cast two votes
and if two Union members are not present the Union member
present may cast two votes.
(D) All decisions and actions taken by the Investment Committee
shall be by the affirmative vote or agreement of not less than
three members. Such affirmative vote or agreement shall be in
writing if given other than during a meeting of the Investment
Committee. Selection and replacement of the Trustee and
Investment Advisers, formulation of investment objectives,
establishment and revision of Investment Options, allocation
of assets within particular Investment Options, retention of
investment and benefit consultants and approval of the form of
payment of such consultants' fees shall be subject to approval
by the Company and the Union.
(E) The compensation, travel and other reasonable living expenses,
if any, of members of the Investment Committee selected by the
Company which are incidental to the holding of such meetings
and performing functions of the Investment Committee, shall be
paid by the Company. The compensation, travel and other
reasonable living expenses, if any, of members of the
Investment Committee selected by the Union which are
incidental to the holding of such meetings and performing
functions of the Investment Committee, shall be paid by the
Union.
(F) Regular meetings of the Investment Committee shall be held
quarterly at such dates and times as the Investment Committee
may from time to time prescribe. Additional meetings may be
called by mutual agreement of the members at any time without
notice or by any two members of the Investment Committee upon
thirty days' written notice to the other members of the
Investment Committee. All meetings shall be conducted at the
Company's executive offices unless otherwise agreed to by the
members of the Investment Committee.
(G) The Investment Committee shall have the power to establish
rules of procedure for the conduct of its business, which
rules shall not be inconsistent with the provisions of the
Plan.
(H) The Investment Committee shall have no power to add or
subtract from or modify any of the terms of the Plan.
(I) The Investment Committee shall have the following rights and
review functions: to examine all books, records, reports,
regulations and procedures relative to the Plan,
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<PAGE> 81
including Trust Agreements, Trust Instruments, amendments,
annual reports, Trustees' reports for the Plan, Trust Fund
accountings and related data.
(J) The Company or the Trustee, as the case may be, shall furnish
to the Union members of the Investment Committee and the Union
all records and material set forth in Paragraph (I) above
within thirty days from the date in which such material may
have been prepared or compiled. In any case, annual reports,
Trustees' reports for the Plan shall be furnished to the Union
members of the Investment Committee and the Union may request
and shall be entitled to receive additional material and data
relating to the foregoing.
(K) The Investment Committee and any members thereof shall be
entitled to rely upon the correctness of any information
furnished by the Company and the Union. Neither the
Investment Committee nor any of its members, nor the Union,
nor the Company, nor any officers or other representatives of
the Company, shall be liable because of any act or failure to
act on the part of the Investment Committee, or any of its
members, except as may be required by ERISA.
17.5 TRUSTEE REPORTS. The Company will obtain from the Trustee, within 60
days following the close of each Plan Year and within 90 days after
the removal or resignation of the Trustee, a written account of the
Trustee setting forth all investments, receipts, disbursements and
other transactions effected by the Trustee during such Fiscal Year or
during the period from the close of the last Fiscal Year to the date
of such removal or resignation. The company shall, within five days
after receiving such account, file copies thereof with the Union
members of the Retirement Board. Within 30 days form the date of
filing of such account, the Union members of the Retirement Board or
any agent acting on their behalf or the Union may file with the
company either a written approval or written objections, with the
reasons therefor, of the account so rendered. Upon the filing of such
written approval or on the expiration of 30 days after the filing of
such account, if written objection thereto shall not have been filed
with the Company, then such account shall have been deemed to have
been approved by the Union members of the Retirement Board and the
Union. Upon the receipt of written objections to the account, the
Company shall raise any such written objections with the Trustee. Any
dispute between the Company and the Union arising out of such
objection shall be submitted to the Retirement Board in the manner
provided in this Article XVII, but such submission shall not eliminate
the Company's obligations to make timely objection with the Trustee.
17.6 RELIANCE UPON INFORMATION. The Trustee, the Company, the officers and
directors of the Company and the members of the Retirement Board, and
the Union shall be entitled to rely upon all valuation, certificates
and reports furnished by any duly appointed Trustee upon all opinions
given by any duly appointed legal counsel and/or investment counsel.
The Trustee, the Company, the officers and directors of the Company
and any members of the Retirement Board and the Union shall be fully
protected against any action taken in good
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<PAGE> 82
faith in reliance upon any such valuations, certificates, reports or
opinions. All actions so taken shall be conclusive upon each of them
and upon all persons having any interest under the Plan. Except as
may be required by ERISA, neither the Trustee nor the Employer nor any
officer or director of the Employer or member of the Retirement Board
or member of the Union shall be personally liable by virtue of any
instrument executed by him or on his behalf or for any mistake of
judgment made by himself, the Trustee, the Employer or any other
officer or director of the Employer or member of the Retirement Board
or member of the Union, as the case may be, or for any neglect,
omission or wrongdoing of the Trustee, the Employer, or any other
officer or director of the Employer or of any member of the Retirement
Board or the Union, as the case may be, or for any loss.
17.7 COPIES OF ACTIONS. Upon giving any direction to the Trustee for the
payment of money, the Company shall serve upon the Union members of
the Retirement Board a copy of the direction.
ARTICLE XVIII
TRUST FUND
18.1 TRUST AGREEMENT. The Company shall enter into one or more Trust
Agreements with one or more Trustees to implement the provisions of
this Plan. The Trust Agreements shall be deemed a part of this Plan
and any and all rights or benefits which may accrue to any person
under this Plan shall be subject to the terms and provisions of said
Trust Agreements. Likewise, all provisions of this Plan shall be
deemed part of the Trust Agreements. In case of any inconsistency
between the provisions of the Plan and the Trust Agreements, the
provisions of this Plan shall control.
18.2 TRUSTEE. The Trustee shall be the party or parties, including the
Company, designated by the Investment Committee in accordance with
Section 17.4, which designation may be changed from time to time by
the Investment Committee. The duties, obligations and
responsibilities of the Trustee shall be as set forth in the Trust
Agreement.
ARTICLE XIX
AMENDMENT, SUSPENSION AND TERMINATION
19.1 REQUIREMENTS. The obligations of the Company under this Plan,
including the obligations to make contributions as herein provided,
shall run pursuant to and concurrently with the Basic Working
Agreements between the Company and the Union. During said periods any
amendment, suspension or discontinuance of the Plan made by the
Company shall be made only with the written consent of the Union
unless and to the extent, in the absence of such consent, such
amendment, suspension or discontinuance shall be:
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(A) Necessary to comply with any requirements of statutory or
general law, or
(B) Required
(1) In the event the Plan shall fail to qualify or remain
qualified as an Employee's Trust exempt from
taxation, and
(2) to permit the contributions of the Company to be
allowable deductions under any Federal, State or
local revenue laws now in force or subsequently
enacted.
19.2 PLAN SUSPENSION OR TERMINATION. The Company intends to continue the
Plan indefinitely, but, except as provided in Section 19.1, reserves
the right to amend, suspend or terminate it in whole or in part at any
time, but only if such action is not inconsistent with a collective
bargaining agreement between the Company and the Union requiring the
Plan's continuance. Any such amendment, suspension or termination
shall not adversely affect the benefits provided under the Plan for
any Member or Beneficiary as of the date of such amendment, suspension
or termination.
19.3 PLAN TERMINATION. In the event the Plan is terminated:
(A) Only such action shall be taken under the Trust Agreement
established under the Plan as shall render it impossible at
any time prior to providing for the satisfaction of all
liabilities with respect to Members and Beneficiaries for any
part of the corpus of the Trust, or income thereon to be used
for or diverted to purposes other than for the exclusive
benefit of Members and Beneficiaries.
(B) No further contributions shall be made by either the Members
or the Company.
(C) The rights of all affected Members in their Account Balance
shall become nonforfeitable.
(D) The Trust Fund shall be applied to the benefit of the Members
in proportion to the Account Balance and notwithstanding the
termination of the Plan, the Trust shall continue in effect
until all Members' Account Balances have been distributed to
or for the benefit of the Members in accordance with this
Plan.
(E) The amount to be applied to the benefit of any Member shall be
applied as a retirement, withdrawal or death benefit
consistent with the provisions of this Plan; provided,
however, that the said amounts may otherwise be disposed of
for the benefit of the Members or their Beneficiaries in some
other manner including, without limitation, the purchase of
insurance company contracts, lump sum payments, payments over
a term of years, or transfer to some other trust fund at the
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discretion of the majority of the four members of the
Retirement Board if it deems such other disposition in the
best interest of the Members under the existing circumstances
subject to any applicable consent requirements as otherwise
set forth in the Plan and required by Section 417 of the Code
and regulations promulgated thereunder. In the event that
such alternative method of such disposition is not agreed upon
by at least three of the four members of the Retirement Board,
the Trust may direct an alternative method of disposition in
respect of the Trust Fund, which shall be subject to the
aforesaid applicable consent requirements, provided that such
method shall not in any manner add to the Company's
liabilities under this Plan.
19.4 SUSPENSION OF COMPANY CONTRIBUTIONS. In the event that payment of the
Company's contributions to the Plan shall be suspended, and the Plan
shall thereafter be terminated prior to resumption of such payments,
Members whose employment with the Company has terminated during the
period of such suspension shall be entitled to participate in the
application of funds provided by Section 19.3(C) as if the termination
has occurred upon the date of the suspension of contributions.
19.5 MERGER, CONSOLIDATION OR SALE. In the event of a merger,
consolidation or sale of assets of the Company, under circumstances in
which a successor shall continue and carry on all or a substantial
part of the business of such Company, and shall elect to carry on the
provisions of this Plan, then such successors shall be substituted for
the Company under the terms and provisions of this Plan upon the
filing in writing with the Trustee and the Plan Administrator of its
election to do so.
19.6 VESTED RIGHTS NOT REDUCED ON MERGER, CONSOLIDATION OR SALE. Neither
the Plan nor the Trust may be merged or consolidated with, nor may its
assets or liabilities be transferred to, any other plan or trust,
unless (a) by joint agreement of the Company and the Union, and (b)
each Member would (if the Plan then terminated) receive a benefit
immediately after the merger, consolidation or transfer which is equal
to or greater than the benefit he would have been entitled to receive
immediately before the merger, consolidation or transfer (if the Plan
had then terminated).
19.7 AMENDMENT. The Company and the Union may by joint agreement amend the
Plan and the Trust at any time, and from time to time.
Notwithstanding the foregoing, the Company reserves the right to amend
the Plan as necessary to comply with any requirement imposed by
statute, regulation or case law, or in the event the Plan shall fail
to qualify or remain qualified as an Employees' Trust exempt from
taxation under any federal, state or local revenue laws now in force
or subsequently enacted. No amendment, however, shall have the effect
of reducing any then nonforfeitable benefits of any Member.
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ARTICLE XX
MISCELLANEOUS
20.1 PLAN NOT AN EMPLOYMENT CONTRACT. Nothing herein contained shall be
deemed (a) to give to any Employee the right to be retained in the
employ of the Employer, (b) to affect the right of the Employer to
discipline or discharge any Employee at any time, (c) to give the
Employer the right to require any Employee to remain in its employ or
(d) to affect the Employee's right to terminate his employment at any
time.
20.2 GOVERNING LAW. The Plan shall be construed, regulated, interpreted
and administered under and in accordance with the laws of the State of
New York.
20.3 USE OF WORDS. Wherever appropriate, words used in this Plan in the
singular may mean the plural, and vice- versa, and the masculine may
mean the feminine, and vice-versa and any reference to an Article,
Section or Paragraph shall mean the Article, Section or Paragraph so
delineated in this Plan.
20.4 INDEPENDENT PROVISIONS. If any provision of this Plan shall be held
invalid or illegal for any reason, the remaining provisions shall be
construed and enforced as if the invalid or illegal provisions had
never been included.
20.5 TITLES. Titles to Articles are for convenience of reference only and
shall not affect the construction of this Plan
ARTICLE XXI
TOP HEAVY PROVISIONS
21.1 APPLICABILITY. If the Plan is or becomes Top-Heavy in any Plan Year
beginning after December 31, 1983, the provisions of this Article will
supersede any conflicting provisions in the Plan.
21.2 DEFINITIONS.
(a) Key Employee: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the
"Determination Period" was (1) an officer of the Employer if
such Individual's Annual Compensation exceeds 50 percent of
the dollar limitation under section 415(b)(1)(A) of the Code,
(2) an owner (or considered an owner under section 318 of the
Code) of one of the ten largest interests in the Employer if
such individual's Annual Compensation exceeds 100 percent of
the dollar limitation under section 415(c)(1)(A) of the Code,
(3) a more-than-5-percent
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owner of the Employer, or (4) a more-than-1-percent owner of
the Employer who has an Annual Compensation of more than
$150,000. Annual Compensation means compensation as defined
in section 415(c)(3) of the Code, but including amounts
contributed by the Employer pursuant to a salary reduction
agreement which are excludable from the Employee's gross
income under section 125, section 402(a)(8), section 402(h) or
section 403(b) of the Code. The "Determination Period" is the
Plan Year containing the Determination Date and the four (4)
preceding Plan Years.
The determination of who is a Key Employee will be
made in accordance with section 416(i)(1) of the code and the
Regulations thereunder.
(b) Top-Heavy Plan: For any Plan Year beginning after December
31, 1983, this Plan is Top-Heavy if any of the following
conditions exists:
(1) If the Top-Heavy Ratio for this Plan exceeds 60
percent and this Plan is not part of any Required
Aggregation Group or Permissive Aggregation Group of
Plans.
(2) If this Plan is a part of a Required Aggregation
Group of Plans, but not part of a Permissive
Aggregation Group of Plans and the Top-Heavy Ratio
for the Permissive Aggregation Group exceeds 60
percent.
(3) If this Plan is a part of a Required Aggregation
Group and part of a Permissive Aggregation Group of
Plans and the Top-Heavy Ratio for the Permissive
Aggregation Group exceeds 60 percent.
(c) Super-Top-Heavy Plan:
A Plan is Super-Top-Heavy if such a Plan would be Top-Heavy if
"90 percent" were substituted for "60 percent" each place it
appears in (b) above.
(d) Top-Heavy Ratio:
(1) If the Employer maintains one or more defined
contribution plans (including any simplified employee
pension Plan) and the Employer has not maintained any
defined benefit plan which during the 5-year period
ending on the Determination Date(s) has or has had
accrued benefits, the top-Heavy Ratio, for this Plan
alone or for the required or Permissive Aggregation
Group, as appropriate, is a fraction, the numerator
of which is the sum of this Account balances of all
Key Employees as of Determination Date(s) (including
any part of any Account balance distributed in the
5-year period ending on the Determination Date(s)),
and the denominator of which is the sum of all
Account balances (including any part of any Account
balance distributed in
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the 5-year period ending on the Determination
Date(s)), both computed in accordance with section
416 of the Code and the Regulations thereunder. Both
the numerator and denominator of the Top-Heavy Ratio
are increased to reflect any contribution not
actually made as of the Determination Date, but which
is required to be taken into account on that date
under section 418 of the Code and the Regulations
thereunder.
(2) If the Employer maintains one or more defined
contribution plans (including any simplified employee
pension Plan) and the Employer maintains or has
maintained one or more defined benefit plans which
during the 5-year period ending on the Determination
Date(s) has or has had any accrued benefits, the
Top-Heavy Ratio for any required or Permissive
Aggregation Group as appropriate, is a fraction, the
numerator of which is the sum of account balances
under the aggregated defined contribution plan or
Plans for all Key Employees, determined in accordance
with (1) above, and the Present Value of accrued
benefits under the aggregated defined benefit plan
or plans for all Key Employees as of the
Determination Date(s), and the denominator of which
is the sum of the account balances under the
aggregated defined contribution plan or Plans for
all Members, determined in accordance with (1)
above, and the Present Value of accrued benefits
under the defined benefit plan or Plans for all
Members of the Determination Date(s), are determined
in accordance with section 416 of the Code and the
Regulations thereunder. The accrued benefits under a
defined benefit plan in both the numerator and
denominator of the Top-Heavy Ratio are increased for
any distribution of an accrued benefit made in the
five-year period ending on the Determination Date.
(3) For purposes of (1) and (2) above, the value of
account balances and the Present Value of accrued
benefits will be determined as of the most recent
Valuation Date that falls within or ends with the
12-month period ending on the Determination Date,
except as provided in section 416 of the Code and the
Regulations thereunder for the first and second Plan
Years of a defined benefit plan. The account
balances and accrued benefits of a Member (a) who is
not a Key Employee but who was a Key Employee in a
prior year, or (b) who has not been credited with at
least one Hour of Service with any Employee
maintaining the Plan at any time during the 5-year
period ending on the Determination Date will be
disregarded. The calculation of the Top-Heavy Ratio,
and the extent to which distributions, roll overs and
transfers are taken into account will be made in
accordance with section 416 of the Code and the
Regulations thereunder. Employee contributions
previously deductible under section 219 of the code
will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating
Plans, the
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value of account balances and accrued benefits will
be calculated with reference to the Determination
Dates that fall within the same calendar year.
The accrued benefit of a Member other than a
Key Employee shall be determined under either (a) the
method, if any, that uniformly applies for accrual
purposes under all defined benefit plans maintained
by the Employer, or (b) if there is no such method,
as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional
rule of section 411(b)(1)(C) of the Code.
(e) Permissive Aggregation Group: The Required Aggregation Group
of Plans plus any other Plan or Plans of the Employer which,
when considered as a group with the Required Aggregation
Group, would continue to satisfy the requirements of section
401(a)(4) and 410 of the Code.
(f) Required Aggregation Group: (1) Each qualified Plan of the
Employer in which at least one Key Employee participates or
participated at any time during the Determination Period
(regardless of whether the Plan has terminated), and (2) any
other qualified Plan of the Employer which enables a Plan
described in (1) to meet the requirements of sections
401(a)(4) or 410 of the Code.
(g) Determination Date: For any Plan Year subsequent to the first
Plan Year, the last day of the preceding Plan Year. For the
first Plan Year of the Plan, the last day of that year.
(h) Valuation Date: The date as defined in ARTICLE II of the Plan
as of which Account balances or accrued benefits are valued
for purposes of calculating the Top-Heavy Ratio.
(i) Present Value: Present Value shall be determined using the
interest and mortality rates specified in the applicable Plan.
Notwithstanding the foregoing, all determinations shall be
made in accordance with section 416 of the Code and the
Regulations thereunder.
21.3 MINIMUM ALLOCATION.
(a) Except as otherwise provided in (c) and (d) below, Employer
contributions and Forfeitures, not including Employee Salary
Deferrals, allocated on behalf of any Member who is not a Key
Employee shall not be less than the lesser of three percent
(four percent if the Plan is super-Top-Heavy) of such Member's
Compensation or, in the cases where the Employer has no
defined benefit plan which designates this Plan to satisfy
section 401 of the Code, the largest percentage of Employer
contributions and Forfeitures, as a percentage of the first
$200,000 of the Key
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Employee's Compensation, allocated on behalf of any Key
Employee for that year. The minimum allocation is determined
without regard to any Social Security contribution. This
minimum allocation shall be made even though, under the Plan
provisions, the Member would not otherwise be entitled to
receive an allocation, or would have received a lesser
allocation for the year because of (1) the Member's failure to
complete 1,000 hours of service (or any equivalent provided in
the Plan), or (2) the Member's failure to make mandatory
Employee contributions to the Plan or (3) Compensation less
than a stated amount.
(b) For purposes of computing the minimum allocation, Compensation
means Compensation as defined in ARTICLE II of the Plan.
(c) The provision in (a) above shall not apply to any Member who
was not employed by the Employer on the last day of the Plan
Year.
(d) The provision in (a) above shall not apply to any Member to
the extent the Member is covered under any other Plan or Plans
of the Employer and the minimum allocation or benefit
requirement applicable to Top-Heavy Plans will be met in the
other Plan or Plans.
21.4 NONFORFEITABILITY OF MINIMUM ALLOCATION. The minimum allocation
required (to the extent required to be nonforfeitable under section
416(b) of the Code) may not be forfeited under section 412(a)(3)(B) or
411(a)(3)(D) of the Code.
21.5 ALLOCATION LIMITATIONS. In determining the Defined Contribution
Fraction under section 415(e)(3)(B) of the Code and pursuant to
Section 7.1 of the Plan "100 percent" shall be substituted for "125
percent" unless the minimum allocation percentage under section
416(c)(2)(A) of the Code and Section 21.3(a) of the Plan is increased
from "3 percent" to "4 percent" and the Plan would not be a Top-Heavy
Plan if "90 percent" were substituted for "60 percent" each place it
appears in Section 21.2(b) of the Plan.
21.6 MINIMUM VESTING SCHEDULES. For any Plan Year in which this Plan is
Top-Heavy, the vesting schedule(s) in the Plan will be followed as
such schedule(s) already satisfy the requirements of section 416 of
the Code.
IN WITNESS WHEREOF, the Company and the Union, by the signatures of
their duly authorized representatives below, hereby adopt and agree to be bound
by the provisions of the RETIREMENT SAVINGS PLAN FOR FLIGHT ATTENDANTS OF TRANS
WORLD AIRLINES, INC. Dated this _______ day of ____________, 19__.
WITNESS: TRANS WORLD AIRLINES, INC.
By:
- ---------------------------- ------------------------
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WITNESS: THE INTERNATIONAL FEDERATION OF
FLIGHT ATTENDANTS
By:
- -------------------------------- -------------------------------
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SECOND AMENDMENT
to the
RETIREMENT SAVINGS PLAN FOR
FLIGHT ATTENDANTS OF
TRANS WORLD AIRLINES, INC.
(November 1, 1988, Restatement)
Section 19.7 of the Retirement Savings Plan for Flight Attendants of
Trans World Airlines, Inc. (the "Plan"), provides that the Company and the
Union may, by joint agreement, amend the Plan at any time. Pursuant to the
provisions of that Section, the Plan is hereby amended as follows:
1. Section 2.1 ("Account") is amended to read as follows:
2.1 ACCOUNT. With respect to any Member, any or all of the
following Accounts established and maintained on his behalf
under the Plan:
(A) Before-Tax Account, to which shall be
allocated any Salary Deferral Contributions
made pursuant to Section 4.1.
(B) New Flight Service Manager Account, to
which shall be allocated any Company
contributions made on or after September 1,
1995, on behalf of International or
Domestic Flight Service Managers, in
accordance with the fixed contribution
formula specified in Section 4.2.
(C) Employer Basic Account, to which shall be
allocated any Supplemental Agreement
Contributions or Other Company
Contributions made on behalf of all Members
pursuant to Section 4.2A.
(D) New After-Tax Account, to which shall be
allocated any contributions made by Members
on an after-tax basis (other than
contributions previously made to the Stock
Purchase Plan or Pursers Plan), in
accordance with Section 4.3.
<PAGE> 92
(E) Rollover Account, to which shall be
allocated any Member rollover contributions
made pursuant to Section 4.4.
(F) Prior Plan Employer Account, to which shall
be allocated any amounts attributable to
contributions made by the Company to the
Stock Purchase Plan and subsequently
transferred to this Plan.
(G) Prior Plan Employee Account, to which shall
be allocated any amounts attributable to
contributions made by Members to the Stock
Purchase Plan (on an after-tax basis) and
subsequently transferred to this Plan.
(H) Old Flight Service Manager Account, to
which shall be allocated:
(1) Any amounts attributable to
contributions made by the Company to
the Pursers Plan and subsequently
transferred to this Plan; and
(2) Any contributions made by the
Company on behalf of International
Flight Service Managers pursuant to
the version of Section 4.2 in
effect prior to September 1, 1992.
(I) Old After-Tax Account, to which shall be
allocated any amounts attributable to
contributions made by Members to the
Pursers Plan (on an after-tax basis) and
subsequently transferred to this Plan.
When appropriate in the context, the term "Account" shall
also refer to the aggregate of a Member's Accounts listed in
this Section 2.1.
2. The following new sentence is added at the end of Section 2.2
("Account Balance"):
A Member shall be 100% vested in the Account Balance of his
Accounts at all times.
3. Section 2.9 ("Company Contributions Account") is deleted in its
entirety.
4. The last two paragraphs of Section 2.10 ("Compensation") are
deleted in their entirety, and the following paragraph is substituted in their
place:
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Effective for Plan Years beginning after December
31, 1988, but before August 31, 1995, the annual
Compensation of each Member taken into account under the
Plan for any Plan Year shall not exceed $200,000, as
adjusted by the Secretary of the Treasury at the same time
and in the same manner as under Section 415(d) of the Code.
Effective for Plan Years beginning after August 31, 1995,
the annual Compensation of each Member taken into account
under the Plan for any Plan Year shall not exceed $150,000,
as adjusted by the Secretary of the Treasury in accordance
with Section 401(a)(17) of the Code. If Compensation is
determined on the basis of a period of less than 12
calendar months, then the applicable dollar limitation in
effect for the calendar year in which the period begins
shall be multiplied by the ratio obtained by dividing the
number of full months in the period by 12. In determining
the Compensation of a Member for purposes of any such
dollar limitation, the rules of Section 414(q)(6) of the
Code shall apply, except in applying such rules, the term
"family" shall include only the spouse of the Member and
any lineal descendants of the Member who have not attained
age 19 before the close of the Plan Year. If, as a result
of the application of such rules, a dollar limitation is
exceeded, then the limitation shall be prorated among the
affected individuals in proportion to each such
individual's Compensation as determined prior to the
application of the dollar limitation.
5. The following new Section 2.11A is added immediately after
Section 2.11:
2.11A DISABILITY: A medically determinable physical or mental
impairment or impairments which are likely to be
permanent and of such severity that the Member is not only
unable to do his previous work but cannot, considering his
age, education, and work experience, engage in any other
kind of substantial gainful work which exists in the
national economy, regardless of whether such work exists in
the immediate area in which he lives, or whether he would
be hired if he applied for work. For purposes of the
preceding sentence, "work which exists in the national
economy" means work which exists in significant numbers
either in the region where such Member lives or in several
regions of the country; provided that if the definition of
disability should be changed for purposes of Federal Social
Security, a corresponding change will be deemed made in the
definition for purposes of this Plan. Anything contained
herein to the contrary notwithstanding, a Member shall be
considered Disabled if he and the Plan Administrator,
acting in a uniform and nondiscriminatory manner
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and after a report by a physician or physicians appointed
by the Plan Administrator, shall agree that he is Disabled,
even if his condition does not fall within the definition
in the first sentence of this Section.
6. Section 2.29 ("Old After-Tax Contributions") is deleted
in its entirety, and the following is substituted in its
place:
2.29 OTHER COMPANY CONTRIBUTIONS. A contribution made
by the Company at the discretion of the Board of
Directors.
7. Section 2.30 ("Plan") is amended to read as follows:
2.30 PLAN. The Retirement Savings Plan for Flight
Attendants of Trans World Airlines, Inc., as
amended and restated, and any amendments thereto.
For purposes of Section 401(a)(27)(B) of the
Code, the Plan is a profit sharing plan.
8. The following new Section 2.39A is added immediately after
Section 2.39
2.39A SUPPLEMENTAL AGREEMENT CONTRIBUTION5. A
contribution made by the Company pursuant
to Section 15 ("Supplemental Agreement') of
the January 5, 1993, Settlement Agreement
among the Company, the Union, and other
parties.
9. Section 3.1 ("Minimum Service Requirement") and Section 3.2
("Delayed Participation for Certain Employees") are amended
to read as follows:
3.1 MINIMUM SERVICE REQUIREMENT. Each Employee shall
be eligible to participate in the Plan as of the
Effective Date. Any Employee hired after the
Effective Date shall be eligible to participate
in the Plan as of the first day of the next
month. Notwithstanding the foregoing, for
purposes of the Fixed Company Contributions
described in Section 4.2, only International or
Domestic Flight Service Managers who have
completed two Years of Continuous Service shall
be eligible for membership on the first day of
the month next following the completion of said
period of Continuous Service.
3.2 DELAYED PARTICIPATION FOR CERTAIN EMPLOYEES. In
the event a person who is employed by the
Employer in a capacity other than as an Employee
(including "leased employees" within the meaning
of Section 414(n) of the Code) subsequently
becomes
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an Employee, he shall be eligible to elect to
commence participation on the first day of the
month subsequent to his commencement of service
as an Employee or, with respect to the Fixed
Company Contributions described in Section 4.2,
upon completing two Years of Recognized Service.
10. Section 4.2 ("Company Contributions') is deleted in its
entirety, and the following is substituted in its place:
4.2 FIXED COMPANY CONTRIBUTIONS. Effective September
1, 1995, with respect to each Member who is an
International or Domestic Flight Service Manager,
the Company shall contribute monthly to such
Member's New Flight Service Manager Account an
amount equal to 5% of the Member's Compensation
from the Company for his Recognized Service in
each month, including any amount thereof computed
retroactively. There shall be no offset,
deduction, credit or diminution of the Company's
contribution for any reason.
11. The following new Sections 4.2A and 4.2B are inserted
immediately after Section 4.2:
4.2A SUPPLEMENTAL AGREEMENT CONTRIBUTIONS. To the
extent required under Section 15 ("Supplemental
Agreement") of the January 5, 1993, Settlement
Agreement among the Company, the Union, and other
parties, the Company shall make Supplemental
Agreement Contributions to the Plan. Any such
Supplemental Agreement Contribution shall be made by
the close of the Plan Year to which it relates, and
shall be allocated among the Employer Basic Accounts
of all Members in accordance with Section 5.4.
4.2B OTHER COMPANY CONTRIBUTIONS. With respect to any
Plan Year, the Company's Board of Directors may
specify an amount of money to be contributed to the
Plan for that Plan Year. Any such Other Company
Contribution shall be allocated among the Employer
Basic Accounts of all Members in accordance with
Section 5.5.
12. Section 4.4 ("Rollover Contributions") is amended to read
as follows:
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4.4 ROLLOVER CONTRIBUTIONS. Each Member may elect to
make a rollover contribution to the Plan,
provided such contribution qualifies as an
"eligible rollover distribution" under Section
402(c)(4) of the Code, which determination shall
be made by the Plan Administrator. The Plan
Administrator may request of the Member any
documents or evidence it deems necessary to
assist it in making such determination. All
rollover contributions shall be paid to the Plan
Administrator in cash, delivered by the Plan
Administrator to the Trustee as soon as
practicable thereafter, and invested by the
Trustee in accordance with the Member's election
under Article VI.
13. Section 4.7 ("Adjustments to Contribution Percentage") is
amended to read as follows:
4.7 ADJUSTMENTS TO CONTRIBUTION PERCENTAGE. A
member may elect to increase, decrease, suspend or
restart his Salary Deferral Contributions and
after-tax contributions at any time, such election
to take effect on the first day of the payroll
period next following the Plan Administrator's
receipt of the election (or as soon as
administratively practicable thereafter).
14. Article V ("Allocations to Members' Accounts") is amended
to read as follows:
ARTICLE V
ALLOCATIONS TO MEMBERS' ACCOUNTS
5.1 SEPARATE ACCOUNTS. The Plan Administrator shall
establish and maintain separate Accounts in the
name of each Member pursuant to the remaining
provisions of this Article V.
5.2 SALARY DEFERRAL CONTRIBUTIONS. The Plan
Administrator shall allocate Salary Deferral
Contributions to the Before-Tax Accounts in
accordance with the applicable Salary Deferral
Elections, concurrent with the Company's deposit
of such contributions in the Trust pursuant to
Section 4.1.
5.3 FIXED COMPANY CONTRIBUTIONS. The Plan
Administrator shall allocate fixed Company
contributions to the New Flight Service Manager
Accounts of International and Domestic Flight
Service Managers, concurrent with the Company's
deposit of such contributions in the Trust
pursuant to Section 4.2. Such contributions shall
be allocated to such Members' Accounts in
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accordance with the same formula used to
calculate the Company's fixed contribution
obligation.
5.4 SUPPLEMENTAL AGREEMENT CONTRIBUTIONS. The Plan
Administrator shall allocate any Supplemental
Agreement Contributions to the Employer Basic
Accounts of all Members, concurrent with the
Company's deposit of such contributions in the
Trust pursuant to Section 4.2A. Such
contributions shall be allocated in accordance
with Appendix A hereto.
5.5 OTHER COMPANY CONTRIBUTIONS. The Plan
Administrator shall allocate any Other Company
Contributions to the Employer Basic Accounts of
all Members, concurrent with the Company's
deposit of such contributions in the Trust
pursuant to Section 4.2A. Such contributions
shall be allocated to each Member's Account in
the proportion that such Member's Plan Year
Compensation bears to the total Plan Year
Compensation of all Members.
5.6 AFTER-TAX CONTRIBUTIONS. The Plan Administrator
shall allocate any Member after-tax contributions
to the New After-Tax Accounts of the Members
making such contributions in accordance with the
applicable after-tax contribution elections,
concurrent with the Company's deposit of such
contributions in the Trust pursuant to Section
4.3.
5.7 ROLLOVER CONTRIBUTIONS. The Plan Administrator
shall allocate any rollover contributions to the
Rollover Accounts of Members electing to make
such contributions, concurrent with the deposit
of such contributions in the Trust pursuant to
Section 4.4.
5.8 FORMER COMPANY CONTRIBUTIONS. The Plan
Administrator shall allocate any Company
contributions made under the version of Section
4.2 in effect prior to September 1, 1992, to the
Old Flight Service Manager Accounts of
International Flight Service Managers, in
accordance with the same formula used to
calculate the Company's contribution obligation
during the periods such contributions were made.
5.9 CONTRIBUTIONS TO PRIOR PLANS. The Plan
Administrator shall allocate amounts transferred
to this Plan from the Stock Purchase Plan or
Pursers Plan to the following Accounts, as
appropriate under subsections (F) through (I) of
Section 2.1:
(A) Prior Plan Employer Account;
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(B) Prior Plan Employee Account;
(C) Old Flight Service Manager Account; and/
or
(D) Old After-Tax Account.
5.10 NOTICE OF ALLOCATION. The Plan Administrator
shall notify the Trustee, in writing, of the
allocations made pursuant to the provisions of
this Article V.
15. Section 6.2 ("Investment Options") is amended to read as
follows:
6.2 INVESTMENT OPTIONS. The Investment Committee
shall select three or more Investment Options in
which the Trustee shall invest the assets held in
the Trust Fund. All such Investment Options shall
comply with applicable laws and regulations. Each
Member shall elect, in accordance with procedures
established from time to time by the Plan
Administrator, any combination of the Investment
Options, in 1% increments, with respect to the
funds in his Account. A similar election shall be
made with respect to all future contributions to
his Account.
Each Member shall be solely responsible for the
selection of his Investment Options provided for
hereunder. The fact that an Investment Option is
made available to a Member for investment under
the Plan shall not constitute, or be construed as
constituting, a recommendation for investment in
that Investment Option.
The Investment Committee is empowered with the
authority and discretion to review or change any
of the Investment Options. The Trustee and the
Company shall not be liable or responsible for
any loss resulting to a Member's Account because
of any sale or investment directed by the Member
under this Section 6.2 or because of the failure
to take any action regarding an investment
acquired pursuant to such elective investment.
The Trustee and the Company shall be indemnified
by the Member from and against any personal
liability to which the Trustee and the Company
may be subjected due to carrying out an elective
investment directed by the Member or failing to
act in the absence of instructions from the
Member.
16. Section 6.3 ("Frequency of Changing Investment Options") is
amended to read as follows:
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6.3 FREQUENCY OF CHANGING INVESTMENT OPTIONS. At any
time, and without limitation, a Member shall be
permitted to change his election of any
Investment Option(s) and/or the percentage of
funds in his Account to be invested in each
Investment Option. Any such change in an
investment election shall apply either to the
Member's current Account Balance, to future
contributions to his Account, or to both -- as
designated by the Member -- and shall be
effective as of the Valuation Date on which the
Plan Administrator is notified of the election
(or as soon as administratively practicable
thereafter).
17. Paragraph (3) of subsection 7.1 (a) is amended to read as
follows:
(3) If there is an excess Annual Addition due to a
calculation error, Employee contributions, the
allocation of Forfeitures (if any), or other
facts and circumstances as determined by the Plan
Administrator, the excess will be corrected as
follows:
(A) Any after-tax employee contributions,
to the extent they would reduce the
Excess Amount, will be returned to the
Member;
(B) Any elective deferrals (within the
meaning of Code Section 402(g)(3))
credited for the Limitation Year will
be returned to the Member, to the
extent they would reduce the Excess
Amount;
(C) If after the application of
subparagraphs (A) and (B) an Excess
Amount still exists, and the Member is
covered by the Plan at the end of the
Limitation Year, the Excess Amount in
the Member's Account will be used to
reduce contributions beginning with
Employee Salary Deferrals, if any,
(including any allocation of
Forfeitures for such Member) in the
next Limitation Year, and each
succeeding Limitation Year if
necessary;
(D) If after the application of
subparagraphs (A) and (B) an Excess
Amount still exists, and the Member is
not covered by the Plan at the end of a
Limitation Year, the Excess Amount will
be held unallocated in a suspense
account. The suspense account will be
applied to reduce future contributions
beginning with Employee Salary
Deferrals, if
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secondary education for the Member, his
spouse, children, or dependents;
(4) Payments necessary to prevent the
eviction of the Member from his
principal residence or foreclosure on
the mortgage of the Member's principal
residence; or
(5) Payment of funeral expenses for the
Member's spouse or for any lineal
ascendant or descendant of the Member
or the Member's spouse.
(B) A withdrawal will be considered as necessary to
satisfy an immediate and heavy financial need of
the Member only if:
(1) The Member has obtained all
distributions, other than hardship
withdrawals, and all nontaxable loans
under all deferred compensation plans
maintained by the Company;
(2) All deferred compensation plans
maintained by the Company provide that
the Member's contributions (both
pre-tax and after-tax) will be
suspended for twelve months after the
receipt of the hardship withdrawal;
(3) The withdrawal is not in excess of the
amount of the immediate and heavy
financial need; and
(4) All deferred compensation plans
maintained by the Company provide that
the Member may not make Salary
Deferrals for the Member's taxable year
immediately following the taxable year
of the hardship withdrawal in excess of
the applicable limit under Section
402(g) of the Code for such taxable
year, less the amount of such Member's
Salary Deferrals for the taxable year
of the hardship withdrawal.
(C) For purposes of determining the amount of the
immediate and heavy need, the amount may include
additional amounts necessary to pay any federal,
state or local income taxes reasonably
anticipated to result from the withdrawal.
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(D) A hardship withdrawal shall be available only
from a Member's Before-Tax Account, and then only
to the extent of:
(1) The Member's Salary Deferral
Contributions; and
(2) Income attributable to the Member's
Salary Deferral Contributions, to the
extent such income was credited to the
Member's Before-Tax Account as of
December 31, 1988.
9.2 WITHDRAWAL UPON ATTAINMENT OF AGE 59 1/2. Subject to the
limitations provided in the remainder of this Article IX,
any active Member who has attained age fifty-nine and
one-half (59 1/2) may Elect to withdraw an amount up to
his or her Account Balance in the following Accounts of the
Member, to be withdrawn in the following order:
(A) Prior Plan Employee Account;
(B) Old After-Tax Account;
(C) New After-Tax Account;
(D) Prior Plan Employer Account;
(E) Rollover Account; and
(F) Before-Tax Account.
9.3 WITHDRAWALS AVAILABLE AT ANY TIME. Subject to the
limitations provided in the remainder of this Article IX,
any active Member may Elect at any time to withdraw an
amount up to his or her Account Balance in the following
Accounts of the Member, to be withdrawn in the following
order:
(A) Prior Plan Employee Account;
(B) Old After-Tax Account;
(C) New After-Tax Account;
(D) Prior Plan Employer Account;
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(E) Rollover Account.
9.4 PERMITTED FREQUENCY OF IN-SERVICE WITHDRAWALS. Only one
in-service withdrawal is permitted per calendar quarter.
9.5 MINIMUM AMOUNT. The minimum amount of an in-service
withdrawal is the lesser of $500 or the Member's "maximum
withdrawable amount." A Member's "maximum withdrawable
amount" shall equal the Member's total available Account
Balance in the Accounts from which the Member may take a
withdrawal, in accordance with Sections 9.1, 9.2 and 9.3 of
the Plan. The minimum in-service withdrawal amount will be
calculated and applied to the Member on a Plan-wide basis,
rather than on a per-Account basis.
9.6 SPOUSAL CONSENT. If a Married Member elects an in-service
withdrawal when he or she has a positive Account Balance in
his or her Old After-Tax Account, the Member must obtain
the consent of his or her spouse in order to make an
in-service withdrawal.
9.7 FORM OF DISTRIBUTION. The form of payment for an inservice
withdrawal is a single lump sum, except in the case of a
Member who has a positive Account Balance in his or her Old
After-Tax Account. An in-service withdrawal made by a
Member with a positive Account Balance in his or her Old
After-Tax Account shall be in the form of a Single Life
Annuity (in the case of an unmarried Member) or a Qualified
Joint and Survivor Annuity (in the case of a Married
Member), as provided in subsection 12.1 (B); subject,
however, to the right of the Member to waive the annuity
form of distribution in the manner provided in subsection
12.1(C).
9.8 EMPLOYEES NO LONGER IN ELIGIBLE CLASS. In the event a
Member remains an employee of the Employer, but is no
longer within the class of eligible Employees, such
individual shall remain a Member for purposes of any
in-service withdrawal under this Article IX, even though no
further contributions are being made to the Plan on his or
her behalf.
9.9 INVESTMENT OPTION SOURCES. Within each Account type used
for funding a withdrawal, amounts shall be withdrawn in
direct proportion to the market value of the Member's
interest in each Investment Option at the time the
withdrawal is made.
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9.10 SUSPENSE ACCOUNTS AND DOMESTIC RELATIONS ORDERS. No
withdrawal may be made from that portion of any Account
which is in a suspense account pursuant to Section
7.1(a)(3) of the Plan or from that portion of an Account
which is segregated while a determination is being made
with respect to a Domestic Relations Order pursuant to
Section 16.4 of the Plan.
19. Article X ("Death Benefits") is deleted in its entirety,
and the following is substituted in its place:
ARTICLE X
LOANS
10.1 AMOUNTS. Each Member who is on active pay status,
on a medical leave of absence, on furlough, or a
party in interest (as such term is defined in
ERISA) may borrow from the Plan an amount not to
exceed the lesser of:
(A) $50,000, reduced by the greater (if
any) of:
(1) The highest outstanding
balance of loans to the
Member from the Plan during
the one-year period ending on
the day before the date on
which the loan is to be made;
or
(2) The outstanding balance of
any loan to the Member from
the Plan on the date on which
such loan is to be made or;
or
(B) One-half (1/2) of the Member's Account
Balance in all of his or her Accounts
(determined as of the last day of the
preceding calendar month).
No loan may be for an amount less than
$1000, and no member may have more than
one loan outstanding at any time. The
amount the Member may borrow shall be
reduced by the amount of any loan from
any other tax-qualified plan maintained
by the Company.
10.2 LOAN TERMS. An application for a loan shall be
made in accordance with procedures established by
the Plan Administrator. The terms and conditions
of such loan shall be as follows:
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(A) An annual rate of interest equal to the
base rate on corporate loans at large
United States money center commercial
banks as reported in the Wall Street
Journal (prime rate) in effect on the
first business day of the calendar
month in which such loan is requested.
(B) A fixed maturity date of no longer than
five (5) years.
(C) Adequate security, which will be up to
fifty percent (50%) of the value of the
borrower's interest in his or her
Accounts, although the Plan
Administrator may require additional
security as it deems appropriate.
(D) Repayment:
(1) Active Employees: a level
schedule of payroll
deductions, to be made each
payroll period for repayment
of loan principal and
interest. Repayment will
commence on the first
available pay period after
receipt of the loan check.
(2) Inactive Employees: repayment
will be monthly, on an
amortized loan repayment
schedule.
Repayments will be
invested according to the
Member's current investment
election at the time of
repayment. If there is not a
current investment election
at the time of repayment, the
last investment election will
be used for investment of
repayments.
(E) The Member may repay the loan in full
at any time without penalty.
(F) Upon termination of employment the
Member may either:
(1) Repay the loan from the
Member's current Account
Balance before distribution;
or
(2) Continue the same repayment
schedule, in accordance with
procedures established by the
Plan Administrator and with
the same loan terms as in
effect at the time of
termination.
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(G) Loans shall be made available to all
Members and Beneficiaries on a
reasonably equivalent basis.
(H) Loans shall not be made available to
Highly Compensated Employees (as
defined in section 414(q) of the Code)
in an amount greater than the amount
made available to other Employees.
(I) Loans granted or renewed on or after
the last day of the first Plan Year
beginning after December 31, 1988,
shall be made pursuant to a written
Member loan program, incorporated
herein by reference, which will include
the following:
(1) The basis on which loans will
be approved or denied;
(2) Procedures for applying for
the loans;
(3) The person or positions
authorized to administer the
Member loan program;
(4) Limitations, if any, on the
types and amounts of loans
offered;
(5) Procedures under the program
for determining the rates of
interest;
(6) The types of collateral which
may secure a Member loan; and
(7) The events constituting
default and the steps that
will be taken to preserve
Plan assets.
10.3 SOURCE OF LOAN FUNDING. A loan to a Member shall
be made solely from the assets of his or her own
Accounts. The available assets shall be
determined first by Account type and then by
Investment Option within each type of Account.
(A) The hierarchy for loan funding by type
of Account shall be as follows:
(1) New Flight Service Manager
Account;
(2) Old Flight Service Manager
Account;
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(3) Employer Basic Account;
(4) Before-Tax Account;
(5) Rollover Account;
(6) Prior Plan Employer Account;
(7) New After-Tax Account;
(8) Old After-Tax Account; and
(9) Prior Plan Employee Account.
(B) Within each Account used for funding a
loan, amounts shall be drawn in direct
proportion to the market value of the
Member's interest in each Investment
Option as of the date on which the loan
is made.
10.4 EMPLOYEES NO LONGER IN ELIGIBLE CLASS. In the
event a Member remains an employee of the
Employer, but is no longer within the class of
eligible Employees, such individual shall remain
a Member for purposes of any Plan loan under this
Article X, even though no further contributions
are being made to the Plan on his or her behalf.
10.5 SPOUSAL CONSENT. Any Married Member who is
subject to the rules set forth in subsection
12.1(B) (because he has a positive Account
Balance in either the Old Flight Service Manager
Account or the Old After-Tax Account, or because
he has previously elected to receive a
distribution in any form of life annuity) must
obtain the consent of his or her spouse in order
to obtain a loan. Moreover, no such Member's loan
shall be renegotiated, extended, renewed, or
otherwise revised without the prior written
consent of the Member's spouse to the use of the
Member's Account Balance as security for the
loan. Any such consent shall be obtained in
accordance with Section 12.1, and shall be valid
only if given during the 90-day period
immediately preceding the date of the loan,
renegotiation, extension, renewal, or other
revision.
10.6 LOAN APPLICATION PROCEDURE.
(A) A loan application may be obtained
either by contacting the Plan
Administrator or by following any other
procedures specified by the Plan
Administrator.
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(B) The completed application should be
returned to the location specified by
the Plan Administrator. The loan terms
will be described on the loan
application. The completed and signed
loan application will serve as the
promissory note.
(C) There will be an initial fee for
obtaining a loan. An additional fee
will be assessed on each March 31, June
30, September 30, and December 31 on
which the loan remains outstanding. All
fees will be established from time to
time by the Plan Administrator, and
will be charged to the loan applicant's
account.
10.7 LOAN DEFAULT-FORECLOSURE. Actively employed
Members will make repayment via non-revocable
continuing payroll deductions from each paycheck.
If pay should become insufficient to cover the
repayment or if the borrower is not actively
receiving a paycheck to cover the repayment,
monthly repayment checks must be submitted for
scheduled payments. In the event that timely
repayment is not received within 15 days, the
Member will be notified of potential loan default
and possible foreclosure upon the Account
Balance. If the loan is not made current within
30 days of notice, the loan shall be declared in
default. Upon default, the loan shall be
immediately due and payable and a deemed
distribution to the Member of the outstanding
balance of the loan shall occur, to the extent
provided under applicable Code provisions.
Additionally, the amount of the loan in default
will be subtracted from the Member's Account
Balance for the purpose of determining the
Account Balance available to the Member in the
event the Member requests an in-service
withdrawal under Article IX of the Plan.
Notwithstanding the foregoing, the default shall
not be satisfied out of the Member's interest in
the Plan prior to his or her entitlement to a
distribution under the terms of the Plan.
20. Article XI ("Employment Termination Benefits") is
deleted in its entirety, and the following is
substituted in its place:
ARTICLE XI
TIMING OF DISTRIBUTIONS
11.1 RETIREMENT, DISABILITY OR TERMINATION OF EMPLOYMENT. Upon a
Member's Early Retirement, Normal Retirement, Deferred-
Retirement (collectively, a "Member's Retirement"),
Disability or Termination of Employment, a Member shall be
entitled to a benefit, to be calculated as provided in
subsection 11.5(D)(5) and to be distributed as provided in
Article XII. The distribution of the Member's benefit shall
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commence as soon as administratively practicable following
the Plan Administrator's receipt of notice of the Member's
Retirement, Disability or Termination of Employment.
Notwithstanding the foregoing, if the Member's total
Account Balance exceeds (or, at the time of any prior
distribution has ever exceeded) $3500, the distribution
shall be made in accordance with Section 11.3.
11.2 DEATH. Upon the death of a Member, the Member's Beneficiary
shall be entitled to a benefit, to be calculated as
provided in subsection 11.5(D)(5) and to be distributed as
provided in Article XIII. The distribution to the
Beneficiary shall commence as soon as administratively
practicable following the Plan Administrator's receipt of
notice of the Member's death.
11.3 ACCOUNT BALANCE OVER $3500. In the case of a Member who has
not attained the age of 62 years and whose Account Balance
exceeds $3500 (or at the time of any prior distribution has
ever exceeded $3500), distribution of benefits under
Article XII shall not commence within 30 days after the
date the Plan Administrator issues to the Member the
notice required by Treasury Regulation Section 1.411(a)-
11(c) (the "Tax Notice"). The Tax Notice shall be
distributed no less than 30 days and no more than 90 days
before any distribution would be made.
The Tax Notice shall explain the tax rules that apply to
Plan distributions and shall notify the Member of his right
to (1) have benefit payments deferred to a later date, (2)
have benefits paid to the Member, (3) have benefits paid in
a direct rollover described in Article XIV, or (4) have
benefits split between payment to the Member and payment in
a direct rollover.
The Member shall elect in writing, on a form to be provided
by the Plan Administrator, whether and/or how benefits are
to be distributed. No distribution shall be made unless the
Member (and the Member's spouse, if married) consents to
such distribution. Such consent may not be given before the
Member receives the Tax Notice nor more than 90 days before
the distribution would be made. If the Member (or the
Member's spouse, if married) refuses to consent to such
distribution, his or her Accounts shall be retained in the
Trust Fund. In that case, distribution shall commence as
soon as administratively practicable after the first to
occur of the Member's:
(1) Election to receive benefits (with
spousal consent, if married);
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(2) Required Beginning Date, as defined in
subsection 11.5(D)(6); or
(3) Death, provided the Plan Administrator
receives notice of the Member's death.
If the Member has no balance in either the Old Flight
Service Manager Account or the Old After-Tax Account, and
if the Member is not otherwise subject to the annuity
distribution rules described in subsection 12.1(B), the
distribution to the Member may commence less than 30 days
after the Tax Notice is given to the Member, provided that:
(1) The Plan Administrator clearly informs
the Member that the Member has a right
to a period of at least 30 days after
receiving the Tax Notice to consider
the decision of whether or not to elect
a distribution (and, if applicable, a
particular distribution option), and
(2) The Member, after receiving the Tax
Notice, affirmatively elects a
distribution.
11.4 MEMBER'S RIGHT TO ELECT DISTRIBUTION. Except with
the Member's consent, distribution of a Member's
Account Balance shall commence no later than the
60th day after the close of the Plan Year in
which the latest of the following occurs:
(A) The date on which the Member attains
Normal Retirement Age;
(B) The tenth (l0th) anniversary of the
year in which the Member commenced
participation in the Plan; or
(C) The date the Member terminates his
service with the Company;
provided, however, that any Member who declines a
distribution upon his or her termination of
service with the Company shall be deemed to have
consented to a deferral of any distribution until
his or her Required Beginning Date, as defined in
subsection 11.5(D)(6), subject to the Member's
right to revoke such consent at any time by
Electing to receive a distribution.
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<PAGE> 110
11.5 REQUIRED DISTRIBUTIONS. The requirements of this
Section shall apply to any distribution of a
Member's interest and will take precedence over
any inconsistent provisions of this Plan.
(A) Unless otherwise specified, the
provisions of this Article apply to
calendar years beginning after December
31, 1984. All distributions shall be
determined and made in accordance with
the proposed Regulations under section
401(a)(9) of the Code, including the
minimum distribution incidental benefit
requirement of Section 1.401(a)(9)-2 of
the proposed regulations as prescribed
by the IRS.
The entire interest of a Member must be
distributed or must begin to be
distributed no later than the Member's
Required Beginning Date (defined below)
which is generally the April 1st
following his attainment of age 7O1/2.
(B) Distributions, if not made in a single
sum, may only be made over a period
equal to or less than the following (or
a combination thereof):
(1) The life of the Member,
(2) The life of the Member and a
Designated Beneficiary,
(3) A period certain not
extending beyond the Life
Expectancy of the Member, or
(4) A period certain not
extending beyond the joint
life and last survivor
expectancy of the Member and
a Designated Beneficiary.
(C) If the Member's interest is to be
distributed in other than a single sum,
the following minimum distribution
rules shall apply on or after the
Required Beginning Date:
(1) Distribution During the
Member's Life: If a Member's
benefit is to be distributed
over (a) a period not
extending beyond the Life
Expectancy of the Member or
the joint life and last
survivor expectancy of the
Member and the Member's
Designated Beneficiary or (b)
a period not extending beyond
the Life Expectancy of the
Designated Beneficiary, then
the amount required to be
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distributed for each calendar
year, beginning with the
distribution for the first
Distribution Calendar Year,
must at least equal the
quotient obtained by dividing
the Member's benefit by the
Applicable Life Expectancy.
For calendar years beginning
before January 1, 1989, if
the Member's spouse is not
the Designated Beneficiary,
the method of distribution
selected must assure that at
least 50 percent of the
present value of the amount
available for distribution is
paid within the Life
Expectancy of the Member.
For calendar years beginning
after December 31, 1988, the
amount to be distributed each
year, beginning with
distributions for the first
Distribution Calendar Year
shall not be less than the
quotient obtained by dividing
the Member's benefit by the
lesser of (a) the Applicable
Life Expectancy or (b) if the
Member's spouse is not the
Designated Beneficiary, the
applicable divisor determined
from the table set forth is
Q&A-4 of Section
1.401(a)(9)-2 of the proposed
regulations as proscribed by
the IRS. Distributions after
the death of the Member shall
be made using the Applicable
Life Expectancy above as the
relevant advisor without
regard to proposed
Regulations Section
1.401(a)(9)-2.
The minimum distribution
required for the Member's
first Distribution Calendar
Year must be made on or
before the Member's Required
Beginning Date. The minimum
distribution for other
calendar years, including the
minimum distribution for the
Distribution Calendar Year in
which the Employee's Required
Beginning Date occurs, must
be made on or before December
31 of that Distribution
Calendar Year.
If the Member's benefit is
distributed in the form of an
annuity purchased from an
insurance company,
distributions thereunder
shall be made in accordance
with the requirements of
Section 401(a)(9) of the Code
and the proposed regulations
thereunder.
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<PAGE> 112
(2) Distributions After the
Member's Death: If the Member
dies after distribution of
his or her interest has begun
and he had attained age 70
1/2, the remaining portion of
such interest, if any, will
continue to be distributed at
least as rapidly as under the
method of distribution being
used prior to the Member's
death.
If the Member dies before
distribution of his or her
interest begins or if he is
not yet 70, distribution of
the Member's entire interest
shall be completed by the
later of December 31 of the
calendar year containing the
fifth anniversary of the
Member's death or if any
portion of the Member's
interest is payable to a
Designated Beneficiary,
distributions may be made
over the life or over a
period certain not greater
than the Life Expectancy of
the Designated Beneficiary
commencing on or before
December 31 of the calendar
year immediately following
the calendar year in which
the Member died, but if the
Designated Beneficiary is the
Member's surviving spouse,
the date distributions are
required to begin shall not
be earlier than the later of
(a) December 31 of the
calendar year in which the
Member died or (b) December
31 of the calendar year in
which the Member would have
attained age 70 1/2 ("spousal
exception rule").
If the Member has not made an
election pursuant to this
Section by the time of his or
her death, the Member's
Designated Beneficiary must
elect the method of
distribution no later than
the earlier of (a) December
31 of the calendar year in
which distributions would be
required to begin under this
Section, or (b) December 31
of the calendar year which
contains the fifth
anniversary of the date of
death of the Member. If the
Member has no Designated
Beneficiary, or if the
Designated Beneficiary does
not elect a method of
distribution, distribution of
the Member's entire interest
must be completed by December
31 of the calendar year
containing the fifth
anniversary of the Member's
death.
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<PAGE> 113
For purposes of the above
paragraphs, if the surviving
spouse dies after the Member,
but before payments to such
spouse begin, the provisions
above, except for the spousal
exception rule, shall be
applied as if the surviving
spouse were the Member.
Any amount paid to a child of
the Member will be treated as
if it has been paid to the
surviving spouse if the
amount becomes payable to the
surviving spouse when the
child reaches the age of
minority.
Distribution of Member's
interest is considered to
begin on the Member's
Required Beginning Date
(or, if applicable, the
date distribution is required
to begin to the surviving
spouse pursuant to the
above). If distribution in
the form of an annuity
irrevocably commences to the
Member before the Required
Beginning Date, the date
distribution is considered to
begin is the date
distribution actually
commences.
(D) Definitions:
(1) Applicable Life Expectancy. The Life
Expectancy (or joint life and last
survivor expectancy) calculated using
the attained age of the Member (or
Designated Beneficiary) as of the
Member's (or Designated Beneficiary's)
birthday in the applicable calendar
year reduced by one (1) for each
calendar year which has elapsed since
the date the Life Expectancy was first
calculated. If Life Expectancy is being
recalculated, the applicable Life
Expectancy shall be the Life Expectancy
as so recalculated. The applicable
calendar year shall be the first
Distribution Calendar Year and if Life
Expectancy is being recalculated, such
succeeding calendar year.
(2) Designated Beneficiary. An individual
affirmatively elected by the Member or
the Member's surviving spouse. If no
Beneficiary is elected, the Designated
Beneficiary shall be the spouse of the
Beneficiary under the Plan in
accordance with Section 401(a)(9) of
the Code and the proposed Regulations
thereunder.
(3) Distribution Calendar Year. A calendar
year for which a minimum distribution
is required. For distributions
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<PAGE> 114
beginning before the Member's death,
the first Distribution Calendar Year is
the calendar year immediately preceding
the calendar year which contains the
Member's Required Beginning Date. For
distributions beginning after the
Member's death, the first Distribution
calendar year is the calendar year in
which distributions are required to
begin pursuant to the above.
(4) Life Expectancy. Life Expectancy and
joint life and last survivor expectancy
are computed by use of the expected
return multiples in Tables V and VI of
Section 1.72-9 of the Regulations.
Unless the Member or the surviving
spouse elect otherwise by the time
distributions are required to begin,
life expectancies shall be recalculated
annually. Such election shall be
irrevocable as to the Member or
surviving spouse and shall apply to all
subsequent years. The Life Expectancy
of a non-spouse Beneficiary may not be
recalculated.
(5) Member's Benefits.
(a) The Account Balance as of the
last Valuation Date in the
calendar year immediately
preceding the Distribution
Calendar Year (valuation
calendar year) increased by
the amount of any
contributions or Forfeitures
allocated to the Account
balance as of dates in the
valuation calendar year after
the Valuation Date and
decreased by distributions
made in the valuation
calendar year after the
Valuation Date.
(b) Exception for second
Distribution Calendar Year.
For purposes of paragraph (a)
above, if any portion of the
minimum Distribution Calendar
Year is made in the second
Distribution Calendar Year on
or before the Required
Beginning Date, the amount of
the minimum distribution made
in the second Distribution
Calendar Year shall be
treated as if it had been
made in the immediately
preceding Distribution
Calendar Year.
(6) Required Beginning Date.
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<PAGE> 115
(a) General Rule. The Required
Beginning Date of a Member is
the first day of April of the
calendar year following the
calendar year in which the
Member attains age 70 1/2
subject to the transition
rules below.
(b) Transitional rules. The
Required Beginning Date of a
Member who attains 70 1/2
before January 1, 1988, shall
be determined in accordance
with (1) or (2) below:
(1) Non 5-percent owners: The
Required Beginning Date
of a Member who is not a
5-percent owner is the
first day of April of the
calendar year following
the calendar year in
which the later of
retirement or attainment
of age 70 1/2 occurs.
(2) 5-percent owners. The
Required Beginning Date of
a Member who is 5-percent
owner during any year
beginning after December
31, 1979, is the first day
of April following the
later of:
(A) The calendar year in
which the Member
attains age 70 1/2,
or
(B) The earlier of the
calendar year with
or within which ends
the Plan Year in which
the Member becomes a
5-percent owner, or
the calendar year in
which the Member
retires.
(c) The Required Beginning Date of a
Member who is not a 5-percent owner
who attains age 70 1/2 during 1988
and who has not retired as of
January 1, 1989, is April 1, 1990.
(d) 5-percent owner. A Member is treated
as a 5-percent owner for purposes of
this Section if such Member is a
5-percent owner as defined in
Section 416(i) of the Code
(determined in accordance with
Section 416 but without regard to
whether the Plan is Top-Heavy) at
any time during the Plan Year ending
with or within the calendar year
in which
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<PAGE> 116
such owner attains age 66 1/2 or
any subsequent Plan Year.
(e) Once distributions have begun to a
5-percent owner under this Section,
they must continue to be76132
distributed even if the Member
ceased to be a 5-percent owner
in a subsequent year.
(E) Transitional Rules for TEFRA Elections:
Notwithstanding the other requirements of this
Section and subject to the joint and survivor
annuity requirements, distribution on behalf of any
Employee, including a 5-percent owner, may be made
in accordance with all of the following requirements
(regardless of when such distribution commences):
(1) The distribution by the Trust is one which
would not have disqualified such Trust
under Section 401(a)(9) of the Code as in
effect prior to amendment by the Deficit
Reduction Act of 1984.
(2) The distribution is in accordance with a
method of distribution designated by the
Employee whose interest in the Trust is
being distributed or, if the Employee is
deceased, by a Beneficiary of such
Employee.
(3) Such designation was in writing, was signed
by the Employee or the Beneficiary, and was
made before January 1, 1984.
(4) The Employee has accrued a benefit under
the Plan as of December 31, 1983.
(5) The method of distribution designated by
the Employee or the Beneficiary specifies
the time at which distribution will
commence, the period over which
distributions will be made, and in the case
of any distribution upon the Employee's
death, the Beneficiaries of the Employee
listed in order of priority.
A distribution upon death will not be covered by
this transitional rule unless the information in the
designation contains the required information
described above with respect to the distributions to
be made upon the death of the Employee.
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<PAGE> 117
For any distribution which commences before January
1, 1984, but continues after December 31, 1983, the
Employee or the Beneficiary to whom such
distribution is being made, will be presumed to have
designated the method of distribution under which
the distribution is being made if the method of
distribution was specified in writing and the
distribution satisfied the requirements of (a) and
(e) above.
If a designation is revoked, any subsequent
distribution must satisfy the requirements of
Section 401(a)(9) of the Code and the proposed
Regulations thereunder. If a designation is revoked
subsequent to the date distributions are required to
begin, the Trust must distribute by the end of the
calendar year following the calendar year in which
the revocation occurs the total amount not yet
distributed which would have been required to have
been distributed to satisfy Section 401(a)(9) of the
Code and the proposed regulations as prescribed by
the IRS thereunder, but for the Section 242(b)(2)
election. For calendar years beginning after
December 31, 1988, such distributions must meet the
minimum distributions incidental benefit
requirements in Section 1.401(a)(9)-2 of the
proposed regulations as prescribed by the IRS. Any
changes in the designation will be considered to be
a revocation of the designation. However, the mere
substitution or addition of another Beneficiary (one
not named in the designation) under the designation
will not be considered to be a revocation of the
designation, so long as such substitution or
addition does not alter the period over which
distributions are to be made under the designation,
directly or indirectly (for example, by altering the
relevant measuring life). In the case in which an
amount is transferred or rolled over from the Plan
or another Plan, the rules in Q&A J-2 and Q&A J-3 of
the proposed regulations shall apply.
21. Article XII ("In-Service Withdrawals") is deleted in its
entirety, and the following is substituted in its place:
ARTICLE XII
RETIREMENT, DISABILITY, AND TERMINATION
OF EMPLOYMENT BENEFITS
12.1 STANDARD FORMS OF DISTRIBUTION.
(A) Unless the Member Elects otherwise, as
provided in Section 12.2, if the Member has
no balance in either his or her Old
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<PAGE> 118
Flight Service Manager Account or his or her Old
After-Tax Account, the Trustee shall distribute
Retirement, Disability or Termination of
Employment Benefits in the form of a single lump
sum.
(B) Unless the Member Elects otherwise, as provided
in subsection 12.1(C) and Section 12.2, if the
Member has a positive balance in either his or
her Old Flight Service Manager Account or his or
her Old After-Tax Account, the Trustee shall
distribute Retirement, Disability or Termination
of Employment Benefits in the form of an annuity,
as provided in the following paragraphs:
(1) Each unmarried Member shall receive
a Single Life Annuity, purchased
with the Member's Account Balance.
For purposes of this Plan, a Single
Life Annuity shall mean a benefit
payable monthly from a Member's
benefit commencement date to the
first day of the month in which the
Member dies, or ten years,
whichever is later. If the Member
dies before the end of the ten-year
period, continued payments will be
made to his or her Beneficiary for
the remainder of the ten-year
period.
(2) Each Married Member shall receive a
Qualified Joint and Survivor
Annuity, purchased with the
Member's Account Balance. For
purposes of this Plan, a Qualified
Joint and Survivor Annuity shall
mean a benefit payable monthly from
a Member's benefit commencement
date to the first day of the month
in which the Member dies, or ten
years, whichever is later, and
payable thereafter in monthly
installments of 50% of the monthly
amount payable to the Member during
his or her lifetime, to the
Member's surviving spouse, if any,
for the remainder of his or her
lifetime (where the surviving
spouse is the person to whom the
Member was married on the Member's
benefit commencement date). No
benefits shall be payable under a
Qualified Joint and Survivor
Annuity to a surviving spouse who
was not the Member's spouse as of
the Member's benefit commencement
date.
(C) A Member may Elect to have any benefit hereunder
paid in
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<PAGE> 119
a manner described in Section 12.2,
rather than in the form of a Single
Life Annuity or Qualified Joint and
Survivor Annuity, if he or she
establishes to the satisfaction of the
Plan Administrator that he or she has
no spouse or that the spouse cannot be
located, or if the spouse consents in
writing to the Election and
acknowledges its effect. Any spousal
consent and acknowledgment shall be in
a form authorized by the Plan
Administrator and shall be witnessed by
a notary public or a representative of
the Plan Administrator. Any such
consent and acknowledgment shall bind
only the spouse who executes it, and
shall not be effective unless the
Election designates a specific
alternative Beneficiary, including any
class of Beneficiaries or contingent
Beneficiaries, which may not be changed
without spousal consent. Additionally,
any such spousal consent will not be
effective unless the Election
designates a specific form of benefit
payment which may not be changed
without spousal consent. A Member may
revoke such Election by completing a
revocation form furnished by the Plan
Administrator and filing it with the
Plan Administrator during the election
period. The number of such revocations
shall not be limited. After an Election
is revoked, another Election under this
Section may be made during the election
period; the conditions relating to
spousal consent with respect to the
initial Election shall apply as well to
any subsequent Election. Any Election
or revocation under this Section shall
be effective on receipt thereof during
the election period by the Plan
Administrator. The "election period"
shall be the 90-day period ending on
the Member's benefit commencement date.
The "benefit commencement date" is the
first day of the first period with
respect to which an amount is payable
as a benefit under the Plan.
(D) During the period beginning 90 days
before a Member's benefit commencement
date and ending 30 days before the
Member benefit commencement date, the
Plan Administrator shall furnish each
Member with a written explanation of:
(a) The terms and conditions of
the Qualified Joint and
Survivor Annuity;
(b) The Member's right to make,
and the effect of, an
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<PAGE> 120
Election under subsection
12.1(C) to waive the Qualified
Joint and Survivor Annuity
form of benefit;
(c) The rights of the Member's
spouse under subsection
12.1(C);
(d) The right to make, and the
effect of, a revocation of an
Election under subsection
12.1(C); and
(e) The relative values of the
various optional forms of
benefit under the Plan.
12.2 OPTIONAL FORMS OF DISTRIBUTION. A Member may
elect an optional form of benefit distribution,
as provided in this Section. A Member who has a
positive balance in either his or her Old Flight
Service Manager Account or his or her Old
After-Tax Account who Elects an optional form of
distribution must waive the Single Life Annuity,
if unmarried. If married, such a Member must
waive the Qualified Joint and Survivor Annuity
and receive spousal consent to such waiver in
accordance with subsection 12.1(C) in order for
such Election to be effective. The optional forms
of benefit distribution are as follows:
(A) A single lump sum.
(B) A partial lump sum. A member may Elect to have a
portion of the Member's Account Balance paid in a
lump sum, with the remainder to be paid later.
Any such partial lump-sum distribution will be
subject to the limitations applicable to
in-service withdrawals, set forth in subsection
9.4 (frequency) and 9.5 (minimum amount).
(C) Installment distributions. A Member may Elect
either to receive periodic installments over a
period not to exceed the life expectancy of the
Member and his or her spouse, or to receive
installment payments of a specified dollar amount
per month. In the event the Member Elects to
receive installment payments of a specified
dollar amount per month, he or she may Elect to
receive a greater or lesser monthly payment in
subsequent months, without the requirement of any
further spousal consent.
(D) Single-life annuity with no term-certain
guarantee.
(E) Single-life annuity with any term-certain
guarantee.
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<PAGE> 121
A Member who is not otherwise subject to the survivor
annuity distribution rules of subsection 12.1(B) (because
the Member has no positive Account Balance in either the
Old Flight Service Manager Account or the Old After- Tax
Account) will become subject to the annuity distribution
rules of subsection 12.1(B) if he or she elects any form of
life annuity as an optional form of distribution. If such a
Member is unmarried, he or she will receive a Single Life
Annuity in accordance with subsection 12.1(B)(1). If such a
Member is married, he or she will receive a Qualified Joint
and Survivor Annuity in accordance with subsection
12.1(B)(2). The Member may elect to waive such form of
annuity, as provided in subsection 12.1(C), and Elect any
of the optional forms of distribution described in this
Section 12.2.
22. Article XIII ("Distributions to Members and Beneficiaries")
is deleted in its entirety, and the following is
substituted in its place.
ARTICLE XIII
DEATH BENEFITS
13.1 SPOUSAL BENEFICIARIES. Upon a Member's death, a
spousal Beneficiary may elect to receive any
Death Benefit payable hereunder in any of the
distribution options available to Members set
forth in Section 12.2, with the following
exceptions:
(A) A spousal Beneficiary may not elect any
joint-life annuity; and
(B) A spousal Beneficiary may not elect any
installment distribution calculated
over the lives of the Beneficiary and
any other individual.
13.2 NON-SPOUSAL BENEFICIARIES. Upon a Member's death,
a non-spousal Beneficiary will receive any Death
Benefit payable hereunder in a single lump sum.
13.3 PROOFS. The Plan Administrator may require such
proof of death and such evidence of the right of
any Beneficiary to receive payment of the
benefits of the deceased Member as it may deem
advisable. The Plan Administrator's determination
of death and of the right of any Beneficiary to
receive payment shall be conclusive.
23. Article XIV ("Loans") is deleted in its entirety, and the
following is substituted in its place:
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<PAGE> 122
ARTICLE XIV
DIRECT ROLLOVERS
14.1 Direct Rollovers. This Article applies to distributions
made on or after January 1, 1993. Notwithstanding any
provision of the Plan to the contrary that would otherwise
limit a distributee's election under this Article, a
distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion
of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributes in a
direct rollover.
14.2 Definitions. For purposes of this Article, the following
terms shall have the meaning ascribed to them below:
(A) An "eligible rollover-distribution" is any
distribution of all or any portion of the
balance to the credit of the distributee, except
that an eligible rollover distribution does not
include: any distribution that is one of a series
of substantially equal periodic payments (not
less frequently than annually) made for the life
(or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the
distributee and the distributee's designated
beneficiary, or for a specified period of ten
years or more; any distribution to the extent
such distribution is required under Section
401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross
income (determined without regard to the
exclusion for net unrealized appreciation with
respect to employer securities).
(B) An "eligible retirement plan" is an individual
retirement account described in Section 408(a) of
the Code, an individual retirement annuity
described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of
the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution.
However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible
retirement plan is an individual retirement
account or individual retirement annuity.
(C) A "distributee", includes an Employee or former
Employee. In addition, the Employee's or former
Employee's surviving
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<PAGE> 123
spouse and the Employee's or former Employee's
spouse or former spouse who is the alternate
payee under a qualified domestic relations order,
as defined in Section 414(p) of the Code, are
distributees with regard to the interest of the
spouse or former spouse.
(D) A "direct rollover" is a payment by the Plan to
the eligible retirement plan specified by the
distributee.
24. The following new Section 16.6 is added at the end of
Article XVI:
16.6 SPECIAL PAYMENT RULES. Notwithstanding any other
provision of the Plan to the contrary, the Plan
may make payment to an "alternate payee" under a
"qualified domestic relations order" at any time
specified in such order, whether before, at, or
after a Member's "earliest retirement age" (as
such terms are defined in Code Section 414(p)),
provided that any such payment before a Member's
earliest retirement age shall be subject to the
following conditions:
(a) The order must either provide for, or
permit the Plan and alternate payee to
agree to, such an early payment;
(b) The payment must constitute a
single-sum payment of all Plan benefits
to which the alternate payee may become
entitled under the terms of the order;
and
(c) If the order so provides, any such
payment which exceeds $3,500 shall be
made only with the alternate payee's
written consent.
Unless the context clearly requires a contrary
interpretation, any order providing for a
single-sum payment to an alternate payee as of a
Member's "earliest retirement age" shall be
construed as providing for such payment to be
made on the date which is as soon as
administratively practicable after the Plan
Administrator has determined that the order
constitutes a qualified domestic relations order.
25. The following new Appendix A is added after Article XXI:
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<PAGE> 124
APPENDIX A
ALLOCATION OF SUPPLEMENTAL
AGREEMENT CONTRIBUTIONS
Any Supplemental Agreement Contribution made with respect to a Plan
Year beginning on or after January 1, 1993, shall be allocated among the
Employer Basic Accounts of all Members, in the proportion that each Member's
Weighted Compensation for that Plan Year bears to the total Weighted
Compensation of all Members for that Plan Year. For this purpose, a Member's
"Weighted Compensation" shall be determined by multiplying the Member's
Compensation by the applicable factor from the following table, based on the
Member's age as of the first day of the Plan Year following the Plan Year to
which the Supplemental Agreement Contribution relates:
AGE FACTOR
--- ------
20 & UNDER 0.0554
21 0.0596
22 0.0640
23 0.0688
24 0.0740
25 0.0796
26 0.0855
27 0.0919
28 0.0988
29 0.1063
30 0.1142
31 0.1228
32 0.1320
33 0.1419
34 0.1525
35 0.1640
36 0.1763
37 0.1895
38 0.2037
39 0.2190
40 0.2354
41 0.2531
42 0.2720
43 0.2925
44 0.3144
45 0.3380
46 0.3633
47 0.3906
48 0.4199
49 0.4513
50 0.4852
51 0.5216
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<PAGE> 125
52 0.5607
53 0.6028
54 0.6480
55 0.6966
56 0.7488
57 0.8050
58 0.8653
59 0.9302
60& OVER 1.0000
Except as otherwise provided in the amended Plan provisions, the
changes made by this Amendment shall be effective as of January 1, 1994.
IN WITNESS WHEREOF, the Company and the Union, by the signatures of
their duly authorized representatives below, hereby adopt and agree to be bound
by the provisions of this Second Amendment to the Retirement Savings Plan for
Flight Attendants of Trans World Airlines, Inc. Dated this ____ day of March,
1995.
TRANS WORLD AIRLINES, INC.
WITNESS: By:
---------------------------
- ----------------------------------------
THE INDEPENDENT FEDERATION
OF FLIGHT ATTENDANTS
WITNESS: By:
--------------------------
- -----------------------------------------
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<PAGE> 126
THIRD AMENDMENT
TO THE
RETIREMENT SAVINGS PLAN FOR
FLIGHT ATTENDANTS OF
TRANS WORLD AIRLINES, INC.
(NOVEMBER 1, 1988 RESTATEMENT)
Section 19.7 of the Retirement Savings Plan for Flight Attendants of
Trans World Airlines, Inc. (the "Plan"), provides that the Company and the
Union may, by joint agreement, amend the Plan at any time. Pursuant to the
provisions of that Section, the Plan is hereby amended as follows:
1. Section 2.45 is amended to read as follows:
2.45 Union. the International Association of Machinists and
Aerospace Workers.
2. The reference in Section 17.2 to the
"Trans World Airlines Flight Attendants' Retirement Board
Independent Federal of Flight Attendants
630 Third Avenue
New York, New York 10017"
should be changed to:
Trans World Airlines Flight Attendants' Retirement Board
District Lodge 142
The International Association of Machinists and Aerospace Workers
400 N.E. 32nd Street
Kansas City, Missouri 64116
Except as otherwise provided in the amended Plan provisions, the
changes made by this Amendment shall be effective as of April 1, 1997.
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<PAGE> 127
IN WITNESS WHEREOF, the Company and the Union, by the signatures of
their duly authorized representatives below, hereby adopt and agree to be bound
by the provision sof this Third Amendment to the Retirement Savings Plan for
Flight Attendants of Trans World Airlines, Inc.
WITNESS: TRANS WORLD AIRLINES, INC.
By:
- --------------------------------- -------------------------
WITNESS: THE INTERNATIONAL ASSOCIATION
OF MACHINISTS AND AEROSPACE
WORKERS
By:
- --------------------------------- ------------------------
2
<PAGE> 128
FOURTH AMENDMENT
TO THE
RETIREMENT SAVINGS PLAN FOR
FLIGHT ATTENDANTS OF
TRANS WORLD AIRLINES, INC.
(as amended and restated effective November 1, 1988)
WHEREAS, Trans World Airlines, Inc. (the "Company") and the
International Association of Machinists and Aerospace Workers (the "IAM"),
representative of all of the flight attendants employed by the Company, desire
to amend the Retirement Savings Plan for Flight Attendants of Trans World
Airlines, Inc. (as amended and restated effective November 1, 1988 and as
subsequently amended) (the "Plan") pursuant to authority jointly held by the
Company and IAM under Section 19.7 of the Plan;
NOW, THEREFORE, the Plan is hereby amended in the following
particulars, effective as of the date written below, except as otherwise
specifically provided herein:
1. The first paragraph of Section 6.2 ("Investment Options") is
amended to read as follows:
"The Investment Committee shall select three or more
Investment Options in which the Trustee shall invest the
assets held in the Trust Fund. Such Investment Options may
consist of individual securities (including Company
securities), insurance contracts, mutual funds or
collective investment funds, money market funds or any
other investment vehicle deemed appropriate by the
Investment Committee. All such Investment Options shall
comply with applicable laws and regulations. Each Member
shall elect, in accordance with the procedures established
from time to time by the Investment Committee any
combination of Investment Options, in 1% increments, with
respect to the funds in his Account. A similar election
shall be made with respect to all future contributions to
his Account. The Investment Committee may, in its sole
discretion, limit investments in Company securities to a
specified percentage of each Member's total Account. All
Company securities in which a Member invests pursuant to
this Plan will be purchased or sold on the American Stock
Exchange or other securities exchanges or, with the
Company's and Investment
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<PAGE> 129
Committee's consent, shall be purchased from or sold to the
Company (without commission.)"
2. The following new Section 6.5 is added to the end of
Article VI:
"6.5 EXPENSES. Expenses of managing investments in each
Investment Option, including investment management fees,
commissions, and other transactions costs, shall be charged
against the assets of the applicable Investment Option,
except that expenses associated with the purchase or sale
of Company securities shall be charged against the Account
of the Member directing such transaction."
3. Effective for Limitation Years beginning on or after January 1,
1995, subsection (b)(3) of Section 7.1 ("Allocation Limitations") is amended to
read as follows:
"(3) If, pursuant to subsection (b)(2), or as a result of a
calculation error, Employee contributions, the allocation of
Forfeitures or other facts and circumstances as determined by the
Plan Administrator, a Member's Annual Additions under this Plan and
such other Plans would result in an Excess Amount for a Limitation
Year, the Excess Amount will be deemed to consist of the Annual
Additions from this Plan and such other Plans in the following
sequence:
(A) first, from this Plan, to the extent that the
Excess Amount can be disposed of in the manner
described in subparagraphs (A) and (B) of
subsection (a)(3);
(B) second, from other qualified defined contribution
plans which cover the Member, in reverse
chronological order of allocation, to the extent
that the remaining Excess Amount can be disposed
of under the terms of such plans; and
(C) third, if after application of subparagraph (A)
and (B) of this subsection (b)(3) any Excess
Amount remains with respect to a Member, from
this Plan in the manner described in
subparagraphs (C), (D) and (E) of subsection
(a)(3).";
2
<PAGE> 130
4. Effective for Limitation Years beginning on or after January 1,
1995, subsections (b)(4) and (b)(5) of Section 7.1 are deleted in their
entirety.
5. The following new Section 18.3 is added to the end of Article XVIII:
"18.3 VOTING AND TENDERING COMPANY SECURITIES. Members who
have invested in an Investment Option consisting of Company
securities will be entitled to direct the Trustee with respect to the
voting of full and fractional shares (if any) of Company securities
credited to their Accounts and the manner in which to respond to a
tender or exchange offer (including, but not limited to, a tender
offer or exchange offer within the meaning of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), and the Trustee shall
vote, tender or exchange any full and fractional shares (if any) for
which timely instructions were received in accordance with such
instructions. The Company shall distribute to any Member whose
Account is invested in Company securities information in connection
with any meeting or tender or exchange offer, together with a form
requesting instructions to the Trustee on how to vote any such
securities or respond to any such tender or exchange offer to the
extent required by the federal or state securities laws or by ERISA.
The Trustee shall vote full and fractional shares (if any) of Company
securities for which no timely directions were received in proportion
to the votes of the shares for which timely directions were received,
to the extent consistent with the Trustee's fiduciary duties under
ERISA, as determined by the Trustee in its sole discretion. With
respect to a tender or exchange offer, the Trustee shall not tender
or exchange any full and fractional shares for which no timely
instructions were received, except as otherwise directed by the
Investment Committee or to the extent required in accordance with its
fiduciary duties under ERISA.
Each Member with Company securities credited to his Account is a
"named fiduciary" within the meaning of Section 403(a)(1) of ERISA
with respect to the Company securities held in his Account and, for
purposes of voting, those Company securities held in the Accounts of
other Members for which the Trustee has not received timely voting
instructions."
6. The following new Section 20.6 is added to the end of Article XX:
3
<PAGE> 131
"20.6 Incorporation of Certain Documents by
Reference. The following documents are hereby incorporated
by reference in the Registration Statement on Form S-8 for
the Plan (the "Registration Statement") as filed or to be
filed with the Securities and Exchange Commission (the
"Commission") on or about July 14, 1997.
(A) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996, filed with the Commission pursuant to Section 13 of the
Exchange Act, on March 31, 1997;
(B) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, filed with the Commission on May 15, 1997.
(C) The description of the Company's Common Stock contained in the
Form 8-A Registration Statement filed with the Commission on August 1, 1995,
including any amendment or reports filed for the purpose of updating such
description;
(D) When filed, the Company's latest employee plan annual report,
whether filed on Form 11-K or Form 10-K; and
(E) All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of such
Registration Statement and prior to the filing of a post-effective amendment
thereto which indicates that all securities offered thereunder have been sold
or which deregisters all securities then remaining unsold, shall be deemed to
be incorporated by reference into such Registration Statement and to be a part
thereof from the respective dates of filing of such documents.
Any statements contained in a document incorporated or deemed to be
incorporated by reference therein shall be deemed to be modified or superseded
for purposes of such Registration Statement to the extent that a statement
contained therein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference therein modifies or supersedes such
statement. Any such statement so modified or superseded shall be deemed, except
as so modified or superseded, to constitute a part of such Registration
Statement.
4
<PAGE> 132
IN WITNESS WHEREOF, the Company and IAM have caused this Fourth
Amendment to the Retirement Savings Plan for Flight Attendants of Trans World
Airlines, Inc. to be executed as of this ____ day of ________________, 1997,
but effective as provided herein.
TRANS WORLD AIRLINES, INC.
WITNESS: By:
-------------------------
- --------------------------------
INTERNATIONAL ASSOCIATION OF
MACHINISTS AND AEROSPACE
WORKERS
WITNESS: By:
--------------------------
- --------------------------------
5
