As filed with the Securities and Exchange Commission on June 16, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TRANS WORLD AIRLINES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 4512 43-1145889
(State of (Primary Standard Industrial (I.R.S. Employer
Incorporation) Classification Code Number) Identification No.)
One City Centre, 515
N. Sixth Street
St. Louis, Missouri
63101
(314) 589-3000
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
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Copies to:
---------------
Gerald L. Gitner Joseph P. Hadley, Esq.
Chairman and Chief Executive Officer Davis Polk & Wardwell
One City Centre, 515 N. Sixth Street 450 Lexington Avenue
St. Louis, Missouri 63101 New York, New York 10017
(314) 589-3000 (212) 450-4000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agents for Service)
Approximate date of commencement of proposed sale to the
public: From time to time after the effective date of this registration
statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act"), other than
securities offered only in connection with dividend or interest reinvestment
plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration number of the earliest effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant
to Rule 434 under the Securities Act, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================
Proposed
Maximum Proposed
Amount Offering Maximum Amount of
Title of Each Class of to be Price Aggregate Registration
Securities to be Registered Registered Per Unit Offering Price Fee
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value per share..... 3,218,624 shares(1) $9.88(2) $31,800,005 $9,381
====================================================================================================================
(1) Estimated based upon $31,800,000 outstanding principal amount of Mandatory
Conversion Equity Notes to be converted into Common Stock.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) on the basis of the average of the high and low
reported sales prices on June 12, 1998.
</TABLE>
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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PROSPECTUS
TRANS WORLD AIRLINES, INC.
3,218,624 SHARES OF COMMON STOCK
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This Prospectus relates to 3,218,624 shares of common stock,
$0.01 par value per share (the "Common Stock") of Trans World Airlines, Inc.,
a Delaware corporation ("TWA" or the "Company") which are issuable upon
conversion of $31.8 million principal amount of the Company's Mandatory
Conversion Equity Notes due 1999 (the "Equity Notes"). The Equity Notes were
initially issued and delivered by TWA to First Security Bank, National
Association, as owner trustee (the "Owner Trustee") under the trust agreement
(the "Trust") dated as of January 24, 1995 between Seven Sixty Seven Leasing,
Inc., the beneficiary named therein (the "Beneficiary") and the Owner Trustee,
in partial payment of the aggregate purchase price of $75.0 million ($25.0
million per Aircraft) for three Boeing 767-231 ETOPS airframes and six
associated engines (collectively, the "Aircraft"). See "Description of Equity
Notes".
The Common Stock issuable upon conversion of the Equity Notes
may be offered and sold from time to time by the holders named herein or by
their transferees, pledgees, donees, or their successors (the "Selling
Holders") pursuant to this Prospectus. The Registration Statement of which
this Prospectus is a part (the "Registration Statement") has been filed with
the Securities and Exchange Commission (the "SEC" or the "Commission")
pursuant to the Company's obligations under a registration rights agreement
dated as of April 21, 1998 (the "Registration Rights Agreement") among the
Company, the Owner Trustee and Lazard Freres & Co. LLC.
The Common Stock issuable upon conversion of the Equity Notes
may be sold by the Selling Holders from time to time directly to purchasers or
through agents, underwriters or dealers. See "Plan of Distribution." If
required, the names of any agents or underwriters involved in the sale of the
Common Stock in respect of which this Prospectus is being delivered, along
with any applicable agent's commission, dealer's purchase price or
underwriter's discount, will be set forth in an accompanying supplement to
this Prospectus (the "Prospectus Supplement"). Furthermore, information
concerning Selling Holders set forth herein may change from time to time, and
the changes will be set forth in such a Prospectus Supplement.
The Selling Holders will receive all of the net proceeds from
the sale of the shares of the Common Stock issuable upon conversion of the
Equity Notes and will pay any and all underwriting discounts and selling
commissions applicable to the sale of such Common Stock. The Company is
responsible for payment of all other expenses incident to the registration of
such Common Stock.
continued on next page
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER MATTERS
DISCUSSED UNDER THE CAPTION "RISK FACTORS" ON PAGE 11.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT
BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON
OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
---------------
THE DATE OF THIS PROSPECTUS IS JUNE __, 1998.
Continued from cover page
The Selling Holders and any broker-dealers, agents or
underwriters that participate in the distribution of the securities offered
hereby may be deemed to be "underwriters" within the meaning of the Securities
Act, and any commission received by them or purchases by them of such
securities at a price less than the initial price to the public may be deemed
to be underwriting commissions for discounts under the Securities Act.
Pursuant to the Registration Rights Agreement, the Company has
also agreed to pay certain fees and expenses incident to the registration of
the Common Stock issuable upon conversion of the Equity Notes. It is
estimated that the aggregate amount of fees and expenses payable by the
Company in connection with the registration of the securities offered hereby
will be approximately $123,526. The Company intends to keep the Registration
Statement effective until the earlier of (i) the sale of all Common Stock
covered by the Registration Statement and (ii) the expiration of two years
after the date of the initial issuance of the Equity Notes on April 21, 1998,
or, if the period applicable under Rule 144(k) under the Securities Act, or
any successor provision, is shortened, such shorter period.
The Company intends to apply for listing of the Common Stock
issuable upon conversion of the Equity Notes on the ASE under the symbol
"TWA." On June 15, 1998, the closing sale price on the American Stock
Exchange ("ASE") for one share of the Common Stock was $9.8125 per share.
No person has been authorized to give any information or to
make any representations not contained in this Prospectus in connection with
the offer of securities made by this Prospectus and, if given or made, such
information or representations must not be relied upon as having been
authorized by the Company or by any underwriter, dealer or agent. This
Prospectus does not constitute an offer to sell or a solicitation of an offer
to buy any of the securities offered hereby in any jurisdiction to any person
to whom it is unlawful to make such offer or solicitation in such
jurisdiction. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than those to which it
relates. Neither the delivery of this Prospectus nor any sale of, or offer to
sell, the securities offered hereby shall, under any circumstances, create an
implication that there has been no change in the affairs of the Company since
the date hereof or that the information herein is correct as of any time
subsequent to its date.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information
filed by the Company with the Commission pursuant to the informational
requirements of the Exchange Act can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, NW, Washington, D.C. 20549, and at the Commission's regional offices
located at Room 1400, 75 Park Place, New York, New York 10007 and Suite 1400,
Northwestern Atrium, 500 West Madison Street, Chicago, Illinois 60661-2511.
Copies of such material can also be obtained upon written request addressed to
the Securities and Exchange Commission, Public Reference Section, Room 1024,
450 Fifth Street, NW, Washington, D.C. 20549 at prescribed rates. Such
reports, proxy statements and other information can also be inspected at the
offices of the American Stock Exchange, 86 Trinity Place, New York, New York
10006-1881, on which the Common Stock of the Company is listed. The Commission
maintains a Web Site that contains reports, proxy statements and other
materials that are filed through the Commission's Electronic Data Gathering
Analysis and Retrieval System. This Web Site can be accessed at
http://www.sec.gov. In addition, the Company has agreed, for so long as any of
the securities offered hereby remain outstanding, to make available to any
prospective purchaser or beneficial holder of such securities in connection
with any sale thereof, the information required by subsection (d) of Rule 144A
under the Securities Act ("Rule 144A"), until such time as the holders thereof
have disposed of such securities pursuant to an effective registration
statement filed by the Company.
This Prospectus contains summaries believed to be accurate and
complete in all material respects of material terms of certain agreements;
however, in each such case, reference is made to the actual agreements (copies
of which will be made available upon request to the Company) for complete
information with respect thereto, and all such summaries are qualified in
their entirety by this reference.
This Prospectus forms a part of the Registration Statement,
including all amendments (including post-effective amendments) and exhibits
thereto, which the Company has filed under the Securities Act with respect to
the securities offered hereby. This Prospectus does not contain all the
information otherwise set forth in the Registration Statement, certain parts
of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement and the exhibits filed as part thereof. The Registration Statement
may be inspected at the public reference facilities maintained by the
Commission at the addresses set forth in the preceding paragraph. Statements
contained herein concerning any document filed as an exhibit are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus
the following documents filed with the Commission pursuant to the requirements
of the Exchange Act (File No. 001-07815): (i) the Company's Annual Report on
Form 10-K (the "1997-10K") for the fiscal year ended December 31, 1997; (ii)
the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1998; (iii) the description of the Common Stock contained in the Company's
Form 8-A dated August 1, 1995 filed under the Exchange Act, including any
amendment or reports filed for the purpose of updating such description; and
(iv) the Company's Proxy Statement and Notice of Meeting related to the Annual
Meeting of Stockholders held on May 19, 1998.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering of the securities offered hereby
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the respective dates of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document that also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to furnish without charge to each
person to whom a copy of this Prospectus has been delivered, upon written or
oral request of such person, a copy of any and all documents incorporated
herein by reference (not including exhibits to such documents, unless such
exhibits are specifically incorporated by reference into such documents).
Requests should be directed to the Corporate Secretary of Trans World
Airlines, Inc., One City Centre, 515 N. Sixth Street, St. Louis, Missouri
63101, telephone (314) 589-3285.
THE COMPANY
TWA is the eighth largest U.S. air carrier (based on revenue
passenger miles ("RPMs") for the full year 1997), whose primary business is
transporting passengers, cargo and mail. During 1997, the Company carried
approximately 23.4 million passengers and flew approximately 25.1 billion
RPMs. As of March 31, 1998, TWA provided regularly scheduled jet service to 89
cities in the United States, Mexico, Europe, the Middle East, Canada and the
Caribbean. As of March 31, 1998, the Company operated a fleet of 181 jet
aircraft.
TWA's North American operations have a primarily domestic hub
in St. Louis at Lambert International Airport ("St. Louis") and a
domestic-international hub at New York's John F. Kennedy International Airport
("JFK"). TWA is the predominant carrier at St. Louis, with approximately 360
scheduled daily departures as of March 31, 1998 and approximately a 74.5%
share of airline passenger enplanements in St. Louis for the full year 1997.
Given its location in the center of the country, St. Louis is well-suited to
function as an omni-directional hub for both north-south and east-west
transcontinental traffic. Therefore, TWA believes it can offer more
frequencies and connecting opportunities to many travelers in its key
Midwestern markets than competing airlines.
TWA's international operations are concentrated at JFK, from
which TWA currently serves 26 domestic and international cities with
approximately 40 daily departures. JFK is both the Company's and the
industry's largest international gateway from North America. As of March 31,
1998, the Company offered non-stop flights from JFK to 8 cities in Europe and
the Middle East as well as 17 destinations in the U.S. and the Caribbean. As
described below, during 1997, the Company implemented certain steps to refocus
and improve the operating and financial performance of its JFK operations.
TWA is a Delaware corporation organized in 1978 and is the
successor to the business of its predecessor corporation, Transcontinental &
Western Air, Inc., originally formed in 1934. The Company's principal
executive offices are located at One City Centre, 515 N. Sixth Street, St.
Louis, Missouri 63101 and its telephone number is (314) 589-3000.
THE OFFERING
The Prospectus relates to 3,218,624 shares of Common Stock
issuable upon conversion of the Equity Notes issued in connection with the
purchase of the Aircraft. The Company will not receive any proceeds from this
Offering.
RISK FACTORS
In addition to the other information appearing in this
Prospectus, the following risk factors should be considered carefully in
evaluating the Company and its business before purchasing the securities
offered hereby.
Risk Factors Related to the Company
Substantial Indebtedness
The Company is highly leveraged and has and will continue to have
significant debt service obligations. As of March 31, 1998, the Company's ratio
of long-term debt and capital leases (including current maturities) to
shareholders' equity was 5.39 to 1. As of March 31, 1998, after giving effect to
the issuance of the Company's 11 3/8% Senior Secured Notes due 2003 and the
Equity Notes, the aggregate principal amount of the Company's total outstanding
indebtedness would be approximately $1,222.2 million, and the ratio of such
long-term debt and capital leases (including current maturities) to
shareholders' equity would have been 5.75 to 1. TWA's estimated minimum payment
obligations under noncancellable operating leases in effect at March 31, 1998
were approximately $284.1 million for 1998 and approximately $3,346.0 million
for periods thereafter. These amounts exclude payment obligations of the Company
that will arise from financing arrangements relating to the 24 MD-83 aircraft.
Over the last several years, the Company's earnings have not been sufficient to
cover fixed charges. The Company's earnings were not sufficient to cover fixed
charges by $80.6 million and $105.7 million for the three months ended March 31,
1998 and 1997, respectively, $94.1 million for the year ended December 31, 1997,
$280.0 million for the year ended December 31, 1996, $32.3 million for the four
months ended December 31, 1995, $338.3 million for the eight months ended August
31, 1995, $435.0 million for the year ended December 31, 1994, $88.4 million for
the two months ended December 31, 1993 and $364.7 million for the ten months
ended October 31, 1993. See "Selected Consolidated Financial Data."
The degree to which the Company is leveraged could have important
consequences to holders of the Common stock, 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 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 (including, under certain circumstances, a cross-default
of other debt).
Capital Expenditure Requirements
The Company's capital expenditures for 1998 are currently
anticipated to total approximately $90.4 million compared to capital
expenditures totaling approximately $100.1 million for 1997. The Company's
capital expenditures budget for 1998 includes $60.0 million for flight
equipment related expenditures (including pre-delivery deposits 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 continue
to implement its strategic plan.
Liquidity
The Company's ability to improve its financial position and
meet its financial obligations will depend upon a variety of factors,
including: significantly improved operating results, favorable domestic and
international airfare pricing environments, absence of adverse general
economic conditions, more effective operating cost controls and efficiencies,
and the Company's ability to attract new capital and maintain adequate
liquidity. On December 31, 1997, the Company's total cash and cash
equivalents balance was approximately $237.8 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). This balance represented an increase of approximately $56.2
million from the Company's corresponding cash balance at December 31, 1996.
This increase in the Company's cash balance resulted primarily from the
proceeds from various capital markets offerings during 1997 and asset
dispositions offset by capital expenditures and debt repayments. Due to
improvements in operating results experienced by the Company, cash used by
operations in 1997 was reduced from the prior year. On March 31, 1998, the
Company had total cash and cash equivalents of $346.1 million.
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. As a result of the financings consummated in the fourth quarter of
1997 and the repayment of certain debt in connection therewith, assets with
an approximate appraised value of $165.0 million were released from
collateral liens. Since that time, the Company has sold and subsequently
leased back 15 B-727 aircraft and sold two L-1011 aircraft leaving assets with
an approximate appraised value of $100.0 million free and clear of liens and
encumbrances. Further pledging of these unencumbered assets, however, may be
limited by negative pledge restrictions in outstanding indebtedness.
Substantially all of TWA's other strategic assets, have been pledged to
secure various issues of outstanding indebtedness of the Company. To the
extent that pledged assets are sold, the applicable financing agreements
generally require the sale proceeds to be applied to repay the corresponding
indebtedness. To the extent that the Company's access to capital is
constrained, the Company may not be able to make certain capital expenditures
or to continue to implement certain other aspects of its strategic plan, and
the Company may therefore be unable to achieve the full benefits expected
therefrom.
The Company's 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. 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, improved operational reliability; 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.
Prior Operating Losses and Future Uncertainties Relating to
Results of Operations; Results for First Quarter 1998
TWA's long-term viability depends on its ability to achieve and
maintain profitable operations. Although the airline industry has generally
seen strengthened performance in recent years, particularly since 1995 when
many airlines reported record profits, the Company has reported significant
net losses. For example, the Company reported a net loss of $227.5 million
for the combined 12-month period ended December 31, 1995 (including
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), which represented 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. The Company's 1997 financial results reflected a net loss of $110.8
million, which represented an improvement of $174.0 million over the $284.8
million net loss for the full year 1996, and a $29.3 million operating loss,
which represented a $169.2 million improvement over the $198.5 million
operating loss reported for the full year 1996. 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.
On April 22, 1998, the Company reported financial results for
the first quarter 1998 reflecting an operating loss of $68.7 million and a net
loss before extraordinary items of $54.1 million for the three months ended
March 31, 1998, including a non-cash operating expense of $26.5 million
relating to the distribution in July 1998 of Common Stock to employee stock
plans. These results compare with an operating loss of $99.5 million and a
net loss before extraordinary items of $70.0 million in the first quarter
1997. Excluding the effect of non-cash expense associated with earned stock
compensation, the first quarter 1998 operating loss was $42.2 million compared
to the first quarter 1997 operating loss of $98.2 million. Similarly
calculated, the net loss before extraordinary items for the first quarter 1998
and 1997 were $38.0 million and $69.3 million, respectively. Operating
revenue for the first quarter 1998 was $765.4 million versus $762.3 million in
the first quarter 1997 despite a slight reduction in capacity from the first
quarter 1997 to 1998 resulting from the replacement of B747 and L-1011
aircraft with smaller B767, B757 and MD-80 aircraft.
TWA has historically experienced significant variations in
quarterly and annual operating revenues and operating expenses and expects
such variations to continue. Due to the greater demand for air travel during
the summer months, airline industry revenues for the third quarter of the year
are generally significantly greater than revenues in the first and fourth
quarters of the year and moderately greater than revenues in the second
quarter of the year. In the past, given the Company's historical dependence
on summer leisure travel, TWA's results of operations have been particularly
sensitive to such seasonality. While the Company, through an acceleration of
its fleet renewal program and restructuring of its JFK operations, anticipates
that the deseasonalization of operations affected thereby will reduce quarter
to quarter fluctuations in the future, there can be no assurance that such
deseasonalization will occur.
The Company's results of operations have also been impacted by
numerous other factors that are not necessarily seasonal. Among the
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 necessitating additional
capital or operating expenditures; (vii) the outcome of certain ongoing labor
negotiations (see "--'94 Labor Agreements"); and (viii) the reduction in yield
due to the continued implementation of a discount ticket program entered into
by the Company with Karabu Corporation ("Karabu"), a Delaware corporation
controlled by Carl Icahn, in connection with the '95 Reorganization on the
terms currently applied by Karabu (which terms are, in the opinion of the
Company, inconsistent with, and in violation of, the agreement governing such
program). The Company is unable to predict the potential impact of any such
uncertainties upon its future results of operations.
On March 20, 1996, the Company filed a Petition (the "TWA
Petition") in the Circuit Court for St. Louis County, Missouri, commencing a
lawsuit against Carl Icahn, Karabu and certain other entities affiliated with
Icahn (collectively, the "Icahn Defendants"). The TWA Petition alleged that the
Icahn Defendants are violating the Ticket Program Agreement between the
Company and Karabu (the "Ticket Agreement") relating to the discount ticket
program 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. The TWA Petition sought a declaratory judgment finding that the
Icahn Defendants have violated the Ticket Agreement, and also sought
liquidated, compensatory and punitive damages, in addition to the Company's
costs and attorney's fees. On May 7, 1998 the court denied the TWA
Petition and dismissed the Icahn Defendants' counterclaims. The court
concluded that the Icahn Defendants could sell discount tickets under the
Ticket Agreement to any person who actually uses the ticket, including non-
business travelers, and that the Icahn Defendants had not breached the
Ticket Agreement. No damages were assessed in respect to either
plaintiff's or defendants' petitions.
The court's ruling could have an adverse effect on TWA's
revenue, which could be significant but the impact of which will depend on a
number of factors, including yield, load factors and whether any resulting
incremental sales by the Icahn Defendants will be to passengers that would not
otherwise have flown on TWA. The Icahn Defendants have moved to amend or
modify the court's ruling to include a declaratory judgment that the Icahn
Defendants are permitted to sell tickets to any person for any purpose which
could include use by the purchaser's family members or friends. TWA has
opposed this motion and has requested that the court clarify the ruling to
limit its scope consistent with the reasoning set forth in the decision,
specifically that the person purchasing the ticket must use the ticket (with
certain enumerated exceptions) and may not purchase a ticket for any other
person. TWA also intends to appeal the court's ruling in its entirety.
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. The National Transportation Safety Board held hearings
relating to the crash in December 1997 and is continuing its investigation.
While TWA is currently a defendant in a number of lawsuits relating to the
crash, 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 or from any future findings by the National Transportation Safety
Board.
Changes to Management Team
Commencing in June 1996, the Company experienced a substantial
number of changes in its executive management team. Although the Company
believes that a stable executive management team has now been put in place,
there can be no assurance that future changes will not occur or, that if such
changes do occur, that they will not adversely affect future operations.
Current Executives of the Company
---------------------------------
DATE OF
ELECTION OR
APPOINTMENT
NAME CURRENT TITLE AS EXECUTIVE
---- ------------- ------------
Gerald L. Gitner(1) Chairman & CEO December 1996
William F. Compton(2) President & COO December 1996
Michael J. Palumbo Senior Vice President & CFO December 1996
Donald M. Casey Executive Vice President, Marketing May 1997
James F. Martin Senior Vice President, Human Resources November 1997
Kathleen A. Soled Senior Vice President & General Counsel January 1998
- ------------
(1) Mr. Gitner, a director since November 1993, was Vice Chairman and Acting
CEO from December 1996 until February 1997.
(2) Mr. Compton, a director since November 1993, was Acting Executive Vice
President, Operations from December 1996 until March 1997 and Executive
Vice President, Operations from March 1997 until December 1997.
In addition, David M. Kennedy, a director, served as Acting
Executive Vice President and Chief Operating Officer from December 1996 until
June 1997.
'94 Labor Agreements
As of March 31, 1998, the Company had approximately 22,203
full-time employees (based upon full-time equivalents which include part-time
employees). Of these, approximately 84.6% were represented by ALPA and the
IAM. On March 6, 1997, the IAM was certified to replace IFFA as the
bargaining representative of the Company's flight attendants. The Company's
currently effective collective bargaining agreement with each such union
(collectively the " '94 Labor Agreements") 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 became amendable as of August 31, 1997. Negotiations on a new
collective bargaining agreement with the IAM with regard to the flight
attendants commenced in July 1997 and are currently ongoing and negotiations
regarding the Company's ground employees represented by the IAM commenced in
February 1997 and are also currently ongoing. Negotiations on a new
collective bargaining agreement with ALPA commenced in June 1997 and are
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 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. At the request of the IAM, a
mediator was appointed on August 6, 1997 with respect to ground employees
represented by the IAM. On March 27, 1998, at the request of the IAM, a
mediator was appointed with respect to the flight attendants represented by
the IAM.
In the opinion of management, 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.
In connection with certain wage scale adjustments afforded to
non-contract employees, employees previously represented by the IFFA have
asserted and won an arbitration ruling with respect to the comparability of
wage concessions made in 1994 that, if sustained, would require that the
Company provide additional compensation to such employees. The Company
estimates that at December 31, 1997 such additional compensation that would be
payable pursuant to the arbitration ruling would be approximately $12.0
million. The Company denies any such obligation and is pursuing an appeal of
the arbitration ruling and a court award affirming the ruling. Effective
September 1, 1997, the Company also reduced the overall compensation and
benefits package for non-contract employees so as to offset, in the Company's
view, any claims by such employees previously represented by IFFA for any
retroactive or prospective wage increases. As such, no liability has been
recorded by the Company.
Age of Fleet; Noise
At March 31, 1998, the average age of TWA's operating aircraft
fleet was 16.5 years, making TWA's fleet one of the oldest of U.S. air
carriers. As a result, TWA has incurred increased overall operating costs due
to the higher maintenance, fuel and other operating costs associated with
older aircraft. During 1997, TWA acquired 27 new or later-model used
aircraft. The Company expects to continue the process of acquiring a number
of new and later-model used aircraft. As of March 31, 1998, TWA's fleet
included 55 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 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. Many of the Company's
aircraft are currently affected by these aging aircraft ADs. In 1996 and
1997, TWA spent approximately $3.4 million and $4.2 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 an additional approximately $19.8 million through
the year 2001. 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 "--Liquidity; Substantial Indebtedness; Capital
Expenditure Requirements" and "--Aging Aircraft Maintenance."
Potential Dilution
The Company underwent two financial restructurings during the
period between 1992 and 1995, with the first of such restructurings effected
in 1993 (the "'93 Reorganization") and the second of such restructurings
effected in 1995 (the "'95 Reorganization" and, together with the '93
Reorganization, the "Reorganizations"). Pursuant to the '95 Reorganization,
the Company canceled its then outstanding equity securities in exchange for
new securities and other consideration and issued a special class of voting
preferred stock in three series (the "Employee Preferred Stock") to its union
employees and shares of Common Stock to its non-union employees. Also 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 an employee stock incentive program (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.
The first stock grant under the ESIP was to be made on July 15,
1997 in an amount sufficient to increase employee ownership of the combined
total number of then outstanding shares of Common Stock and Employee Preferred
Stock by 2.0% if the average Closing Price of the Common Stock for 30
consecutive trading days (the "Average Closing Price") exceeded a target price
of $11.00 per share during the period from January 1, 1997 to July 14, 1997.
Because such target price was not reached, the grant would instead be made on
July 15 of the next year (up to and including July 15, 2002) in which the
Average Closing Price of the Common Stock exceeded such target price prior to
July 15 of that year. In each of 1998 through 2002, additional shares of
Employee Preferred Stock and Common Stock will become subject to grant under
this program in an amount sufficient to increase the employee ownership by
1.5% in 1998, 1.5% in 1999, 1.0% in 2000, 1.0% in 2001 and 1.0% in 2002
(subject to adjustment as described below) based on the combined total number
of shares of Common Stock and Employee Preferred Stock outstanding as of the
applicable July 15 grant date, with the target price applicable to the
additional shares made available for grant in such year equal to $12.10 in
1998, $13.31 in 1999, $14.64 in 2000, $16.11 in 2001 and $17.72 in 2002. Each
such grant is cumulative and, where the applicable target price is not met in
the initial grant year, the applicable grant is carried forward and is subject
to grant in future years up to and including July 15, 2002 in the manner
described above. To protect against the dilutive effect of certain stock
issuances, the ESIP provides for an adjustment (the "Adjustment") to the grants
described above in the event the Company issues additional Common Stock to
third parties for cash or property or in lieu of cash payments on the 12%
Senior Secured Reset Notes due 1998 (the "12% Reset Notes") or the Company's
Mandatorily Redeemable 12% Preferred Stock (both the 12% Reset Notes and the
Mandatorily Redeemable 12% Preferred Stock have been retired). To the extent
that a sale of additional capital stock for cash results in a decline in the
percentage of employee ownership of the combined total number of shares of
Common Stock and Employee Preferred Stock below a level equal to the Adjusted
Base Ownership Percentage (as defined in the ESIP), one-quarter of the
difference between the new percentage of employee ownership and the Adjusted
Base Ownership Percentage (but in no event greater than 1.0% in each year)
would be added to the percentage of Employee Preferred Stock and Common Stock
to be granted to union employees and non-union employees, respectively, under
the ESIP in each of the years 1999 through 2002, assuming the target prices
are met. Furthermore, if TWA issues additional shares of Common Stock with an
aggregate value of more than $20 million to third parties for cash or a
reduction in debt at a price equal to or greater than $11.00 per share (the
"Equity Issuance Acceleration Trigger"), the last two scheduled grants under
the ESIP are to be aggregated and these shares allocated equally to the
remaining installments in the program. In addition, pursuant to the ESIP,
employees have the right commencing July 15, 1997 through July 15, 2002, to
purchase additional shares of Employee Preferred Stock in amounts up to an
aggregate of 2.0% of the combined total number of outstanding shares of Common
Stock and Employee Preferred Stock at a discount of 20.0% from the then
current market price. Should all of the target prices be met or exceeded
within the time periods specified and should the entire discount stock
purchase option be exercised, the various employee stock trusts would receive
a total of 10.0% (as adjusted as described below) of the Company's outstanding
Common Stock, with the exact amount issued dependent upon the number of shares
outstanding as of the date of each grant and option exercise.
The ESIP separately provides that if additional shares of
Employee Preferred Stock and Common Stock are distributed following the '95
Effective Date in respect of the '95 Reorganization, employees will be
entitled to receive an additional number of shares of Employee Preferred Stock
and Common Stock such that the employees will retain the same level of
ownership. Union representatives and the Company agreed to a one-time
distribution pursuant to this provision of the ESIP in an aggregate amount of
525,856 shares of Employee Preferred Stock and Common Stock. As part of that
agreement, since additional ESIP shares were not issued to the employees in
July 1997, an additional 405,750 shares of Employee Preferred Stock and Common
Stock were issued to the employee trusts and, to the extent that additional
shares are granted under the ESIP, the Company will receive a credit towards
the new grant for these previously issued shares, in that amount.
While the $11.00 target price was not exceeded as of July 15,
1997 and no grant was made on that date, on February 17, 1998, the Average
Closing Price for the Company's Common Stock did exceed the $11.00 target price
with respect to the first scheduled grant. As a result, the initial grant in
an amount sufficient to increase the employee ownership by 2.0% based on the
then outstanding Common Stock and Employee Preferred Stock will be made on July
15, 1998. Based on the current outstanding Voting Equity (as defined in the
ESIP) of 57,890,907, the number of shares of Employee Preferred Stock and
Common Stock to be issued to the employees under the ESIP on that date is
1,515,472. TWA is entitled to a credit against this number in the amount of
405,750 shares due to the prior grant to employees as described above. In
addition, on March 4, 1998, the Average Closing Price for the Company's Common
Stock exceeded the $12.10 target price with respect to the 1998 grant of 1.5%.
As a result, the 1998 grant in an amount sufficient to increase the employee
ownership by 1.5% based on the then outstanding Common Stock and Employee
Preferred Stock will also be made on July 15, 1998. Based on the current
outstanding Voting Equity, the number of additional shares of Employee
Preferred Stock and Common Stock to be issued under the ESIP on that date for
the 1998 grant is 1,172,354 shares, which together with the shares to be
issued in connection with the 1997 grant equals a total of 2,282,076 shares.
The number of shares to be granted could be increased if the last two grants
are accelerated pursuant to the Equity Issuance Acceleration Trigger.
Furthermore, based on issuances of Common Stock to date, the Adjustment has
resulted in a revised grant schedule of 1.5% in 1998, 1.84% in 1999, 1.34% in
2000, 1.34% in 2001 and 1.34% in 2002. Assuming the Transaction is
consummated and taking into account the Common Stock issued upon conversion of
the Equity Notes, the grants for the years 1999 through 2002 would further
increase pursuant to the Adjustment to: 2.13% in 1999, 1.63% in 2000, 1.63% in
2001 and 1.63% in 2002. Finally, in the event that the Transaction is
consummated and the final conversion price of the Equity Notes to be issued in
connection with the Transaction is in excess of $11.00 per share, the Equity
Issuance Acceleration Trigger will be met and the final two scheduled
installments will be aggregated and these shares will be allocated equally to
the remaining installments in the program. As a result, the remaining grants
would be as follows: 2.81% in 1997 (already vested and payable on July 15,
1998); 2.31% in 1998 (already vested and payable on July 15, 1998); 2.94% in
1999 if the Average Closing Price exceeds $13.31 and 2.44% in 2000 if the
Average Closing Price exceeds $14.64.
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 for the award of incentive and nonqualified stock options for a
cumulative total of up to 14% of the aggregate number of shares of Common
Stock and Employee Preferred Stock outstanding as of January 1, of each year,
subject to certain restrictions. As of December 31, 1997, [69] 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 unless otherwise approved by the
Compensation Committee vest at a rate of 34%, 33% and 33% on the first three
anniversaries of the award date of such options. See "Business--Employees."
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.
In March 1997, the Company issued 50,000 Units (the "Units")
each consisting of (i) one 12% Senior Secured Note due April 1, 2002 (a "12%
Note"), in the principal amount of $1,000 of the Company and (ii) one
Redeemable Warrant (a "Warrant") to purchase 126.26 shares of Common Stock at
an exercise price of approximately $7.92 per share. The Warrants are
exercisable commencing March 31, 1998 through their expiration on April 1,
2002, unless previously redeemed by the Company. If all of the Warrants were
exercised an aggregate of 6,313,000 additional shares of Common Stock would be
issued.
In December 1997, the Company issued 1,725,000 shares of the
Company's 9-1/4% Cumulative Convertible Exchangeable Preferred Stock (the "1997
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 $7.90 per share (equivalent to a conversion rate of approximately 6.329
shares of Common Stock for each share of 1997 Preferred Stock), subject to
adjustment under certain circumstances. Based on the current conversion price,
upon conversion of all shares of 1997 Preferred Stock into shares of Common
Stock, an aggregate of 10,917,525 additional shares of Common Stock would be
issued.
The Company is currently negotiating the acquisition of one
additional Boeing 767-231 ETOPS airframe and accompanying engines currently
being leased by the Company in exchange for the proposed issuance of (i) $14.5
million aggregate principal amount of senior secured notes and (ii) $13.0
million aggregate principal amount of mandatory conversion equity notes (the
"New Equity Notes"). Such notes would be issued in a private placement to
the sellers of such aircraft, would not be registered under the Securities Act
and could not be transferred or sold in the United States absent registration
or an applicable exemption from registration requirements. The terms of the
New Equity Notes are expected to be similar (but not identical) to those of
the Equity Notes. In particular, the New Equity Notes would be convertible
into shares of Common Stock based upon a formula set forth in such notes
immediately following (a) the effectiveness of a shelf registration statement
filed by the Company with respect to resales of such shares of Common Stock
and (b) the approval for listing of such Common Stock on the ASE. In
connection with the issuance of the New Equity Notes, the Company is expected
to agree to use its reasonable best efforts to file and have declared
effective such shelf registration statement as soon as practicable after the
New Equity Notes are issued, but in no event earlier than June 23, 1998.
Corporate Governance Provisions; Special Voting Arrangements
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 (the "Blocking Coalition 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, which together constitute a
"Blocking Coalition". Actions subject to disapproval by the Blocking Coalition
include: (a) any sale, transfer or disposition, in a single or series of
transactions, of at least 20% of the Company's assets, except for transactions
in the ordinary course of business including aircraft transactions as part of
a fleet management plan; (b) any merger of the Company into or with, or
consolidation of the Company with any other entity; (c) any business
combination within the meaning of Section 203 of the Delaware General
Corporation Law (the "DGCL"); (d) any dissolution or liquidation of the
Company; (e) any filing of a petition for bankruptcy, reorganization or
receivership under any state or federal bankruptcy, reorganization or
insolvency law; (f) any repurchase, retirement or redemption of the Company's
capital stock or other equity securities prior to their scheduled maturity or
expiration, except for redemptions out of the proceeds of any substantially
concurrent offering of comparable or junior securities and mandatory
redemptions of any redeemable preferred stock of the Company; (g) any
acquisition of assets, not related to the Company's current business as an air
carrier, in a single transaction or a series of related transactions exceeding
$50 million adjusted annually by the consumer price index; or (h) any sale of
the Company's capital stock or securities convertible into capital stock of
the Company to any person if (i) at the time of issuance or (ii) assuming
conversion of all outstanding securities of the Company convertible into
capital stock, such person or entity would beneficially own at least 20% of
the capital stock of the Company.
Anti-takeover Provisions in Certificate of Incorporation and
By-laws; Rights Plan
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 and the Blocking Coalition Provisions, as well as
federal laws limiting foreign ownership of U.S. flag carriers and the
prohibition on certain business combinations contained in Section 203 of the
DGCL, could have the effect of delaying, deferring or preventing a change in
control or the removal of existing management. In addition, the Board of
Directors declared a dividend distribution of one Right for each outstanding
share of Common Stock and Employee Preferred Stock payable to holders of
record as of the close of business on January 12, 1996 and, thereafter all
Common Stock issued by the Company has had an equivalent number of rights
attendant to it. The Rights are intended to protect TWA's shareholders from
certain non-negotiated takeover attempts which present the risk of a change of
control on terms which may be less favorable to TWA's stockholders than would
be available in a transaction negotiated with and approved by the Board of
Directors of the Company. See "Certain Provisions of the Certificate of
Incorporation, the By-laws and Delaware Law" and "Description of Capital
Stock--Rights Plan."
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 employee stock incentive plan (the "ESIP")
will generally result in a charge equal to the fair market value of shares
granted plus 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 (the 1997 and 1998
target prices having been met) would be approximately $108.8 million based
upon such target prices and the number of shares of Common Stock and Employee
Preferred Stock outstanding at January 30, 1998. The charge for any year,
however, could be substantially higher if the then market price of the Common
Stock exceeds certain target prices. On February 17, 1998, the first target
price of $11.00 was realized and a grant of 2.0% of the outstanding Common
Stock and Employee Preferred Stock will be made on July 15, 1998. Based on
the current number of outstanding shares of Common Stock and Employee
Preferred Stock and taking into account a credit with respect to the Company's
required contribution, the net contribution will be 1,109,722 shares. In
addition, on March 4, 1998 the market price of the Company's Common Stock
exceeded the $12.10 target price for the 30-day period necessary to earn the
1998 grant. As a result, on July 15, 1998 the Company will be required to
make an additional contribution to the relevant employee trusts of 1.5% of its
Common Stock and Employee Preferred Stock. Based on the current number of
outstanding shares of Common Stock and Employee Preferred Stock, that
contribution would be 1,172,354 shares. As a result of the grants earned in
1998, an aggregate non-cash charge in connection with such issuance was
recorded in the first quarter of 1998 in the amount of $26.5 million. However,
the actual number of shares and the actual charge will not be known until the
shares are issued on July 15, 1998.
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 Consolidated 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.
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 various 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 RASM and cost per
available seat mile ("CASM") 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 as a result of mergers
and liquidations and more recently through alliances, 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. In
addition, many of the major U.S. carriers have announced plans for alliances
with other major U.S. carriers. Such alliances could further intensify the
competitive environment. In addition, certain of the Company's competitors
have in recent years established alliances with one or more large foreign
carriers, allowing those competitors to strengthen their overall operations
by, among other things, transporting passengers connecting with or otherwise
traveling on the alliance carriers. Although the Company has established a
code share arrangement with one foreign carrier and has filed an application
with the DOT to establish an alliance with another foreign carrier, it does
not have an alliance with a large foreign carrier.
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 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. Certain of the traditional carriers that
compete with TWA have implemented, or are in the process of implementing,
measures to reduce their operating costs including the creation of low cost
regional jet airline affiliates. 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 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 and approximately 14.3%
in 1997), 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% versus 1995,
from approximately 57.0 Cents per gallon to approximately 69.8 Cents per
gallon. During 1997, the Company's average per gallon cost of fuel decreased
approximately 5.6%, from approximately 69.8 Cents per gallon to approximately
65.9 Cents per gallon. During the first quarter of 1998, the Company's
average per gallon cost of fuel decreased approximately 25.0%, from
approximately 74.1 Cents per gallon to approximately 55.6 Cents per gallon,
over the same period in 1997. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations." A one cent change in the cost
per gallon of fuel (based on consumption during 1997) impacts operating
expense by approximately $609,000 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.
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 expects that a number of aircraft
will be retired before major aging aircraft modifications and noise compliance
will be required; however, required capital expenditures will vary depending
upon changes in TWA's 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--Liquidity; Substantial Indebtedness; Capital Expenditure
Requirements."
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. For
example, several airports have recently sought to increase substantially the
rates charged to airlines, and the ability of airlines to contest such
increases has been restricted by federal legislation, DOT resolutions and
judicial decisions. In addition, 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.
Congress has passed tax legislation reimposing and significantly modifying the
Ticket Tax, effective October 1, 1997. The legislation includes the
imposition of new excise tax and significant fee tax formulas over a multiple
year period, an increase in the international departure tax, the imposition
of a new arrivals tax, and the extension of the Ticket Tax to cover items such
as the sale of frequent flier miles. Management believes that the
reimposition and modification of the Ticket Tax will have a negative impact on
the Company, although neither the amount of such negative impact nor the
benefit previously realized by its expiration can be precisely determined.
However, management believes that the recent tax legislation and any other
increases 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.
USE OF PROCEEDS
The Selling Holders (as defined herein) will receive all of the
net proceeds from any sale of the Common Stock, and, accordingly, the Company
will receive none of the proceeds from the sales thereof.
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below relate
to periods in the three months ended March 31, 1998 and 1997, years ended
December 31, 1997 and 1996, the four months ended December 31, 1995, the eight
months ended August 31, 1995, the year ended December 31, 1994, the two months
ended December 31, 1993 and the ten months ended October 31, 1993. The
consolidated financial data for the above periods were derived from the
audited consolidated financial statements of the Company. Certain amounts
have been reclassified to conform with presentations adopted in 1997.
During the period from 1992 through 1995, TWA underwent two
separate Chapter 11 reorganizations, the first in 1992-93 and the second in
1995. In connection with the '95 Reorganization, TWA has applied fresh start
reporting in accordance with 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"), which has resulted in
the creation of a new reporting entity for accounting purposes and the
Company's assets and liabilities being adjusted to reflect fair values on the
'95 Effective Date. A description of the adjustments to the financial
statements arising from the consummation of the '95 Reorganization and the
application of fresh start reporting is contained in Note 19 to the
Consolidated Financial Statements. For accounting purposes, the '95 Effective
Date is deemed to be September 1, 1995. Because of the application of fresh
start reporting, the financial statements for periods after the '95
Reorganization are not comparable in all respects to the financial statements
for periods prior to the reorganization. Similarly, the Consolidated
Financial Statements for the periods prior to the '93 Reorganization are not
consistent with periods subsequent to the '93 Reorganization. Accordingly, a
vertical black line separates these periods. Preferred stock dividend
requirements and earnings per share of the predecessor companies have not been
presented as these amounts are not meaningful
<TABLE>
<CAPTION>
Reorganized Company
----------------------------------------------------------------
Four Months
Three Months Ended Ended
March 31, Year Ended December 31, December 31,
1998 1997 1997 1996 1995
-------- -------- ---------- ---------- ------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Operating revenues..... $765,389 $762,306 $3,327,952 $3,554,407 $1,098,474
Operating income
(loss)(1)............ (68,707) (99,486) (29,260) (198,527) 10,446
Loss before income
taxes and
extraordinary
items(2)............. (79,558) (105,193) (89,335) (274,577) (32,268)
Provision (credit) for
income taxes......... (25,418) (35,161) 527 450 1,370
Loss before
extraordinary items.. (54,140) (70,032) (89,862) (275,027) (33,638)
Extraordinary items,
net of income
taxes(3)............. (1,380) (1,532) (20,973) (9,788) 3,500
Net income (loss)...... (55,520) (71,564) (110,835) (284,815) (30,138)
Preferred Stock
dividend
requirements.........
Income (loss)
applicable to common
shares...............
Weighted average
shares outstanding...
Ratio of earnings to
combined fixed
charges and
preferred stock
dividends(4)......... -- -- -- -- --
Per share amounts(5):
Loss before
extraordinary
items.............. $(1.04) $(1.51) $(1.98) $(6.60) $(1.15)
Net loss............. (1.06) (1.54) (2.37) (7.27) (1.05)
<CAPTION>
Prior
Predecessor
Predecessor Company Company
--------------------------------------- -----------
Eight Months Two Months Ten Months
Ended Year Ended Ended Ended
August 31, December 31, December 31, October 31,
1995 1994 1993 1993
----------- ---------- ------------ -----------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Statement of Operations
Data:
Operating revenues..... $2,218,355 $3,407,702 $520,821 $2,633,937
Operating income
(loss)(1)............ 14,642 (279,494) (58,251) (225,729)
Loss before income
taxes and
extraordinary
items(2)............. (338,309) (432,869) (88,140) (362,620)
Provision (credit) for
income taxes......... (96) 960 (248) 1,312
Loss before
extraordinary items.. (338,213) (433,829) (87,892) (363,932)
Extraordinary items,
net of income
taxes(3)............. 140,898 (2,005) -- 1,075,581
Net income (loss)...... (197,315) (435,834) (87,892) 711,649
Preferred Stock
dividend
requirements.........
Income (loss)
applicable to common
shares...............
Weighted average
shares outstanding...
Ratio of earnings to
combined fixed
charges and
preferred stock
dividends(4)......... -- -- -- --
Per share amounts(5):
Loss before
extraordinary
items..............
Net loss.............
</TABLE>
<TABLE>
<CAPTION>
Reorganized Company Predecessor Company
----------------------------------------------------- -------------------------
December 31,
March 31, -------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
--------- ---------- ---------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Selected Balance Sheet Data:
Cash and cash equivalents(6)...... $ 346,134 $ 237,765 $ 181,586 $ 304,340 $ 138,531 $ 187,717
Current assets.................... 860,591 632,957 625,745 737,301 603,806 728,303
Net working capital (deficiency).. (211,471) (303,988) (336,416) (81,913) (1,238,216) (106,703)
Flight equipment, net............. 594,399 626,382 472,495 455,434 508,625 660,797
Total property and equipment, net. 706,718 741,765 614,207 600,066 693,045 886,116
Intangible assets, net............ 1,103,034 1,118,864 1,184,786 1,275,995 921,659 1,024,846
Total assets...................... 2,974,701 2,773,848 2,681,939 2,868,211 2,512,435 2,958,862
Current maturities of long-term
debt and capital leases(7)...... 85,779 88,460 134,948 110,401 1,149,739 108,345
Long-term debt, less current
maturities(7)................... 855,771 736,540 608,485 764,031 -- 1,053,644
Long-term obligations under
capital leases, less current
maturities...................... 174,520 182,922 220,790 259,630 339,895 376,646
Shareholders' equity
(deficiency)(8)................. 207,151 268,284 238,105 302,855 (417,476) 18,358
</TABLE>
- ------------
(1) Includes special charges of $85.9 million in 1996, $1.7 million in the
eight months ended August 31, 1995 and $138.8 million in 1994. For a
discussion of these and other non-recurring items, see Note 16 to the
Consolidated Financial Statements.
(2) The eight months ended August 31, 1995 includes charges of $242.2 million
related to reorganization items. The ten months ended October 31, 1993
includes a charge of $342.4 million related to the settlement of pension
obligations and income of $268.1 million related to reorganization items.
(3) The extraordinary items in 1997 and 1996 are the result of the early
extinguishment of certain debt. The extraordinary item in the four months
ended December 31, 1995 was the result of the settlement of a debt of a
subsidiary, while the extraordinary item in the eight months ended August
31, 1995 represents the gain on the discharge of indebtedness pursuant to
the consummation of the '95 Reorganization. The extraordinary item in 1994
represents the charge for a prepayment premium related to the sale and
lease back of four McDonnell Douglas MD-80 aircraft. The extraordinary
item in 1993 represents the gain on discharge of indebtedness pursuant to
the consummation of the '93 Reorganization.
(4) For purposes of determining the ratio of earnings to fixed charges,
"earnings" consist of earnings before income taxes, extraordinary items and
fixed charges (excluding capitalized interest) and "fixed charges" consist
of interest (including capitalized interest) on all debt and that portion
of rental expense that management believes to be representative of
interest. Earnings were not sufficient to cover fixed charges as follows
(in millions): for the three months ended March 31, 1998 and 1997, $80.6
and $105.7, respectively; for the years ended December 31, 1997 and 1996,
$94.1 and $280.0, respectively; for the four months ended December 31,
1995, $32.3; for the eight months ended August 31, 1995, $338.3; for the
year ended December 31, 1994, $435.0; for the two months ended December 31,
1993, $88.4; and for the ten months ended October 31, 1993, $364.7.
(5) No effect has been given to stock options, warrants, convertible preferred
stock or potential issuances of additional Employee Preferred Stock as the
impact would have been anti-dilutive.
(6) Includes cash and cash equivalents held in international operations and by
subsidiaries which, based upon foreign monetary regulations and other
factors, might not be immediately available to the Company.
(7) Long-term debt in 1994 was reclassified to current maturities as a result
of certain alleged defaults and payment defaults.
(8) No dividends were paid on the Company's outstanding common stock during
the periods presented above.
SELLING HOLDERS
The Registration Statement has been filed pursuant to Rule 415
under the Securities Act of 1933, as amended (the "Securities Act") to afford
the holders of the securities offered hereby the opportunity to sell such
securities in a public transaction rather than pursuant to an exemption from the
registration and prospectus delivery requirements of the Securities Act. In
order for a Selling Holder to avail himself of that opportunity, such holder
must notify the Company in writing of his intention to sell securities and
request the Company to file a supplement to this Prospectus or an amendment to
the Registration Statement, if required, identifying such holder as a Selling
Holder and disclosing such other information concerning the Selling Holder and
the securities to be sold as may then be required by the Securities Act and the
rules of the Commission. No offer or sale pursuant to this Prospectus may be
made by any holder until such a request has been made and until any such
supplement has been filed or any such amendment has become effective. The
holders of securities who have made such a request and as to which any such
required supplement or amendment has been filed or become effective are referred
to herein as "Selling Holders."
As of the date of this Prospectus, no holder of securities has
made such a request and, accordingly, no Selling Holders are named herein.
The Company will from time to time supplement or amend this Prospectus to
reflect the required information concerning any Selling Holder.
DESCRIPTION OF EQUITY NOTES
The Equity Notes were initially issued and delivered by TWA to
First Security Bank, National Association, as owner trustee (the "Owner
Trustee") under the trust agreement (the "Trust") dated as of January 24, 1995
between Seven Sixty Seven Leasing, Inc., the beneficiary named therein (the
"Beneficiary") and the Owner Trustee, in partial payment of the aggregate
purchase price of $75.0 million ($25.0 million per Aircraft) for three Boeing
767-231 ETOPS airframes and six associated engines (collectively, the
"Aircraft").
Mandatory Conversion
Immediately following the occurrence of both (i) the
effectiveness of the Registration Statement and (ii) the approval for listing
of the Common Stock on the ASE, or such other stock exchange or market on
which the Common Stock is then principally traded, each Equity Note will be
automatically converted into fully paid and non-assessable shares of Common
Stock in accordance with the provisions of the Indenture dated as of April 21,
1998 by and between the Company and First Security Bank, National Association,
as Trustee.
Registration Rights
Pursuant to the Registration Rights Agreement, the Company was
required to file and did file with the Commission, on or prior to the 60th day
after the date of original issuance of the Equity Notes, the Registration
Statement to register resales of the shares of Common Stock into which the
Equity Notes are convertible (the "Restricted Common Stock"). The Company will
use its reasonable best efforts to cause the Registration Statement to become
effective within 150 days after the date of original issuance of the Equity
Notes and to keep such Registration Statement effective until the earlier of
(i) the sale of all securities covered by the Registration Statement and (ii)
the expiration of two years after the date of original issuance of the Equity
Notes or, if the period applicable under Rule 144(k) under the Securities Act,
or any successor provision for such securities, is shortened, such shorter
period.
The Company has also agreed that it will use its reasonable
efforts to have the shares of Restricted Common Stock approved for listing on
the ASE, or such other stock exchange or market on which the Common Stock is
then principally traded, no later than the date on which this Registration
Statement becomes effective and to maintain such listing until the earlier of
(i) the sale of all securities covered by the Shelf Registration Statement and
(ii) the expiration of two years after the date of original issuance of the
Equity Notes or, if the period applicable under Rule 144(k) under the
Securities Act, or any successor provision for such securities, is shortened,
such shorter period.
Prior to the termination of the Company's obligations under the
Registration Rights Agreement, if after the date of original issuance of the
Equity Notes either the Registration Statement shall cease to be effective
(without being succeeded immediately by an additional shelf registration
statement registering resales of the Company's Common Stock filed and declared
effective for any reason) or the Company shall fail to maintain the listing of
the Common Stock on the ASE, or such other stock exchange or market on which
the Common Stock is then principally traded, for a period of time which shall
in the aggregate exceed 60 days during any 365-day period (each such event, an
"Effectiveness Default"), the Company will pay liquidated damages ("Liquidated
Damages") to each holder of Restricted Common Stock issued upon conversion of
the Equity Notes, during the first 90-day period immediately following the
occurrence of such Effectiveness Default in an amount equal to $0.01 per week
per share (subject to adjustment in the event of stock splits, stock
recombinations, stock dividends and the like) of such Restricted Common Stock.
The amount of the Liquidated Damages will increase by an additional $0.01 per
week per share (subject to adjustment as set forth above) of Restricted Common
Stock for each subsequent 90-day period until the Registration Statement again
becomes effective or the shares of Common Stock have again been approved for
listing on the ASE, or such other stock exchange or market on which the Common
Stock is then principally traded, up to a maximum amount of Liquidated Damages
with respect to any Effectiveness Default of $0.05 per week per share (subject
to adjustment as set forth above) of Restricted Common Stock. All accrued
Liquidated Damages shall be paid to holders of the Restricted Common Stock by
wire transfer of immediately available funds or by federal funds check by the
Company on the last business day in each month. Following the cure of an
Effectiveness Default, Liquidated Damages will cease to accrue with respect to
such Effectiveness Default.
Holders of Restricted Common Stock will be required to make
certain representations to the Company (as described in the Registration
Rights Agreement) in order to benefit from the provisions regarding Liquidated
Damages set forth in the preceding paragraph. The Company has agreed to use
its reasonable best efforts to file on a timely basis all such reports
required to be filed under the Exchange Act as, and endeavor in good faith to
take such other actions as, are reasonably necessary to enable any beneficial
owner of Restricted Common Stock to sell such or Restricted Common Stock
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144, as such rule may be amended from time to
time, or any similar rules or regulations hereafter adopted by the Commission.
DESCRIPTION OF CAPITAL STOCK
Pursuant to TWA's Certificate of Incorporation, the Company has
the authority to issue 287.5 million shares of capital stock, consisting of
150 million shares of Common Stock, and 137.5 million additional shares of
preferred stock. The Certificate of Incorporation authorizes the Board of
Directors to establish one or more series of preferred stock and to establish
such relative voting, dividend, redemption, liquidation, conversion and other
powers, preferences, rights, qualifications, limitations and restrictions as
the Board of Directors may determine without further approval of the
stockholders of the Company. The issuance of preferred stock by the Board of
Directors could, among other things, adversely affect the voting power of the
holders of Common Stock and, under certain circumstances, make it more
difficult for a person or group to gain control of the Company. See "Certain
Provisions of the Certificate of Incorporation, the By-laws and Delaware Law."
The issuance of any series of preferred stock, and the relative
powers, preferences, rights, qualifications, limitations and restrictions of
such series, if and when established, will depend upon, among other things,
the future capital needs of the Company, the then existing market conditions
and other factors that, in the judgment of the Board of Directors, might
warrant the issuance of preferred stock. At the date of this Prospectus,
there are no plans, agreements or understandings relative to the issuance of
any additional series of preferred stock other than the Series A Preferred
Stock issuable pursuant to the Rights.
Description of Common Stock
The holders of the Common Stock are entitled to one vote per
share on all matters voted on by stockholders, including elections of
directors, and, except for the voting rights of the holders of Employee
Preferred Stock (who are entitled to elect a total of four directors to the
Board) and, under certain circumstances, the 1997 Preferred Stock and 8%
Preferred Stock, and as otherwise required by law or provided in any
resolution adopted by the Board of Directors with respect to any series of the
preferred stock, the holders of such shares exclusively possess all voting
power. The Certificate of Incorporation does not provide for cumulative
voting in the election of directors but the Board is classified, which means
that the holders of a majority of the shares entitled to vote at a meeting at
which a quorum is present can elect all of the directors of the class then to
be elected (except that the holders of a majority of the shares of Employee
Preferred Stock are exclusively entitled to elect four labor directors) and
the holders of the remaining shares would not be able to elect any directors
at that meeting. Subject to any preferential rights of the 8% Preferred
Stock, the 1997 Preferred Stock or any other outstanding series of Preferred
Stock entitled to vote in the election of directors, the holders of Common
Stock are entitled to such dividends as may be declared from time to time by
the Board of Directors from funds available therefor, and upon liquidation are
entitled to receive pro rata all assets of the Company available for
distribution to such holders. The holders of Common Stock have no preemptive
rights and no rights to convert their shares of Common Stock into any other
security. It is not presently anticipated that dividends will be paid on the
Common Stock in the foreseeable future. All outstanding shares of Common
Stock are fully paid and nonassessable, and the shares of Common Stock
issuable upon conversion of the 1997 Preferred Stock and the 8% Preferred
Stock and, if issued, upon conversion of the 91/4% Convertible Subordinated
Debentures due 2007 (the "2007 Debentures") and the 8% Convertible
Subordinated Debentures due 2006 (the "2006 Debentures") will be, upon
issuance, fully paid and nonassessable. As of May 29, 1998, 52,242,014 shares
of Common Stock were issued and outstanding and were held by approximately
21,581 holders of record.
Rights Plan
The Board of Directors of the Company declared a dividend
distribution of one right (a "Right") for each outstanding share of Common
Stock and Employee Preferred Stock (collectively, the "Voting Stock") payable
to holders of record as of the close of business on January 12, 1996 (the
"Record Date") and, thereafter, all Common Stock issued by the Company has had
an equivalent number of Rights attendant to it. Each Right entitles the
holder to purchase, after the Distribution Date (as defined below), from the
Company one one-hundredth of a share of Series A Preferred Stock of the
Company at a price of $47.50 (the "Purchase Price"). The description and
terms of the Rights are set forth in a Rights Agreement, dated as of December
19, 1995 between the Company and American Stock Transfer & Trust Company, as
Rights Agent (the "Rights Agent") as supplemented. The Rights Plan is set
forth in full in the Rights Agreement and the description thereof herein is
qualified in its entirety by reference to such Rights Agreement.
Until the earlier to occur of (a) the tenth day after public
announcement that any person or group has become the beneficial owner of at
least 15% of the Company's Voting Stock (other than pursuant to a "Permitted
Offer," as defined below) and (b) the tenth business day after the date of the
commencement of a tender or exchange offer (other than a Permitted Offer) by
any person which would, if consummated, result in such person becoming the
beneficial owner of at least 20% of the Voting Stock (the earlier of such
dates being hereinafter called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Voting Stock certificates outstanding as
of the Record Date, by such Voting Stock certificates.
Each share of Voting Stock issued or delivered by the Company
after the Record Date but prior to the earlier of the Distribution Date or the
expiration of the Rights shall be accompanied by one Right.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the Voting Stock.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), the surrender or transfer of any certificates for Voting Stock in
respect of which Rights have been issued will also constitute the transfer of
the Rights associated with the Voting Stock represented by such certificates.
As soon as practicable after the Distribution Date, separate certificates
evidencing the Rights (the "Right Certificates") will be mailed to holders of
record of the Voting Stock as of the close of business on the Distribution
Date and such separate Right Certificates alone will evidence the Rights.
No Right is exercisable at any time prior to the Distribution
Date. The Rights will expire on January 12, 2006 (the "Final Expiration
Date") unless earlier exchanged or redeemed by the Company as described below.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including without limitation the right to
vote or to receive dividends.
Upon exercise, each Right shall be converted into one
one-hundredth of a share of the Series A Preferred Stock. Holders of shares
of Series A Preferred Stock are entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available therefor, quarterly
dividends in an amount per share equal to the greater of (a) $1.00 and (b) 100
times the aggregate per share amount of all cash dividends or other
distributions (other than dividends payable solely in shares of Common Stock),
declared on the Common Stock since the first dividend payment date with respect
to the Series A Preferred Stock. Dividends payable on the Series A Preferred
Stock are cumulative. In addition, in the event the Company enters into any
consolidation, merger, combination or other transaction in which shares of
Common Stock are exchanged for or changed into other stock or securities,
shares of Series A Preferred Stock shall be similarly exchanged for or changed
into 100 times the aggregate amount of stock, securities, cash or other
consideration.
Subject to the rights of holders of the 1997 Preferred Stock
and the 8% Preferred Stock, holders of shares of Series A Preferred Stock are
entitled to 100 votes on all matters submitted to a vote of the stockholders
of TWA, voting together as a single class, except as otherwise required by
applicable law. In the event dividends payable on the Series A Preferred
Stock shall be in arrears in an amount equal to six quarterly payments, all
holders of the Series A Preferred Stock together with other holders of
preferred stock entitled to vote, shall, voting together as a single class be
entitled to elect one director to the Company's Board of Directors.
In the event that any person or group (an "Acquiring Person")
becomes the beneficial owner of at least 15% of the Company's Voting Stock,
then each Right (other than Rights beneficially owned by the Acquiring Person
and certain affiliated persons) will entitle the holder to elect to receive,
without payment of the Purchase Price, a number of shares of the Company's
Common Stock having a market value equal to the Purchase Price. The term
"Acquiring Person" does not include (i) the Company, any of its subsidiaries
or any employee benefit plan of the Company, except for any such employee
benefit plan acting in concert with a third party (other than another employee
benefit plan of the Company) or (ii) any person or group which becomes the
beneficial owner of at least 15% of the Voting Stock pursuant to a "Permitted
Offer" (as defined below).
"Permitted Offer" means a tender or exchange offer by a Person
for all outstanding shares of Voting Stock, which is made at a price and on
such other terms determined by at least a majority of the Continuing Directors
(as defined below) to be in the best interests of the Company and its
stockholders.
In the event that, after any person has become an Acquiring
Person, (i) the Company is involved in a merger or other business combination
in which the Company is not the surviving corporation or its Voting Stock is
exchanged for other securities or assets or (ii) the Company and/or one or
more of its subsidiaries sell or otherwise transfer assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its subsidiaries, taken as a whole, then each Right will entitle the holder to
purchase, for the Purchase Price, a number of shares of Common stock of the
other party to such business combination or sale (or in certain circumstances,
an affiliate) having a market value of two times the Purchase Price.
At any time after any person has become an Acquiring Person
(but before any person becomes the beneficial owner of at least 50% of the
Voting Stock), a majority of the Company's Continuing Directors may exchange
all or part of the Rights (other than the Rights beneficially owned by the
Acquiring Person and certain affiliated persons) for shares of Common Stock at
an exchange ratio of one share of Common Stock per Right.
"Continuing Director" means (i) any member of the Board of
Directors who was a member of the Board prior to the time an Acquiring Person
becomes such or (ii) any person subsequently elected to the Board if he is
recommended or approved by a majority of the Continuing Directors or, in the
case of a successor to a director elected by holders of a series of Employee
Preferred Stock, if such person is elected pursuant to the applicable terms of
such Employee Preferred Stock. Continuing Directors do not include an
Acquiring Person, an affiliate or associate of an Acquiring Person or any
representative or nominee of the foregoing.
The Company may redeem the Rights, in whole but not in part, at
a price of $.01 per Right at any time prior to the close of business on the
tenth day after public announcement that any person has become an Acquiring
Person (subject to extension by a majority of the Continuing Directors).
After the Distribution Date, the Rights Agreement may be
amended in any respect that does not adversely affect the Rights holders
(other than any Acquiring Person and certain affiliated persons). In addition,
after any person has become an Acquiring Person, the Rights Agreement may be
amended only with the approval of a majority of the Continuing Directors.
Description of Employee Preferred Stock
Pursuant to the '95 Reorganization, the Company issued an
aggregate of 6,425,118 shares of Employee Preferred Stock to employee stock
trusts for the benefit of certain domestic employees of the Company then
represented by ALPA, IFFA and IAM pursuant to the terms of the '94 Labor
Agreements (collectively, the "Employee Stock Trusts"). The Employee Preferred
Stock was issued in three series designated ALPA Preferred Stock, IAM
Preferred Stock and IFFA Preferred Stock. Except for an exclusive right to
elect a certain number of directors to the Board of Directors and the
liquidation preference described below under "--Liquidation Preference and
Other Rights," the Employee Preferred Stock is the functional equivalent of
Common Stock. The Employee Preferred Stock is junior to the 1997 Preferred
Stock and the 8% Preferred Stock, as to the payment of dividends and the
distribution of assets upon Liquidation.
Dividends
Subject to the issuance by the Company of preferred stock with
senior rights (including the 1997 Preferred Stock and the 8% Preferred Stock),
the holders of the Employee Preferred Stock are entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available
therefor, dividends payable in cash, stock or otherwise. No dividends may be
paid on the Common Stock unless an equivalent dividend is paid on the Employee
Preferred Stock, and no dividends may be paid on the Employee Preferred Stock
unless an equivalent dividend is paid on the Common Stock. It is not presently
anticipated that dividends will be paid on the Employee Preferred Stock in the
foreseeable future.
Liquidation Preference and Other Rights
Subject to the issuance by the Company of preferred stock with
senior rights (including the 1997 Preferred Stock and the 8% Preferred Stock),
upon any liquidation of the Company, holders of the Employee Preferred. Stock
will be entitled to a liquidation preference equal to $.01 per share from
TWA's net assets before any amounts are paid to, or on account of, the holders
of Common Stock, and thereafter the remaining net assets of the Company will
be distributed pro rata to the holders of the Employee Preferred Stock, the
Common Stock and other equity securities of the Company which rank on a parity
with such stock and with respect to such rights, all in accordance with their
respective rights and interests. The Employee Preferred Stock does not have
redemption rights.
Automatic Conversion
Each share of Employee Preferred Stock will automatically
convert into one share of Common Stock upon the withdrawal of such share of
Employee Preferred Stock from the Employee Stock Trust in which such share is
held.
Voting
So long as any shares of ALPA Preferred Stock are outstanding,
the holders of the ALPA Preferred Stock are entitled to one vote per share (i)
on each matter submitted to a vote at a meeting of stockholders other than the
election of directors and (ii) for the ALPA Director (defined below) to be
elected at an annual meeting of stockholders. Such holders have the exclusive
right to elect to the Board one director (the "ALPA Director"), which director
shall be a Class II director.
So long as any shares of IFFA Preferred Stock are outstanding,
the holders of the IFFA Preferred Stock are entitled to one vote per share (i)
on each matter submitted to a vote at a meeting of stockholders other than the
election of directors and (ii) for the IFFA Director (defined below) to be
elected at an annual meeting of stockholders. Such holders have the exclusive
right to elect to the Board one director (the "IFFA Director"), which director
shall be a Class II director.
So long as any shares of IAM Preferred Stock are outstanding,
the holders of the IAM Preferred Stock are entitled to one vote per share (i)
on each matter submitted to a vote at a meeting of stockholders other than the
election of directors and (ii) for the IAM Directors (defined below) to be
elected at an annual meeting of stockholders. Such holders have the exclusive
right to elect to the Board two directors (the "IAM Directors"), one of which
directors shall be a Class II director and one of which shall be a Class III
director.
Amendment
The Certificate of Designations, Preferences and Rights
relating to each series of Employee Preferred Stock may be amended only upon
the unanimous approval of the holders of the outstanding shares of such series
of Employee Preferred Stock.
Description of the 8% Preferred Stock
The 8% Preferred Stock ranks on a parity with the 1997
Preferred Stock and on a parity with all other Preferred Stock, the terms of
which expressly provide that it ranks on a parity with the 8% Preferred Stock
with respect to dividends and amounts payable upon Liquidation. The 8%
Preferred Stock ranks senior to the Common Stock, the Series A Preferred
Stock, if issued, and the Employee Preferred Stock with respect to payment of
dividends and amounts payable upon Liquidation.
Dividends
The holders of the 8% Preferred Stock are entitled to receive
cumulative cash dividends at the rate of 8% per annum (equivalent to $4.00 per
share per annum), when, as and if declared by the Board of Directors out of
funds legally available therefor. Dividends and liquidated damages, if any,
are payable quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year (and, in the case of any accrued but unpaid
dividends, at such additional times and for such interim periods, if any, as
determined by the Board of Directors) to the holders of record on the record
dates, which shall be not more than 30 days nor less than 10 days preceding
the payment dates. Dividends on the 8% Preferred Stock commenced to accrue on
March 18, 1996
If dividends are not paid in full upon the 8% Preferred Stock
and any other preferred stock ranking on a parity as to dividends with the 8%
Preferred Stock, all dividends declared upon shares of 8% Preferred Stock and
such other preferred stock ranking on a parity as to dividends with the 8%
Preferred Stock will be declared pro rata so that in all cases the amount of
dividends declared per share on the 8% Preferred Stock and such other
preferred stock bear to each other the same ratio that accrued and unpaid
dividends per share on the shares of the 8% Preferred Stock and such other
preferred stock bear to each other. Except as set forth above, unless full
cumulative dividends or the 8% Preferred Stock have been paid and funds set
aside, and all liquidated damages, if any, paid, dividends (other than
dividends paid solely in Common Stock or other stock ranking junior as to
dividends and liquidation preference) may not be paid or declared and set
aside for payment and other distributions may not be made upon the Common
Stock or on any other stock of the Company ranking junior to or on a parity
with the 8% Preferred Stock as to dividends and liquidation preference. Under
such circumstances, such stock may not be redeemed, purchased, or otherwise
acquired for any consideration by the Company.
Conversion Rights
Each share of 8% Preferred Stock may be converted at any time
at the option of the holder, unless previously redeemed or exchanged, into
fully paid, nonassessable shares of Common Stock at an initial conversion
price of $20.269 per share of Common Stock (equivalent to a conversion rate of
approximately 2.467 shares of Common Stock for each share of 8% Preferred
Stock), subject to adjustments in certain circumstances. The right to convert
8% Preferred Stock called for redemption will expire at the close of business
on the fifth business day prior to the redemption date. Whenever the Company
issues shares of Common Stock upon conversion of 8% Preferred Stock, the
Company will, subject to certain conditions, issue, together with each share
of Common Stock, one Right, entitling the holder to purchase one one-hundredth
of a share of Series A Preferred Stock under certain circumstances.
No fractional shares of Common Stock will be issued upon
conversion but, in lieu thereof, an appropriate amount will be paid in cash
based on the Closing Price on the last trading day before the conversion date.
The conversion price is subject to adjustment upon the occurrence of certain
events.
Optional Redemption by the Company
The 8% Preferred Stock may not be redeemed prior to March 15,
1999. On or after March 15, 1999, the 8% Preferred Stock may be redeemed, in
whole or in part, at the option of the Company, at a redemption price of $52.80
in 1999 and at a redemption price decreasing by $0.40 increments each March 15
thereafter until 2006, from which time the redemption price shall be and
remain $50.00, in each case, plus accrued and unpaid dividends thereon to the
date fixed for redemption.
Liquidation Rights
Upon any Liquidation of the Company, and after provision is
made for any preferential amounts to which the holders of any senior preferred
stock may be entitled, holders of 8% Preferred Stock will be entitled to
receive from the Company's assets available for distribution to all
stockholders $50.00 per share plus all accrued and unpaid dividends through
the date of distribution or determination whether or not declared, and
liquidated damages, if any, before any distribution is made on the Employee
Preferred Stock or Common Stock, Series A Preferred Stock (if issued) or any
other capital stock ranking junior to the 8% Preferred Stock and will be
entitled to such amount on a parity with the 1997 Preferred Stock and every
other series of the Company's preferred stock that ranks on a parity with the
8% Preferred Stock in respect of distributions of assets upon Liquidation.
Neither a consolidation or merger of the Company with another corporation nor
a sale or transfer of all or substantially all of the Company's assets for
cash, securities or other property will be considered a liquidation,
dissolution or winding up of the Company for these purposes.
Voting Rights
Except as indicated below or otherwise required by law, holders
of 8% Preferred Stock have no voting rights. If at any time the equivalent of
six quarterly dividends payable on the 8% Preferred Stock are accrued and
unpaid, the holders of all outstanding shares of 8% Preferred Stock and any
stock ranking on a parity as to dividends with the shares of 8% Preferred
Stock and having similar voting rights then exercisable, voting separately as
a class without regard to series, will be entitled to elect at the next annual
or special meeting of the stockholders of the Company, two directors to serve
until all dividends accumulated and unpaid have been paid or declared and
funds set aside to provide for payment in full. In exercising any such vote,
each outstanding share of 8% Preferred Stock will be entitled to one vote,
excluding shares held by the Company or any entity controlled by the Company,
which shares shall have no vote.
Exchange Provisions
Provided that all accrued and unpaid dividends and liquidated
damages, if any, then owing on the 8% Preferred Stock have been paid, the 8%
Preferred Stock is exchangeable in whole, but not in part, at the Company's
option for the Company's 2006 Debentures on any dividend payment date,
beginning on March 15, 1998, at the rate of $50.00 principal amount thereof
for each share of 8% Preferred stock outstanding at the time of exchange. The
2006 Debentures are issuable in denominations of $1,000 and integral multiples
thereof. The 2006 Debentures, if issued, will be unsecured, subordinated
obligations of the Company and will mature on March 15, 2006. The 2006
Debentures are convertible into fully paid non assessable shares of Common
Stock and may be redeemed on and after March 15, 1999 at the option of the
Company.
Description of the 1997 Preferred Stock
The 1997 Preferred Stock ranks on a parity with the 8%
Preferred Stock and on a parity with all other Preferred Stock, the terms of
which expressly provide that it ranks on a parity with the 1997 Preferred
Stock with respect to dividends and amounts payable upon Liquidation. The 1997
Preferred Stock ranks senior to the Common Stock, the Series A Preferred
Stock, if issued, and the Employee Preferred Stock with respect to payment of
dividends and amounts payable upon Liquidation.
Dividends
The holders of the 1997 Preferred Stock are entitled to receive
cumulative cash dividends at the rate of 91/4% per annum (equivalent to $4.625
per share per annum), when, as and if declared by the Board of Directors out
of funds legally available therefor. Dividends and liquidated damages, if any,
are payable quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year (and, in the case of any accrued but unpaid
dividends, at such additional times and for such interim periods, if any, as
determined by the Board of Directors) to the holders of record on the record
dates, which shall be not more than 30 days nor less than 10 days preceding
the payment dates. Dividends on the 1997 Preferred Stock commenced accruing on
December 2, 1997.
If dividends are not paid in full upon the 1997 Preferred Stock
and any other preferred stock ranking on a parity as to dividends with the
1997 Preferred Stock, all dividends declared upon shares of 1997 Preferred
Stock and such other preferred stock ranking on a parity as to dividends with
the 1997 Preferred Stock will be declared pro rata so that in all cases the
amount of dividends declared per share on the 1997 Preferred Stock and such
other preferred stock bear to each other the same ratio that accrued and
unpaid dividends per share on the shares of the 1997 Preferred Stock and such
other preferred stock bear to each other. Except as set forth above, unless
full cumulative dividends or the 1997 Preferred Stock have been paid and funds
set aside, and all liquidated damages, if any, paid, dividends (other than
dividends paid solely in Common Stock or other stock ranking junior as to
dividends and liquidation preference) may not be paid or declared and set
aside for payment and other distributions may not be made upon the Common Stock
or on any other stock of the Company ranking junior to or on a parity with the
1997 Preferred Stock as to dividends and liquidation preference. Under such
circumstances, such stock may not be redeemed, purchased, or otherwise
acquired for any consideration by the Company.
Conversion Rights
Each share of 1997 Preferred Stock may be converted at any time
at the option of the holder, unless previously redeemed or exchanged, into
fully paid, nonassessable shares of Common Stock at an initial conversion
price of $7.90 per share of Common Stock (equivalent to a conversion rate of
approximately 6.329 shares of Common Stock for each share of 1997 Preferred
Stock), subject to adjustments in certain circumstances. The right to convert
1997 Preferred Stock called for redemption will expire at the close of
business on the second business day prior to the redemption date. Whenever the
Company issues shares of Common Stock upon conversion of 1997 Preferred Stock,
the Company will, subject to certain conditions, issue, together with each
share of Common Stock, one Right, entitling the holder to purchase one
one-hundredth of a share of Series A Preferred Stock under certain
circumstances.
No fractional shares of Common Stock will be issued upon
conversion but, in lieu thereof, an appropriate amount will be paid in cash
based on the Closing Price on the last trading day before the conversion date.
The conversion price is subject to adjustment upon the occurrence of certain
events.
Optional Redemption by the Company
The 1997 Preferred Stock may not be redeemed prior to December
15, 2000. On or after December 15, 2000, the 1997 Preferred Stock may be
redeemed, in whole or in part, at the option of the Company, at a redemption
price of $53.24 in 2000 and at a redemption price decreasing by approximately
$0.46 each December 15 thereafter until 2007, from which time the redemption
price shall be and remain $50.00, in each case, plus accrued and unpaid
dividends thereon to the date fixed for redemption.
Liquidation Rights
Upon any Liquidation of the Company, and after provision is
made for any preferential amounts to which the holders of any senior preferred
stock may be entitled, holders of 1997 Preferred Stock will be entitled to
receive from the Company's assets available for distribution to all
stockholders $50.00 per share plus all accrued and unpaid dividends through
the date of distribution or determination whether or not declared, and
liquidated damages, if any, before any distribution is made on the Employee
Preferred Stock or Common Stock, Series A Preferred Stock (if issued) or any
other capital stock ranking junior to the 1997 Preferred Stock and will be
entitled to such amount on a parity with the 8% Preferred Stock and every
other series of the Company's preferred stock that ranks on a parity with the
1997 Preferred Stock in respect of distributions of assets upon Liquidation.
Neither a consolidation or merger of the Company with another corporation nor
a sale or transfer of all or substantially all of the Company's assets for
cash, securities or other property will be considered a liquidation,
dissolution or winding up of the Company for these purposes.
Voting Rights
Except as indicated below or otherwise required by law, holders
of 1997 Preferred Stock have no voting rights. If at any time the equivalent
of six quarterly dividends payable on the 1997 Preferred Stock are accrued and
unpaid, the holders of all outstanding shares of 1997 Preferred Stock and any
stock ranking on a parity as to dividends with the shares of 1997 Preferred
Stock and having similar voting rights then exercisable, voting separately as
a class without regard to series, will be entitled to elect at the next annual
or special meeting of the stockholders of the Company, two directors to serve
until all dividends accumulated and unpaid have been paid or declared and
funds set aside to provide for payment in full. In exercising any such vote,
each outstanding share of 1997 Preferred Stock will be entitled to one vote,
excluding shares held by the Company or any entity controlled by the Company,
which shares shall have no vote.
Exchange Provisions
Provided that all accrued and unpaid dividends and liquidated
damages, if any, then owing on the 1997 Preferred Stock have been paid, the
1997 Preferred Stock is exchangeable in whole, but not in part, at the
Company's option for the 2007 Debentures on any dividend payment date,
beginning on December 15, 1999, at the rate of $50.00 principal amount thereof
for each share of 1997 Preferred Stock outstanding at the time of exchange.
The 2007 Debentures are issuable in denominations of $1,000 and integral
multiples thereof. The 2007 Debentures, if issued, will be unsecured,
subordinated obligations of the Company and will mature on December 15, 2007.
The 2007 Debentures are convertible into fully paid non assessable shares of
Common Stock and may be redeemed on and after December 15, 2000 at the option
of the Company.
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION,
THE BY-LAWS AND DELAWARE LAW
The Certificate of Incorporation and the By-laws contain
certain provisions that could make more difficult the acquisition of the
Company by means of a tender offer, a proxy contest or otherwise. These
provisions are expected to discourage certain types of coercive takeover
practices and inadequate takeover bids and to encourage persons seeking to
acquire control of the Company first to negotiate with the Company. The
Company believes that the benefits of increased protection of the Company's
potential ability to negotiate with the proponent of an unfriendly or
unsolicited proposal to acquire or restructure the Company outweigh the
disadvantages of discouraging such proposals because, among other things,
negotiation of such proposals could result in an improvement of their terms.
In addition, pursuant to the '95 Reorganization and in connection with the
adoption of the '94 Labor Agreements, the Company adopted certain amendments,
both to the Certificate of Incorporation and the By-laws, relating to
corporate governance matters. These amendments are designed to enhance the
input of the Company's union employees or the directors nominated by them in
the governance of the Company and to limit the ability to change the
provisions of the Certificate of Incorporation in general and the By-laws in
particular without broad support from the Company's voting stockholders. Such
provisions will also make it more difficult to enact any change in the By-laws
or to take any of the specified actions, if such changes or actions are
opposed by a substantial constituency, including the Company's employees who
are represented by organized labor. The description set forth below is
intended as a summary only and is qualified in its entirety by reference to
the Certificate of Incorporation and the By-laws.
Board of Directors
The Certificate of Incorporation and the By-laws provide,
subject to any rights of holders of the Company's preferred stock to elect
additional directors under certain circumstances, that the number of directors
constituting the entire Board of Directors will be fifteen. The Certificate
of Incorporation also provides that, as of the 1999 annual meeting of
stockholders, the term of service for each director will be one year. Subject
to any rights of holders of any class or series of the Company's preferred
stock, a majority of the remaining directors then in office has the sole
authority to fill any vacancies on the Board of Directors. See "Description
of Capital Stock--Description of Employee Preferred Stock." Any director
elected to fill a vacancy will hold office for the remainder of the full term
in which the vacancy occurred and until the director's successor is elected
and qualified. The Certificate of Incorporation provides that directors may
be removed only by the affirmative vote of at least a majority of the voting
power of all the then outstanding shares of stock entitled to vote generally
in the election of directors, voting together as a single class. The
affirmative vote of at least 80% of the Voting Stock, voting together as a
single class, is required to amend or repeal, or adopt any provision
inconsistent with, the provision of the Certificate of Incorporation relating
to the number, election and terms of directors.
Stockholder Actions and Special Meetings
The Certificate of Incorporation provides that stockholder
action can be taken only at an annual or special meeting of stockholders, and
prohibits, subject to the rights of holders of any class or series of the
Company's preferred stock to the contrary, stockholder action by written
consent in lieu of a meeting. The Certificate of Incorporation and By-laws
provide that, subject to the rights of holders of any series of preferred
stock, special meetings of stockholders can be called only by (i) the Chairman
of the Board of Directors of the Company, (ii) the Corporate Secretary of the
Company within ten calendar days after receipt of the written request of a
majority of the total number of directors that the Corporation would have if
there were no vacancies, and (iii) the Board of Directors after receipt by the
Company of a written request executed by the holders of at least 35% of the
outstanding Voting Stock of the Company, provided, however, that no separate
special meeting will be required to be convened if the Board of Directors
calls an annual or special meeting to be held no later than ninety (90)
calendar days after receiving the request for a meeting and the purposes of
such annual or special meeting of stockholders called by the Board of
Directors include the purposes specified in the request. Business permitted to
be conducted at a special meeting of stockholders is limited to the business
(x) specified in the notice of meeting given by or at the direction of the
chairman of the meeting or a majority of the entire Board of Directors or (y)
otherwise properly brought before the meeting by the chairman of the meeting
or at the direction of a majority of the entire Board of Directors. Moreover,
the chairman of the annual or special meeting of the stockholders will
determine whether any business sought to be brought before the meeting is
properly brought.
Pursuant to the Certificate of Incorporation, the By-laws
establish an advance notice procedure with regard to the nomination, other
than by or at the direction of the Board of Directors, of candidates for
election as directors and with regard to business to be brought before an
annual meeting of stockholders of the Company.
Amendment of the Certificate of Incorporation and By-laws
The Certificate of Incorporation contains provisions requiring
the affirmative vote of the holders of at least 80% of the Voting Stock,
voting together as a single class, to amend certain provisions of the
Certificate of Incorporation, primarily those related to anti-takeover
provisions. In addition, the Certificate of Incorporation requires the
affirmative vote of at least three-fourths of its issued and outstanding
Voting Stock, voting as a single class and not as separate classes, to amend
the By-laws by stockholder action. "Voting Stock" means the outstanding
shares of all classes and series of capital stock of the Company entitled to
vote generally in the election of directors of the Company and does not
include any class or series of preferred stock of the Company unless the
certificate of designations, preferences and rights for such class or series
specifically states that such class or series shall be deemed "Voting Stock"
for purposes of the Certificate of Incorporation. Employee Preferred Stock has
been deemed Voting Stock and the 1997 Preferred Stock and the 8% Preferred
Stock are not Voting Stock. See "Description of Capital Stock."
Blocking Coalition
Pursuant to the '94 Labor Agreements and in connection with the
'95 Reorganization, the Company amended the By-laws to provide that certain
actions (as set forth in the next paragraph) may not be approved by the Board
of Directors if votes are cast against such actions by directors sufficient to
constitute a "Blocking Coalition." A Blocking Coalition is defined as the
negative votes of (i) a total of the four directors elected by the holders of
the Employee Preferred Stock plus (ii) the negative votes of any two of the
Company's other directors.
Actions subject to disapproval by the Blocking Coalition
include: (a) any sale, transfer or disposition, in a single or series of
transactions, of at least 20% of the Company's assets, except for transactions
in the ordinary course of business including aircraft transactions as part of
a fleet management plan; (b) any merger of the Company into or with, or
consolidation of the Company with any other entity; (c) any business
combination within the meaning of Section 203 of the DGCL; (d) any dissolution
or liquidation of the Company; (e) any filing of a petition for bankruptcy,
reorganization or receivership under any state or federal bankruptcy,
reorganization or insolvency law; (f) any repurchase, retirement or redemption
of the Company's capital stock or other equity securities prior to their
scheduled maturity or expiration, except for redemptions out of the proceeds
of any substantially concurrent offering of comparable or junior securities
and mandatory redemptions of any redeemable preferred stock of the Company;
(g) any acquisition of assets, not related to the Company's current business
as an air carrier, in a single transaction or a series of related transactions
exceeding $50.0 million adjusted annually by the consumer price index; or (h)
any sale of the Company's capital stock or securities convertible into capital
stock of the Company to any person if (i) at the time of issuance or (ii)
assuming conversion of all outstanding securities of the Company convertible
into capital stock, such person or entity would beneficially own at least 20%
of the capital stock of the Company.
Super Majority Voting Provisions
At all times before September 1, 2000, the Company must obtain
the approval of at least two-thirds of the issued and outstanding Voting Stock
of the Company, voting as a single class and not as separate classes, for the
holders of such Voting Stock to approve certain actions, unless such matters
have been approved by a vote of at least 80% of the Board of Directors then in
office. Actions requiring such approval are the following: (i) any merger of
the Company into or with, or consolidation of the Company with, any other
entity; (ii) any business combination within the meaning of Section 203 of the
DGCL; (iii) any dissolution or liquidation of the Company; or (iv) any
repurchase, retirement or redemption of the Company's capital stock or other
equity securities prior to their scheduled maturity or expiration, except for
redemptions out of the proceeds of any substantially concurrent offering of
comparable or junior securities, and mandatory redemptions of any redeemable
preferred stock of the Company.
Preferred Stock
The Company believes that the ability of the Board of Directors
to issue one or more series of preferred stock of the Company provides TWA
with increased flexibility in structuring possible future financings and in
meeting other corporate needs that might arise. The authorized shares of
preferred stock, as well as shares of Common Stock, will be available for
issuance without further action by TWA's stockholders, unless such action is
required by applicable law or the rules of any stock exchange on which TWA
securities may be listed. If the approval of TWA's stockholders is not
required for the issuance of shares of preferred stock or Common Stock, the
Board of Directors does not intend to seek stockholder approval. Although the
Board of Directors has no intention of doing so, it could issue a series of
preferred stock that could, depending on the terms of such series, impede the
completion of a merger, tender offer or other takeover attempt. The Board of
Directors will make any determination to issue such shares based on its
judgment as to the best interests of TWA and its stockholders. The Board of
Directors, in so acting, could issue preferred stock having terms that could
discourage an acquisition attempt or other transaction that some, or a
majority, of the stockholders might believe to be in their best interests or
in which stockholders might receive a premium for their stock over the then
current market price of such stock.
Rights to Purchase Stock
The Rights are intended to protect TWA's stockholders from
certain non-negotiated takeover attempts which present the risk of a change of
control on terms which may be less favorable to TWA's stockholders than would
be available in a transaction negotiated with and approved by the Board of
Directors of the Company. Although there can be no certainty as to the results
of any particular negotiation, the Board of Directors believes that the
interests of the stockholders are best served if any acquisition of TWA or a
substantial percentage of the Common Stock results from arms-length
negotiations and reflects the Board's or stockholders' careful consideration
of the proposed terms of a transaction. In particular, the Rights are intended
to help (a) reduce the risk of coercive, two-tiered, front-end loaded or
partial offers which may not offer fair value to all stockholders, (b)
mitigate against market accumulators who through open market or private
purchases may achieve a position of substantial influence or control without
paying to selling or remaining stockholders a fair control premium, and (c)
deter market accumulators who are simply interested in putting a Company "in
play." See "Description of Capital Stock--Rights Plan."
Anti-Takeover Statute
Section 203 of the DGCL is applicable to corporate takeovers in
Delaware. Subject to certain exceptions set forth therein, Section 203 of the
DGCL provides that a corporation shall not engage in any business combination
with any "interested stockholder" for a three-year period following the date
that such stockholder becomes an interested stockholder unless (a) prior to
such date, the board of directors of the corporation approved either the
business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, (b) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced (excluding
certain shares) or (c) on or subsequent to such date, the business combination
is approved by the board of directors of the corporation and by the
affirmative vote of at least 662/3% of the outstanding voting stock which is
not owned by the interested stockholder. Except as specified therein, an
interested stockholder is defined to include any person that is the owner of
15% or more of the outstanding voting stock of the corporation, or is an
affiliate or associate of the corporation and was the owner of 15% or more of
the outstanding voting stock of the corporation, at any time within three
years immediately prior to the relevant date, and the affiliates and
associates of such person. Under certain circumstances, Section 203 of the
DGCL makes it more difficult for an "interested stockholder" to effect various
business combinations with a corporation for a three-year period, although the
stockholders may, by adopting an amendment to the corporation's certificate of
incorporation or by-laws, elect not to be governed by this section, effective
twelve months after adoption. The Certificate of Incorporation and the By-laws
do not exclude TWA from the restrictions imposed under Section 203 of the
DGCL, but do provide that a business combination within the meaning of Section
203 of the DGCL (i) may be approved without the approval of at least 662/3% of
the Voting Stock if the business combination is approved by at least 80% of
the directors then in office and (ii) may not be approved if votes are cast
against the action by the Blocking Coalition. It is anticipated that the
provisions of Section 203 of the DGCL and the provisions of the Certificate of
Incorporation may encourage companies interested in acquiring TWA to negotiate
in advance with the Board of Directors of TWA since the stockholder approval
requirement would be avoided if 80% of the directors then in office approve
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
PROSPECTIVE PURCHASERS ARE STRONGLY URGED TO CONSULT THEIR OWN
TAX ADVISORS REGARDING THE TAX CONSEQUENCES OF ACQUIRING, HOLDING OR DISPOSING
OF THE COMMON STOCK IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AND THE
CONSEQUENCES UNDER FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
PLAN OF DISTRIBUTION
The Company will not receive any of the proceeds from the sale
of the Common Stock pursuant to this Prospectus, all of which will be sold by
Selling Holders. Such securities as offered hereby may be sold from time to
time to purchasers directly by the Selling Holders; alternatively, the Selling
Holders may from time to time offer such securities to and through
underwriters, broker/dealers or agents, who may receive compensation in the
form of underwriting discounts, concessions or commissions from the Selling
Holders or the purchasers of such securities for whom they may act as agents.
The Selling Holders and any underwriters, broker/dealers and agents that
participate in the distribution of such securities may be deemed to be
"underwriters" within the meaning of the Securities Act and any profit on the
sale of such securities by them and any discount commissions or other
compensation received by any such underwriter, broker/dealer or agent may be
deemed to be underwriting discounts and commissions under the Securities Act.
The Common Stock offered hereby may be sold from time to time
in one or more transactions at fixed prices, at prevailing market prices at
the time of sale, at varying prices determined at the time of sale or at
negotiated prices. The sale of such securities may be effected in
transactions (which may involve crosses or block transactions) (i) on any
national securities exchange or quotation service on which such securities may
be listed or quoted at the time of sale, (ii) in the over-the-counter market,
(iii) in transactions otherwise than on such exchanges or in the
over-the-counter market, or (iv) through the writing of options. At the time
a particular offering of such securities is made, a Prospectus Supplement, if
required, will be distributed which will set forth the aggregate amount of
Common Stock being offered and the terms of the offering, including the name
or names of any underwriters, broker/dealers or agents, any discounts,
commissions and other terms constituting compensation from the Selling Holders
and any discounts, commissions or concessions allowed or reallowed or paid to
broker/dealers.
To comply with the securities laws of certain jurisdictions, if
applicable, the Common Stock will be offered or sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in
certain jurisdictions, such securities may not be offered or sold unless they
have been registered or qualified for sale in such jurisdictions or any
exemption from registration or qualification is available and is complied with.
Pursuant to the Registration Rights Agreement, all expenses of
the registration of the Common Stock will be paid by the Company, including,
without limitation, SEC filing fees and expenses of compliance with state
securities or "blue sky" laws; provided, however, that the Selling Holders
will pay all underwriting discounts and selling commissions, if any. The
Company will indemnify the Selling Holders against certain civil liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith.
LEGAL MATTERS
The validity of the Common Stock offered hereby was passed upon
for the Company by Davis Polk & Wardwell, New York, New York.
EXPERTS
The consolidated financial statements of the Company as of
December 31, 1996 and 1997 and for each of the periods in the three year
periods ended December 31, 1997 included or incorporated by reference in this
Prospectus, have been audited by KPMG Peat Marwick LLP, independent auditors,
as set forth in their report appearing herein and are included in reliance
upon the report of such firm given and upon their authority as experts in
accounting and auditing. The report of KPMG Peat Marwick LLP refers to the
application of fresh start reporting in connection with the '95
Reorganization.
===============================================================================
No dealer, salesperson or other person has been authorized to
give any information or to make any representations other than those contained
in this Prospectus, and if given or made, such information or representations
must not be relied upon. This Prospectus does not constitute an offer to sell
or a solicitation by anyone in any jurisdiction in which such offer or
solicitation is not authorized, or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such offer or solicitation. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that the information contained herein is correct as of any time subsequent to
the date hereof or that there has been no change in the affairs of the Company
since the date hereof.
---------------
TABLE OF CONTENTS
Page
----
Available Information........................................................4
Incorporation of Certain Documents by Reference..............................5
Prospectus Summary...........................................................6
Risk Factors................................................................11
Use of Proceeds.............................................................19
Selected Consolidated Financial Data........................................20
Selling Holders.............................................................22
Description of Equity Notes.................................................22
Description of Capital Stock................................................24
Certain Provisions of the Certificate of Incorporation, the By-laws
and Delaware Law....................................................31
Certain Federal Income Tax Considerations...................................34
Plan of Distribution........................................................35
Legal Matters...............................................................35
Experts.....................................................................35
===============================================================================
===============================================================================
TRANS WORLD
AIRLINES, INC.
3,218,624 Shares (par value $0.01
per share) of Common Stock
---------------
PROSPECTUS
---------------
June __, 1998
===============================================================================
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution
SEC registration fee............................ $ 8,526
--------
Accounting fees................................. 15,000*
--------
Legal fees...................................... 50,000*
--------
Miscellaneous................................... 50,000*
--------
TOTAL...................................... $123,526*
========
- ------------
* Estimated
ITEM 15. Indemnification of Directors and Officers
Under the Delaware General Corporation Law (the "DGCL"),
directors, officers, employees and other individuals may be indemnified
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement in connection with specified actions, suits or proceedings,
whether civil, criminal, administrative or investigative (other than a
derivative action) if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of TWA and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe their conduct was unlawful. A similar standard of care is applicable
in the case of a derivative action, except that indemnification only extends
to expenses (including attorneys' fees) incurred in connection with the
defense or settlement of such an action, and the DGCL requires court approval
before there can be any indemnification of expenses where the person seeking
indemnification has been found liable to TWA.
The eleventh article of TWA's 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
settlement by nolo contendere) in defense of any action, suit or proceeding
referred to in the immediately preceding paragraph, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
Expenses incurred by an officer, director, employee or agent in
defending or testifying in a civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking
by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified by the Company against such expenses as authorized by Article
Eleventh and the Company may adopt By-Laws or enter into agreements with such
persons for the purpose of providing for such advances.
The indemnification permitted by Article Eleventh shall not be
deemed exclusive of any other rights to which any person may be entitled under
any agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in such person's official capacity and as to action in
another capacity while holding an office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such person.
The Company shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent
of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership,
joint venture, employee benefit plan trust or other enterprise, against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
Company would have the power to indemnify such person against such liability
under the provisions of Article Eleventh or otherwise.
If the DGCL is amended to further expand the indemnification
permitted to directors, officers, employees or agents of the Company, then the
Company shall indemnify such persons to the fullest extent permitted by the
DGCL, as so amended.
The obligations of the Company to indemnify any person serving
as one of its directors, officers or employees as of or following the
Company's '93 Reorganization, by reason of such person's past or future
service in such a capacity, or as a director, officer or employee of another
corporation, partnership or other legal entity, to the extent provided in
Article Eleventh or in similar constituent documents or by statutory law or
written agreement of or with the Company, shall be deemed and treated as
executory contracts assumed by the Company pursuant to the Company's '93
Reorganization. Accordingly, such indemnification obligations survive and were
unaffected by the entry of the order confirming the Company's '93
Reorganization. The obligations of the Company to indemnify any person who, as
of the '93 Reorganization, was no longer serving as one of its directors,
officers or employees, which indemnity obligation arose by reason of such
person's prior service in any such capacity, or as a director, officer or
employee of another corporation, partnership or other legal entity, to the
extent provided in the certificate of incorporation, by-laws or other
constituent documents or by statutory law or written agreement of or with TWA
were terminated and discharged pursuant to Section 502(e) of the United States
Bankruptcy Code or otherwise, as of the date the '93 Reorganization was
confirmed. Nothing contained in the Second Amended and Restated Certificate of
Incorporation of the Company shall be deemed to reinstate any obligation of
the Corporation to indemnify any person or entity, which was otherwise
released under or in connection with the Comprehensive Settlement Agreement
entered into pursuant to the '93 Reorganization.
ITEM 16. Exhibits
(a) Exhibits
*2.1 --Joint Plan of Reorganization, dated May 12, 1995 (Appendix B to the
Registrant's Registration Statement on Form S-4, Registration Number
33-84944, as amended)
*2.2 --Modifications to Joint Plan of Reorganization, dated July 14, 1995 and
Supplemental Modifications to Joint Plan of Reorganization dated
August 2, 1995 (Exhibit 2.5 to 6/95 10-Q)
*2.3 --Findings of Fact, Conclusions of Law and Order Confirming Modified
Joint Plan of Reorganization, dated August 4, 1995, with Exhibits A-B
attached (Exhibit 2.6 to 6/95 10-Q)
*2.4 --Final Decree, dated December 28, 1995, related to the '95
Reorganization (Exhibit 2.7 to 12/31/95 Form 10-K)
*4.1 --Voting Trust Agreement, dated November 3, 1993, between TWA and
LaSalle National Trust, N.A. as trustee (Exhibit 4.3 to 9/93 10-Q)
*4.2 --IAM Trans World Employees' Stock Ownership Plan and related Trust
Agreement, dated August 31, 1993, between TWA, the IAM Plan Trustee
Committee and the IAM Trustee (Exhibit to 9/93 10-Q)
*4.3 --IFFA Trans World Employees' Stock Ownership Plan and related Trust
Agreement, dated August 31, 1993, between TWA, the IFFA Plan Trustee
Committee and the IFFA Trustee (Exhibit 4.5 to 9/93 10-Q)
*4.4 --Trans World Airlines, Inc. Employee Stock Ownership Plan, dated August
31, 1993, First Amendment thereto, dated October 31, 1993, and
related Trust Agreement, dated August 31, 1993, between TWA and the
ESOP Trustee (Exhibit 4.6 to 9/93 10-Q)
*4.5 --ALPA Stock Trust, dated August 31, 1993, between TWA and the ALPA
Trustee (Exhibit 4.7 to 9/93 10-Q)
*4.6 --Stockholders Agreement, dated November 3, 1993, among TWA, LaSalle
National Trust, N.A., as Voting Trustee and the ALPA Trustee, IAM
Trustee, IFFA Trustee and Other Employee Trustee (each as defined
therein), as amended by the Addendum to Stockholders dated November
3, 1993 (Exhibit 4.8 to 9/93 10-Q)
*4.7 --Registration Rights Agreement, dated November 3, 1993, between TWA and
the Initial Significant Holders (Exhibit 4.9 to 9/93 10-Q)
*4.8 --Indenture between TWA and Harris Trust and Savings Bank, dated
November 3, 1993 relating to TWA's 8% Senior Secured Notes Due 2000
(Exhibit 4.11 to 9/93 10-Q)
*4.9 --Indenture between TWA and American National Bank and Trust Company of
Chicago, N.A., dated November 3, 1993 relating to TWA's 8% Secured
Notes Due 2001 (Exhibit 4.12 to 9/93 10-Q)
*4.10 --The TWA Air Line Pilots 1995 Employee Stock Ownership Plan, effective
as of January 1, 1995 (Exhibit 4.12 to 9/95 10-Q)
*4.11 --TWA Air Line Pilots Supplemental Stock Plan, effective September 1,
1994 (Exhibit 4.13 to 9/95 10-Q)
*4.12 --TWA Air Line Pilots Supplemental Stock Plan Trust, effective August
23, 1995 (Exhibit 4.14 to 9/95 10-Q)
*4.13 --TWA Air Line Pilots Supplemental Stock Plan Custodial Agreement,
effective August 23, 1995 (Exhibit 4.15 to 9/95 10-Q)
*4.14 --Form of Indenture relating to TWA's 8% Convertible Subordinated
Debentures Due 2006 (Exhibit 4.16 to Registrant's Registration
Statement on Form S-3, No. 333-04977)
*4.15 --Indenture dated as of March 31, 1997 between TWA and First Security
Bank, National Association relating to TWA's 12% Senior Secured Notes
due 2002 (Exhibit 4.15 to Registrant's Registration Statement on Form
S-4, No. 333-26645)
*4.16 --Form of 12% Senior Secured Note due 2002 (contained in Indenture
filed as Exhibit 4.15 to 12/31/97 Form 10-K)
*4.17 --Registration Rights Agreement dated as of March 31, 1997 between the
Company and the Initial Purchaser relating to the 12% Senior Secured
Notes due 2002 and the warrants to purchase 126.26 shares of TWA
Common Stock (Exhibit 4.17 to Registrant's Registration Statement on
Form S-4, No. 333-26645)
*4.18 --Warrant Agreement dated as of March 31, 1997 between the Company and
American Stock Transfer & Trust Company, as Warrant Agent, relating
to warrants to purchase 126.26 shares of TWA Common Stock (Exhibit
4.18 to Registrant's Registration Statement on Form S-4, No.
333-26645)
*4.19 --Form of Indenture relating to TWA's 9 1/4% Convertible Subordinated
Debentures due 2007 (Exhibit 4.19 to Registrant's Registration
Statement on Form S-3, No. 33-44689)
*4.20 --Registration Rights Agreement dated as of December 2, 1997 between
the Company and the Initial Purchasers (Exhibit 4.20 to Registrant's
Registration Statement on Form S-3, No. 33-44689)
*4.21 --Indenture dated as of December 9, 1997 by and between TWA and First
Security Bank, National Association, as Trustee, relating to TWA's 11
1/2% Senior Secured Notes due 2004 (Exhibit 4.21 to Registrant's
Registration Statement on Form S-3, No. 33-44661)
*4.22 --Form of 11 1/2% Senior Secured Note due 2004 (contained in Indenture
filed as Exhibit 4.21 to 12/31/97 Form 10-K)
*4.23 --Registration Rights Agreement dated as of December 9, 1997 among the
Company and Lazard Freres & Co. LLC and PaineWebber Incorporated, as
initial purchasers, relating to TWA's 11 1/2% Senior Secured Notes
due 2004 (Exhibit 4.23 to Registrant's Registration Statement on
Form S-3, No. 33-44661)
*4.24 --Sale and Service Agreement dated as of December 30, 1997 between TWA
and Constellation Finance LLC, as purchaser, relating to TWA's
receivables (Exhibit 4.24 to Registrant's Registration Statement on
Form S-3, No. 33-44661)
*4.25 --Registration Rights Agreement dated as of March 3, 1998 between the
Company and the Initial Purchaser (Exhibit 4.25 to Registrant's
Registration Statement on Form S-4, No. 333-51581)
*4.26 --Indenture dated as of March 3, 1998 by and between TWA and First
Security Bank, National Association, as Trustee, relating to TWA's 11
3/8% Senior Notes due 2006 (Exhibit 4.26 to Registrant's Registration
Statement on Form S-4, No. 333-51581)
*4.27 --Aircraft Sale and Note Purchase Agreement dated as of April 9, 1998
among TWA, First Security Bank, National Association, as Owner Trustee
and Seven Sixty Seven Leasing, Inc. (Exhibit 4.27 to Registrant's
Registration Statement on Form S-4, No. 333-51581)
*4.28 --Indenture dated as of April 21, 1998 by and between TWA and First
Security Bank, National Association, as Trustee, relating to TWA's 11
3/8% Senior Secured Notes due 2003 (Exhibit 4.28 to Registrant's
Registration Statement on Form S-4, No. 333-51581)
*4.29 --Form of 11 3/8% Senior Secured Notes due 2003 (contained as Exhibit 1
to Rule 144A/Regulation S Appendix to Indenture in Exhibit 4.28)
*4.30 --Form of Mandatory Conversion Equity Note due 1999 (contained as
Exhibit A to Indenture in Exhibit 4.28)
4.31 --Registration Rights Agreement dated as of April 21, 1998 between the
Company, Lazard Freres & Co. LLC and First Security Bank, National
Association relating to the 11 3/8% Senior Secured Notes Due 2003
4.32 --Registration Rights Agreement dated as of April 21, 1998 between the
Company, Lazard Freres & Co. LLC and First Security Bank, National
Association relating to the Mandatory Conversion Equity Notes Due 1999
5 --Opinion of Davis Polk & Wardwell, Counsel of the Registrant, regarding
the validity of the securities being registered
*12 --Statement of Computation of Ratio of Earnings to Fixed Charges
(Exhibit 12 to Registrant's Registration Statement on Form S-4,
Registration Number 333-___________, filed on June 16, 1998)
23.1 --Consent of KPMG Peat Marwick LLP
23.2 --Consent of Davis Polk & Wardwell, counsel of the Registrant (included
in Exhibit 5)
24 --Powers of Attorney
*27 --Financial Data Schedule (included in 12/31/97 Form 10-K)
- ------------
* Incorporated by reference
ITEM 17. Undertakings
(a) 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:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement:
provided, however, that paragraphs (a)(1)(i) and (a)(2)(ii) above do not apply
if the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Company pursuant to section 13 or section 15(d) of the
Exchange Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question 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.
(d) The undersigned registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the Trustee to
act under subsection (a) of Section 310 of the Trust Indenture Act ("Act") in
accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Act.
(e) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on Form S-3 to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of St. Louis,
State of Missouri, June 16, 1998.
TRANS WORLD AIRLINES, INC.
June 16, 1998
By /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 on Form S-3 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ Gerald L. Gitner Director, Chairman of the Board and June 16, 1998
- ----------------------- Chief Executive Officer (Principal
Gerald L. Gitner Executive Officer)
/s/ Michael J. Palumbo Senior Vice President and Chief June 16, 1998
- ----------------------- Financial Officer (Principal Financial
Michael J. Palumbo Officer and Principal Accounting
Officer)
* Director June 16, 1998
- -----------------------
John W. Bachmann
* Director June 16, 1998
- -----------------------
William F. Compton
* Director June 16, 1998
- -----------------------
Eugene P. Conese
Director
- -----------------------
Sherry L. Cooper
* Director June 16, 1998
- -----------------------
Edgar M. House
* Director June 16, 1998
- -----------------------
Thomas H. Jacobsen
* Director June 16, 1998
- -----------------------
Myron Kaplan
Director
- -----------------------
David M. Kennedy
* Director June 16, 1998
- -----------------------
Merrill A. McPeak
* Director June 16, 1998
- -----------------------
Thomas F. Meagher
* Director June 16, 1998
- -----------------------
Brent S. Miller
* Director June 16, 1998
- -----------------------
William O'Driscoll
* Director June 16, 1998
- -----------------------
G. Joseph Reddington
* Director June 16, 1998
- -----------------------
Blanche M. Touhill
*By:/s/ Kathleen A. Soled June 16, 1998
- -------------------------
Kathleen A. Soled,
as Attorney-in-fact
</TABLE>
<TABLE>
EXHIBIT INDEX
Exhibit
No. Description Page
- ------- ----------- ----
<S> <C> <C>
*2.1 --Joint Plan of Reorganization, dated May 12, 1995
(Appendix B to the Registrant's Registration Statement on Form S-4,
Registration Number 33-84944, as amended)
*2.2 --Modifications to Joint Plan of Reorganization, dated July 14, 1995
and Supplemental Modifications to Joint Plan of Reorganization dated
August 2, 1995 (Exhibit 2.5 to 6/95 10-Q)
*2.3 --Findings of Fact, Conclusions of Law and Order Confirming Modified
Joint Plan of Reorganization, dated August 4, 1995, with Exhibits A-B
attached (Exhibit 2.6 to 6/95 10-Q)
*2.4 --Final Decree, dated December 28, 1995, related to the '95
Reorganization (Exhibit 2.7 to 12/31/95 Form 10-K)
*3(i) --Third Amended and Restated Certificate of Incorporation of the
Registrant (Exhibit 3(i) to the Registrant's Registration Statement
on Form S-4, Registration Number 333-26645)
*3(ii)--Amended and Restated By-Laws of Trans World Airlines, Inc., effective
May 24, 1996 (Exhibit 3(ii) to 6/96 10-Q)
*4.1 --Voting Trust Agreement, dated November 3, 1993, between TWA and
LaSalle National Trust, N.A. as trustee (Exhibit 4.3 to 9/93 10-Q)
*4.2 --IAM Trans World Employees' Stock Ownership Plan and related Trust
Agreement, dated August 31, 1993, between TWA, the IAM Plan Trustee
Committee and the IAM Trustee (Exhibit to 9/93 10-Q)
*4.3 --IFFA Trans World Employees' Stock Ownership Plan and related Trust
Agreement, dated August 31, 1993, between TWA, the IFFA Plan Trustee
Committee and the IFFA Trustee (Exhibit 4.5 to 9/93 10-Q)
*4.4 --Trans World Airlines, Inc. Employee Stock Ownership Plan, dated
August 31, 1993, First Amendment thereto, dated October 31, 1993, and
related Trust Agreement, dated August 31, 1993, between TWA and the
ESOP Trustee (Exhibit 4.6 to 9/93 10-Q)
*4.5 --ALPA Stock Trust, dated August 31, 1993, between TWA and the ALPA
Trustee (Exhibit 4.7 to 9/93 10-Q)
*4.6 --Stockholders Agreement, dated November 3, 1993, among TWA, LaSalle
National Trust, N.A., as Voting Trustee and the ALPA Trustee, IAM
Trustee, IFFA Trustee and Other Employee Trustee (each as defined
therein), as amended by the Addendum to Stockholders dated November
3, 1993 (Exhibit 4.8 to 9/93 10-Q)
*4.7 --Registration Rights Agreement, dated November 3, 1993, between TWA
and the Initial Significant Holders (Exhibit 4.9 to 9/93 10-Q)
*4.8 --Indenture between TWA and Harris Trust and Savings Bank, dated
November 3, 1993 relating to TWA's 8% Senior Secured Notes Due 2000
(Exhibit 4.11 to 9/93 10-Q)
*4.9 --Indenture between TWA and American National Bank and Trust Company of
Chicago, N.A., dated November 3, 1993 relating to TWA's 8% Secured
Notes Due 2001 (Exhibit 4.12 to 9/93 10-Q)
*4.10 --The TWA Air Line Pilots 1995 Employee Stock Ownership Plan, effective
as of January 1, 1995 (Exhibit 4.12 to 9/95 10-Q)
*4.11 --TWA Air Line Pilots Supplemental Stock Plan, effective September 1,
1994 (Exhibit 4.13 to 9/95 10-Q)
*4.12 --TWA Air Line Pilots Supplemental Stock Plan Trust, effective August
23, 1995 (Exhibit 4.14 to 9/95 10-Q)
*4.13 --TWA Air Line Pilots Supplemental Stock Plan Custodial Agreement,
effective August 23, 1995 (Exhibit 4.15 to 9/95 10-Q)
*4.14 --Form of Indenture relating to TWA's 8% Convertible Subordinated
Debentures Due 2006 (Exhibit 4.16 to Registrant's Registration
Statement on Form S-3, No. 333-04977)
*4.15 --Indenture dated as of March 31, 1997 between TWA and First Security
Bank, National Association relating to TWA's 12% Senior Secured Notes
due 2002 (Exhibit 4.15 to Registrant's Registration Statement on Form
S-4, No. 333-26645)
*4.16 --Form of 12% Senior Secured Note due 2002 (contained in Indenture
filed as Exhibit 4.15 to 12/31/97 Form 10-K)
*4.17 --Registration Rights Agreement dated as of March 31, 1997 between the
Company and the Initial Purchaser relating to the 12% Senior Secured
Notes due 2002 and the warrants to purchase 126.26 shares of TWA
Common Stock (Exhibit 4.17 to Registrant's Registration Statement on
Form S-4, No. 333-26645)
*4.18 --Warrant Agreement dated as of March 31, 1997 between the Company and
American Stock Transfer & Trust Company, as Warrant Agent, relating
to warrants to purchase 126.26 shares of TWA Common Stock (Exhibit
4.18 to Registrant's Registration Statement on Form S-4, No.
333-26645)
*4.19 --Form of Indenture relating to TWA's 9 1/4% Convertible Subordinated
Debentures due 2007 (Exhibit 4.19 to Registrant's Registration
Statement on Form S-3, No. 33-44689)
*4.20 --Registration Rights Agreement dated as of December 2, 1997 between
the Company and the Initial Purchasers (Exhibit 4.20 to Registrant's
Registration Statement on Form S-3, No. 33-44689)
*4.21 --Indenture dated as of December 9, 1997 by and between TWA and First
Security Bank, National Association, as Trustee, relating to TWA's 11
1/2% Senior Secured Notes due 2004 (Exhibit 4.21 to Registrant's
Registration Statement on Form S-3, No. 33-44661)
*4.22 --Form of 11 1/2% Senior Secured Note due 2004 (contained in Indenture
filed as Exhibit 4.21 to 12/31/97 Form 10-K)
*4.23 --Registration Rights Agreement dated as of December 9, 1997 among the
Company and Lazard Freres & Co. LLC and PaineWebber Incorporated, as
initial purchasers, relating to TWA's 11 1/2% Senior Secured Notes
due 2004 (Exhibit 4.23 to Registrant's Registration Statement on
Form S-3, No. 33-44661)
*4.24 --Sale and Service Agreement dated as of December 30, 1997 between TWA
and Constellation Finance LLC, as purchaser, relating to TWA's
receivables (Exhibit 4.24 to Registrant's Registration Statement on
Form S-3, No. 33-44661)
*4.25 --Registration Rights Agreement dated as of March 3, 1998 between the
Company and the Initial Purchaser (Exhibit 4.25 to Registrant's
Registration Statement on Form S-4, No. 333-51581)
*4.26 --Indenture dated as of March 3, 1998 by and between TWA and First
Security Bank, National Association, as Trustee, relating to TWA's 11
3/8% Senior Notes due 2006 (Exhibit 4.26 to Registrant's Registration
Statement on Form S-4, No. 333-51581)
*4.27 --Aircraft Sale and Note Purchase Agreement dated as of April 9, 1998
among TWA, First Security Bank, National Association, as Owner Trustee
and Seven Sixty Seven Leasing, Inc. (Exhibit 4.27 to Registrant's
Registration Statement on Form S-4, No. 333-51581)
*4.28 --Indenture dated as of April 21, 1998 by and between TWA and First
Security Bank, National Association, as Trustee, relating to TWA's 11
3/8% Senior Secured Notes due 2003 (Exhibit 4.28 to Registrant's
Registration Statement on Form S-4, No. 333-51581)
*4.29 --Form of 11 3/8% Senior Secured Notes due 2003 (contained as Exhibit 1
to Rule 144A/Regulation S Appendix to Indenture in Exhibit 4.28)
*4.30 --Form of Mandatory Conversion Equity Note due 1999 (contained as
Exhibit A to Indenture in Exhibit 4.28)
4.31 --Registration Rights Agreement dated as of April 21, 1998 between the
Company, Lazard Freres & Co. LLC and First Security Bank, National
Association relating to the 11 3/8% Senior Secured Notes Due 2003.
4.32 --Registration Rights Agreement dated as of April 21, 1998 between the
Company Lazard Freres & Co. LLC and First Security Bank, National
Association relating to the Mandatory Conversion Equity Notes Due 1999.
5 --Opinion of Davis Polk & Wardwell, Counsel of the Registrant, regarding
the validity of the securities being registered
*12 --Statement of Computation of Ratio of Earnings to Fixed Charges
(Exhibit 12 to Registrant's Registration Statement,
Registration Number 333-___________, filed on June 16, 1998)
23.1 --Consent of KPMG Peat Marwick LLP
23.2 --Consent of Davis Polk & Wardwell, counsel of the Registrant (included
in Exhibit 5)
24 --Powers of Attorney
*27 --Financial Data Schedule (included in 12/31/97 Form 10-K)
- ------------
* Incorporated by reference
</TABLE>
TRANS WORLD AIRLINES, INC.
11 3/8% Senior Secured Notes Due 2003
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
and entered into as of April 21, 1998, by and among Trans World Airlines,
Inc., a Delaware corporation (the "Company"), Lazard Freres & Co. LLC
("Lazard") and First Security Bank, National Association, as Owner Trustee
(the "Owner Trustee"), under the Trust Agreement (the "Trust Agreement") dated
as of January 24, 1995 between the Owner Trustee and Seven Sixty Seven
Leasing, Inc., as beneficiary (the "Beneficiary"). Subject to the terms and
conditions stated in the Aircraft Sale and Note Purchase Agreement dated as of
April 9, 1998 among the Company, the Owner Trustee and the Beneficiary (the
"Sale Agreement"), the Beneficiary will instruct the Owner Trustee to, and the
Owner Trustee will sell to the Company three Boeing 767-231 ETOPS aircraft and
their associated engines for $25,000,000 for each such aircraft, payable by
the issuance by the Company of (i) $43,200,000 aggregate principal amount of
the Company's 113/8% Senior Secured Notes Due 2003 (the "Notes") and (ii)
$31,800,000 aggregate principal amount of the Company's Mandatory Conversion
Equity Notes due 1999 (the "Equity Notes"). In connection therewith, subject
to the terms and conditions stated in the Placement Agreement dated as of
April 9, 1998 between the Company and Lazard (the "Placement Agreement"), the
Company has agreed to pay Lazard a placement fee of $3,000,000, which fee has
been agreed under the Sale Agreement to be paid by the Owner Trustee on behalf
of the Beneficiary to Lazard by payment of (x) $1,728,000 aggregate principal
amount of the Notes and (y) $1,272,000 aggregate principal amount of the
Equity Notes. The Notes will be issued pursuant to an indenture dated as of
April 21, 1998 (the "Indenture"), between the Company and First Security Bank,
National Association, as trustee (the "Trustee").
This Agreement is made pursuant to the Sale Agreement and the
Placement Agreement. In order to (x) fulfill its obligations to Owner Trustee
under the Sale Agreement and (y) fulfill its obligations to Lazard under the
Placement Agreement, the Company hereby agrees with Lazard and the Owner
Trustee for the benefit of the holders of the Notes (including, without
limitation, the Owner Trustee and Lazard), the Exchange Notes (as defined
below) and the Private Exchange Notes (as defined below) (collectively, the
"Holders"), as follows:
Section 1. Exchange Offer Registration.
The Company shall, at its cost, use its reasonable best efforts
to prepare and, not later than 60 days after (or if the 60th day is not a
business day, the first business day thereafter) the Issue Date (as defined in
the Indenture) of the Notes, file with the Securities and Exchange Commission
(the "Commission"), a registration statement (the "Exchange Offer Registration
Statement") on an appropriate form under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to a proposed offer (the
"Registered Exchange Offer") to the Holders of Transfer Restricted Notes (as
defined below), who are not prohibited by any law or policy of the Commission
from participating in the Registered Exchange Offer, to issue and deliver to
such Holders, in exchange for the Notes, a like aggregate principal amount of
debt securities (the "Exchange Notes") of the Company issued under the
Indenture and identical in all material respects to the Notes (except for the
transfer restrictions relating to the Notes) that would be registered under
the Securities Act. The Company shall use its reasonable best efforts to
cause such Exchange Offer Registration Statement to become effective under the
Securities Act within 150 days (or if the 150th day is not a business day, the
first business day thereafter) after the Issue Date of the Notes and shall
keep the Exchange Offer Registration Statement effective for not less than 20
business days (or longer if required by applicable law) after the date on which
notice of the Registered Exchange Offer is mailed to the Holders (such period
being called the "Exchange Offer Registration Period").
If the Company effects the Registered Exchange Offer, the
Company will be entitled to close the Registered Exchange Offer 20 business
days after the commencement thereof; provided, however, that the Company has
accepted all the Notes theretofore validly tendered in accordance with the
terms of the Registered Exchange Offer.
Following the declaration of the effectiveness of the Exchange
Offer Registration Statement, the Company shall promptly commence the
Registered Exchange Offer, it being the objective of such Registered Exchange
Offer to enable each Holder of Transfer Restricted Notes electing to exchange
the Notes for Exchange Notes (assuming that such Holder is not an affiliate of
the Company within the meaning of the Securities Act, acquires the Exchange
Notes in the ordinary course of such Holder's business, has no arrangements
with any person to participate in the distribution (within the meaning of the
Securities Act) of the Exchange Notes and is not prohibited by any law or
policy of the Commission from participating in the Registered Exchange Offer)
to trade such Exchange Notes from and after their receipt without any
limitations or restrictions under the Securities Act and without material
restrictions under the securities laws of the several states of the United
States. In connection with such Registered Exchange Offer, the Company shall
take such further action, including, without limitation, appropriate filings
under state securities laws, as may be necessary to realize the foregoing
objective subject to the proviso of Section 3(h).
The Company acknowledges that, pursuant to current
interpretations by the Commission's staff of Section 5 of the Securities Act,
in the absence of an applicable exemption therefrom, (i) each Holder that is a
broker-dealer electing to exchange Notes, acquired for its own account as a
result of market making activities or other trading activities, for Exchange
Notes (an "Exchanging Dealer"), is required to deliver a prospectus containing
the information set forth in Annex A hereto on the cover, in Annex B hereto in
the "Exchange Offer Procedures" section and the "Purpose of the Exchange
Offer" section, and in Annex C hereto in the "Plan of Distribution" section of
such prospectus in connection with a sale of any such Exchange Notes received
by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii)
Lazard selling Exchange Notes acquired in exchange for Notes constituting any
portion of an unsold allotment is required to deliver a prospectus containing
the information required by Items 507 or 508 of Regulation S-K under the
Securities Act, as applicable, in connection with such sale.
The Company shall use its reasonable best efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement the
prospectus contained therein in order to permit such prospectus to be lawfully
delivered by all persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Notes; provided, however, that (i)
in the case where such prospectus and any amendment or supplement thereto must
be delivered by an Exchanging Dealer, such period shall be the lesser of 180
days after the expiration date of the Registered Exchange Offer and the date
on which all Exchanging Dealers have sold all Exchange Notes held by them
(unless such period is extended pursuant to Section 3(j) below), and (ii) the
Company shall make such prospectus and any amendment or supplement thereto
available to any broker-dealer for use in connection with any resale of any
Exchange Notes for a period not less than 90 days after the consummation of
the Registered Exchange Offer.
If, upon consummation of the Registered Exchange Offer, Lazard
holds Notes which constitute some or all of its compensation in the form of
Notes under the Placement Agreement, the Company, simultaneously with the
delivery of the Exchange Notes pursuant to the Registered Exchange Offer,
shall issue and deliver to Lazard upon the written request of Lazard in
exchange (the "Private Exchange") for the Notes held by Lazard, a like
principal amount of debt securities of the Company issued under the Indenture
and identical in all material respects (including the existence of
restrictions on transfer under the Securities Act and the securities laws of
the several states of the United States) to the Notes (the "Private Exchange
Notes"). The Notes, the Exchange Notes and the Private Exchange Notes are
herein collectively called the "Securities".
In connection with the Registered Exchange Offer, the Company
shall:
(a) mail to each Holder a copy of the prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 20
business days (or longer, if required by applicable law) after the date notice
thereof is mailed to the Holders;
(c) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of New
York, which may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York time, on the last business day on which the
Registered Exchange Offer shall remain open; and
(e) otherwise comply in all material respects with all applicable
law.
As soon as practicable after the close of the Registered
Exchange Offer or the Private Exchange, as the case may be, the Company shall:
(i) accept for exchange all the Notes validly tendered and not
withdrawn pursuant to the Registered Exchange Offer or the Private
Exchange, as the case may be;
(ii) deliver to the Trustee for cancellation all the Notes so accepted
for exchange; and
(iii) cause the Trustee to authenticate and promptly deliver to each
Holder of the Notes, Exchange Notes or Private Exchange Notes, as the case
may be, equal in principal amount to the Notes of each Holder so accepted
for exchange.
The Indenture will provide that the Exchange Notes will not be
subject to the transfer restrictions set forth in the Indenture and that all
the Securities will vote and consent together on all matters as one class and
that none of the Securities will have the right to vote or consent as a class
separate from one another on any matter.
Each Holder participating in the Registered Exchange Offer
shall be required to represent to the Company that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Notes received
by such Holder will be acquired in the ordinary course of business, (ii) such
Holder will have no arrangements or understanding with any person to
participate in the distribution of the Notes or the Exchange Notes within the
meaning of the Securities Act, (iii) such Holder is not an "affiliate", as
defined in Rule 405 of the Securities Act, of the Company or, if it is an
affiliate, such Holder will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable, (iv) if
such Holder is not a broker-dealer, that it is not engaged in, and does not
intend to engage in, the distribution of the Exchange Notes, and (v) if such
Holder is a broker-dealer, that it will receive Exchange Notes for its own
account in exchange for Notes that were acquired as a result of market-making
activities or other trading activities and that it will deliver a prospectus
in connection with any resale of such Exchange Notes.
Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Exchange Offer Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto will
comply in all material respects with the Securities Act and the rules and
regulations thereunder, (ii) any Exchange Offer Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration
Statement, and any supplement to such prospectus, will not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that in no such case shall the Company be responsible for
information concerning Lazard included in the Exchange Offer Registration
Statement, the prospectus contained therein, or any amendment or supplement
thereto, as the case may be.
Section 2. Shelf Registration Statement.
(a) If (i) because of any change in law or in applicable
interpretations thereof by the staff of the Commission, the Company is not
permitted to effect a Registered Exchange Offer, as contemplated by Section 1
hereof, (ii) the Registered Exchange Offer is not consummated within 180 days
of the date of this Agreement, (iii) Lazard so requests with respect to the
Notes (or the Private Exchange Notes) not eligible to be exchanged for
Exchange Notes in the Registered Exchange Offer and held by it following
consummation of the Registered Exchange Offer or (iv) any Holder (other than
an Exchanging Dealer) is not eligible to participate in the Registered
Exchange Offer or, in the case of any Holder (other than an Exchanging Dealer)
that participates in the Registered Exchange Offer, such Holder does not
receive freely tradeable Exchange Notes on the date of the exchange, the
Company shall take the following actions:
(i) The Company shall use its reasonable best efforts, at its cost, as
promptly as practicable (but in no event more than the later of (i) 60 days
after the Issue Date and (ii) 30 days after so required or requested
pursuant to this Section 2), to file with the Commission and thereafter
shall use its reasonable best efforts to cause to be declared effective a
registration statement (the "Shelf Registration Statement" and, together
with the Exchange Offer Registration Statement, a "Registration Statement")
on an appropriate form under the Securities Act relating to the offer and
sale of the Transfer Restricted Notes by the Holders thereof from time to
time in accordance with the methods of distribution set forth in the Shelf
Registration Statement and Rule 415 under the Securities Act (hereinafter,
the "Shelf Registration"); provided, however, that no Holder (other than
the Owner Trustee and Lazard) shall be entitled to have the Securities held
by it covered by such Shelf Registration Statement unless such Holder
agrees in writing to be bound by all the provisions of this Agreement
applicable to such Holder (including certain indemnification obligations).
(ii) The Company shall use its reasonable best efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
prospectus included therein to be lawfully delivered by the Holders of the
relevant Securities, for a period of two years (or for such longer period
if extended pursuant to Section 3(j) below) from the Issue Date or such
shorter period that will terminate when all the Securities covered by the
Shelf Registration Statement have been sold pursuant thereto or can be sold
pursuant to Rule 144(k) thereof. Subject to Section 6(b), the Company shall
be deemed not to have used its reasonable best efforts to keep the Shelf
Registration Statement effective during the requisite period if it
voluntarily takes any action that would result in Holders of Securities
covered thereby not being able to offer and sell such Securities during
that period, unless such action is required by applicable law; provided,
however, that the Company shall not be deemed to have voluntarily taken any
such action if it enters, in good faith, into negotiations concerning, or
executes and delivers any agreement or other document relating to, any
business combination, acquisition or disposition.
(iii) Notwithstanding any other provision of this Agreement to the
contrary, the Company shall cause the Shelf Registration Statement and the
related prospectus and any amendment or supplement thereto, as of the
effective date of the Shelf Registration Statement, amendment or
supplement, (i) to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission and (ii) not to contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(b) No Holder of Securities may include any of its Securities in
the Shelf Registration Statement unless such Holder furnishes to the Company in
writing, within 10 business days after receipt of a request therefor (which
initial request shall be made within 40 days after the Issue Date to the
Holders of record on a date not more than 5 days prior to such request), such
information and representations and warranties as the Company may reasonably
request for use in connection with the Shelf Registration Statement or
prospectus or preliminary prospectus included therein. No Holder of
Securities shall be entitled to Special Interest, pursuant to Section 6
hereof, if such Holder's Securities are excluded from the Shelf Registration
Statement because such Holder failed to furnish the Company in writing such
information and representations and warranties reasonably requested by the
Company for use in connection with the Shelf Registration Statement or
prospectus or preliminary prospectus included therein. Each Holder as to
which the Shelf Registration Statement is being effected agrees to furnish
promptly to the Company all information required to be disclosed in order to
make the information previously provided to the Company by such Holder not
misleading.
Section 3. Registration Procedures.
In connection with the Shelf Registration contemplated by
Section 2 hereof and, to the extent applicable, any Registered Exchange Offer
contemplated by Section 1 hereof, the following provisions shall apply:
(a) The Company shall (i) furnish to the Owner Trustee and Lazard,
prior to the filing thereof with the Commission, a copy of the Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein, and in the event that (x) Lazard (with respect to
securities acquired in other than market making or trading activity) is
participating in the Registered Exchange Offer or (y) either the Owner Trustee
or Lazard is making use of the Shelf Registration Statement, shall use its
reasonable best efforts to reflect in each such document, when so filed with
the Commission, such comments as the Owner Trustee and Lazard, as applicable,
reasonably may propose; (ii) include the information set forth in Annex A
hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures"
section and the "Purpose of the Exchange Offer" section and in Annex C hereto
in the "Plan of Distribution" section of the prospectus forming a part of the
Exchange Offer Registration Statement and include the information set forth in
Annex D hereto in the Letter of Transmittal delivered pursuant to the
Registered Exchange Offer; (iii) if requested by Lazard, include the
information required by Items 507 or 508 of Regulation S-K under the
Securities Act, as applicable, in the prospectus forming a part of the Exchange
Offer Registration Statement; (iv) include within the prospectus contained in
the Exchange Offer Registration Statement a section entitled "Plan of
Distribution", reasonably acceptable to Lazard, which shall contain a summary
statement of the positions taken or policies made by the staff of the
Commission with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of Exchange
Notes received by such broker-dealer in the Registered Exchange Offer (a
"Participating Broker-Dealer"), whether such positions or policies have been
publicly disseminated by the staff of the Commission or such positions or
policies, in the reasonable judgment of Lazard based upon advice of counsel
(which may be in-house counsel), represent the prevailing views of the staff
of the Commission; and (v) in the case of a Shelf Registration Statement,
include the names of the Holders who propose to sell Securities pursuant to
the Shelf Registration Statement as selling securityholders.
(b) The Company shall give written notice to the Owner Trustee,
Lazard, the Holders of the Securities and any Participating Broker-Dealer from
whom the Company has received prior written notice that it will be a
Participating Broker-Dealer in the Registered Exchange Offer (which notice
pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to
suspend the use of the prospectus until the requisite changes have been made):
(i) when the Registration Statement or any amendment thereto has been
filed with the Commission and when the Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements to
the Registration Statement or the prospectus included therein or for
additional information (provided, however, that with respect to any
requests prior to the effectiveness of the Registration Statement, the
Company shall be required to give written notice only to the Owner Trustee
and its counsel, to certain indirect beneficiaries under the Trust
Agreement and their counsel, Kleinberg, Kaplan, Wolff & Cohen PC, and to
Lazard and its counsel, Hughes Hubbard & Reed LLP);
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and
(v) of the happening of any event that requires the Company to make
changes in the Registration Statement or the prospectus in order that the
Registration Statement or the prospectus does not contain an untrue
statement of a material fact nor omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(c) The Company shall use its reasonable best efforts to obtain the
withdrawal at the earliest possible time of any order suspending the
effectiveness of the Registration Statement.
(d) The Company shall furnish to each Holder of Securities included
within the coverage of the Shelf Registration, without charge, at least one
copy of the Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Holder so
requests in writing, all exhibits thereto (including those, if any,
incorporated by reference).
(e) The Company shall deliver to each Exchanging Dealer or
Participating Broker-Dealer, to the Owner Trustee, to Lazard, and to any other
Holder who so requests, without charge, at least one copy of the Exchange
Offer Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Owner Trustee,
Lazard or any such Holder requests, all exhibits thereto (including those
incorporated by reference).
(f) The Company shall deliver to each Holder of Securities included
within the coverage of the Shelf Registration, without charge, as many copies
of the prospectus (including each preliminary prospectus) included in the Shelf
Registration Statement and any amendment or supplement thereto as such person
may reasonably request. The Company consents, subject to the provisions of
this Agreement, to the use of the prospectus or any amendment or supplement
thereto included in the Shelf Registration Statement by each of the selling
Holders of the Securities in connection with the offering and sale of the
Securities covered by such prospectus, or any such amendment supplement.
(g) The Company shall deliver to Lazard, any Exchanging Dealer,
any Participating Broker-Dealer and such other persons required to deliver a
prospectus following the Registered Exchange Offer, without charge, as many
copies of the final prospectus included in the Exchange Offer Registration
Statement and any amendment or supplement thereto as such persons may
reasonably request. The Company consents, subject to the provisions of this
Agreement, to the use of the prospectus or any amendment or supplement thereto
by Lazard, if necessary, any Exchanging Dealer, any Participating
Broker-Dealer and such other persons required to deliver a prospectus
following the Registered Exchange Offer in connection with the offering and
sale of the Exchange Notes covered by the prospectus, or any amendment or
supplement thereto, included in such Exchange Offer Registration Statement.
(h) Prior to any public offering of the Securities, pursuant to any
Registration Statement, the Company shall use its reasonable best efforts to
register or qualify or cooperate with the Holders of the Securities included
therein and their respective counsel in connection with the registration or
qualification of the Securities for offer and sale under the securities or
"blue sky" laws of such states of the United States as any Holder of the
Securities reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the offer and sale in such
jurisdictions of the Securities covered by such Registration Statement;
provided, however, that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it is not then so
qualified, (ii) take any action which would subject it to general service of
process or to taxation in any jurisdiction where it is not then so subject or
(iii) register or qualify Securities or take any other action under the
securities or "blue sky" laws of any jurisdiction if, in the judgment of the
Board of Directors of the Company, the consequences of such registration,
qualification or other action would be unduly burdensome to the Company.
(i) The Company shall cooperate with the Holders of the Securities
to facilitate the timely preparation and delivery of certificates representing
the Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names as
the Holders may request a reasonable period of time prior to sales of the
Securities pursuant to such Registration Statement.
(j) Upon the occurrence of any event contemplated by paragraphs
(ii) through (v) of Section 3(b) above during the period for which the Company
is required to maintain an effective Registration Statement, the Company shall
promptly prepare and file a post-effective amendment to the Registration
Statement or a supplement to the related prospectus and any other required
document so that, as thereafter delivered to Holders of the Notes or the
Exchange Notes or purchasers of Securities, the prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. If the Company
notifies the Owner Trustee, Lazard, the Holders of the Securities and any
known Exchanging Dealer or Participating Broker-Dealer in accordance with
paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the
prospectus until the requisite changes to the prospectus have been made, then
the Owner Trustee, Lazard, the Holders of the Securities and any such
Exchanging Dealer or Participating Broker-Dealer shall suspend use of such
prospectus, and the period of effectiveness of the Shelf Registration Statement
provided for in Section 2 above and the Exchange Offer Registration Statement
provided for in Section 1 above shall each be extended (i) by the number of
days from and including the date of the giving of such notice to and including
the date when the Owner Trustee, Lazard, the Holders of the Securities and any
known Exchanging Dealer or Participating Broker-Dealer shall have received
such amended or supplemented prospectus pursuant to this Section 3(j) or (ii)
if earlier, until the date when none of the Securities represent Transfer
Restricted Notes (as defined in Section 6(d)).
(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the Notes,
the Exchange Notes or the Private Exchange Notes, as the case may be, and
provide the applicable trustee with printed certificates for the Notes, the
Exchange Notes and the Private Exchange Notes, as the case may be, in a form
eligible for deposit with The Depository Trust Company.
(l) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Registered
Exchange Offer or the Shelf Registration and will make generally available to
its security holders (or otherwise provide in accordance with Section 11(a) of
the Securities Act) an earnings statement satisfying the provisions of Section
11(a) of the Securities Act, no later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year) beginning with the first
month of the Company's first fiscal quarter commencing after the effective
date of the Registration Statement, which statement shall cover such 12-month
period.
(m) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended, in a timely manner and containing
such changes, if any, as shall be necessary for such qualification. In the
event that such qualification would require the appointment of a new trustee
under the Indenture, the Company shall appoint a new trustee thereunder
pursuant to the applicable provisions of the Indenture.
(n) The Company may require each Holder of Securities to be sold
pursuant to the Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of the Securities as the
Company may from time to time reasonably require for inclusion in the Shelf
Registration Statement, and the Company may exclude from such registration the
Securities of any Holder that unreasonably fails to furnish such information
within a reasonable time after receiving such request.
(o) The Company shall enter into such customary agreements
(including if requested an underwriting agreement in customary form) and take
all such other action, if any, as may be required in order to facilitate the
disposition of the Securities pursuant to any Shelf Registration.
(p) In the case of any Shelf Registration, subject to appropriate
confidentiality arrangements being entered into, the Company shall (i) make
available at reasonable times for inspection by the Holders of the Securities,
any underwriter participating in any disposition pursuant to the Shelf
Registration Statement and any attorney, accountant or other agent retained by
the Holders of the Securities or any such underwriter all relevant financial
and other records, pertinent corporate documents and properties of the Company
and (ii) cause the Company's officers, directors, employees, accountants and
auditors to supply all relevant information reasonably requested by the Holders
of the Securities or any such underwriter, attorney, accountant or agent in
connection with the Shelf Registration Statement, in each case, as shall be
reasonably necessary, in the judgment of the Holder or any such underwriter,
attorney, accountant or agent referred to in this paragraph, to conduct a
reasonable investigation within the meaning of Section 11 of the Securities
Act.
(q) In the case of any Shelf Registration, the Company, if
requested by any Holder of Securities covered thereby, shall cause (i) its
counsel to deliver an opinion and updates thereof relating to the Securities
in customary form addressed to such Holders and the managing underwriters, if
any, thereof and dated, in the case of the initial opinion, the effective date
of such Shelf Registration Statement covering the matters customarily covered
in opinions of counsel requested in underwritten offerings and such other
matters as may be reasonably requested by the managing underwriter or
underwriters; (ii) its officers to execute and deliver all customary documents
and certificates and updates thereof reasonably requested by any underwriters
of the applicable Securities; and (iii) its independent public accountants to
provide to the selling Holders of the applicable Securities and any
underwriter therefor a comfort letter in customary form and covering matters
of the type customarily covered in comfort letters in connection with primary
underwritten offerings, subject to receipt of appropriate documentation as
contemplated, and only if permitted, by Statement of Auditing Standards No.
72.
(r) In the case of the Registered Exchange Offer, if requested by
the Owner Trustee, Lazard or any known Exchanging Dealer or Participating
Broker-Dealer, the Company shall cause (i) its counsel to deliver to the Owner
Trustee, Lazard or such Exchanging Dealer or Participating Broker-Dealer,
signed opinions in the forms set forth in Section 7.04(e) of the Sale Agreement
with such changes as are customary in connection with the preparation of a
Registration Statement and (ii) its independent public accountants to deliver
to the Owner Trustee, Lazard or such Exchanging Dealer or Participating
Broker-Dealer a comfort letter, in customary form, meeting the requirements as
to the substance thereof as set forth in Section 7.04(f) of the Sale
Agreement, with appropriate date changes.
(s) If a Registered Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Notes by Holders to the Company (or to such
other Person as directed by the Company) in exchange for the Exchange Notes or
the Private Exchange Notes, as the case may be, the Company shall mark, or
cause to be marked, on the Notes so exchanged that such Notes are being
cancelled in exchange for the Exchange Notes or the Private Exchange Notes, as
the case may be; in no event shall the Notes be marked as paid or otherwise
satisfied.
(t) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Securities or participate as a member of an
underwriting syndicate or selling group or "assist in the distribution" (within
the meaning of the Conduct Rules and the By-Laws of the National Association
of Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of such
Securities or as an underwriter, a placement or sales agent or a broker or
dealer in respect thereof, or otherwise, the Company shall assist such
broker-dealer in complying with the requirements of such Rules and By-Laws
(including without limitation the indemnification of any "qualified
independent underwriter" required thereby).
(u) The Company will use its reasonable best efforts to cause the
Transfer Restricted Notes to be eligible for inclusion in the National
Association of Securities Dealers, Inc. Private Offerings, Resales and Trading
through Automated Linkages trading system.
(v) The Company shall use its reasonable best efforts to take all
other steps necessary to effect the registration of the Securities covered by a
Registration Statement contemplated hereby.
(w) The Company agrees that it will not include in the registration
contemplated by the Shelf Registration Statement any securities other than the
Securities.
(x) The Company hereby agrees to list the Notes on the American
Stock Exchange or on such other stock exchange or market as the common stock,
par value $.01 per share, of the Company is then principally traded no later
than the earliest to occur of (i) the effectiveness of the initial Exchange
Offer Registration Statement and (ii) the effectiveness of the initial Shelf
Registration Statement, provided that such Notes meet the minimum requirements
for listing on any such exchange or market, and, if applicable, to maintain
such listing for so long as any of the Notes is outstanding.
Section 4. Registration Expenses.
The Company shall bear all fees and expenses incurred in
connection with the performance of its obligations under Sections 1 through 3
hereof (including the reasonable fees and expenses of Hughes Hubbard & Reed
LLP, counsel for Lazard, incurred in connection with the Registered Exchange
Offer), whether or not the Registered Exchange Offer or a Shelf Registration
is filed or becomes effective, and, in the event of a Shelf Registration, shall
bear, or reimburse the Holders of the Securities covered thereby for, the
reasonable fees and disbursements of one firm of counsel designated by the
Holders of a majority in principal amount of the Securities covered thereby to
act as counsel for the Holders of the Securities in connection therewith, it
being understood that the Company shall not be responsible for the fees and
expenses of more than one counsel employed at any one time.
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, and the fees and expenses of any Person, including special experts,
retained by the Company. The Holders shall bear the expense of any broker's
commission or underwriters' discount or commission.
Section 5. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Holder
of the Securities, any Exchanging Dealer, any Participating Broker-Dealer and
each person, if any, who controls such Holder, Exchanging Dealer or
Participating Broker-Dealer within the meaning of the Securities Act or the
Exchange Act (each Holder, any Exchanging Dealer, any Participating
Broker-Dealer and such controlling persons referred to in this Section 5(a)
and the Company and its controlling persons referred to in Section 5(b), being
collectively referred to herein, as the case may be, as the "indemnified
parties") from and against any losses, claims, damages or liabilities, joint or
several, or any actions in respect thereof (including, but not limited to, any
losses, claims, damages, liabilities or actions relating to purchases and
sales of the Securities) to which each indemnified party may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained
in a Registration Statement or prospectus or in any amendment or supplement
thereto or in any preliminary prospectus relating to a Registration Statement,
or arise out of, or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and shall reimburse, as incurred, the indemnified parties for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in a Registration Statement or prospectus
or in any amendment or supplement thereto or in any preliminary prospectus
relating to a Registration Statement in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by
or on behalf of such Holder specifically for inclusion therein, (ii) with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any prospectus relating to such Registration Statement, the
indemnity agreement contained in this subsection (a) shall not inure to the
benefit of any person as to which there is a prospectus delivery requirement (a
"Delivering Seller") that sold the Securities to the person asserting any such
losses, claims, damages or liabilities to the extent that any such loss, claim,
damage or liability of such Delivering Seller results from the fact that there
was not sent or given to such person, on or prior to the written confirmation
of such sale, a copy of the relevant prospectus, as amended and supplemented,
provided that (I) the Company shall have previously furnished copies thereof
to such Delivering Seller in accordance with this Agreement and (II) such
furnished prospectus, as amended and supplemented, would have corrected any
such untrue statement or omission or alleged untrue statement or omission, and
(iii) this indemnity agreement will be in addition to any liability which the
Company may otherwise have to such indemnified party. The Company shall also
indemnify underwriters, selling brokers, dealer-managers and similar
securities industry professionals participating in the distribution (in each
case as described in the Registration Statement), their officers and directors
and each person who controls such persons within the meaning of the Securities
Act or the Exchange Act to the same extent as provided above with respect to
the indemnification of the Holders of the Securities if requested by such
Holders; provided, however, that the Company shall not indemnify any such
party to the extent its liability arises from its failure to comply with the
requirements described in Annexes A, B and C hereto.
(b) Each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless the Company, each other Holder and each person, if
any, who controls the Company and each such Holder within the meaning of the
Securities Act or the Exchange Act from and against any losses, claims,
damages or liabilities or any actions in respect thereof to which the Company,
each other Holder or any such controlling person may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, but in each case
only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by
or on behalf of such Holder specifically for inclusion therein; and, subject
to the limitation set forth immediately preceding this clause, shall
reimburse, as incurred, the Company, each such Holder for any legal or other
expenses reasonably incurred by the Company, each other Holder or any such
controlling person in connection with investigating or defending any loss,
claim, damage, liability or action in respect thereof. This indemnity
agreement will be in addition to any liability which such Holder may otherwise
have to the Company, each other Holder or any of their controlling persons.
(c) Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action or proceeding (including
a governmental investigation), such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party under this
Section 5, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not, in any event, relieve
the indemnifying party from any obligations to any indemnified party, except to
the extent that it is prejudiced or harmed in any material respect by failure
to give such prompt notice. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with one counsel (and local
counsel as necessary) reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 5 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior
written consent of the indemnified party, not to be unreasonably withheld,
effect any settlement of any pending or threatened action in respect of which
any indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party unless such settlement
includes an unconditional release of such indemnified party from all liability
on any claims that are the subject matter of such action and does not include
any injunctive relief against such indemnified party. No indemnifying party
shall be liable for any amounts paid in settlement of any action or claim
without its written consent, which consent shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section 5 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above for any reason, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from
the initial sale of the Aircraft for the Notes and the Equity Notes; provided,
however, that in no event shall the Owner Trustee, Lazard or any subsequent
Holder be responsible, in the aggregate, for any amount in excess of the
Placement Fee (as defined in the Placement Agreement), or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company on the one hand or such Holder or such other indemnified person,
as the case may be, on the other, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (d).
Notwithstanding any other provision of this Section 5(d), the Holders of the
Securities shall not be required to contribute any amount in excess of the
amount by which the net proceeds received by such Holders from the sale of the
Securities pursuant to a Registration Statement exceeds the amount of damages
which such Holders have otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this
paragraph (d), each officer, director, employee, representative and agent of
an indemnified party and each person, if any, who controls such indemnified
party within the meaning of the Securities Act or the Exchange Act shall have
the same rights to contribution as such indemnified party.
(e) The Company and each Holder agree that it would not be just and
equitable if contributions pursuant to Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable consideration referred to in Section 5(d).
(f) The agreements contained in this Section 5 shall survive the
sale of the Securities pursuant to a Registration Statement and shall remain
in full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
Section 6. Special Interest.
(a) If any of the following events occurs (each such event in
clauses (i) through (v) below a "Registration Default"):
(i) if by June 22, 1998, neither the Exchange Offer Registration
Statement nor a Shelf Registration Statement has been filed with the
Commission;
(ii) if by September 18, 1998, neither the Exchange Offer Registration
Statement nor the Shelf Registration Statement is declared effective;
(iii) if by October 19, 1998, neither the Registered Exchange
Offer is consummated nor, if required in lieu thereof, the Shelf Registration
Statement is declared effective by the Commission;
(iv) if, notwithstanding the filing of the Exchange Offer Registration
Statement or the effectiveness thereof or the consummation of the
Registered Exchange Offer, pursuant to the terms of subparagraph (i) of
Section 2(a) hereof, by the later of (x) June 22, 1998 and (y) 30 days
after a request made pursuant to Section 2, a Shelf Registration Statement
has not been filed with the Commission or such Shelf Registration Statement
has not been declared effective by the Commission within 150 days after any
such request; or
(v) if after either the Exchange Offer Registration Statement or the
Shelf Registration Statement is declared effective (A) such Registration
Statement thereafter ceases to be effective; or (B) such Registration
Statement or the related prospectus ceases to be usable (except as
permitted in paragraph (b)) in connection with resales of Transfer
Restricted Notes during the periods specified herein,
the Company will pay special interest ("Special Interest") to each Holder of
Transfer Restricted Notes, during the first 90-day period immediately following
such Registration Default at a per annum rate of 0.50% per Transfer Restricted
Note held by such Holder. The amount of Special Interest will increase by an
additional 0.50% per annum per Transfer Restricted Note, for each subsequent
90-day period until the date on which the Exchange Offer Registration Statement
or Shelf Registration Statement is filed or declared effective, as the case may
be, or such Registration Statement again becomes effective, or such Registration
Statement prospectus becomes usable as the case may be, up to a maximum Special
Interest with respect to any Registration Default of 1.50% per annum per
Transfer Restricted Note. Such Special Interest is payable in addition to any
other interest payable from time to time with respect to the Securities.
(b) A Registration Default referred to in Section 6(a)(v) shall be
deemed not to have occurred and be continuing in relation to a Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to such Shelf Registration Statement to incorporate annual audited
or, if required by the rules and regulations under the Securities Act,
quarterly unaudited financial information with respect to the Company where
such post-effective amendment is not yet effective and needs to be declared
effective to permit Holders to use the related prospectus or (y) other
material events or developments with respect to the Company that would need to
be described in such Shelf Registration Statement or the related prospectus
and (ii) in the case of clause (y), the Company is proceeding promptly and in
good faith to amend or supplement such Shelf Registration Statement and
related prospectus to describe such events; provided, however, that in no
event shall the Company be required to disclose the business purpose for such
suspension if the Company determines in good faith that such business purpose
must remain confidential; provided further, however, that in any case if such
Registration Default occurs for a continuous period in excess of 45 days,
Special Interest shall be payable in accordance with the above paragraph from
the day following such 45 day period until the date on which such Registration
Default is cured.
(c) All accrued Special Interest shall be payable by the Company in
cash on the regular interest payment dates with respect to the Notes, the
Exchange Notes or the Private Exchange Notes to the Holders of record on the
applicable record dates. The parties hereto agree that Special Interest
provided in this Section constitutes a reasonable estimate of the damages that
will be incurred by the Holders by reason of the failure of the Exchange Offer
Registration Statement or the Shelf Registration Statement to be filed,
declared effective or to remain effective or such Registration Statement or
related prospectus to be usable, as the case may be.
(d) "Transfer Restricted Notes" means each Note until (i) the date
on which such Transfer Restricted Note has been exchanged by a person other
than a broker-dealer for a freely transferable Exchange Note in the Registered
Exchange Offer, (ii) following the exchange by a broker-dealer in the
Registered Exchange Offer of a Transfer Restricted Note for an Exchange Note,
the date on which such Exchange Note is sold to a purchaser who receives from
such broker-dealer on or prior to the date of such sale a copy of the
prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Transfer Restricted Note has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iv) the date on which such Transfer Restricted Note
is distributed to the public pursuant to Rule 144 under the Securities Act or
is saleable pursuant to Rule 144(k) under the Securities Act.
Section 7. Rule 144 and Rule 144a.
The Company shall use its reasonable best efforts to file on a
timely basis all such reports required to be filed under the Exchange Act as,
and endeavor in good faith to take such other actions as, are reasonably
necessary to enable Holders to sell Transfer Restricted Notes without
registration under the Securities Act within the limitation of the exemptions
provided under (a) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, (b) Rule 144A under the Securities Act, as such
Rule may be amended from time to time, and (c) any similar rules or
regulations hereafter adopted by the Commission. Upon request of any Holder
of Transfer Restricted Notes, the Company will provide a written statement as
to whether it has complied with such requirements and will, at its expense,
forthwith upon the request of the Owner Trustee or Lazard, deliver to the
Owner Trustee or Lazard, a certificate, signed by the Company's principal
financial officer, stating (i) the Company's name, address and telephone
number (including area code), (ii) the Company's Internal Revenue Service
identification number, (iii) the Company's Commission file number, (iv) the
number of shares of each class of capital stock outstanding as shown by the
most recent report or statement published by the Company, and (v) whether the
Company has filed the reports required to be filed under the Exchange Act for
a period of at least ninety (90) days prior to the date of such certificate
and in addition has filed the most recent annual report required to be filed
thereunder.
Section 8. Underwriting.
If any of the Transfer Restricted Notes covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
investment banker(s) and manager(s) that will manage the offering will be
selected by the Holders of a majority of the then outstanding Transfer
Restricted Notes (determined in accordance with Section 9(d)) included in such
offering (after consultation with the Company as to such selection and upon the
written consent of the Company, which consent will not be unreasonably
withheld or delayed). If requested by the underwriters, the Company will
promptly enter into an underwriting agreement reasonably acceptable to the
Company with such underwriters for such offering, such agreement to contain
such representations and warranties by the Company and such other terms and
conditions as are customary for underwriting agreements with respect to
secondary offerings, including without limitation, indemnities to the effect
and to the extent provided in Section 5 hereof. The Holders of Transfer
Restricted Notes on whose behalf such securities are being distributed shall
be party to any such underwriting agreement. Such Holders shall not be
required by the Company to make any representations or warranties to the
underwriters with respect to the Company or the Transfer Restricted Notes
(other than that the Holders are conveying such securities free and clear of
all pledges, securities interests, liens, charges, encumbrances, agreements,
equities, claims and options of whatever nature), and the Holders shall not be
required to indemnify the Company or the underwriters (other than with respect
to the matters, and to the extent, provided in Section 5). Furthermore, the
Company shall make available for inspection by the Holders, any underwriter
participating in any disposition pursuant to such Shelf Registration Statement,
and any attorney, accountant or other agent retained by any Holder or
underwriter, all financial and other records and other information, pertinent
corporate documents and properties of the Company as shall be reasonably
necessary to enable them to exercise their due diligence responsibilities.
No Holder of Transfer Restricted Notes may participate in any
underwritten distribution hereunder unless such holder (a) agrees to sell such
Holder's Transfer Restricted Notes on the basis provided in any underwriting
arrangements approved in accordance with the terms hereof, and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
Section 9. Miscellaneous.
(a) Remedies. Each Holder of Securities, in addition to being
entitled to exercise all rights provided herein, and as provided in the Sale
Agreement and granted by law, and, in the case of Lazard, as provided in the
Placement Agreement, including the recovery of damages, shall be entitled to
specific performance of such Holder's rights under this Agreement. Except
with respect to the payment of Special Interest in the event of the occurrence
of a Registration Default, the Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Agreement and hereby agrees in any action for specific
performance to waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company has not and shall not
on or after the date of this Agreement enter into any agreement with respect
to its securities that is inconsistent with the rights granted to the Holders
of Securities in this Agreement or otherwise conflicts with the provisions
hereof. The rights granted to the Holders of Securities hereunder do not and
will not in any way conflict with and are not and will not be inconsistent
with the rights granted to the holders of the Company's other securities under
any other agreements. No holder of any securities of the Company has rights
to the registration of any securities of the Company because of the execution,
delivery or performance by the Company of this Agreement or as a result of the
filing of the Exchange Offer Registration Statement or the Shelf Registration
Statement.
(c) No Adverse Action Affecting the Securities. The Company has
not taken and will not take, any action, or permit any change to occur with
respect to the Securities which would adversely affect the ability of any of
the Holders of Securities to include such Securities in a registration
undertaken pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of
Holders of a majority of the outstanding principal amount of Transfer
Restricted Notes. Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof that relates exclusively to the rights of
Holders of Transfer Restricted Notes whose Transfer Restricted Notes are being
sold pursuant to the Shelf Registration Statement and that does not directly
or indirectly affect the rights of other Holders of Transfer Restricted Notes
may be given by the Holders of a majority of the Transfer Restricted Notes
being sold.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder of Securities, at the address set forth on the
records of the Company or the Trustee under the Indenture, with a copy to
the Trustee, if to Lazard, at the address set forth in the Placement
Agreement and if to the Owner Trustee, at the address set forth in the Sale
Agreement; and
(ii) if to the Company, initially at its address set forth in the Sale
Agreement and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
under the Indenture at the address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Securities.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Securities except as provided in the Indenture, the Sale
Agreement and the Placement Agreement. Except as set forth in the prior
sentence, this Agreement supersedes all prior agreements and understandings
between the parties with respect to the subject matter hereof.
[Remainder of this page is blank.]
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
TRANS WORLD AIRLINES, INC.
By: /s/ Michael J. Lichty
-----------------------------------
Name: Michael J. Lichty
Title: Vice President and Deputy
General Counsel
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual
capacity but as Owner Trustee for
Seven Sixty Seven Leasing, Inc.
By: /s/ C. Scott Nielsen
-----------------------------------
Name: C. Scott Nielsen
Title: Vice President
LAZARD FRERES & CO. LLC
By: /s/ Michael S. Liss
-----------------------------------
Name: Michael S. Liss
Title: Managing Director
ANNEX A
Each broker-dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus,
a broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Notes where such Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities. The Company has agreed that, for a period of 180
days after the Expiration Date (as defined herein), it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
ANNEX B
Each broker-dealer that receives Exchange Notes for its own
account in exchange for Notes, where such Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution."
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own
account pursuant to the Registered Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Notes received
in exchange for Existing Notes where such Existing Notes were acquired as a
result of market-making activities or other trading activities. The Company
has agreed that, for a period of 180 days after the Expiration Date, it will
make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In addition, until
_____, 199_, all dealers effecting transactions in the Exchange Notes may be
required to deliver a prospectus.(1)
The Company will not receive any proceeds from any sale of
Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Notes. Any broker-dealer that resells Exchange Notes that were received by it
for its own account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such Exchange Notes may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit on
any such resale of Exchange Notes and any commission or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
For a period of 180 days after the Expiration Date the Company
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such
documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (including the reasonable expenses of
one counsel for the Holders of the Notes) other than commissions or
concessions of any brokers or dealers and will indemnify the Holders of
Securities (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
- ----------
(1)In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.
ANNEX D
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
---------------------------------------
Address:
------------------------------------
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If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Notes. If the undersigned is a broker-dealer that
will receive Exchange Notes for its own account in exchange for Notes that
were acquired as a result of market-making activities or other trading
activities, it acknowledges that it will deliver a prospectus in connection
with any resale of such Exchange Notes; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
TRANS WORLD AIRLINES, INC.
Mandatory Conversion Equity Notes due 1999
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
and entered into as of April 21, 1998, by and among Trans World Airlines,
Inc., a Delaware corporation (the "Company"), Lazard Freres & Co. LLC
("Lazard") and First Security Bank, National Association, as Owner Trustee
(the "Owner Trustee"), under the Trust Agreement dated as of January 24, 1995
between the Owner Trustee and Seven Sixty Seven Leasing, Inc., as beneficiary
(the "Beneficiary"). Subject to the terms and conditions stated in the
Aircraft Sale and Note Purchase Agreement dated as of April 9, 1998 among the
Company, the Owner Trustee and the Beneficiary (the "Sale Agreement"), the
Beneficiary will instruct the Owner Trustee to, and the Owner Trustee will,
sell to the Company three Boeing 767-231 ETOPS aircraft and their associated
engines for $25,000,000 for each such aircraft, payable by the issuance by the
Company of (i) $43,200,000 aggregate principal amount of the Company's 113/8%
Senior Secured Notes Due 2003 (the "Senior Notes") and (ii) $31,800,000
aggregate principal amount of the Company's Mandatory Conversion Equity Notes
due 1999 (the "Equity Notes"). In connection therewith, subject to the terms
and conditions stated in the Placement Agreement dated as of April 9, 1998
between the Company and Lazard (the "Placement Agreement"), the Company has
agreed to pay Lazard a placement fee of $3,000,000 which such fee has been
agreed under the Sale Agreement to be paid by the Owner Trustee, on behalf of
the Beneficiary, by payment of (x) $1,728,000 aggregate principal amount of
the Senior Notes and (y) $1,272,000 aggregate principal amount of the Equity
Notes to Lazard.
This Agreement is made pursuant to the Sale Agreement and the
Placement Agreement. In order to (x) fulfill its obligations to the Owner
Trustee under the Sale Agreement and (y) fulfill its obligations to Lazard
under the Placement Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the closing of the Sale Agreement. All
capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Indenture (as defined below) governing the Equity Notes.
The parties hereby agree as follows:
Section 1. Definitions.
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Closing Date: The date on which the closing of the sale of the
Aircraft to the Company in exchange for Senior Notes and Equity Notes to the
Owner Trustee is consummated pursuant to the Sale Agreement.
Commission: The United States Securities and Exchange
Commission and any successor federal agency having similar powers.
Common Stock: Includes any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which is not subject to redemption by the Company. Unless the
context otherwise requires, all references to Common Stock shall include the
associated Rights.
Damages Payment Date: The last business day of each month.
Effectiveness Target Date: As defined in Section 3.
Equity Notes: Mandatory Conversion Equity Notes due 1999 of the
Company.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Holder: As defined in Section 2(b) hereof.
Indenture: The Indenture dated as of April 21, 1998 between the
Company and First Security Bank, National Association (the "Trustee"),
pursuant to which the Equity Notes have been issued, as such Indenture is
amended or supplemented from time to time in accordance with the terms thereof.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, limited
liability company, trust or unincorporated organization or other entity, or a
government or agency or political subdivision thereof.
Private Placement Memorandum: The Private Placement
Memorandum, dated April 9, 1998, and all amendments and supplements thereto,
relating to the Equity Notes and prepared by the Company pursuant to the Sale
Agreement and the Placement Agreement.
Prospectus: The prospectus included in the Shelf Registration
Statement, as amended or supplemented by any prospectus supplement and by all
other amendments and supplements to the prospectus included in the Shelf
Registration Statement, including post-effective amendments, and all material
which may be incorporated by reference into such prospectus.
Record Holder: With respect to any Damages Payment Date
relating to the Transfer Restricted Securities, each Person who is a Holder of
record on the business day immediately preceding such Damages Payment Date.
Registrar: As defined in the Indenture.
Rights: The Rights of the Company entitling the holder to
purchase one one-hundredth of a share of the Company's Series A Participating
Preferred Stock, par value $.01 per share, under certain circumstances issued
pursuant to the Rights Agreement dated as of December 19, 1995 between the
Company and American Stock Transfer & Trust Company, as Rights Agent,
supplemented as of March 18, 1996 and as it may be further amended or
supplemented from time to time.
Shelf Registration Statement: As defined in Section 3(a)
hereof.
Transfer Restricted Securities: Each share of Common Stock,
issued upon conversion of the Equity Notes, until the date on which each such
share of Common Stock (i) has been effectively registered under the Act and
disposed of in accordance with the Shelf Registration Statement or (ii) is
distributed to the public pursuant to Rule 144 under the Act or is saleable
pursuant to Rule 144(k) under the Act (or similar provisions then in force).
Usable: Complies with the applicable rules and regulations of
the Act including, without limitation, Rule 3-12 of Regulation S-X and Item
512 of Regulation S-K.
Section 2. Securities Subject to this Agreement.
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A
Person is deemed to be a holder of record of Transfer Restricted Securities
(each, a "Holder") whenever such Person owns Transfer Restricted Securities
or is entitled to receive Transfer Restricted Securities upon conversion of
the Equity Notes.
Section 3. Shelf Registration and Listing.
(a) The Company shall file with the Commission, as soon as
practicable after the Closing Date, but in any event on or prior to the date
60 days after the Closing Date, a shelf registration statement pursuant to
Rule 415 under the Act (the "Shelf Registration Statement") on Form S-3 to
cover resales of all Transfer Restricted Securities by the Holders thereof who
have provided the information required by Section 3(b) hereof; provided that
the Company may file the Shelf Registration Statement on Form S-1 or Form S-2
if Form S-3 is not then available to the Company. The Company will use its
reasonable best efforts to cause such Shelf Registration Statement to be
declared effective by the Commission within 150 days after the Closing Date
(the "Effectiveness Target Date"). The Company shall use its reasonable best
efforts to keep such Shelf Registration Statement continuously effective,
subject to the provisions of Section 5 hereof, until the earlier of (i) the
sale of all Transfer Restricted Securities covered by the Shelf Registration
Statement, and (ii) the expiration of two years after the date of original
issuance of the Equity Notes or, if the period applicable under Rule 144(k)
under the Act, or any successor provision for such securities is shortened,
such shorter period. Subject to the right of the Company to have the Shelf
Registration Statement not be effective for periods of time set forth in
Section 5 hereof, the Company further agrees to use its reasonable best
efforts to prevent the happening of any event that would cause the Shelf
Registration Statement to contain a material misstatement or omission or to be
not effective and usable for resale of the Transfer Restricted Securities
during the period that such Shelf Registration Statement is required to be
effective and usable. Upon the occurrence of any event that would cause the
Shelf Registration Statement (i) to contain a material misstatement or
omission or (ii) to not be effective or usable for resale of Transfer
Restricted Securities during the period that such Shelf Registration Statement
is required to be effective and usable, the Company shall promptly file an
amendment to the Shelf Registration Statement, in the case of clause (i),
correcting any such misstatement or omission, and in the case of either clause
(i) or (ii), use its reasonable best efforts to cause such amendment to be
declared effective and such Shelf Registration Statement to become usable as
soon as practicable thereafter. The Company's obligation to maintain an
effective Shelf Registration Statement shall be extended for the amount of
time that such Shelf Registration shall not have been effective or otherwise
usable.
(b) No Holder may include any of its Transfer Restricted
Securities in any Shelf Registration Statement pursuant to this Agreement
unless such Holder furnishes to the Company in writing, within 10 business
days after receipt of a request therefor (which initial request shall be made
within 40 days after the Closing Date to the Holders on a record date not more
than 5 days prior to such request), such information and representations and
warranties as the Company may reasonably request for use in connection with
any Shelf Registration Statement or Prospectus or preliminary Prospectus
included therein. No Holder shall be entitled to liquidated damages pursuant
to Section 4 hereof if such Holder's Transfer Restricted Securities are
excluded from a Shelf Registration Statement because such Holder failed to
furnish the Company in writing such information and representations and
warranties reasonably requested by the Company for use in connection with such
Shelf Registration Statement or Prospectus or preliminary Prospectus included
therein. Each Holder as to which any Shelf Registration Statement is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously provided to the
Company by such Holder not materially misleading.
(c) The Company shall use its reasonable best efforts to have the
shares of Common Stock issuable upon conversion of the Equity Notes approved
for listing on the American Stock Exchange ("ASE"), or on such other stock
exchange or market as the Common Stock is then principally traded, no later
than the effectiveness date of the Shelf Registration Statement relating to
such Common Stock, and, if applicable, to maintain such listing until the
earlier to occur of (i) the sale of all Transfer Restricted Securities covered
by the Shelf Registration Statement, and (ii) the expiration of two years
after the date of issuance of the Equity Notes or, if the period applicable
under Rule 144(k) under the Act, or any successor provision relating to the
free transferability of the Transfer Restricted Securities, is shortened, such
shorter period.
Section 4. Liquidated Damages.
Each of the Company, on behalf of itself, the Owner Trustee, on
behalf of the Beneficiary, and Lazard, on behalf of itself, (and each of them
on behalf of each subsequent Holder) agrees that (a) the Holders will suffer
damages if (i) the Shelf Registration Statement is not maintained in the manner
and within the time periods contemplated by Section 3 hereof or (ii) the
Company does not maintain the listing of the Common Stock issuable on the
Conversion Date (as defined in the Indenture) on the ASE, or such other stock
exchange or market on which the Common Stock is principally traded, within the
time period contemplated by Section 3 and (b) it would not be feasible to
ascertain the extent of such damages with precision. Accordingly, if (x) the
Shelf Registration Statement is filed and declared effective but shall on or
after the Conversion Date cease to be effective (without being succeeded
immediately by an additional Shelf Registration Statement filed and declared
effective) or usable for a period of time which shall exceed 60 days in the
aggregate during any year (defined as any period of 365 days commencing on or
after the date the Shelf Registration Statement is declared effective) or (y)
the Company shall fail to maintain the approval for listing of the shares of
Common Stock that constitute the Transfer Restricted Securities in accordance
with Section 3(c) (each such event, an "Effectiveness Default"), the Company
shall pay liquidated damages to each Holder who has complied with such
Holder's obligations hereunder, during the first 90-day period immediately
following the occurrence of any such Effectiveness Default in an amount equal
to $0.01 per week per share of Common Stock (subject to adjustment in the
event of stock splits, stock recombinations, stock dividends and the like)
constituting Transfer Restricted Securities held by such Holder. The amount
of the liquidated damages will increase by an additional $0.01 per week per
share of Common Stock (subject to adjustment as set forth above) constituting
Transfer Restricted Securities held by such Holder for each subsequent 90-day
period until the Shelf Registration Statement again becomes effective and
usable or the approval for listing is cured, up to a maximum amount of
liquidated damages with respect to any such Effectiveness Default of $0.05 per
week per share (subject to adjustment as set forth above) of Common Stock
constituting Transfer Restricted Securities. All accrued and unpaid liquidated
damages shall be paid to Record Holders by wire transfer of immediately
available funds or by federal funds check by the Company on each Damages
Payment Date. If the Company defaults in a payment of any liquidated damages
hereunder, it shall pay the liquidated damages, plus interest on the
liquidated damages at the rate of twelve percent (12%) per annum to the extent
permitted by law, to the persons who are Holders on the subsequent Damages
Payment Date. Following the cure of an Effectiveness Default, liquidated
damages will cease to accrue with respect to such Effectiveness Default.
All of the Company's obligations to pay accrued but unpaid
liquidated damages set forth in the preceding paragraph which are outstanding
with respect to any Transfer Restricted Security at the time such security
ceases to be a Transfer Restricted Security shall survive until such time as
all such obligations with respect to such security shall have been satisfied
in full.
The parties hereto agree that the liquidated damages provided
in this Section 4 constitute a reasonable estimate of the damages that will be
incurred by Holders if, on or after the Conversion Date, after using
reasonable best efforts, the Company is unable (x) to maintain the
effectiveness of the Shelf Registration Statement for the period required by
Section 3(a) or (y) to maintain the approval for listing of the shares of
Common Stock that constitute Transfer Restricted Securities for the period
required by Section 3(c). It is the intention of the parties that if an
Effectiveness Default shall occur as a result of the Company's failure to use
its reasonable best efforts to cause the undertakings described in clauses (x)
and (y) of the preceding sentence to occur, Holders shall be entitled to any
damages appropriate under applicable law, which damages shall not be limited
to the liquidated damages under this Section 4; provided that any amounts of
interest or liquidated damages paid pursuant to Section 2.2 of the Indenture
or Section 4 of this Agreement, respectively, shall be credited against any
amounts awarded to Holders by a court of competent jurisdiction.
Section 5. Registration Procedures.
In connection with the Shelf Registration Statement, the
Company will use its reasonable best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution or disposition thereof,
and pursuant thereto the Company will as expeditiously as possible:
(a) on or prior to the date 60 days after the Closing Date, prepare
and file with the Commission a Shelf Registration Statement relating to the
registration on Form S-3 (or, if Form S-3 is not available, on Form S-1 or
Form S-2) for the sale of the Transfer Restricted Securities in accordance with
the intended method or methods of distribution thereof and shall include or
incorporate all required financial statements, reports, schedules, exhibits and
other documents; cause to be made, or otherwise cooperate and assist in any
filings required to be made with the NASD and use its reasonable best efforts
to cause such Shelf Registration Statement to become effective and approved
on or prior to the Effectiveness Target Date by such governmental agencies or
authorities as may be necessary to enable the selling Holders to consummate
the disposition of such Transfer Restricted Securities; provided that before
filing a Shelf Registration Statement or any Prospectus, or any amendments or
supplements thereto, including documents incorporated by reference after the
initial filing of the Shelf Registration Statement, the Company shall furnish
to such Holders and underwriters, if any, copies of all such documents proposed
to be filed, which documents shall be subject to the review of such Holders,
and the Company shall not file any Shelf Registration Statement or amendment
thereto or any Prospectus or any supplement thereto (including such documents
incorporated by reference) to which the Holders of the Transfer Restricted
Securities covered by such Shelf Registration Statement or the underwriters, if
any, shall reasonably object in writing within four business days after the
receipt thereof on the grounds that such Shelf Registration Statement,
Prospectus, amendment or supplement does not (x) comply in all material
respects with the requirements of the Act or the rules and regulations
thereunder or (y) fairly or accurately describe any description or other
information pertaining to any of such Holders or concerning the plan of
distribution contemplated by such Holders;
(b) prepare and file with the Commission such amendments and
post-effective amendments to the Shelf Registration Statement as may be
necessary to keep the Shelf Registration Statement effective for the
applicable period set forth in Section 3(a) hereof; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 under the Act, and to comply fully with the
applicable provisions of Rule 424 under the Act in a timely manner; and comply
with the provisions of the Act with respect to the disposition of all
securities covered by such Shelf Registration Statement during the applicable
period in accordance with the intended method or methods of distribution by
the sellers thereof set forth in such Shelf Registration Statement or
supplement to the Prospectus;
(c) advise the selling Holders promptly and, if requested by such
Persons, to confirm such advice in writing, (i) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to the Shelf Registration Statement or any post-effective amendment
thereto, when the same has become effective, (ii) of any request by the
Commission for amendments to the Shelf Registration Statement or amendments or
supplements to the Prospectus or for additional information relating thereto,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Shelf Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (iv) if at any
time the representations and warranties of the Company contemplated by
paragraph (l)(i) below cease to be true and correct, and (v) of the existence
of any fact and the happening of any event that makes any statement of a
material fact made in the Shelf Registration Statement, the Prospectus, any
amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
the Shelf Registration Statement or the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein in order to make
the statements therein not misleading in the light of the circumstances then
existing. If at any time the Commission shall issue any stop order suspending
the effectiveness of the Shelf Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Transfer Restricted
Securities under state securities or Blue Sky laws, the Company shall use its
best efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;
(d) no less than 24 hours prior to the filing of any document that
is to be incorporated by reference into the Shelf Registration Statement or the
Prospectus (after the initial filing of the Shelf Registration Statement),
provide copies of such document to the selling Holders and underwriters, if
any, make the Company's representatives available at reasonable times for
discussion of such document and include such information in such document
prior to the filing thereof as such selling Holders or underwriters may
reasonably and timely request;
(e) furnish to each selling Holder and underwriter, if any, without
charge, at least one copy of the Shelf Registration Statement, as first filed
with the Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(f) deliver to each selling Holder and underwriter, if any, without
charge, as many copies of the Prospectus (including each preliminary
Prospectus) and any amendment or supplement thereto as such Persons may
reasonably request; the Company consents to the use of the Prospectus and any
amendment or supplement thereto by each of the selling Holders and
underwriters, if any, in connection with the public offering and sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment or
supplement thereto;
(g) prior to any public offering of Transfer Restricted
Securities, use its reasonable best efforts to cause the Transfer Restricted
Securities covered by the Shelf Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Transfer Restricted Securities and otherwise cooperate
with the selling Holders and underwriters, if any, and their respective
counsel in connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders and underwriters, if any, may reasonably
request and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the Shelf Registration Statement; provided, however,
that the Company shall be required neither to register or qualify as a foreign
corporation where it is not now so qualified nor to take any action that would
subject it to the service of process in suits or to taxation, other than as to
matters and transactions relating to the Shelf Registration Statement, in any
jurisdiction where it is not now so subject;
(h) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the selling Holders to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and enable such
Transfer Restricted Securities to be in such denominations and registered in
such names as the Holders may request at least two business days prior to any
sale of Transfer Restricted Securities made by such Holders;
(i) use its reasonable best efforts to cause the Transfer
Restricted Securities covered by the Shelf Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the seller or sellers thereof to consummate the
disposition of such Transfer Restricted Securities, subject to the proviso
contained in clause (g) above;
(j) if any fact or event contemplated by clause (v) of paragraph
(c) above shall exist or have occurred, as promptly as practicable thereafter,
prepare a supplement or post-effective amendment to the Shelf Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading;
(k) provide CUSIP numbers for all Transfer Restricted Securities
not later than the effective date of the Shelf Registration Statement and
provide the transfer agent for the Common Stock with printed certificates for
the Transfer Restricted Securities;
(l) enter into such agreements and take all such other actions
consistent with its obligations hereunder in connection therewith and as may be
reasonably required in order to expedite or facilitate the disposition of the
Transfer Restricted Securities pursuant to the Shelf Registration Statement,
and in such connection the Company shall (i) make such representations and
warranties to the Holders and underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters in primary
underwritten offerings and covering matters including, but not limited to,
those set forth in the Sale Agreement and the Placement Agreement; (ii) obtain
opinions of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
Holders of the Transfer Restricted Securities being sold and underwriters, if
any) addressed to each selling Holder and underwriter, if any, requesting the
same and covering such matters as are customarily covered in company counsel
opinions to underwriters in primary underwritten offerings; (iii) obtain "cold
comfort" letters and updates thereof from the Company's independent certified
public accountants addressed to the selling Holders and underwriters, if any,
requesting the same, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters to underwriters in
connection with primary underwritten offerings; and (iv) deliver such
documents and certificates as may be reasonably requested by the Holders of
the Transfer Restricted Securities being sold and underwriters, if any, to
evidence compliance with clause (i) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Company pursuant to this clause (1);
(m) subject to appropriate confidentiality arrangements being
entered into, make available at reasonable times for inspection by the Holders
of the Transfer Restricted Securities participating in any disposition
pursuant to such Shelf Registration Statement, any underwriters and any
attorney or accountant retained by such selling Holders or underwriters, all
financial and other records, pertinent corporate documents and properties of
the Company and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Holder, underwriter,
attorney or accountant at reasonable times in connection with such Shelf
Registration Statement subsequent to the filing thereof and prior to its
effectiveness;
(n) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as reasonably practicable, a
consolidated earnings statement (which need not be audited) for the
twelve-month period, beginning with the first month of the Company's first
fiscal quarter commencing after the effective date of the Shelf Registration
Statement;
(o) use its reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of the Shelf Registration Statement at the
earliest possible moment; use its reasonable best efforts (i) to prevent the
entry of any stop order affecting the Registration Statement and (ii) to
remove any such stop order if entered; and
(p) cooperate and assist in any filings required to be made with
the NASD.
The Company agrees that it will not include in the registration
contemplated by the Shelf Registration Statement any securities other than the
Transfer Restricted Securities. The Company represents and warrants to the
Owner Trustee and Lazard that it will not be required to include under the
Shelf Registration Statement any other securities.
The Owner Trustee, on behalf of the Beneficiary, Lazard, on
behalf of itself, and both the Owner Trustee and Lazard on behalf of each
subsequent Holder agree by acquisition of Transfer Restricted Securities that,
upon receipt of any notice from the Company of the existence of any fact or
the happening of any event of the kind described in clause (v) of Section 5(c)
hereof, such Holder will forthwith discontinue disposition of Transfer
Restricted Securities pursuant to the Shelf Registration Statement until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(j) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus may be resumed, and
has received copies of any additional or supplemental filings which are
incorporated by reference in the Prospectus. If so directed by the Company,
each Holder will, or will request the managing underwriter or underwriters, if
any, to deliver to the Company (at the Company's expense) all copies, other
than permanent file copies then in such Holder's possession, of the Prospectus
covering such Transfer Restricted Securities current at the time of receipt of
such notice.
Section 6. Registration Expenses.
All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether a Shelf Registration Statement becomes effective, including without
limitation:
(i) all registration and filing fees and expenses;
(ii) fees and expenses of compliance with federal securities or
state blue sky laws (including reasonable fees and disbursements of
counsel to the Holders and the underwriters, if any, in connection
with blue sky qualifications of the Transfer Restricted Securities);
(iii) expenses of printing (including, without limitation,
expenses of printing or engraving certificates for the Transfer
Restricted Securities, expenses of printing or engraving certificates
for the Common Stock and expenses of printing prospectuses), messenger
and delivery services and telephone;
(iv) fees and disbursements of counsel for the Company and
reasonable fees and disbursements of one counsel for the Holders
chosen by the Holders of a majority of the outstanding Transfer
Restricted Securities (determined as provided in Section 10(d));
(v) fees and disbursements of all independent certified public
accountants of the Company (including the expenses of any special
audit and "cold comfort" letters required by or incident to such
performance);
(vi) filing fees associated with any NASD filing required to be
made in connection with the Shelf Registration Statement;
(vii) fees and expenses of listing the Transfer Restricted
Securities on any securities exchange or quotation system in
accordance with Section 3(c) hereof; and
(viii) securities acts liability insurance, if the Company
desires such insurance.
All such expenses, including without limitation those described
in the foregoing clauses (i) to (viii) are referred to herein as "Registration
Expenses."
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, and the fees and expenses of any Person, including special experts,
retained by the Company. The Holders shall bear the expense of any broker's
commission or underwriters' discount or commission.
Section 7. Underwriting.
If any of the Transfer Restricted Securities covered by any
Shelf Registration Statement are to be sold in an underwritten offering, the
investment banker(s) and manager(s) that will manage the offering will be
selected by the Holders of a majority of the then outstanding Transfer
Restricted Securities (determined in accordance with Section 10(d)) included in
such offering (after consultation with the Company as to such selection and
upon the written consent of the Company, which consent shall not be
unreasonably withheld or delayed). If requested by the underwriters, the
Company will promptly enter into an underwriting agreement reasonably
acceptable to the Company with such underwriters for such offering, such
agreement to contain such representations and warranties by the Company and
such other terms and conditions as are customary for underwriting agreements
with respect to secondary offerings, including without limitation, indemnities
to the effect and to the extent provided in Section 8 hereof. The Holders on
whose behalf such securities are being distributed shall be party to any such
underwriting agreement. Such Holders shall not be required by the Company to
make any representations or warranties to the underwriters with respect to the
Company or the Transfer Restricted Securities (other than that the Holders are
conveying such securities free and clear of all pledges, security interests,
liens, charges, encumbrances, agreements, equities, claims and options of
whatever nature), and the Holders shall not be required to indemnify the
Company or the underwriters (other than with respect to the matters, and to
the extent, provided in Section 8). Furthermore, the Company shall make
available for inspection by the Holders, any underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and any attorney,
accountant or other agent retained by any Holder or underwriter, all financial
and other records and other information, pertinent corporate documents and
properties of the Company as shall be reasonably necessary to enable them to
exercise their due diligence responsibilities.
No Holder may participate in any underwritten distribution
hereunder unless such Holder (a) agrees to sell such Holder's Transfer
Restricted Securities on the basis provided in any underwriting arrangements
approved in accordance with the terms hereof, and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents required under the terms of such underwriting arrangements.
Section 8. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Holder
and each person, if any, who controls such Holder within the meaning of the
Act or the Exchange Act (each Holder and such controlling persons referred to
in this Section 8(a) and the Company and its controlling persons referred to in
Section 8(b), being collectively referred to herein, as the case may be, as the
"indemnified parties") from and against any losses, claims, damages or
liabilities, joint or several, or any actions in respect thereof (including,
but not limited to, any losses, claims, damages, liabilities or actions
relating to purchases and sales of the Transfer Restricted Securities) to
which each indemnified party may become subject under the Act, the Exchange
Act or otherwise, insofar as such losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Shelf Registration Statement or
Prospectus or in any amendment or supplement thereto or in any preliminary
prospectus relating to the Shelf Registration Statement, or arise out of, or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and shall reimburse, as incurred, the indemnified parties for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action
in respect thereof; provided, however, that (i) the Company shall not be
liable in any such case to the extent that such loss, claim, damage or
liability arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in the Shelf
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to the Shelf Registration Statement
in reliance upon and in conformity with written information pertaining to such
Holder and furnished to the Company by or on behalf of such Holder
specifically for inclusion therein, (ii) with respect to any untrue statement
or omission or alleged untrue statement or omission made in the Prospectus
relating to such Shelf Registration Statement, the indemnity agreement
contained in this subsection (a) shall not inure to the benefit of any person
as to which there is a prospectus delivery requirement (a "Delivering Seller")
that sold the Transfer Restricted Securities to the person asserting any such
losses, claims, damages or liabilities to the extent that any such loss,
claim, damage or liability of such Delivering Seller results from the fact
that there was not sent or given to such person, on or prior to the written
confirmation of such sale, a copy of the Prospectus, as amended and
supplemented, provided that (I) the Company shall have previously furnished
copies thereof to such Delivering Seller in accordance with this Agreement and
(II) such furnished Prospectus, as amended and supplemented, would have
corrected any such untrue statement or omission or alleged untrue statement or
omission, and (iii) this indemnity agreement will be in addition to any
liability which the Company may otherwise have to such indemnified party. The
Company shall also indemnify underwriters, selling brokers, dealer-managers
and similar securities industry professionals participating in the
distribution (in each case as described in the Shelf Registration Statement),
their officers and directors and each person who controls such persons within
the meaning of the Act or the Exchange Act to the same extent as provided
above with respect to the indemnification of the Holders if requested by such
Holders.
(b) Each Holder, severally and not jointly, will indemnify and hold
harmless the Company, each other Holder and each person, if any, who controls
the Company and each such Holder within the meaning of the Act or the Exchange
Act from and against any losses, claims, damages or liabilities or any actions
in respect thereof to which the Company, each other Holder or any such
controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Shelf Registration Statement or Prospectus
or in any amendment or supplement thereto or in any preliminary prospectus
relating to the Shelf Registration Statement, or arise out of or are based upon
the omission or alleged omission to state therein a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information pertaining to such
Holder and furnished to the Company by or on behalf of such Holder
specifically for inclusion therein; and, subject to the limitation set forth
immediately preceding this clause, shall reimburse, as incurred, the Company
and each such Holder for any legal or other expenses reasonably incurred by
the Company, each other Holder or any such controlling person in connection
with investigating or defending any loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any liability
which such Holder may otherwise have to the Company, each other Holder or any
of their respective controlling persons.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action or proceeding (including
a governmental investigation), such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not, in any event, relieve
the indemnifying party from any obligations to any indemnified party, except
to the extent that it is prejudiced or harmed in any material respect by
failure to give such prompt notice. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with one
counsel (and local counsel as necessary) reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof the indemnifying party will not be liable to such indemnified
party under this Section 8 for any legal or other expenses, other than
reasonable costs of investigation, subsequently incurred by such indemnified
party in connection with the defense thereof. No indemnifying party shall,
without the prior written consent of the indemnified party, not to be
unreasonably withheld, effect any settlement of any pending or threatened
action in respect of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such indemnified party
unless such settlement includes an unconditional release of such indemnified
party from all liability on any claims that are the subject matter of such
action and does not include any injunctive relief against such indemnified
party. No indemnifying party shall be liable for any amounts paid in
settlement of any action or claim without its written consent, which consent
shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above for any reason, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from
the initial sale of the Aircraft for the Notes and the Equity Notes; provided,
however, that in no event shall the Owner Trustee, Lazard or any subsequent
Holder be responsible, in the aggregate, for any amount in excess of the
Placement Fee (as defined in the Placement Agreement), or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company on the one hand or such Holder or such other indemnified person,
as the case may be, on the other, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (d).
Notwithstanding any other provision of this Section 8(d), the Holders shall
not be required to contribute any amount in excess of the amount by which the
net proceeds received by such Holders from the sale of the Transfer Restricted
Securities pursuant to the Shelf Registration Statement exceeds the amount of
damages which such Holders have otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this
paragraph (d), each officer, director, employee, representative and agent of
an indemnified party and each person, if any, who controls such indemnified
party within the meaning of the Act or the Exchange Act shall have the same
rights to contribution as such indemnified party.
(e) The Company and each Holder agree that it would not be just and
equitable if contributions pursuant to Section 8(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 8(d).
(f) The agreements contained in this Section 8 shall survive the
sale of the Transfer Restricted Securities pursuant to the Shelf Registration
Statement and shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement or any investigation made by or
on behalf of any indemnified party.
Section 9. Rule 144.
The Company shall use its reasonable best efforts to file on a
timely basis all such reports required to be filed under the Exchange Act as,
and endeavor in good faith to take such other actions as, are reasonably
necessary to enable Holders to sell Transfer Restricted Securities without
registration under the Act within the limitation of the exemptions provided by
(a) Rule 144 under the Act, as such Rule may be amended from time to time, and
(b) any similar rules or regulations hereafter adopted by the Commission. Upon
request of any Holder, the Company will deliver a written statement as to
whether it has complied with such requirements and will, at its expense,
forthwith upon the request of the Owner Trustee, the Beneficiary or Lazard,
deliver to the Owner Trustee, the Beneficiary or Lazard a certificate, signed
by the Company's principal financial officer, stating (i) the Company's name,
address and telephone number (including area code), (ii) the Company's
Internal Revenue Service identification number, (iii) the Company's Commission
file number, (iv) the number of shares of each class of capital stock
outstanding as shown by the most recent report or statement published by the
Company, and (v) whether the Company has filed the reports required to be
filed under the Exchange Act for a period of at least ninety (90) days prior
to the date of such certificate and in addition has filed the most recent
annual report required to be filed thereunder.
Section 10. Miscellaneous.
(a) Remedies. Each Holder, in addition to being entitled to
exercise all rights provided herein, and as provided in the Sale Agreement and
granted by law and, in the case of Lazard, as provided in the Placement
Agreement, including the recovery of damages, shall be entitled to specific
performance of such Holder's rights under this Agreement. Except with respect
to the payment of Liquidated Damages in the event of the occurrence of an
Effectiveness Default, the Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees in any action for specific
performance to waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company has not and shall not
on or after the date of this Agreement enter into any agreement with respect
to its securities that is inconsistent with the rights granted to the Holders
in this Agreement or otherwise conflicts with the provisions hereof. The
rights granted to the Holders hereunder do not and will not in any way
conflict with and are not and will not be inconsistent with the rights granted
to the holders of the Company's securities under any other agreements. No
holder of securities of the Company has rights to the registration of any
securities of the Company because of the execution, delivery or performance
by the Company of this Agreement or as a result of the filing of the Shelf
Registration Statement.
(c) No Adverse Action Affecting the Transfer Restricted
Securities. The Company has not taken and will not take, any action, or
permit any change to occur with respect to the Transfer Restricted Securities
which would adversely affect the ability of any of the Holders to include such
Holder's Transfer Restricted Securities in a registration undertaken pursuant
to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of
Holders of a majority of the outstanding principal amount of Equity Notes
assuming conversion thereof into Common Stock or, if the Equity Notes have
been converted into Common Stock, the outstanding shares of Common Stock
constituting Transfer Restricted Securities, as the case may be.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders whose
Transfer Restricted Securities are being sold pursuant to the Shelf
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by the Holders of a majority of the
Transfer Restricted Securities being sold.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight deliver:
(i) if to a Holder, at the address set forth on the records of
the Company or the Registrar under the Indenture, with a copy to the
Registrar, and if to the Owner Trustee, at the address set forth in
the Sale Agreement and if to Lazard, at the address set forth in the
Placement Agreement; and
(ii) if to the Company, initially at its address set forth in the
Sale Agreement and thereafter at such other address, notice of which
is given in accordance with the provisions of this Section.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
under the Indenture at the address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon and enforceable by the successors and assigns
of each of the parties, including without limitation and without the need for
an express assignment, subsequent Holders.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the securities sold pursuant to the Sale Agreement and the Placement
Agreement except as provided in the Indenture, the Sale Agreement and the
Placement Agreement. Except as set forth in the prior sentence, this
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
(l) Like Treatment of Holders. Neither the Company nor any of its
affiliates shall, directly or indirectly, pay or cause to be paid any
consideration (immediate or contingent), whether by way of interest, fee,
payment for the exchange of Transfer Restricted Securities, or otherwise, to
any Holder, for or as an inducement to, or in connection with the solicitation
of, any vote, consent, waiver or amendment of any terms or provisions of this
Agreement, unless such consideration is required to be paid to all Holders
bound by such vote, consent, waiver or amendment whether or not such Holders
so consent, vote, waive or agree to amend and whether or not such Holders
tender their Transfer Restricted Securities for redemption or conversion.
Notwithstanding the foregoing, the Company may pay or cause to be paid
consideration to any Holder in connection with any transaction the purpose of
which is not to induce or solicit any vote, consent, waiver or amendment of
any terms or provisions of this Agreement.
[Remainder of this page is blank.]
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
TRANS WORLD AIRLINES, INC.
By: /s/ Michael J. Lichty
-----------------------------------
Name: Michael J. Lichty
Title: Vice President and Deputy
General Counsel
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual
capacity but as Owner Trustee for
Seven Sixty Seven Leasing, Inc.
By: /s/ C. Scott Nielsen
-----------------------------------
Name: C. Scott Nielsen
Title: Vice President
LAZARD FRERES & CO. LLC
By: /s/ Michael S. Liss
-----------------------------------
Name: Michael S. Liss
Title: Managing Director
Exhibit 5
DAVIS POLK & WARDWELL
450 Lexington Avenue
New York, N.Y. 10017
June 16, 1998
Trans World Airlines, Inc.
One City Centre
515 N. Sixth Street
St. Louis, Missouri 63101
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have served as counsel for Trans World Airlines, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, pursuant to a Registration Statement on
Form S-3 (the "Registration Statement"), of 3,218,624 shares of the Company's
Common Stock, $.01 par value per share (the "Common Stock").
We have examined and are familiar with originals or copies (certified,
photostatic or otherwise identified to our satisfaction) of such documents,
corporate records and other instruments relating to the incorporation of the
Company and the authorization and issuance of the Securities as we have deemed
necessary and advisable.
In all such examinations, we have assumed the genuineness of all
signatures on all originals and copies of documents we have examined, the
authenticity of all documents submitted to us as originals and the conformity
to original documents of all certified, conformed or photostatic copies. As to
questions of fact material and relevant to our opinion, we have relied upon
certificates or representations of Company officials and of appropriate public
officials.
We express no opinion as to matters under or involving laws of any
jurisdiction other than the State of Delaware and its political subdivisions.
Based upon and subject to the foregoing and having regard for such legal
considerations as we have deemed relevant, it is our opinion that:
i. the Company is a corporation validly existing under the
laws of the State of Delaware;
ii. the issuance and sale of the Common Stock have been
duly and validly authorized; and
iii. the Common Stock when issued will be fully paid, non-
assessable and free of preemptive rights.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus. In giving this consent, we do not thereby
admit we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Davis Polk & Wardwell
Exhibit 23.1
AUDITORS' CONSENT
The Board of Directors
Trans World Airlines, Inc.:
We consent to the use of our report included herein and incorporated herein by
reference and to the reference to our firm under the heading "Experts" in the
prospectus. Our report, dated March 4, 1998 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
June 16, 1998
EXHIBIT 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, John W. Bachmann, a Director of
TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Gerald L. Gitner, Michael J. Palumbo and Kathleen
A. Soled, jointly and severally, my true and lawful attorneys-in-fact,
with full power of substitution and resubstitution for me in my name, place
and stead, in any and all capacities, to sign, pursuant to the requirements
of the Securities Act of 1933, the Registration Statement on Form S-4 for
TRANS WORLD AIRLINES, INC. in connection with the Company's registration of
its Exchange Notes issuable in exchange for the Company's 11 3/4% Senior
Secured Notes due 2003, 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 (including post effective 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 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 this 8th day of June,
1998.
/s/ John W. Bachmann
--------------------
John W. Bachmann
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, William F. Compton, a Director of
TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Gerald L. Gitner, Michael J. Palumbo and Kathleen A.
Soled, jointly and severally, my true and lawful attorneys-in-fact, with full
power of substitution and resubstitution for me in my name, place and stead, in
any and all capacities, to sign, pursuant to the requirements of the Securities
Act of 1933, the Registration Statement on Form S-4 for TRANS WORLD AIRLINES,
INC. in connection with the Company's registration of its Exchange Notes
issuable in exchange for the Company's 11 3/4% Senior Secured Notes due 2003,
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 (including
post effective 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 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 this 8 day of June,
1998.
/s/ William F. Compton
----------------------
William F. Compton
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Eugene P. Conese, a Director of
TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Gerald L. Gitner, Michael J. Palumbo and Kathleen A.
Soled, jointly and severally, my true and lawful attorneys-in-fact, with full
power of substitution and resubstitution for me in my name, place and stead, in
any and all capacities, to sign, pursuant to the requirements of the Securities
Act of 1933, the Registration Statement on Form S-4 for TRANS WORLD AIRLINES,
INC. in connection with the Company's registration of its Exchange Notes
issuable in exchange for the Company's 11 3/4% Senior Secured Notes due 2003,
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 (including
post effective 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 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 this 9 day of June,
1998.
/s/ Eugene P. Conese
--------------------
Eugene P. Conese
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Sherry L. Cooper, a Director of
TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Gerald L. Gitner, Michael J. Palumbo and Kathleen A.
Soled, jointly and severally, my true and lawful attorneys-in-fact, with full
power of substitution and resubstitution for me in my name, place and stead, in
any and all capacities, to sign, pursuant to the requirements of the Securities
Act of 1933, the Registration Statement on Form S-4 for TRANS WORLD AIRLINES,
INC. in connection with the Company's registration of its Exchange Notes
issuable in exchange for the Company's 11 3/4% Senior Secured Notes due 2003,
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 (including
post effective 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 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 this 16 day of June,
1998.
/s/ Sherry L. Cooper
--------------------
Sherry L. Cooper
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Edgar M. House, a Director of
TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Gerald L. Gitner, Michael J. Palumbo and Kathleen A.
Soled, jointly and severally, my true and lawful attorneys-in-fact, with full
power of substitution and resubstitution for me in my name, place and stead, in
any and all capacities, to sign, pursuant to the requirements of the Securities
Act of 1933, the Registration Statement on Form S-4 for TRANS WORLD AIRLINES,
INC. in connection with the Company's registration of its Exchange Notes
issuable in exchange for the Company's 11 3/4% Senior Secured Notes due 2003,
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 (including
post effective 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 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 this 5 day of June,
1998.
/s/ Edgar M. House
------------------
Edgar M. House
/
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Thomas H. Jacobsen, a Director of
TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Gerald L. Gitner, Michael J. Palumbo and Kathleen A.
Soled, jointly and severally, my true and lawful attorneys-in-fact, with full
power of substitution and resubstitution for me in my name, place and stead, in
any and all capacities, to sign, pursuant to the requirements of the Securities
Act of 1933, the Registration Statement on Form S-4 for TRANS WORLD AIRLINES,
INC. in connection with the Company's registration of its Exchange Notes
issuable in exchange for the Company's 11 3/4% Senior Secured Notes due 2003,
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 (including
post effective 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 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 this 6th day of June,
1998.
/s/ Thomas H. Jacobsen
----------------------
Thomas H. Jacobsen
/
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Myron Kaplan, a Director of TRANS
WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do constitute and
appoint Gerald L. Gitner, Michael J. Palumbo and Kathleen A. Soled, jointly and
severally, my true and lawful attorneys-in-fact, with full power of substitution
and resubstitution for me in my name, place and stead, in any and all
capacities, to sign, pursuant to the requirements of the Securities Act of 1933,
the Registration Statement on Form S-4 for TRANS WORLD AIRLINES, INC. in
connection with the Company's registration of its Exchange Notes issuable in
exchange for the Company's 11 3/4% Senior Secured Notes due 2003, 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 (including post
effective 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 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 this 8th day of June,
1998.
/s/ Myron Kaplan
----------------
Myron Kaplan
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Merrill A. McPeak, a Director of
TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Gerald L. Gitner, Michael J. Palumbo and Kathleen A.
Soled, jointly and severally, my true and lawful attorneys-in-fact, with full
power of substitution and resubstitution for me in my name, place and stead, in
any and all capacities, to sign, pursuant to the requirements of the Securities
Act of 1933, the Registration Statement on Form S-4 for TRANS WORLD AIRLINES,
INC. in connection with the Company's registration of its Exchange Notes
issuable in exchange for the Company's 11 3/4% Senior Secured Notes due 2003,
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 (including
post effective 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 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 this 6 day of June,
1998.
/s/ Merrill A. McPeak
---------------------
Merrill A. McPeak
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Thomas F. Meagher, a Director of
TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Gerald L. Gitner, Michael J. Palumbo and Kathleen
A. Soled, jointly and severally, my true and lawful attorneys-in-fact,
with full power of substitution and resubstitution for me in my name, place
and stead, in any and all capacities, to sign, pursuant to the requirements
of the Securities Act of 1933, the Registration Statement on Form S-4 for
TRANS WORLD AIRLINES, INC. in connection with the Company's registration of
its Exchange Notes issuable in exchange for the Company's 11 3/4% Senior
Secured Notes due 2003, 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 (including post effective 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 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 this 5th day of June,
1998.
/s/ Thomas F. Meagher
---------------------
Thomas F. Meagher
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Brent S. Miller, a Director of
TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Gerald L. Gitner, Michael J. Palumbo and Kathleen
A. Soled, jointly and severally, my true and lawful attorneys-in-fact,
with full power of substitution and resubstitution for me in my name, place
and stead, in any and all capacities, to sign, pursuant to the requirements
of the Securities Act of 1933, the Registration Statement on Form S-4 for
TRANS WORLD AIRLINES, INC. in connection with the Company's registration of
its Exchange Notes issuable in exchange for the Company's 11 3/4% Senior
Secured Notes due 2003, 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 (including post effective 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 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 this 9th day of June,
1998.
/s/ Brent S. Miller
-------------------
Brent S. Miller
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, William O'Driscoll, a Director
of TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Gerald L. Gitner, Michael J. Palumbo and Kathleen
A. Soled, jointly and severally, my true and lawful attorneys-in-fact,
with full power of substitution and resubstitution for me in my name, place
and stead, in any and all capacities, to sign, pursuant to the requirements
of the Securities Act of 1933, the Registration Statement on Form S-4 for
TRANS WORLD AIRLINES, INC. in connection with the Company's registration of
its Exchange Notes issuable in exchange for the Company's 11 3/4% Senior
Secured Notes due 2003, 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 (including post effective 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 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 this 8 day of June,
1998.
/s/ William O'Driscoll
----------------------
William O'Driscoll
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, G. Joseph Reddington, a Director
of TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Gerald L. Gitner, Michael J. Palumbo and Kathleen A.
Soled, jointly and severally, my true and lawful attorneys-in-fact, with full
power of substitution and resubstitution for me in my name, place and stead,
in any and all capacities, to sign, pursuant to the requirements of the
Securities Act of 1933, the Registration Statement on Form S-
4 for TRANS WORLD AIRLINES, INC. in connection with the Company's registration
of its Exchange Notes issuable in exchange for the Company's 11 3/4% Senior
Secured Notes due 2003, 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 (including post effective 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
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 this 5th day of June,
1998.
/s/ G. Joseph Reddington
------------------------
G. Joseph Reddington
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Blanche M. Touhill, a Director
of TRANS WORLD AIRLINES, INC. (the "Company"), a Delaware corporation, do
constitute and appoint Gerald L. Gitner, Michael J. Palumbo and Kathleen
A. Soled, jointly and severally, my true and lawful attorneys-in-fact,
with full power of substitution and resubstitution for me in my name, place
and stead, in any and all capacities, to sign, pursuant to the requirements
of the Securities Act of 1933, the Registration Statement on Form S-4 for
TRANS WORLD AIRLINES, INC. in connection with the Company's registration of
its Exchange Notes issuable in exchange for the Company's 11 3/4% Senior
Secured Notes due 2003, 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 (including post effective 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 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 this 5 day of June,
1998.
/s/ Blanche M. Touhill
----------------------
Blanche M. Touhill
